WEBVTT - How Trump's Tariffs Will Impact You 0:00:01.760 --> 0:00:04.880 Als media. 0:00:05.400 --> 0:00:08.640 Welcome to it happened here, a podcast that's about trade policy. 0:00:08.760 --> 0:00:12.039 Now I'm your host, Via Wong. This is amazingly going 0:00:12.080 --> 0:00:14.280 to be the fun one of all of these episodes. 0:00:14.680 --> 0:00:19.919 It's about working tariffs, so it's gonna be a long week. Yeah. Yeah, 0:00:20.079 --> 0:00:23.520 that was the voice of the singular Garrison Davis, the 0:00:23.600 --> 0:00:29.000 one the only Yes. Hello, I'm excited to hear about tariffs. 0:00:29.000 --> 0:00:31.720 It's tariff talk here and it could happen here one 0:00:31.760 --> 0:00:35.600 of my favorite favorite topics. I guess now, all right, Garish, 0:00:35.600 --> 0:00:38.280 you're putting you on the spot. What is a tariff? Uh, 0:00:38.320 --> 0:00:46.120 it's basically googling tariff. No, A tariff is when Trump 0:00:46.159 --> 0:00:51.240 says China's bad, so he makes China pay extra money 0:00:51.280 --> 0:00:56.280 to sell their goods to Americans, and luckily China pays 0:00:56.280 --> 0:00:58.920 for all of it, and the American consumer gets off 0:00:59.000 --> 0:01:03.080 with a boot sting economy. That's at least what I've heard. Yeah, so, 0:01:03.200 --> 0:01:07.000 unfortunately for every one, I don't know, I guess I 0:01:07.040 --> 0:01:09.400 guess there's some acceleration this. Two are probably really excited 0:01:09.440 --> 0:01:10.759 about this, most certainly. 0:01:11.440 --> 0:01:14.760 But the way this actually works is Okay, So the 0:01:14.800 --> 0:01:17.240 government sets up a tariff and that means if anyone 0:01:17.480 --> 0:01:19.720 is bringing a good into the US, they have to 0:01:19.720 --> 0:01:21.280 pay the tariff on it, and that money goes to 0:01:21.280 --> 0:01:24.640 the government. So okay, that There's been a long history 0:01:24.720 --> 0:01:27.040 of tariffs in the US. This was a huge domestic 0:01:27.080 --> 0:01:30.559 policy think, particularly in the eighteen hundreds. That's really fucking boring. 0:01:31.000 --> 0:01:34.200 The incredibly short version of it is that the thing 0:01:34.240 --> 0:01:37.080 about tariffs is that, especially like tariffs on a specific sector, 0:01:37.200 --> 0:01:40.520 is that they're good for you manufacturing that thing kind 0:01:40.560 --> 0:01:43.520 of mostly, and they're bad for anyone trying to buy 0:01:43.520 --> 0:01:47.559 that good because it's now more expensive. So Trump's plan, 0:01:48.240 --> 0:01:50.240 and we're going to get into a bit more detail 0:01:50.240 --> 0:01:52.280 about this, because there's parts of Trump's tariff plan that 0:01:52.320 --> 0:01:54.960 everyone seems to have forgotten about for some reason that 0:01:55.200 --> 0:01:56.720 I don't know why they've forgotten about. 0:01:57.280 --> 0:02:00.280 But the basic plan is to impose something like a 0:02:00.320 --> 0:02:02.880 ten to twenty percent tariff on all goods that enter 0:02:02.920 --> 0:02:07.600 the US from anywhere. There's specifically one for Mexico, but 0:02:07.760 --> 0:02:10.600 the numbers on what the Mexico tariff is changes every 0:02:10.600 --> 0:02:13.560 time he opens his mouth. Sometimes it's like twenty five percent. 0:02:13.680 --> 0:02:15.960 There's one where it's like two hundred and fifty percent, 0:02:16.480 --> 0:02:21.919 of course, two interchangeable percentages. Yeah, and then for China, 0:02:22.000 --> 0:02:25.080 it's supposed to be a tariff of somewhere between sixty 0:02:25.320 --> 0:02:27.360 sixty percent is the most commonly sided number. But he's 0:02:27.400 --> 0:02:30.520 also set one hundred percent tariff once again basically the 0:02:30.560 --> 0:02:33.560 same thing. Yeah, and so you know, part of what we, 0:02:33.760 --> 0:02:35.880 unfortunately the rest of us who live in the normal world, 0:02:35.960 --> 0:02:37.839 have to do is figure out what is actually going 0:02:37.880 --> 0:02:41.799 to happen if we get, for example, twenty percent tariffs 0:02:41.840 --> 0:02:44.400 on all goods entering the US and a sixty percent 0:02:44.440 --> 0:02:48.440 tariff on goods from China. So the first thing you 0:02:48.480 --> 0:02:50.680 need to understand. I think most people kind of get 0:02:50.760 --> 0:02:52.880 this now. But the thing about a tariff is that 0:02:52.919 --> 0:02:54.959 you pay for it. So the way that it works 0:02:55.000 --> 0:02:57.079 in general is that this is just an additional cost 0:02:57.440 --> 0:03:00.440 for the company that's doing it, that's doing that like 0:03:00.480 --> 0:03:03.680 moving the good around, right, and so they are almost 0:03:03.720 --> 0:03:06.960 always going to just pass that cost directly on to you. Obviously, 0:03:07.000 --> 0:03:10.040 sometimes we've talked about pricing, the way that pricing works 0:03:10.080 --> 0:03:13.000 a lot on this show. Companies tend not to want 0:03:13.000 --> 0:03:16.239 to raise prices, largely because of their effects on consumer 0:03:16.280 --> 0:03:18.960 happiness and brand loyalty. And stuff like that. 0:03:19.000 --> 0:03:21.120 So sometimes people will just eat shit on it. But 0:03:21.360 --> 0:03:23.680 if you're talking about a sixty percent tariff, like you, 0:03:23.800 --> 0:03:25.600 the sixty percent tariff is going to be paid for 0:03:25.680 --> 0:03:25.960 by you. 0:03:26.639 --> 0:03:30.320 So that means that anytime we buy something that's either 0:03:30.400 --> 0:03:33.480 from Mexico or China or any of the other countries, 0:03:34.000 --> 0:03:36.600 that this will be applied to the easiest way for 0:03:36.680 --> 0:03:38.960 these for these companies to get around the tariff is 0:03:38.960 --> 0:03:40.760 just to pass off the cost to the consumer. 0:03:41.120 --> 0:03:43.560 Yeah, and it's actually worse than that because and this 0:03:43.600 --> 0:03:46.560 is something I don't think people really understand when you 0:03:46.600 --> 0:03:49.880 think about global trade, right, people tend to think about 0:03:49.920 --> 0:03:52.840 trade as something that happens between countries, and this is 0:03:52.880 --> 0:03:54.920 something that was an old you know dream, like the 0:03:54.960 --> 0:03:57.560 anti globalization movement. People sort of understood this and kind 0:03:57.560 --> 0:04:01.040 of don't now. Trade doesn't actually really happened between countries. 0:04:01.120 --> 0:04:04.920 Most trade is one company, an international company, moving a 0:04:05.000 --> 0:04:08.840 resource from one country to another. Right, So, like trade 0:04:09.040 --> 0:04:11.840 is fucking Amazon moving something from a warehouse in one 0:04:11.880 --> 0:04:13.560 country to a warehouse in a second country. 0:04:14.040 --> 0:04:18.040 Right now. I've seen a lot of people and this 0:04:18.480 --> 0:04:21.000 ranges from like very very serious sort of you know, 0:04:21.200 --> 0:04:24.200 news sources and economists trying to sort of just directly 0:04:24.279 --> 0:04:26.080 model what the price increases are going to be have 0:04:26.120 --> 0:04:27.560 since people be like, oh, your shirts are going to 0:04:27.600 --> 0:04:30.800 cost sixty percent more, or physical video games will stop 0:04:30.839 --> 0:04:34.240 existing because they're too expensive, and who gives a shit? 0:04:34.680 --> 0:04:37.120 Why are we even trying to do sectoral modeling of 0:04:37.160 --> 0:04:39.880 the impacts of this. If you try to impose a 0:04:39.920 --> 0:04:42.640 sixty to one hundred percent tariff on goods from China 0:04:42.680 --> 0:04:44.560 and a twenty percent tariff on all goes into the country, 0:04:44.560 --> 0:04:48.039 the economy will collapse. I don't know why everyone is 0:04:48.080 --> 0:04:51.240 pretending that this won't fucking happen. We're going to get 0:04:51.240 --> 0:04:52.960 into it a second. I guess the reason why people 0:04:53.000 --> 0:04:55.440 are pretending this is happening because the way they're doing 0:04:55.440 --> 0:04:59.200 the modeling kind of assumes that it won't, which is baffling, 0:04:59.520 --> 0:05:04.279 incomp handsible nonsense. Well, and that's especially amusing because the 0:05:04.400 --> 0:05:07.880 seemingly biggest issue this year around politics has been inflation, 0:05:08.240 --> 0:05:11.560 which has impacted every country around the globe. The US 0:05:11.600 --> 0:05:15.640 is actually whether it decently well, although there's been a 0:05:15.839 --> 0:05:19.640 catastrophic failure in communicating that and listening to the actual 0:05:19.640 --> 0:05:23.880 complaints from people on how they're still struggling with rising inflation, 0:05:24.360 --> 0:05:27.160 but still a big reason why Trump was elected is 0:05:27.200 --> 0:05:30.080 because he simply is not Joe Biden, and he's not 0:05:30.120 --> 0:05:33.400 from the Biden Harris administration, and there's this perception that 0:05:33.440 --> 0:05:35.480 he will be able to fix the economy, he will 0:05:35.520 --> 0:05:39.960 be able to get around inflation lower prices, when seemingly 0:05:40.040 --> 0:05:43.640 his main economic proposal will lead to what's probably going 0:05:43.720 --> 0:05:45.840 to be an economic collapse if it happens in the 0:05:46.120 --> 0:05:49.680 brutality of which he proposes. And there's another element of this, 0:05:49.839 --> 0:05:52.159 right when I say that the likely result of Trump 0:05:52.200 --> 0:05:54.279 actually trying to implement his tariff policy is a global 0:05:54.320 --> 0:05:56.559 economic collapse, there's another part of this that everyone seems 0:05:56.560 --> 0:05:59.120 to have forgotten. And I don't know why they've forgotten this. 0:05:59.160 --> 0:06:01.000 I guess it's because nobody he actually reads any of 0:06:01.080 --> 0:06:03.320 the things that Trump puts out on his website. 0:06:03.160 --> 0:06:06.560 Which is true. No one actually reads that stuff. It's nuts, 0:06:07.120 --> 0:06:09.400 especially his own supporters. Yeah, a majority of his own 0:06:09.400 --> 0:06:12.200 supporters do not pay attention to like Daily News. 0:06:12.440 --> 0:06:14.240 Yes, and now I remember this because I did an 0:06:14.279 --> 0:06:17.280 episode about these tariffs, like like six months ago, and 0:06:17.600 --> 0:06:19.960 one of the things about this, he has a thing 0:06:19.960 --> 0:06:22.279 called Agenda forty seven, right, which is his agenda for 0:06:22.279 --> 0:06:23.719 what he's going to do when he takes. 0:06:23.560 --> 0:06:25.880 Power, which no one has cared about. And now everyone 0:06:26.000 --> 0:06:28.960 is going through and posting policy proposals from like fucking 0:06:29.000 --> 0:06:32.359 two years ago with the headline breaking news Trump announces 0:06:32.480 --> 0:06:35.120 new plan, Like, no, he hasn't. This is our old plans. 0:06:35.200 --> 0:06:37.680 This stuff is like two years old. He's been openly 0:06:37.720 --> 0:06:39.920 talking about all that. Yeah, frages, And one of the 0:06:39.960 --> 0:06:42.479 important parts of this, I'm just gonna read this quote 0:06:42.560 --> 0:06:44.640 because it is a part of this has been ignored 0:06:44.680 --> 0:06:47.880 by every single fucking analysis I've seen, from like fucking 0:06:47.880 --> 0:06:50.120 the Center for American Progress, who obviously we're gonna screw 0:06:50.160 --> 0:06:53.039 this up, to like Stamford's labs, Like everyone who's been 0:06:53.080 --> 0:06:55.080 writing about this has just ignored this part, which is 0:06:55.200 --> 0:06:58.640 quote as one of his top economic priorities, President Trump 0:06:58.680 --> 0:07:01.320 will stop the flow of American jobs overseas by passing 0:07:01.400 --> 0:07:05.400 the Trump Reciprocal Trade Act. Under the landmark legislation, if 0:07:05.440 --> 0:07:08.479 any foreign country imposes a tariff on American made goods 0:07:08.480 --> 0:07:10.640 that is higher than the tariff imposed by the US, 0:07:11.000 --> 0:07:13.720 President Trump will have the authority to impose a reciprocal 0:07:13.720 --> 0:07:17.720 tariff on that country's goods. Okay, So what this would 0:07:17.760 --> 0:07:20.400 do again is that any country that has a tariff 0:07:20.400 --> 0:07:22.920 already or imposes a tariff. And this is important if 0:07:22.960 --> 0:07:25.000 we get into a trade war where countries start imposing 0:07:25.040 --> 0:07:27.600 tariffs on each other in retaliation for their other terrorists, 0:07:27.640 --> 0:07:29.480 which is what happens when he did this trade war 0:07:29.520 --> 0:07:32.800 with China in like twenty eighteen twenty nineteen. That means 0:07:32.800 --> 0:07:34.600 that we're also going to impose a tariff, which means 0:07:34.600 --> 0:07:37.320 that the tariff rates don't stay at ten to twenty percent, 0:07:37.400 --> 0:07:41.280 they cyclically spiral upwards. That's just like an escalating series 0:07:41.360 --> 0:07:42.280 of terroriffs. 0:07:42.360 --> 0:07:45.160 Yeah, and the thing is right, the policy process that 0:07:45.200 --> 0:07:47.360 they have on his page are like, well, okay, we're 0:07:47.360 --> 0:07:49.200 going to do this, do like a presidential Act, right, 0:07:49.200 --> 0:07:52.280 But the thing is the president actually has really, really, 0:07:52.680 --> 0:07:56.080 under a number of different acts, has extremely wide discretionary 0:07:56.080 --> 0:07:58.320 authority to set tariffs as long as he can basically 0:07:58.360 --> 0:08:00.000 sort of like cobble together. 0:08:00.000 --> 0:08:01.600 There's some kind of bullshit excuse. 0:08:01.360 --> 0:08:03.240 For it, and at that point you're lying on the 0:08:03.240 --> 0:08:06.400 Supreme Court to stop literally anything that Trump does, Like 0:08:06.960 --> 0:08:08.680 I don't give a shit, Well, I mean I don't know, 0:08:08.800 --> 0:08:12.400 maybe someone will like go up to like can Clarence 0:08:12.440 --> 0:08:14.800 Thomas and go like, hey, if we do this like 0:08:14.920 --> 0:08:18.679 importing new like windshield wipers for your RV is gonna 0:08:18.680 --> 0:08:21.120 cost ten million dollars more or whatever. But like there's 0:08:21.400 --> 0:08:23.880 there's no shot of this stuff getting stuff. And the 0:08:23.920 --> 0:08:27.240 thing is right, the reciprocal tariff stuff. He could just 0:08:27.320 --> 0:08:29.640 do this through his existing Terriforf authority. He doesn't actually 0:08:29.640 --> 0:08:31.600 even need to pass upthing through Congress. Who's actually be 0:08:31.640 --> 0:08:33.520 I think tricky for him, but he doesn't need to 0:08:34.000 --> 0:08:34.280 do You. 0:08:34.160 --> 0:08:37.240 Know what we need to do right now, Tomia just badly, 0:08:37.520 --> 0:08:39.559 badly cut to a bunch of companies that are going 0:08:39.559 --> 0:08:44.040 to be absolutely fucking eviscerated if this goes through. That's right, 0:08:44.120 --> 0:08:47.400 Donald Trump stands for anti capitalist action. He's going to 0:08:47.480 --> 0:09:02.120 destroy free trade. So enjoy these ads when you still can. Okay, 0:09:02.160 --> 0:09:04.640 we are back Miah. Let's hear how Trump is going 0:09:04.679 --> 0:09:07.440 to perfect the capitalist economic system by a series of 0:09:07.559 --> 0:09:10.360 escalating tariffs that will destroy the economy and in doing so, 0:09:10.440 --> 0:09:12.559 but about in the opportunity for Marxist to size power 0:09:12.960 --> 0:09:16.040 and change the world economic system. Yeah, so I'm going 0:09:16.120 --> 0:09:20.880 to read another quote from that same agenda forty seven thing. Quote. 0:09:21.200 --> 0:09:24.200 For example, food items like cereals, your other preparatory goods 0:09:24.200 --> 0:09:26.680 are tariffed at thirty two point nine percent by India 0:09:26.679 --> 0:09:29.000 and nineteen point five percent by China and only three 0:09:29.000 --> 0:09:32.000 point one percent by the US. India applies a tariff 0:09:32.040 --> 0:09:34.719 of twenty five point three percent on transportation equipment, while 0:09:34.720 --> 0:09:37.240 the US only terrorists goes at two point nine percent. Now, 0:09:37.240 --> 0:09:39.760 those exact numbers are debatable, but it doesn't matter because 0:09:39.880 --> 0:09:43.079 these these are going to be vibes based ones, based 0:09:43.080 --> 0:09:45.600 on how pissed off Trump is at a country. Yeah, 0:09:45.640 --> 0:09:48.960 as Trump is usually a vibes based guy. Yeah, especially 0:09:49.000 --> 0:09:50.880 when it comes to the economy, especially when it comes 0:09:50.920 --> 0:09:53.800 to like these numbers he's pulling out like between sixty 0:09:53.880 --> 0:09:56.280 to one hundred percent. He doesn't know what any of 0:09:56.320 --> 0:09:58.520 those numbers means. He's just thinking of a number and 0:09:58.600 --> 0:09:59.600 saying it out loud. 0:10:00.080 --> 0:10:03.280 And the thing about all of these things, right, even 0:10:03.400 --> 0:10:06.079 just the base twenty percent, or let's let's go to 0:10:06.120 --> 0:10:07.760 the lowest numbers he's talked about, which is a ten 0:10:07.800 --> 0:10:10.560 percent tariff on all goods and a sixty percent tariff 0:10:10.600 --> 0:10:14.880 on Chinese goods. Right, that in and of itself blows 0:10:14.880 --> 0:10:18.319 a smoking crater in the world economy. And none of 0:10:18.160 --> 0:10:21.320 the assessments that you will read are talking about this. 0:10:21.840 --> 0:10:23.800 One of the things that they will mention that is true, 0:10:23.840 --> 0:10:26.040 but they're not, you know, getting to the importance of 0:10:26.120 --> 0:10:28.640 is that this affects stuff that's made in the US. 0:10:29.280 --> 0:10:30.920 Because the thing about things that are made in the 0:10:31.000 --> 0:10:33.520 US is that they're made from components that are from elsewhere, 0:10:33.520 --> 0:10:35.520 because that's how international supply chains work. 0:10:35.880 --> 0:10:38.920 Oh wait, even though we have, through tariffs, moved all 0:10:39.240 --> 0:10:42.800 manufacturing of Toyota into the United States, you're saying that 0:10:42.840 --> 0:10:46.640 still some of the materials are not all solely made 0:10:46.720 --> 0:10:50.360 him produced within the country, and it actually requires unfeign trade. Yeah, 0:10:50.520 --> 0:10:52.480 and part of the problem I think of, like, Okay, 0:10:52.480 --> 0:10:55.480 so if you logically think out the conclusions of what 0:10:55.520 --> 0:10:58.960 that means, right, Okay, first mistake, Abia that you're trying 0:10:59.000 --> 0:10:59.959 to solve this problem through. 0:11:00.600 --> 0:11:03.040 Well, but here's the thing, right, Obviously Trump is not 0:11:03.080 --> 0:11:05.719 going to think through this, right, But I kind of 0:11:05.800 --> 0:11:08.600 expect people who are like writing about this for a 0:11:08.640 --> 0:11:10.439 living to do mildly better than this. 0:11:10.640 --> 0:11:12.960 And possibly some of the people that he like hires 0:11:12.960 --> 0:11:15.280 onto his cabinet and team. Maybe, but we'll. 0:11:15.120 --> 0:11:17.000 Say, you know, I'm not talking about like his critics. 0:11:17.040 --> 0:11:19.320 Oh sure, sure, one of the numbers will see all 0:11:19.320 --> 0:11:21.679 the time. The Center for American Progress has this line 0:11:21.679 --> 0:11:23.480 of how the terrofts will function as a tax that 0:11:23.520 --> 0:11:25.640 costs the America you conceive for like seventeen hundred dollars 0:11:25.679 --> 0:11:26.199 a year. 0:11:26.360 --> 0:11:29.640 Right, which was the line that Kamala used pretty often. Yeah, 0:11:29.679 --> 0:11:31.800 framing his tariffs as like a sales tax. 0:11:32.360 --> 0:11:36.480 This is fucking horseshit. The only way you can think 0:11:36.480 --> 0:11:38.920 that the net effect of this would just be a 0:11:38.920 --> 0:11:41.440 seventeen hundred dollars tax is if you don't understand how 0:11:41.440 --> 0:11:43.120 the economy works at all. Right, So I went there 0:11:43.200 --> 0:11:45.920 and read this, and the way that they model it 0:11:45.960 --> 0:11:48.920 is just by like they find the like net dollar 0:11:49.040 --> 0:11:52.320 value of imported goods and then apply a tax to it, 0:11:52.360 --> 0:11:53.800 and then try to figure out like how much of 0:11:53.840 --> 0:11:56.400 those goods that the average person would buy in a year, 0:11:56.679 --> 0:11:59.600 and then increase the price. But and this is something 0:11:59.640 --> 0:12:01.320 that's very at the end of the analysis, right right 0:12:01.320 --> 0:12:02.920 at the very end, there's little section where they say 0:12:02.920 --> 0:12:04.960 that they assume this would have no other effects on 0:12:05.000 --> 0:12:08.480 the economy. This is unbelievably fucking stupid. I can I 0:12:08.520 --> 0:12:09.280 emphasize enough? 0:12:09.400 --> 0:12:11.920 Can you explain why that doesn't make any sense? So? Okay, 0:12:11.960 --> 0:12:12.560 So here's the thing. 0:12:12.640 --> 0:12:16.760 Right, prices go up, now people can buy less things. 0:12:17.000 --> 0:12:19.240 What does that do to the economy, Well, it slows 0:12:19.280 --> 0:12:21.640 its growth rate. Right, companies start to go out of business. 0:12:21.640 --> 0:12:23.520 And we're gonna get me into more of the ways 0:12:23.559 --> 0:12:26.200 that this plays out in a second. Right, But a 0:12:26.240 --> 0:12:27.840 bunch of a bunch of people in a bunch of 0:12:27.840 --> 0:12:30.959 places fucking lose their jobs because suddenly the reduction and 0:12:31.000 --> 0:12:34.439 consumer demand means that there's a fucking reduction necessary production. 0:12:34.960 --> 0:12:37.960 And this has cyclical effects throughout the entire economy as 0:12:38.000 --> 0:12:39.680 more and more people fucking lose their jobs. 0:12:39.760 --> 0:12:41.559 And also, you know the thing, the thing about those 0:12:41.559 --> 0:12:43.480 people who lose their jobs is that that also fucking 0:12:43.520 --> 0:12:46.439 reduces demand because those people are now even less able 0:12:46.440 --> 0:12:49.280 to afford the stuff that's been increased by inflation prices, 0:12:49.679 --> 0:12:54.800 and this this spirals through the entire world economy. In 0:12:54.880 --> 0:12:55.319 order to. 0:12:55.480 --> 0:12:57.800 Understand what exactly this is going to do, I think 0:12:57.840 --> 0:13:00.880 we need to understand why, you know, because like if 0:13:00.920 --> 0:13:02.720 Kamala Harris, I don't know if it makes any difference 0:13:02.720 --> 0:13:05.120 in the election. But Kamala Harris walks of the stage 0:13:05.160 --> 0:13:08.240 and says this is going to cost you seventeen hundred dollars. 0:13:08.240 --> 0:13:09.760 She does not walk on the stage and say this 0:13:09.840 --> 0:13:12.599 is going to cause an economic collapse, right. And I 0:13:13.080 --> 0:13:15.360 think the reason that happened is because we've gotten into 0:13:15.360 --> 0:13:17.720 this place where nobody fucking understands how the economy works 0:13:17.720 --> 0:13:19.679 at all, in a way that's even worse than it 0:13:19.800 --> 0:13:22.240 was even in like the twenty tens. Like in the 0:13:22.280 --> 0:13:24.840 twenty tens, I think people sort of had a vague understanding. 0:13:24.960 --> 0:13:27.400 The thing that was happening to the economy was uberization, 0:13:27.480 --> 0:13:29.960 whatever you call it, was the expansion of gig work. Right, 0:13:30.160 --> 0:13:32.319 There was sort of an understanding and a focus on 0:13:32.960 --> 0:13:35.160 the very sort of low level parts of the economy, 0:13:35.200 --> 0:13:38.040 like what are you a poor person doing for your job? 0:13:38.240 --> 0:13:39.880 Right? Does how does your income work? 0:13:39.920 --> 0:13:45.040 And not purely on these sort of like high finance 0:13:45.320 --> 0:13:46.960 or in the case in the case of what's been 0:13:46.960 --> 0:13:50.000 happening here, everyone has been unbelievably completely focused on like 0:13:50.520 --> 0:13:54.199 the Chips Act and like state led industrialization and all 0:13:54.240 --> 0:13:56.800 that stuff is fucking bullshit. It's it basically hasn't done 0:13:56.840 --> 0:13:58.520 anything yet, it's not going to do anything for like 0:13:58.520 --> 0:14:01.240 a decade, and it's not mostly what's going on in 0:14:01.240 --> 0:14:04.680 the economy. I've been holding my tongue on this for years, 0:14:05.120 --> 0:14:07.480 but the people who have been writing about the economy 0:14:07.480 --> 0:14:10.080 don't understand how the fuck it works because they've been 0:14:10.120 --> 0:14:12.480 completely myopically obsessed with the idea that we're in this 0:14:12.520 --> 0:14:16.640 new era of state capitalism and no like the actual 0:14:16.760 --> 0:14:19.800 thing that's been happening in the economy. And I think 0:14:19.920 --> 0:14:22.800 if you are like a person who buys stuff, you 0:14:22.920 --> 0:14:25.120 probably understand this. But for some reason this has never 0:14:25.160 --> 0:14:28.560 made it to like economists or like people who fucking 0:14:28.560 --> 0:14:31.720 write about the economy for a living. Is consumer to 0:14:31.800 --> 0:14:35.360 manufacturer sales. So this is stuff like Temu. This is 0:14:35.360 --> 0:14:38.960 stuff like san who she I mean invented It's a 0:14:38.960 --> 0:14:40.520 strong word, but they're one of the first people who 0:14:40.560 --> 0:14:43.200 sort of popularized this model, right, And this is the 0:14:43.200 --> 0:14:45.440 thing where you have a platform that lets people like 0:14:45.560 --> 0:14:48.720 nominally buy directly from the factories or from you know, 0:14:48.760 --> 0:14:53.280 the people who are producing fruit, right, And these factories 0:14:53.360 --> 0:14:57.680 aren't producing goods until basically either people order the goods 0:14:57.800 --> 0:14:59.760 or like analytics tells them to order it, so they 0:14:59.760 --> 0:15:02.960 don't have a lot of the problems that other kind 0:15:02.960 --> 0:15:05.000 of like distribution bottels have. For you have a bunch 0:15:05.000 --> 0:15:06.920 of good sitting in a warehouse, like, you just don't 0:15:06.960 --> 0:15:09.240 have that because you don't start production until your sort 0:15:09.240 --> 0:15:09.800 of orders. 0:15:09.640 --> 0:15:11.520 Come in, your analytics come in. And the theory here 0:15:11.560 --> 0:15:13.920 is you can reduce costs by eliminating the middleman. But 0:15:13.960 --> 0:15:16.520 of course a new kind of middleman emerged, and that 0:15:16.680 --> 0:15:21.360 is the drop shipper god. So the drop shipper is 0:15:21.680 --> 0:15:25.440 just someone using the consumer to manufacturer pipeline right the 0:15:25.680 --> 0:15:28.280 platforms that are supposed to let you the consumer sort 0:15:28.320 --> 0:15:30.000 of just like buy directly from the thing and cut 0:15:30.000 --> 0:15:33.760 out milmen. It's just someone doing that but then turning 0:15:33.760 --> 0:15:37.080 around and selling you the result. And this has become 0:15:37.600 --> 0:15:40.520 just utterly fucking ubiquitous in the American economy. It's sort 0:15:40.520 --> 0:15:43.040 of like an integral part of the American scam economy 0:15:43.080 --> 0:15:46.040 now too, as the American economy has been increasingly sort 0:15:46.040 --> 0:15:48.560 of riddled and consumed by scams and riddled and consumed 0:15:48.600 --> 0:15:52.120 by sort of like people trying to capitalize on like 0:15:52.200 --> 0:15:54.120 some fucking meme or some political thing. 0:15:54.160 --> 0:15:55.520 You know, you have all these people doing like drop 0:15:55.520 --> 0:15:57.760 ship t shirts right where they can immediately come in 0:15:57.960 --> 0:15:59.960 and sell all of this stuff. 0:16:00.040 --> 0:16:03.160 These like short lived like trend meme based either like 0:16:03.240 --> 0:16:05.960 fashion or even like goods. You know, you can talk 0:16:05.960 --> 0:16:09.080 about like the amount of like content creator merch that 0:16:09.240 --> 0:16:11.680 is all funneled through these like drop shipping companies. 0:16:11.840 --> 0:16:14.040 Yeah, and it's also what's been It's a thing that's 0:16:14.160 --> 0:16:16.400 enabled like fast fashion to function. 0:16:16.200 --> 0:16:18.640 In the way that it is right now, right absolutely. 0:16:18.200 --> 0:16:22.240 And this has become what consumption is in large swaths 0:16:22.320 --> 0:16:24.440 of the world is from this sort of like direct 0:16:24.440 --> 0:16:27.120 to consumer drop shipping shit, right. 0:16:27.400 --> 0:16:27.680 Yeah. 0:16:27.840 --> 0:16:30.040 Now, the thing about about these drop shipping things is 0:16:30.040 --> 0:16:33.080 that their profit margins are really really low. They don't 0:16:33.120 --> 0:16:34.800 make that much money, and in fact, a lot of 0:16:34.800 --> 0:16:37.600 these things like hemorrhage money until they've basically you know, 0:16:37.720 --> 0:16:39.440 they do the thing that Amazon did, right, where like 0:16:39.480 --> 0:16:41.320 you lose money for a million years, but then eventually 0:16:41.360 --> 0:16:43.120 you have enough market chourney you start making money again. 0:16:43.240 --> 0:16:45.360 Yeah, because you make it so all your competitors basically 0:16:45.440 --> 0:16:47.960 can't function because you have prices that are so low. 0:16:48.120 --> 0:16:49.800 And then when you're the only one in the game 0:16:50.200 --> 0:16:53.360 with a sizeable power influence, you can raise prices and 0:16:53.400 --> 0:16:55.840 then you make tons of money. Also the Uber model, 0:16:55.880 --> 0:16:59.080 although Uber still is improfitable. Yeah well so yeah, Uber 0:16:59.080 --> 0:17:00.240 will never make any money. Right. 0:17:00.720 --> 0:17:03.360 But the other thing here that's important is that, you know, 0:17:03.360 --> 0:17:06.360 so the margins of a company like Temu, right, which 0:17:06.400 --> 0:17:08.840 is like probably the biggest of these sort of companies. 0:17:08.440 --> 0:17:11.919 Now, are low. But Tamu technically has tech money, Like 0:17:11.960 --> 0:17:14.280 they have money to back them up. Right, you know, 0:17:14.320 --> 0:17:17.520 who doesn't have an unbelievable amount of just like capital 0:17:17.560 --> 0:17:19.399 sitting around that they could just instantly pull from if 0:17:19.400 --> 0:17:21.560 suddenly there is I don't know, a sixty percent fucking 0:17:21.600 --> 0:17:24.960 price shock. Oh wait, it's all of the fucking manufacturing 0:17:25.200 --> 0:17:28.280 you know, like tiny manufacturing firms that these drop shipping 0:17:28.280 --> 0:17:30.520 things use to produce all their stuff. Right. 0:17:30.680 --> 0:17:34.720 That infrastructure is very fragile. It's it's margins are very bad. 0:17:35.240 --> 0:17:37.840 And oh guess what happens to that shit if you 0:17:37.880 --> 0:17:39.320 impose sixty percent terraces on it? 0:17:39.400 --> 0:17:42.000 Right, it just shuts down because that's the easiest option, right. 0:17:42.359 --> 0:17:44.240 Yeah, And you know, and presumably I think one of 0:17:44.280 --> 0:17:46.399 the other parts of this would be part of the 0:17:46.440 --> 0:17:48.280 reason that this has been happening is that all of 0:17:48.320 --> 0:17:51.359 this office are being imported like under terriff loopholes, but 0:17:51.520 --> 0:17:55.600 like that loopholes not hard to close, right. 0:17:55.600 --> 0:17:58.800 What terraf loopholes are you referring to? Oh yeah, so 0:17:58.880 --> 0:18:00.440 I talked about this the ten we episod. So those 0:18:00.480 --> 0:18:03.720 loopholes on American teriffs were like, if you're bringing stuff 0:18:03.760 --> 0:18:06.919 into the country that's below a certain value, it has 0:18:06.920 --> 0:18:08.919 to be above like a six hundred dollars something to 0:18:08.960 --> 0:18:13.639 like trigger a threshold to like activate the teriffs applying 0:18:13.640 --> 0:18:15.800 to it. So people just ship a bunch of like 0:18:16.000 --> 0:18:19.879 one billion boxes individually that are like five hundred and 0:18:19.960 --> 0:18:23.480 ninety nine dollars to go under the thing. So you're saying, 0:18:23.800 --> 0:18:26.520 I can still maybe buy my new Sonic the Hedgehog 0:18:26.960 --> 0:18:29.600 PS five game though, that should be fine. I'll be 0:18:29.680 --> 0:18:31.919 totally good. Oh god, okay. 0:18:32.000 --> 0:18:34.359 So the other part of this that's important, right, So 0:18:34.560 --> 0:18:36.359 this is the kind of I don't know if news 0:18:36.400 --> 0:18:37.960 the right word, but this is the kind of recent 0:18:38.000 --> 0:18:41.360 part of the economy that's incredibly dependent on Chinese supply chains, right, 0:18:41.800 --> 0:18:44.960 that gets just liquefied if these terrorifts go through. These 0:18:44.960 --> 0:18:48.679 are enormous companies that you know are going to just 0:18:48.800 --> 0:18:51.840 eat shit and those companies eating shit have the sort 0:18:51.840 --> 0:18:53.480