Speaker 1: Call Zone Media.
Speaker 2: Welcome to it could Happen Here, a podcast about things
Speaker 2: falling apart this week featuring an entire three sentences about
Speaker 2: putting it back together again. I am your host, Bio Wong,
Speaker 2: and today we are gathered here to talk about tariffs.
Speaker 2: Oh boy, it has been a massive two weeks of
Speaker 2: tariff news, the most important aspect of which has been
Speaker 2: finally getting a resolution to what was going on with
Speaker 2: the Liberation Day turf tariffs that Trump tried to impose
Speaker 2: at the beginning of his time in office. On July
Speaker 2: thirty first, we finally actually found out what those tarrists
Speaker 2: are going to look like, and what those troists are
Speaker 2: going to look like is prisciannen Effectively, what happened is
Speaker 2: that roughly, if the US runs a trade deficit with you,
Speaker 2: you get a fifteen percent tariff, and you get a
Speaker 2: ten percent tariff if we run a trade surplus with you.
Speaker 2: Now there's a bunch of other individual rates. We'll get
Speaker 2: to some of them in a second, but it's worth
Speaker 2: emphasizing that this doesn't make any sense. So okay, before
Speaker 2: we get into the structural effects of this, I want
Speaker 2: to sort of look at what the nominal stated justification
Speaker 2: for imposing these tariffs are and how they're at odds
Speaker 2: with each other. And this is the point where we're
Speaker 2: turn to later. Part of the justification for the tariffs
Speaker 2: is that, okay, they're trying to use tariffts to replace
Speaker 2: the income tax. That's nonsense, it's gibberish. You literally cannot
Speaker 2: raise enough money through tariffs to replace the income tax.
Speaker 2: But okay, that's the thing that they want to do.
Speaker 2: The other nominal justification, and this is what's being used
Speaker 2: in negotiations and is the thing that is causing individual
Speaker 2: tariff rates to randomly sort of be jacked up, is
Speaker 2: that Trump is pissed off that the US runs trade
Speaker 2: deficits with countries. And again, like this is basically nonsense.
Speaker 2: The US pays for things in its own currency. We
Speaker 2: don't actually need other places currency. It doesn't matter if
Speaker 2: we run trade deficits. I really hate that Rand Paul
Speaker 2: is right when he said I run a trade deficit
Speaker 2: with my grocery store. But like, that's how the American
Speaker 2: Empire is supposed to work. These people do not care
Speaker 2: that this is how the American Empire is supposed to work.
Speaker 2: They have been handed the most sophisticated imperial machinery that
Speaker 2: has ever existed in the entirety of human history. And
Speaker 2: they see numbers on a chart which says we pay
Speaker 2: them more money than we're getting and they're pissed about it.
Speaker 2: But again, okay, if that's the state of justification, right,
Speaker 2: then why are you imposing a terra fund countries? We
Speaker 2: have a trade serplus two that doesn't make any sense,
Speaker 2: and the difference between them is only five percent, So
Speaker 2: what are we doing here? It's nonsense, like our trade
Speaker 2: policy is being run by people who don't understand how
Speaker 2: any of this works and are operating off of, you know,
Speaker 2: effectively just pure anger and rage. So I'm going to
Speaker 2: talk about a few of the really really high rates.
Speaker 2: We're not going to focus on much on the thirty
Speaker 2: percent South Africa, for example, but oh boy, so Syria
Speaker 2: is at forty one percent, which is absolutely fucking hideous.
Speaker 2: Syria is a country that I don't know anyone who
Speaker 2: listens to this show is aware of the extent to
Speaker 2: which Syria has been devastated by the civil war, and
Speaker 2: this is an incredible blow to their economy. Laus and
Speaker 2: Me and mar are also being terriffed at forty percent,
Speaker 2: and we promised in the executive disorder to explain how
Speaker 2: Trump recognizing the junta. So Joe Biden had refused to
Speaker 2: recognize me and Mar's like military coup government. As long
Speaker 2: time listeners of this show are aware, there is a
Speaker 2: military coup in in memr There is a large gale
Speaker 2: revolutionary process attempting to overthrow this government. My co host
Speaker 2: James Stout and Robert Evans have done a lot of
Speaker 2: very good reporting on this that you can go find.
Speaker 2: You should find it. It's some of the best journalism
Speaker 2: that I've ever encountered. But the US's official position has
Speaker 2: been that we don't recognize the coup government because it is,
Speaker 2: and this is true, a coup government. But Trump just
Speaker 2: sent the junta a letter of it says you're tariff
Speaker 2: to forty percent. And the thing about this is the
Speaker 2: Junta was like, oh shit, hell yeah, Like that means
Speaker 2: you recognize us, right, because you're sending us official fucking
Speaker 2: notices of shit. So you're recognizing US as the legitimate
Speaker 2: government of mean Mar. And so the Juta is like
Speaker 2: thrilled by this. There's some evidence of like the US
Speaker 2: lifting sanctions on them after. It's kind of messy, but yeah, great,
Speaker 2: somehow in the attempts to sort of just like squeeze
Speaker 2: every last drop out of all of these countries, we
Speaker 2: have recognized an incredibly brutal military dictatorship. Hate that back
Speaker 2: to the more direct tariff stuff. The tariffs on Laos
Speaker 2: is also going to be devastating for Laosian economy, which
Speaker 2: is a lot of the economies in Southeast Asia are
Speaker 2: pretty heavily export driven, and it's one of the places
Speaker 2: where a lot of textiles manufacturing takes place. After the
Speaker 2: sort of increase in labor prices and increase in resistance
Speaker 2: from the labor movement in China kind of pushed all
Speaker 2: of that capital down the make Cong River delta. This
Speaker 2: is going to absolutely fucking suck for everyone in Laos.
Speaker 2: And you know, this is something I want to keep
Speaker 2: emphasizing over and over again that these turf teriffs, people
Speaker 2: they hurt the most are workers in places like Laos,
Speaker 2: in places like Syria, right, who are going to just
Speaker 2: be absolutely fucking devastated by it. Now, let's also talk Switzerland,
Speaker 2: which was the other country that had a terriff at
Speaker 2: like forty percent This one is genuinely really funny, which
Speaker 2: is that it seems to largely be driven by Trump
Speaker 2: being pissed off of the trade deficit, which is like
Speaker 2: compared to like the scale of the US economy, that
Speaker 2: deficit is like zero dollars. But the funniest part of
Speaker 2: this is that the trade deficit is largely driven by
Speaker 2: gold imports. Now, this is extremely funny because if you
Speaker 2: know anything about the American Right, you know that a
Speaker 2: lot of the ways that they did their funding, especially
Speaker 2: when they were sort of building their operations, a huge
Speaker 2: source of their funding is getting their followers to buy gold.
Speaker 2: This was the original Alex Jones grift right. I think
Speaker 2: he still does it a little bit now. Before he
Speaker 2: sort of pivoted into supplements, he would partner with like
Speaker 2: gold salesmen and like silvia salesman. This and this has
Speaker 2: always been a huge source of these people's money. Now
Speaker 2: there's there's been a little bit of decrease in the
Speaker 2: prominence of gold as a thing. There's a very good
Speaker 2: Folding Ideas video about this incredibly bizarre Indrius Elba Weird
Speaker 2: gold promotion documentary which talks about the ways in which
Speaker 2: gold has been sort of threatened by bitcoin, and well
Speaker 2: mostly bitcoin, but it's like cryptocurrency in general is like
Speaker 2: the scam you're trying to sell all of these sort
Speaker 2: of weird prepper and like hard lia line quote unquote
Speaker 2: sound money libertariany types. But it is very funny that
Speaker 2: this is in effect a self reinforcing cycle, because the
Speaker 2: thing about the price of gold is that it is
Speaker 2: largely determined by how fuck the rest of the economy is.
Speaker 2: The old people who are trying to sell gold are
Speaker 2: trying to sell you on the fact that the economy
Speaker 2: is about to fucking explode. But this is a cyclical effect,
Speaker 2: right where these terff rates go up and the economy explodes,
Speaker 2: and so people buy more gold from Switzerland, at which
Speaker 2: point are trade balanced with Switzerland gets worse. It works,
Speaker 2: it worse, so and any other like Swiss watches or
Speaker 2: another sort of major source of export currency so off,
Speaker 2: which are again all worn by all these fucking maga
Speaker 2: grifters with their like fucking ten thousand dollars watches or whatever.
Speaker 2: So that one's just funny. Trump has also announced and
Speaker 2: this has not gone into effect yet, who fucking knows
Speaker 2: when if it goes into effect, But I think it's
Speaker 2: worth talking about, which is that Trump has been talking
Speaker 2: about putting a one hundred percent tariff on semiconductors unless
Speaker 2: you invest in the US. So Apple sort of in
Speaker 2: response to this, pledged one hundred million dollars in investment
Speaker 2: in the US to build chips. And I think it's
Speaker 2: also worth looking at the ideological underpinnings of this, because
Speaker 2: a huge part of this thing is something that you've
Speaker 2: been seeing increasingly on the right, is this dream of
Speaker 2: making domestic iPhones. And if you look at the people
Speaker 2: in the tech sector, right, the sort of tech billionaires
Speaker 2: who run all this stuff, they're openly fantasizing about like, oh,
Speaker 2: these like soft weak liberals are going to be forced
Speaker 2: to like work in the factories and put iPhones together
Speaker 2: or whatever. And it's worth emphasizing that this is just
Speaker 2: not possible, right, And this is true of a significant
Speaker 2: number of the things that they want these tariffs to do.
Speaker 2: They're just not possible results of the policy levers they're pulling.
Speaker 2: A couple of months ago, I described a sort of
Speaker 2: similar policy thing to this as like they're they are
Speaker 2: attempting to scream at the moon in order to control
Speaker 2: the tides and it's like it doesn't work, it's not
Speaker 2: the right lever. It literally can't do what you think
Speaker 2: it's going to you. And it's worth going into why,
Speaker 2: which is that we can't make iPhones here because we
Speaker 2: don't have the migrant labor force to do it. And
Speaker 2: a lot of you may be thinking, oh, well, the
Speaker 2: US has a lot of migrant workers. No, you don't
Speaker 2: understand China, which is where most of these things are built.
Speaker 2: Even with the terriffs, like a lot of you know,
Speaker 2: there were some downcycling of plants, that stuff has mostly
Speaker 2: been upcycled. Again, China has three hundred million migrant workers.
Speaker 2: That is almost the entire population of the United States. Right,
Speaker 2: we are talking about individual plants with two hundred thousand workers.
Speaker 2: That is the low end estimate. By the way of
Speaker 2: those numbers, we don't actually have very good numbers on
Speaker 2: how big some of these fox Con facilities are. The
Speaker 2: low end estimate is two hundred thousand. Right, and again
Speaker 2: this is just in time production. So okay, what does
Speaker 2: that actually mean? Right? This means that the production cycles
Speaker 2: work a lot of For example, the way that ups works. Right,
Speaker 2: We're like, you have a bunch of people who are
Speaker 2: effectively seasonal or part time workers who only come in
Speaker 2: when demand increases, so for ups, right, and it's actually
Speaker 2: a relatively similar schedule to the way it works in China.
Speaker 2: But it's like there's these massive surges around the holidays
Speaker 2: with apples. It's more like September November roughly. But it's
Speaker 2: in order to like massively be able to ramp up
Speaker 2: production in time for you know, the sort of like
Speaker 2: massive holiday increase of orders. Right. But in order to
Speaker 2: do this, you need to have a production apparatus where
Speaker 2: you have two hundred thousand workers there, but you can
Speaker 2: also get rid of most of them and they can
Speaker 2: support themselves doing other stuff for the rest of the year,
Speaker 2: and then you have to be able to bring them
Speaker 2: back in during peak season. We just do not have
Speaker 2: the populations to replicate this, right, even if you're trying
Speaker 2: to replace it with prison labor. The thing about the
Speaker 2: American prison system is that it's decentralized, right. This is
Speaker 2: actually a key element of how the US economy is structured.
Speaker 2: Prisons are one of the sort of three major sources
Speaker 2: of jobs in rural areas. The other two are like
Speaker 2: va March style service jobs, which replaced anything else that
Speaker 2: was in the economy and the military basis, which is
Speaker 2: part of why you know, like like this is part
Speaker 2: of why rural politics of console reactionary because like, okay,
Speaker 2: so if your options in the economy are soldier, prison guard, service, labor,
Speaker 2: you're gonna generate a bunch of unhinged reactionary bullshit. But again,
Speaker 2: even even though the American prison system has a really
Speaker 2: high population, these people are really spread out, and iPhone
Speaker 2: production requires sort of like mass centralization, right, that's the
Speaker 2: only way to get these things to work. Plus, the
Speaker 2: workers that you're bringing in have to be skilled enough
Speaker 2: to be able to do this shit. And this is
Speaker 2: a capacity that's built up in China over the course
Speaker 2: of like of like decades, right, And we don't really
Speaker 2: have this now that people have tried moving this production
Speaker 2: into other places like Vietnam, for example, the teriff rates
Speaker 2: there are also making this extremely difficult. But it's been
Speaker 2: really really hard to replace. And the other issue, and
Speaker 2: this is a technological issue, not just a sort of
Speaker 2: issue of the systemic elements of the population of China.
Speaker 2: The infrastructure to build microchips in the US doesn't exist,
Speaker 2: and it's not just that the infrastructure to build the
Speaker 2: chips doesn't exist. It's actually way worse than that, and
Speaker 2: this is why all of the attempts, and the Biden
Speaker 2: administration has put an enormous amount of money into this.
Speaker 2: The Chinese government also has put an enormous amount of
Speaker 2: money spifically into the microchip angle, and none of them
Speaker 2: may have been able to do it. And part of
Speaker 2: it's technological problem, but part of it is that the
Speaker 2: machines that you need to make the chips don't exist, right,
Speaker 2: But the machines you need to make the machines that
Speaker 2: make the chips also don't exist. And the machines you
Speaker 2: need to make the machines that make the machines that
Speaker 2: make the chips also don't exist. We are so far
Speaker 2: up the supply chain, right, and this is one of
Speaker 2: the you know, one of the things, the thing that
Speaker 2: they're trying to do through sort of like pure politics,
Speaker 2: right through like just like the pure exertion of state power,
Speaker 2: is to reshape the fundamental structural way that the supply
Speaker 2: chain work, and the way the supply chain is worked
Speaker 2: is by intense specialization in very very very small areas. Right,
Speaker 2: So Taiwan for example, becomes the only place basically that
Speaker 2: can manufacture these chips. And that intense specification means that
Speaker 2: like the machines that make the machines that they that
Speaker 2: are used to build this thing are only made by
Speaker 2: like one company in social land, and like machines to
Speaker 2: make those machines like who the fuck knows where they're built.
Speaker 2: And this is a thing where the technology involves become
Speaker 2: so complicated and the laborers become so specialized that you're
Speaker 2: dealing with machines that like just straight up not many
Speaker 2: people in the world know how to use, and not
Speaker 2: on people in the world know how to create, and
Speaker 2: so we're so far up the supply chain, right, And
Speaker 2: this is also if you want to look at like
Speaker 2: what the impact of these terrists are going to be, right,
Speaker 2: because your supply chains are so specialized. You know, you
Speaker 2: can think of these supply chains as like incredibly complicated machines, right,
Speaker 2: and any sort of like little rock that you throw
Speaker 2: into the machine, or do you know, you throw sand
Speaker 2: into the machine and suddenly the ball bearing doesn't work
Speaker 2: at quite the right efficiency, and so things just start
Speaker 2: breaking down across the entire supply chain, and they think
Speaker 2: that they can just replicate all of this with just
Speaker 2: like pure tariffs and like throwing money at it, and no,
Speaker 2: you can't. These are these are actual structural things of
Speaker 2: how the economy works. Now, do you know what else
Speaker 2: is a structural element of how the economy works? Idiot?
Speaker 2: Is these products and services and the fact that they
Speaker 2: fund this podcast. Woo, we are so back now. One
Speaker 2: of the other kind of terriffs I think I've been
Speaker 2: calling I guess like defiance tariffs. One of the things
Speaker 2: that Shop administration has been doing is threatening to impose
Speaker 2: a fifty percent teriff on anyone who buys oil from Russia.
Speaker 2: India has been threatened with this. India's current terrif rate
Speaker 2: is twenty five percent. They're right now threatening with another
Speaker 2: twenty five percent against in the fifty percent. It's sort
Speaker 2: of unclear exactly who's going to back down here. More interestingly,
Speaker 2: and we've talked a little bit about this, Brazil. There
Speaker 2: was a fifty percent turf of tariff on Brazil again
Speaker 2: for refusing to release Bolsonaro, which is very funny because
Speaker 2: this has managed to piss off the entire sort of
Speaker 2: political sphere in Brazil to the extent that like Bolsonaro,
Speaker 2: has had to come out and announce this because Bolsonaro
Speaker 2: was getting fucking torn to shreds by the Brazilian right
Speaker 2: for being basically a trader sort of lapdog of the US,
Speaker 2: as they're sort of, you know, imposing this direct attack
Speaker 2: on Brazil through this fifty percent tariff. Right. It's backfire
Speaker 2: so spectacularly that like Lula, who was floundering, is now
Speaker 2: writing this incredible wave of sort of anti American Brazilian
Speaker 2: nationalism from both the left and the right. So Lula,
Speaker 2: who is who is again in a pretty strong political
Speaker 2: position because of this, has refused that you direct talk
Speaker 2: to the US because he was like, absolutely not fuck this.
Speaker 2: Here's a quote from Routers. We had already pardoned the
Speaker 2: US intervention in the nineteen sixty four coup, said Lula,
Speaker 2: who got his political start as a union leader protesting
Speaker 2: against the military government that followed a US backed ouster
Speaker 2: of a democratically elected presidents. Quote. But this is now
Speaker 2: not a small intervention. It's the president of the United
Speaker 2: States thinking he can dictate rules for a sovereign country
Speaker 2: like Brazil. It's unacceptable. Now. Again, as I said in
Speaker 2: the ed, there's a lot of things now that are
Speaker 2: worth looking at here. Right, we have, on the one hand,
Speaker 2: this direct connection from Lula from you know, the sort
Speaker 2: of subtle CIA backing of military coup stuff which happens
Speaker 2: under the table to you know this just like the
Speaker 2: president of the United States is telling you how to
Speaker 2: run your country. And that is a subjective shift, even
Speaker 2: if like the CIA overthrowing your government like has more
Speaker 2: of a direct political impact on it. Right. The thing
Speaker 2: about the thing about the way American power worked was
Speaker 2: that it was mostly supposed to be under the table,
Speaker 2: and it's not now. It's just it's just out there
Speaker 2: in the open. Right. The premise that the US governments,
Speaker 2: like the president of the United States, should just be
Speaker 2: able to tell another country what to do is the
Speaker 2: fucking premise of American imperialism. And now they're just saying
Speaker 2: it out loud and noting that it's not like Lula
Speaker 2: is some kind of like anti American radical, right, Like
Speaker 2: Lula worked really well in his first term in office,
Speaker 2: which was w Bush, but again because of the way
Speaker 2: that the political winds have shifted here, right to the
Speaker 2: extent that like Bolsonaro has had to condemn an attempt
Speaker 2: to get him released from prison, which is so funny
Speaker 2: because he's doing this. He is, he is, he is
Speaker 2: pushing very hard. Now there hasn't really been a response
Speaker 2: yet for Lula's call for organized terror resistance from China
Speaker 2: and India and bricks. I don't know if there's going
Speaker 2: to be. It's worth talking a little bit about what
Speaker 2: bricks actually is here. So bricks stands for Brazil, Russia, India, China,
Speaker 2: South Africa. It was originally like an asset class designed
Speaker 2: by some guys at Goldman Sachs who were, you know,
Speaker 2: trying to like classify the assets of this kind of
Speaker 2: like developing economy thing. It was like, you know, you
Speaker 2: can buy bonds and these things and maybe you can
Speaker 2: you can classify their asset rates together and has kind
Speaker 2: of become a political alliance. But you know, there's a
Speaker 2: lot of people who will attempt to sell you on
Speaker 2: bricks being this sort of like leftist anti imperial alliance,
Speaker 2: you know, and as a sort of socialist thing. And
Speaker 2: like I will simply ask, right, who is doing the
Speaker 2: socialism here? Right? Is it a butcher of Gujarat? Is
Speaker 2: it she quote? We must oppose Welfarerism jimping. Is it, Vladimir,
Speaker 2: we will show Ukraine true decommunization Putin? Is it the
Speaker 2: African National Congress of selling your country to Bank of America?
Speaker 2: Is it the butcher of Haiti?
Speaker 1: Like?
Speaker 2: What are we doing here?
Speaker 1: Right? Like?
Speaker 2: This is not actually a substantively anti American political alliance.
Speaker 2: India is a close American ally, South Africa is a
Speaker 2: close American ally. None of this really makes any sense.
Speaker 2: It's not a substantive political alliance. Really, people periodically make
Speaker 2: noise about it trying to be a substantive political alliance.
Speaker 2: But like I mean, like India and China are periodically
Speaker 2: like at war or like almost at war with each
Speaker 2: other over the border. It's right, these are a bunch
Speaker 2: of countries that absolutely fucking hate each other. It's never
Speaker 2: been a coherent political project. Lula is trying to turn
Speaker 2: it into one, but like, I fucking I don't think
Speaker 2: that's gonna work. So, you know, that's sort of what's
Speaker 2: been going on on the front to sort of national resistance.
Speaker 2: But Lula does have you know, a kind of very
Speaker 2: very large and powerful political force behind him domestically to
Speaker 2: resist this. We'll see what happens going forward. It's also
Speaker 2: worth noting that China has been negotiating with the US
Speaker 2: and their tariff increases, which are supposed to go into effect,
Speaker 2: have been delayed for another ninety days. So we're stuck
Speaker 2: in this holding pattern again. But let's talk about what
Speaker 2: this means for the economy, right, And I think the
Speaker 2: very short term answer is that I don't think anyone
Speaker 2: really knows, right, Like, the actual macro effects of this
Speaker 2: are things that we've only just started to see. No
Speaker 2: one's ever really tried to model this out because there's
Speaker 2: no reason why it whatever happened, you know, And you're
Speaker 2: starting to see things behind the scenes, like medical supplies
Speaker 2: being incredibly difficult to require. You're starting to see a
Speaker 2: bunch of very very weird items and supply chains become
Speaker 2: increasingly difficult to find. But again, the supply chains are
Speaker 2: going to break down in ways that we just don't
Speaker 2: really understand. What is going to happen, And what has
Speaker 2: started to happen is inflation is increasing. I want to
Speaker 2: sort of again review our kind of inflation theory, right,
Speaker 2: which is largely derived from our friends as strange matter,
Speaker 2: sort of supply chain theory of inflation. Their usis of
Speaker 2: inflation is that, like, it's not set by just supply
Speaker 2: and demand. It's set by cost plus markup. Because you know,
Speaker 2: price is not set by like an autonomous thing called
Speaker 2: the market. Price is set by like a guy with
Speaker 2: like a price gun. Right, It's directly set by people.
Speaker 2: And the way that those people set the price is
Speaker 2: you know, the cost of acquiring the item, plus and
Speaker 2: markup for their profit. Now out, One of the sort
Speaker 2: of fundamental like insights here is that price is sort
Speaker 2: of sticky until it isn't, right, which is that like, okay,
Speaker 2: So the actual thing that controls price is sort of
Speaker 2: like how pissed off consumers get at price increases, but
Speaker 2: also comma that is also very very much tied to brand, right,
Speaker 2: And if you raise your prices and consumers get pissed,
Speaker 2: you even if you drop them again, that doesn't necessarily
Speaker 2: mean those people will come back, right, So you know
Speaker 2: a lot of times when they when they when there's
Speaker 2: price increases, companies try to eat it. And that's and
Speaker 2: that's been what's happening with a lot of these things,
Speaker 2: right where at each point in the supply chain, people
Speaker 2: are you know, people are having to sort of pay
Speaker 2: for the tariff parts, right, and and when someone has
Speaker 2: to pay for the tariff, they increase their prices that
Speaker 2: they sell it to the next person in the supply chain.
Speaker 2: The next person's supply chin increases their prices right now.
Speaker 2: So the way that these terraffs play out, right, is
Speaker 2: that each person in the supply chain is doing costless
Speaker 2: mark up, but their costs are going up. So your
Speaker 2: options are either you sell it at the same price
Speaker 2: and you reduce the amount of markup you're getting, which
Speaker 2: is reducing the raw profit you're taking in, or you
Speaker 2: raise your prices. And these things are trying to not
Speaker 2: raise their prices, and part of this is from direct
Speaker 2: political pressure, right like Trump has been threatening companies to
Speaker 2: not raise their prices from the tariffs. But prices are
Speaker 2: starting to increase. And as this goes on, and as
Speaker 2: more and more teriffs come into effect, that this becomes
Speaker 2: more and more difficult to evade the tariffs. The prices
Speaker 2: are going to keep increasing because they're driven by these
Speaker 2: supply chain price increases. So you know cost is going
Speaker 2: to go up. It is going to have absolutely devastating
Speaker 2: impacts on workers across the world, primarily not in the US.
Speaker 2: But the workers who are in these export oriented economies
Speaker 2: are going to have to deal with just the absolute
Speaker 2: horror of large scale economic collapse. You know what, who
Speaker 2: else hopefully doesn't have to deal with the absolute horror
Speaker 2: of larger scale economic collapse. It is the products and
Speaker 2: services to support this podcast. We are back now. The
Speaker 2: thing I want to close this episode on is not
Speaker 2: actually a look at the economy, because I think, you know,
Speaker 2: we kind of don't know exactly what's going to happen
Speaker 2: with the economy other than bad. But there is something
Speaker 2: that I think we can look at that's been broadly
Speaker 2: ignored or miscovered, which is what these tariffs say about
Speaker 2: the nature of the state. And I think what's happening
Speaker 2: is that we're seeing a fundamental change in the way
Speaker 2: that the state functions from the previous sort of neoliberal
Speaker 2: regime to this like just really openly fascist one. And
Speaker 2: I think the most clear example of this isn't necessarily
Speaker 2: the terroriffs, so they are a pretty clear example. It's
Speaker 2: this extremely weird like extortion agreement reached between Trump, AMD
Speaker 2: and Nvidia. And to read this from CBS quote, US
Speaker 2: chip makers in Nvidia and AMD will pay the US
Speaker 2: government fifteen percent of revenue generated by sales of their
Speaker 2: AI chips in China. A White House official confirmed to
Speaker 2: CPS News this is just a shakedown, right. You know,
Speaker 2: this is part of a negotiating process by which originally
Speaker 2: AMD and and Video are going to be banned for
Speaker 2: selling the AI chips to China. And in order to
Speaker 2: be allowed to sell these ships to China, Trump was like, okay,
Speaker 2: if you want to do that, give us like thirty
Speaker 2: percent of your revenue, when they were like, okay, what
Speaker 2: if we did fifteen percent? Right, this is just a shakedown.
Speaker 2: And you know it's been described as such all over
Speaker 2: the press, but they're missing something fundamental here, which is
Speaker 2: that the state fundamentally is just a shakedown.
Speaker 1: Right.
Speaker 2: The analysis of Trump isn't from the sort of critical
Speaker 2: press has been to view it as corruption. And it
Speaker 2: is absolutely corrupt, right, Like, no question about this. It
Speaker 2: is unbelievably corrupt. Like we have people just giving the
Speaker 2: president blocks of fucking gold with an eye I phone
Speaker 2: embedded into them. Right, it's it's hideous, open corruption. But
Speaker 2: analysis that looks at the Trumpe administration as corruption of
Speaker 2: an ideal type, right, that looks at it as the
Speaker 2: transformation of the state into something that it fundamentally isn't
Speaker 2: That kind of analysis is just wrong. The state has
Speaker 2: always and has always only been the localized monopoly on
Speaker 2: the legitimate use of force. Right, That's all it is.
Speaker 2: That's all it's ever been. Everything we know about the
Speaker 2: state today, right from the legal system to education, to roads,
Speaker 2: to environmental regulation to the welfare state, are all just
Speaker 2: functions that were tacked onto the core monopoly on violence,
Speaker 2: either as part of a carrot and stick gambit to
Speaker 2: maintain control of population or simply as a concession to
Speaker 2: popular force. You can just have a state that is
Speaker 2: a bunch of guys with guns who rule purely by
Speaker 2: fiat and have control over an area. That is a state.
Speaker 2: Everything else that we think of as being part of
Speaker 2: a state is tacked on, and trump Ism as a
Speaker 2: political force has simply reverted the state back to a
Speaker 2: pure mode of extraction. Right, the state is men with
Speaker 2: guns who take shit from you to pay for those guns.
Speaker 2: And it becomes breathtakingly clear that this is, you know,
Speaker 2: how the state is functioning. Try and Trump administration, because
Speaker 2: the Trump administration has been slashing benefits while handing tax
Speaker 2: breaks and giant government contracts worth billions of dollars to
Speaker 2: the tech elite, and they've been spending tens of billions
Speaker 2: of dollars, you know, to hand to the men's with
Speaker 2: guns and to recruit new men with guns for the
Speaker 2: mass deportation regime. Right, this is just a pure version
Speaker 2: of the state as an extraction regime, as a regime
Speaker 2: that fucking takes money for you a gunpoint to buy
Speaker 2: more men with guns so it can take more money
Speaker 2: from you. Trump Ism imagines that you can collect this
Speaker 2: money to pay for the apparatus of violence and terror
Speaker 2: from just pure extortion of foreigners in the working class,
Speaker 2: you know. And we talked about this a bit at
Speaker 2: the beginning, right, this is part of why they want
Speaker 2: to do tariffs, as they think can replace the income tax.
Speaker 2: You know. The income tax is just like absolutely despised
Speaker 2: by the extra state elements of the ruling class because
Speaker 2: rich people hate paying taxes. But there just isn't enough
Speaker 2: capital to run a state like that with unemploying some
Speaker 2: kind of like mmts money printing, which is alienated a
Speaker 2: huge part of from Sosterity coalition because his quote unquote
Speaker 2: deficit reduction stuff hasn't actually reduced the deficit. So the
Speaker 2: people who like really really care about that shit ideologically
Speaker 2: are pissed. But also on a fundamental level, this is
Speaker 2: already how most city governments operate, right. They are enormous
Speaker 2: police budgets extracted at gunpoint, either from the city council
Speaker 2: directly or directly from the working class, from fees and
Speaker 2: fines and tickets, like just leveled at working class people directly.
Speaker 2: And this is something that is a little different from
Speaker 2: how previous regimes of neoliberalism has functions, because those previous
Speaker 2: regimes of neoliberalism did a lot of these same things,
Speaker 2: but they were run through regimes of debt extraction, right.
Speaker 2: It was you know, it was the imf right coming
Speaker 2: into your country and being like, okay, if you want
Speaker 2: to pay back these loans that this dictator took out, right,
Speaker 2: you're going to have to like sell your entire fucking
Speaker 2: working class into pe andage so that your entire economy
Speaker 2: is going to be reoriented towards paying this debt back.
Speaker 2: But again, that was debt extraction, base and finance based.
Speaker 2: Trumpism wants to take out the middleman and just straight
Speaker 2: up set give me all your money if you want
Speaker 2: to live. But this is not a particularly smart strategy.
Speaker 2: There's a reason that the state takes on other guises
Speaker 2: than just a man with a gun asking for your wallet.
Speaker 1: Right.
Speaker 2: A more literal regime, a more direct regime, a regime
Speaker 2: where the violence is just out in the open, invites
Speaker 2: more literal resistance than a sort of symbolic regime, or
Speaker 2: a regime that operates through more principles. All regimes of accumulation,
Speaker 2: of dispossession of resources, taking by violence to produce more
Speaker 2: violence come to an end, brick by brick and stone
Speaker 2: by stone. Trumpism too will be torn to the ground
Speaker 2: by the hands of the people who had thought it
Speaker 2: could exploit forever this husband It could happen Here.
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