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Speaker 1: All Zone Media. Welcome to IKE It Happened Here, a

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Speaker 1: podcast that has increasingly become about tariffs in the second

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Speaker 1: Trump regime. I am your host, Miil Wong, and oh boy,

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Speaker 1: it has been a big few weeks for tariff news.

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Speaker 1: We have tariff numbers on China that I'm not even

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Speaker 1: going to bother to actually record right now because by

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Speaker 1: the time this goes out, the numbers will probably be different.

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Speaker 1: There are supposed to be major negotiations underway between Trump

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Speaker 1: and the Chinese government to attempt to come to yet

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Speaker 1: another trade agreement and stave off yet another round one

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Speaker 1: hundred percent tariffs. Now, if you want to follow the

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Speaker 1: sort of blow by blow of what exactly is going on,

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Speaker 1: I'm going to just sort of refer you to my

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Speaker 1: section tariff talk on Executive Disorder. However, Comma, we need

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Speaker 1: to take a deeper look at what structurally is going

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Speaker 1: on in the global economy that is resulting in the

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Speaker 1: demand for tariffs in the first place. And I think

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Speaker 1: the place to go if that's the thing that you're

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Speaker 1: trying to figure out. And we've talked about the sort

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Speaker 1: of ideological aspects of this in other episodes. We've talked

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Speaker 1: about the ways that the sort of politics of fascism,

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Speaker 1: the politics and anti semitism, the politics of masculinity lead

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Speaker 1: people towards these extremely ulternationalist policies that are specifically supposed

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Speaker 1: to sort of protect the domestic blood and soil national

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Speaker 1: industry and are supposed to protect material goods over services.

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Speaker 1: But there are things that are happening structurally in the

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Speaker 1: economy that make it such that people would consider things

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Speaker 1: like the tariffs that have been happening under this regime

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Speaker 1: as a solution to things that are kind of structural

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Speaker 1: problems of the economy specifically. And this is what we're

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Speaker 1: going to be focusing on today. Over capacity and steel. Now,

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Speaker 1: some of you may be asking, Mia, why are we

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Speaker 1: talking about steel over capacity? And I think there's a

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Speaker 1: few important notes here. One, steel is in some ways

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Speaker 1: emblematic of American tariff policy. It is I guess you

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Speaker 1: would call it the most material of the tariffs in

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Speaker 1: the sense that it's the one where there's the most

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Speaker 1: actual direct sort of material forces and direct lobbying groups

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Speaker 1: asking for these specific tariffs. The American steel industry has

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Speaker 1: been lobbying to some extent for some measures kind of

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Speaker 1: like this Steel is also one of the industries whereas

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Speaker 1: as tariff rates are fluctuated and up and down and

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Speaker 1: whole waves of like Liberation Day, tariffs got put into

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Speaker 1: place and then removed, and some of them we got

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Speaker 1: put back into place a little bit. The steel tariffs

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Speaker 1: were set at fifty percent and they've stayed at fifty

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Speaker 1: percent since they were set. Basically, there's been a little

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Speaker 1: bit of variation sort of before the final fix percent

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Speaker 1: number was arrived at, but the steel tariffs had been

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Speaker 1: one of the most stable tariffs. And the reason why

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Speaker 1: it's been this stable if people can think back all

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Speaker 1: the way to twenty eighteen, which I know that was

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Speaker 1: a long time ago, but there was a miniature trade

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Speaker 1: war between the US and China in twenty eighteen, and

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Speaker 1: significant portions of it were focused on Chinese steel production specifically,

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Speaker 1: and you know, this is one of the sort of

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Speaker 1: fights that was had out Nothing really structurally changed much

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Speaker 1: from those There was kind of a back and forth

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Speaker 1: and then both sides kind of pulled back. But Comma,

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Speaker 1: that's not happening this time. And what's interesting, and the

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Speaker 1: reason that I'm specifically talking about steel here is that

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Speaker 1: it's now not just Trump that is tempting to institute

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Speaker 1: large scale tariffs on steel. The European Commission for the

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Speaker 1: EU has released a proposal to double tariffs on imported

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Speaker 1: steel up to fifty percent, which is matched in the US,

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Speaker 1: and also reduce the amount of steel that could be

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Speaker 1: imported into the EU without paying any tariffs at all.

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Speaker 1: And this is actually massive because this is an example

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Speaker 1: of the EU effectively following US trade policy for very

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Speaker 1: very similar reasons as the US. And if we can

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Speaker 1: get to the bottom of what is going on here,

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Speaker 1: and I promise we will, and I promise this will

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Speaker 1: go towards something that is explaining really truly the macro

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Speaker 1: dynamics of the entire global economy and why it's fucked.

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Speaker 1: If we can actually trace out what's going on with

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Speaker 1: these steel tariffs, we can do that. So well, let's

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Speaker 1: talk about steel over capacity. Over Capacity as a concept

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Speaker 1: is sort of convoluted. You know, you have to sort

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Speaker 1: of ask the question, what is the quote unquote correct

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Speaker 1: amount of steel? Because over capacity, you know, implies that

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Speaker 1: there's capacity to produce steel over the amount that should

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Speaker 1: be produced. So, okay, how do you figure how much

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Speaker 1: steel should be produced? Eh? Very nebulous. It's also very

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Speaker 1: difficult to measure because, okay, we're gonna try to measure

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Speaker 1: steel over capacity. There's a lot of ways to do

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Speaker 1: it that rely on things like utilization rates. Right, So

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Speaker 1: you look at the steel facilities, you see how much

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Speaker 1: they're being used at You see how much you know

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Speaker 1: excess capacity, there is, how many how many factories are

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Speaker 1: sitting empty BOE percentage of factories, you know, total outputs

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Speaker 1: being used. This doesn't work because the utilization rates of

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Speaker 1: these factories of this fixed capital varies seasonally, for example,

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Speaker 1: and it varies due to not just the season, but

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Speaker 1: a whole bunch of other factors, things like you know,

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Speaker 1: labor supply, weather, demand, polls, and a whole bunch of

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Speaker 1: other factors. Utilization rates of steel producing facilities are very

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Speaker 1: rarely at one hundred percent, even in Marcus where demand

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Speaker 1: a shrip supply, and this makes it very, very difficult

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Speaker 1: to measure China's actual quote unquote overcapacity. I am not

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Speaker 1: going to even really try to give numbers because it's

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Speaker 1: extremely subjective. How do I say this? Based on the

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Speaker 1: research that I have done, I think the numbers you

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Speaker 1: normally see in the West are inflated because they are

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Speaker 1: not accounting for things like the weather, because it is

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Speaker 1: in the interest of sort of Western research institutions, but

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Speaker 1: for example, Western financial institutions, specifically steel companies, and they're

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Speaker 1: sort of like allied China Hawk, you know, sort of

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Speaker 1: like academics to have the number be as high as possible.

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Speaker 1: You will also see numbers from people who are tied

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Speaker 1: to Chinese government, and when I say tied to, kind

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Speaker 1: of in a loose ideological sense, in the same way

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Speaker 1: as the Chinahawks are of the Chinahawks tend to actually

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Speaker 1: be more directly connected to the US government. Their numbers

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Speaker 1: are probably also too low. But I don't want to

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Speaker 1: give you the impression that I have a extremely certain

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Speaker 1: understanding of what the exact number of millions of tons

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Speaker 1: of XSDEO production is happening. What we can sort of

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Speaker 1: agree on is that there does seem to be some

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Speaker 1: kind of overcapacity in the Chinese economy, right, and this

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Speaker 1: is something that the Chinese Communist Party also agrees on.

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Speaker 1: If you go back to a document that really really

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Speaker 1: few people in the US have ever seen to have

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Speaker 1: heard of, which is the wonderfully titled Opinions of the

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Speaker 1: CPC Central Committee and the State Council on further promoting

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Speaker 1: the development of Ecological Civilization, which was one of the

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Speaker 1: founding documentary Chinese Environmental Police and the ideological sort of

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Speaker 1: underpinnings of this thing called ecological civilization, which is the

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Speaker 1: basis of Chinese environmental policy. One of the things that

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Speaker 1: they mentioned a lot is specifically overcapacity. Right, they are

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Speaker 1: actually very concerned about the overcapacity of steal from an

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Speaker 1: ecological perspective. And this is sort of fascinating because we'll

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Speaker 1: be looking at some scholars later who are favorably quoted

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Speaker 1: in Chinese state media's sources describing how there isn't actually

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Speaker 1: overcapacity because states say different things in different places, and

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Speaker 1: this is in fact extremely common. But there does seem

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Speaker 1: to be some kind of overcapacity, and the Chinese government

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Speaker 1: was to some extent making attempts to reduce it during

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Speaker 1: this sort of period of trade war. Now, the other

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Speaker 1: issue we're talking about overcapacity is that overcapacity is an

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Speaker 1: extremely political issue. Now, right, It's extremely weird because try

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Speaker 1: to seal overcapacity is like my most niche thing that

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Speaker 1: I've studied. I've had like a paper on this sitting

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Speaker 1: in a drive on my computer for over half a decade.

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Speaker 1: I have never brought it out until now, but it's

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Speaker 1: become an extremely political topic because the different theories of

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Speaker 1: stealover capacity have become a basis for a lot of

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Speaker 1: genuine trade policy. Now. I think a very very interesting

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Speaker 1: book at Chinese stealover capacity is from the book Understanding

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Speaker 1: China's over Capacity. She's written by two Chinese economists that

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Speaker 1: I think is a really interesting literature survey. This This

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Speaker 1: is fround By twenty eighteen. But I think what's interesting

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Speaker 1: about it it's from before the period where everyone in

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Speaker 1: the West had sort of decided what they think caused

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Speaker 1: Chinese steal over capacity, and so you can go back.

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Speaker 1: You know, it's not just useful to sort of go

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Speaker 1: back in time and look at the other theories that

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Speaker 1: were sort of floating around academia before a few of

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Speaker 1: them got specifically selective for ideological purposes. Now I mentioned earlier,

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Speaker 1: we'd be talking about some economists. You don't think that's

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Speaker 1: Chinese steel over capacity is real, that's these people. I

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Speaker 1: think that part of their thesis is not very good.

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Speaker 1: I think their survey of the literature on overcapacity, though,

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Speaker 1: is very good and one of the very interesting arguments

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Speaker 1: they make this doesn't argue with a couple of other economists,

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Speaker 1: that has sort of disappeared from the literature is in

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Speaker 1: argument about, Okay, so there's steel production that's happening that

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Speaker 1: doesn't need to happen. I think it's pretty fair to

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Speaker 1: say that something is over capacity if it's producing a

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Speaker 1: bunch of steel that sits there in rots because no

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Speaker 1: one can sell it, which is a thing that happens

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Speaker 1: with Chinese steel. And one of the most interesting theses

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Speaker 1: that has really been abandoned, even though I think it

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Speaker 1: is actually to a decent extent explanatory of a lot

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Speaker 1: of very very weird stuff that happens in Chinese policy

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Speaker 1: circles and a lot of just very baffling investment decisions,

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Speaker 1: is specifically something about local caudras and their performance incentives. So, okay,

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Speaker 1: something that's very important to understand about the structure of

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Speaker 1: the CCP is that Chinese government institutions are sort of

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Speaker 1: run by these caudras, right, and so if you are,

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Speaker 1: for example, I don't know, you are the mayor of

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Speaker 1: a mid size city, right, you get performance evaluations and

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Speaker 1: those sort of yearly performance evaluations sometimes there's less frequents

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Speaker 1: than that, but those those performance evaluations rank you at

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Speaker 1: sort of how good you're doing your job. And obviously

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Speaker 1: there's political maneuver rank here too, But if you do

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Speaker 1: a good job of hitting your targets, this is your

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Speaker 1: path to advance upwards in the party and be moved

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Speaker 1: from you know, like sort of running a small city

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Speaker 1: to like being brought into caudra in larger cities, and

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Speaker 1: you know, moving your way of the party, moving to

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Speaker 1: national positions. These evaluations are extremely important. You can also

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Speaker 1: get sort of busted down if your evaluations suck. Again,

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Speaker 1: there's also why politics are too, but these evaluations actually

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Speaker 1: do matter. And one of the issues with these evaluations

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Speaker 1: and these are also policy making implementation tools, right, you know,

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Speaker 1: the central government can decide what kinds of policies they

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Speaker 1: want to pursue, and then they can use these codure

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Speaker 1: evaluations to make people at the sort of local level

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Speaker 1: who are usually semi autonomous in ways that I think

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Speaker 1: is not very well understood in the West. These countra

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Speaker 1: evaluations are ways to try to ensure that Chinese sort

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Speaker 1: of local and provincial government policy kind of aligns with

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Speaker 1: national party policy and the waiting on these examinations is

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Speaker 1: such that it has very, very weird effects. And what

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Speaker 1: I'm specifically talking about here is that GDP numbers are

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Speaker 1: very very important to these CAUDRA evaluations, and it matters

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Speaker 1: that it's specifically gross domestic product because GDP is a

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Speaker 1: very very weird number, and there's a lot of stuff

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Speaker 1: you can do to sort of juice GDP numbers that

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Speaker 1: aren't really necessarily beneficial to an economy. So you can

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Speaker 1: have a bunch of firms that are basically unprofitable or

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Speaker 1: doing something that's like not particularly economically or socially useful,

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Speaker 1: and that can still boost GDP numbers. And one of

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Speaker 1: the things that happens with this is that you can

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Speaker 1: boost GDP numbers by making a shit tot of steel

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Speaker 1: that nobody actually really wants or uses. And because of

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Speaker 1: the priority that's set on GDP numbers specifically, and there's

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Speaker 1: also a whole bunch of these sort of weird financial

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Speaker 1: games that you can play. That's also played a major

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Speaker 1: role in the way the Chinese housing bubble has played

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Speaker 1: out and the way that the government has been unwilling

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Speaker 1: to sort of you know, and when I say the

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Speaker 1: government here I be in both the national governments and

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Speaker 1: also sort of these lower level governments have been unwilling

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Speaker 1: to sort of let a bunch of debt bubbles that

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Speaker 1: they've accumulated pop because those things prop up GDP numbers,

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Speaker 1: and the incentive on the local level is to keep

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Speaker 1: these numbers up. This used to actually be one of

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Speaker 1: the things that people would talk about when they talked

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Speaker 1: about Chinese steel over capacity. But it's complicated, like you

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Speaker 1: can't very very easily explain this to you know, like

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Speaker 1: a right wing congress person and have them go, oh, yeah, right,

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Speaker 1: this is unfair to the American market, and so it

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Speaker 1: kind of has like fallen out of favor and sort

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Speaker 1: of like the explanation to steal over capacity you see

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Speaker 1: in places like the New York Times. But I actually

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Speaker 1: think this is one of the things that does, to

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Speaker 1: some extent cause Chinese steal over capacity. Now do you

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Speaker 1: know what doesn't cause Chinese steal over capacity? That's right,

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Speaker 1: it is the products and services that support this podcast.

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Speaker 1: So I wanted to talk about the local quadra explanations

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Speaker 1: because I actually think these are kind of important, and

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Speaker 1: I want to talk about one other argument that's also

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Speaker 1: not really used much that used to be a lot

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Speaker 1: more common, which is an argument that Chinese economist makes

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Speaker 1: that one of the reasons that there's overcapacity in Chinese

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Speaker 1: steel production is that upwards wealth distribution leads to lower

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Speaker 1: levels of consumption and thus over capacity. And so what

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Speaker 1: what this basically means, And this is something that I

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Speaker 1: think is actually also I think that's the best structural

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Speaker 1: problem in in the Chinese economies, that the Chinese economy

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Speaker 1: is extremely highly unequal and wages, you know, like they

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Speaker 1: have risen to some extent, but they're not rising anywhere

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Speaker 1: near you know, like we've everyone in the US have

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Speaker 1: seen that famous charge of productivity versus like labor gains,

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Speaker 1: right like wage gains versus prouctivity increases. Wages in China

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Speaker 1: have gone up. They have absolutely not kept pace with

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Speaker 1: sort of productivity growth, and they also absolutely like have

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Speaker 1: not kept pace with the amount of the profit being

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Speaker 1: produced that is going to a very very small number

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Speaker 1: of capital owners. And this actually creates a structural problem.

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Speaker 1: And this is we're seeing a very similar structural problem

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Speaker 1: to this in the US, where there is a lot

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Speaker 1: of consumption that if that money wasn't just all going

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Speaker 1: to a bunch of rich people, people would actually be

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Speaker 1: spending it on things, And particularly in Chinese context, the

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Speaker 1: argument was that if if there was a better distribution

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Speaker 1: of wealth, people would buy more houses, and this would

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Speaker 1: actually reduce over capacity because suddenly a bunch of the

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Speaker 1: slack capacity will be being used to like build houses,

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Speaker 1: except people can't afford the houses. And this is a

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Speaker 1: structural problem that like economists sort of note about for

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Speaker 1: decades and decades, which is that China has been for

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Speaker 1: a very long time. The whole thing was that they

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Speaker 1: were trying to transition into a consumption economy, which is

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Speaker 1: to say, they were trying to transition into an economy

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Speaker 1: that was fueled by its own internal consumption. The US

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Speaker 1: is to a large extent sort of kind of works

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Speaker 1: like this, where you know, you want to increase the

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Speaker 1: level of consumption and the amount of stuff that people

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Speaker 1: in your country are buying, and this is this is

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Speaker 1: a way to sort of like create a middle income country, right,

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Speaker 1: And China has historically not been able to do this

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Speaker 1: and haven't been able to do this because they won't

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Speaker 1: raise wages. But you know, if they won't actually raise

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Speaker 1: wages enough to increase people's consumption levels. Then you're left

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Speaker 1: for structural overcapacity because demand is being lowered because people

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Speaker 1: don't have any fucking money. Now, this is another argument

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Speaker 1: again and I think is also probably correct that is

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Speaker 1: very much not talked about anymore because the argument that

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Speaker 1: is used in sort of understanding what's going on with

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Speaker 1: Chinese seel capacity is about the Chinese subsidization of state

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Speaker 1: owned enterprises at the expense of sort of private firms.

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Speaker 1: And the argument here basically said, the state is propping

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Speaker 1: up a bunch of unprofitable enterprises and they're they're holding

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Speaker 1: sectors of the economy that should be you know, taken

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Speaker 1: over by more efficient private firms, but they can't because

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Speaker 1: they're being subsidized by the government. And this is sort

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Speaker 1: of true, but this became a massive geopolitical argument because

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Speaker 1: the argument from the American side, and when you hear

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Speaker 1: anyone talking about steal of capacity, now this is the

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Speaker 1: argument that you hear right which that China is flooding

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Speaker 1: the world with cheap steel because there's a whole bunch

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Speaker 1: of like Chinese state owned industries or just like Chinese

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Speaker 1: businesses are just getting money from the Chinese government to

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Speaker 1: produce steel and they're pumping cheap steel to the rest

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Speaker 1: of the world. And this is not really I mean,

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Speaker 1: like kind of this is happening, but it's also not

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Speaker 1: the reason why there's large scale steal over capacity. And

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Speaker 1: of course the argument is that China isn't competing fairly

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Speaker 1: in the market, like this is very silly. Markets have

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Speaker 1: never worked without large scale state quote unquote interference, Like

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Speaker 1: American companies also get extremely high level subsidization et cetera,

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Speaker 1: et cetera, cy all of US COREGN policy. But you know,

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Speaker 1: this is the political imperative that's behind a lot of

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Speaker 1: the rhetoric coming out of steel producers and out of

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Speaker 1: the American right about why there should be terroriists on steel.

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Speaker 1: Now there's a problem though, which is that all of

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Speaker 1: these arguments are very specific to China. Right. The argument

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Speaker 1: is that there are specifically steal over capacity in China

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Speaker 1: because it's something structurally specifically wrong with the Chinese economy

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Speaker 1: that's like ma it not a free market, and because

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Speaker 1: of that, China's like unfairly competing global market. And this

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Speaker 1: is why there's so much of a capacity of Chinese steel.

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Speaker 1: This is wrong. There are individual parts of this where yeah,

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Speaker 1: like there are things where there is excess capacity being

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Speaker 1: produced by quadre evaluations and by to some extent like

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Speaker 1: so we subsidization. However, Comma, there's a problem. And the

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Speaker 1: problem here is that overcapacity and overcapacity and steel is

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Speaker 1: not just a Chinese phenomena. It is a global phenomena.

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Speaker 1: It has been a global phenomena for a long time,

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Speaker 1: and it is largely a product of the fact that

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Speaker 1: we do not live in a global economy that can

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Speaker 1: actually support the amount of production capacity that exists in

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Speaker 1: the world. This has been a problem really since the

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Speaker 1: seventies and arguably even since the sixties, where as countries

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Speaker 1: rebuild from World War Two, and as some some sort

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Speaker 1: of developments in global capital that we're going to be

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Speaker 1: sort of like talking about soon happens that the product

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Speaker 1: of all of this is that production has and this

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Speaker 1: is this is kind of the thing that the sort

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Speaker 1: of fascist right kind of intuitively understands. Production has become

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Speaker 1: zero sum. Right, It's very difficult to increase production in

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Speaker 1: one country without having it, you know, affect production in

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Speaker 1: the countries. There isn't enough demand in the market to

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Speaker 1: sort of like fuel all of these things. So why

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Speaker 1: is there not enough demand to fuel the amount of

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Speaker 1: supply that would be that would be necessary to make

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Speaker 1: there not be over capacity. The answer to this, in

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Speaker 1: sort of marketing theory is that, as they sort of

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Speaker 1: put it, overproduction and under consumption are doubly constructed. I'm

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Speaker 1: going to read a quote from end Notes, volume two,

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Speaker 1: and then we're going to explain a little bit what

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Speaker 1: that means. The wage allocates workers to production and at

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Speaker 1: the same time allocates the product to workers. So what

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Speaker 1: that means is that under consumption and overproduction are in

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Speaker 1: effect the same thing, right, Because the way that we

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Speaker 1: allocate workers to what thing they're going to do, and

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Speaker 1: at the same time allocate products to those workers is

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Speaker 1: the wage, which is one thing. So overproduction and under

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Speaker 1: consumption are the same thing, right, and they're caused by

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Speaker 1: the same structural elements of the wage relation. Now this

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Speaker 1: means that the Chinese capacity crisis is actually part of

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Speaker 1: a larger crisis. Right. You know the thing about the

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Speaker 1: double construction, you know of overcapacity and under consumption, right,

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Speaker 1: the fact that they are really the two things unified

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Speaker 1: in the fact that like your wage allocates what kind

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Speaker 1: of production you're doing and what you can consume the

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Speaker 1: fact that both those things combined are realized in this

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Speaker 1: sort of secular crisis in what's called Marxist absolute general

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Speaker 1: law of capitalist accumulation. So what the fuck is that

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Speaker 1: the short version is? Over time in capitalist economies, there's

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Speaker 1: supposed to be an increase of what's called the organic

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Speaker 1: composition of capital. Basically, they're a composition of capital is

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Speaker 1: a way to measure how much in the pro labor process.

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Speaker 1: It's like fixed capital, variable capital, so it's like how

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Speaker 1: much factory is there relative to the amount of worker

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Speaker 1: there is. And Marxist thesis, which has generally been born out,

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Speaker 1: although we'll talk a little bit about that more later,

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Speaker 1: is that this composition is going to increase, and as

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Speaker 1: it increases, accumulation also needs to increase in order to

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Speaker 1: maintain employment levels. This is sort of accomplished by things

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Speaker 1: like automation, which reduces the size of the labor force.

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Speaker 1: And thus, to quote and notes again, as accumulation proceeds,

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Speaker 1: a growing superabundance of goods lowers the rate of profit

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Speaker 1: and heightens competition across lines, compelling all capitalists to, as

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Speaker 1: Mark said, economize on labor. So basically, what this means

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Speaker 1: is like, as capital gets turned into more capital and

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Speaker 1: larger amounts of capital, this is the accumulation process. As

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Speaker 1: this continues, right, you get this massive sort of increasing

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Speaker 1: the amount of goods that are being produced. Eventually that

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Speaker 1: lowers the rate of profit in a sector. And eventually

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Speaker 1: what that does is, you know, in order to sort

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Speaker 1: of economize on labor, capital increases the amount of automation

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Speaker 1: reduces the amount of people that they need in the

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Speaker 1: labor process. You know, this is what what's generally known

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Speaker 1: as automation and the sort of crisis of people getting

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Speaker 1: kicked out of their draws because of it. As this

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Speaker 1: process is sort of generalized across sectoral lines across different

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Speaker 1: parts of the economy, the relative to demand for labor

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Speaker 1: decreases and workers are spin out of the wage relation,

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Speaker 1: which is the fancy Marxist way to say they become

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Speaker 1: structurally unemployed. And you know, the thing that happens when

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Speaker 1: you get kicked out of the capitalist wage relation is

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Speaker 1: you get kicked into informal labor and slums, which you know,

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Speaker 1: decreases demand and increase overproduction. At the same time, over

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Speaker 1: capacity is skyrocketing, right, because you have increasing numbers of

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Speaker 1: people who have been spat out the formal economy who

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Speaker 1: no longer have access to regular wages. The wages they

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Speaker 1: get in the informal economy are less than the ones

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Speaker 1: they would get in the formal economy. And as we

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Speaker 1: were saying, write, access to like the wage, both determines

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Speaker 1: production and consumption. So if you lose access to the wage, right,

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Speaker 1: and there's still more stuff being produced because of automation levels,

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Speaker 1: what you get is a massive, skyrocketing double increase of

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Speaker 1: overproduction and under consumption, right, because there's just not enough

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Speaker 1: money to fucking buy the stuff. And the result of

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Speaker 1: this is a miseration. Everything gets fucking worse. This sort

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Speaker 1: of used to be an academic argument. It is no

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Speaker 1: longer an academic argument. It is just the terrain on

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Speaker 1: which economic policy unfolds. Now. The miseration thesis is this

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Speaker 1: is you know, it's a sort of like general law

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Speaker 1: of capitalist accumulation is called has been argued about constantly.

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Speaker 1: There have been ways that has been avoided. One of

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Speaker 1: the biggest ways traditionally has been by capitalism sort of

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Speaker 1: transforming goods into services. So for example, like the operative

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Speaker 1: example of this is the transition in the us from

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Speaker 1: rail lines to cars on something that points out, So

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Speaker 1: you know, you get these new industries that are both

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Speaker 1: labor or capital intensive. By replacing train with car, you know,

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Speaker 1: you can absorb huge populations of workers as well as

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Speaker 1: incorporate the peasantry into the industrial economy by sort of

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Speaker 1: like converting these things into services. This has sort of

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Speaker 1: been what the economy has been increasingly converted into a

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Speaker 1: service based economy of various kinds. That's kind of what's

436
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Speaker 1: happening now, you know, and you and you can see

437
00:26:57,320 --> 00:26:59,719
Speaker 1: this process that work in the Chinese economy back when

438
00:26:59,760 --> 00:27:02,159
Speaker 1: it was you know, really growing in the nineties and

439
00:27:02,160 --> 00:27:05,959
Speaker 1: two thousands. But you know, once the peasantry had been

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Speaker 1: absorbed as sort of both a new market and a

441
00:27:08,760 --> 00:27:12,679
Speaker 1: new labor force with lower cost of reproduction because wages

442
00:27:12,720 --> 00:27:15,400
Speaker 1: are cheaper for a bunch of structural reasons, the old

443
00:27:15,400 --> 00:27:18,399
Speaker 1: tendencies of capital set in. And so what happens inside

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00:27:18,440 --> 00:27:21,639
Speaker 1: of China was what was happening everywhere else in the world,

445
00:27:21,960 --> 00:27:25,120
Speaker 1: which is that as labor saving technology begins to be implemented,

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Speaker 1: and you know, a bunch of services refused to be

447
00:27:28,600 --> 00:27:31,680
Speaker 1: turned into new goods to like bolster the ranks industrial

448
00:27:31,720 --> 00:27:33,920
Speaker 1: working class. You know, you get what's happened in the US,

449
00:27:33,960 --> 00:27:38,040
Speaker 1: which is this this full transition to service economy shit

450
00:27:38,160 --> 00:27:40,919
Speaker 1: that doesn't actually really grow. And you know, if if

451
00:27:40,920 --> 00:27:42,520
Speaker 1: you look, if you look at Chinese growth rates, like

452
00:27:42,640 --> 00:27:45,199
Speaker 1: they've been slowing for a decade, actually a little bit

453
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Speaker 1: longer than a decade. And so you know, as China

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00:27:47,880 --> 00:27:50,600
Speaker 1: was integrated to the global economy, it too became caught

455
00:27:50,800 --> 00:27:54,399
Speaker 1: in this cycle of industrial booms where you know, you

456
00:27:54,600 --> 00:27:57,199
Speaker 1: get an industrial boom where you have a country with

457
00:27:57,280 --> 00:28:00,440
Speaker 1: favorable exchange rates, you a stallar that inevitably set off,

458
00:28:01,200 --> 00:28:03,000
Speaker 1: you know, the economies on the bad end of the

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00:28:03,080 --> 00:28:05,879
Speaker 1: exchange rate to collapse as they're forced to bear the

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00:28:05,920 --> 00:28:09,200
Speaker 1: way to global over capacity. As as I've mentioned one

461
00:28:09,280 --> 00:28:12,000
Speaker 1: hundred billion times on this show, it is the one

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00:28:12,040 --> 00:28:14,200
Speaker 1: thing I will make sure every it could happen here

463
00:28:14,560 --> 00:28:18,320
Speaker 1: listener will be able to explain the Plaza Accords and

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00:28:18,359 --> 00:28:22,680
Speaker 1: the Reverse Plaza Cords. You know, but this is sort

465
00:28:22,680 --> 00:28:24,480
Speaker 1: of this is sort of what the Reverse Plazai Cords

466
00:28:24,480 --> 00:28:26,520
Speaker 1: and the Plazai Cords were about. Was the US. This

467
00:28:26,600 --> 00:28:29,600
Speaker 1: is the last time the US tried to you know,

468
00:28:29,800 --> 00:28:33,080
Speaker 1: use its to sort of like pure political power and

469
00:28:33,240 --> 00:28:36,159
Speaker 1: military might to be like, eat shit, I'm going to

470
00:28:36,160 --> 00:28:38,200
Speaker 1: force all of your countries to fuck with your currency

471
00:28:38,240 --> 00:28:41,080
Speaker 1: so that our manufacturing economy will come back. And again,

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00:28:41,480 --> 00:28:45,000
Speaker 1: the US did that successfully and the Japanese economy collapsed

473
00:28:45,000 --> 00:28:47,760
Speaker 1: because we needcap Japanese economy to do it right. And

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00:28:47,960 --> 00:28:51,360
Speaker 1: to some extent, Trump is attempting the farce as farce

475
00:28:51,480 --> 00:28:54,640
Speaker 1: version of this with with these steel terriffs. Right to

476
00:28:54,680 --> 00:28:57,719
Speaker 1: some extent, these tariffs are his attempts to pull the

477
00:28:57,760 --> 00:29:01,240
Speaker 1: Reagan maneuver of Okay, we can just like force other

478
00:29:01,280 --> 00:29:05,200
Speaker 1: countries to lower their capacity and increase our capacity at

479
00:29:05,240 --> 00:29:09,160
Speaker 1: their expense. The problem is that, again, this production is

480
00:29:09,240 --> 00:29:13,600
Speaker 1: zero sum, and if you do this, it will annihilate

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00:29:14,440 --> 00:29:18,280
Speaker 1: the rest of the global economy. And this is the

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00:29:18,320 --> 00:29:22,440
Speaker 1: sort of context behind all of the stuff that we've

483
00:29:22,480 --> 00:29:25,160
Speaker 1: been seeing for the last like thirty years, which that

484
00:29:25,800 --> 00:29:29,320
Speaker 1: actual profit rates have been collapsing for ages. And right

485
00:29:29,320 --> 00:29:34,600
Speaker 1: now we're in the middle of a just unbelievably hideously

486
00:29:34,760 --> 00:29:39,680
Speaker 1: staggeringly massive bubble that is maintaining the sort of last

487
00:29:40,040 --> 00:29:44,840
Speaker 1: like fake vestiges of economic growth where billions and billions

488
00:29:44,840 --> 00:29:47,440
Speaker 1: and billions of dollars have been sunk into all of

489
00:29:47,440 --> 00:29:50,520
Speaker 1: this AI bullshit, and it's you know, like the tech

490
00:29:50,640 --> 00:29:54,760
Speaker 1: driven AI is a significant specifically specifically the AI stuff

491
00:29:55,080 --> 00:29:59,040
Speaker 1: is a significant portion of total US economic growth. If

492
00:29:59,080 --> 00:30:01,560
Speaker 1: you want to live to why that's all going to

493
00:30:01,600 --> 00:30:06,000
Speaker 1: go to shit? Turn on effectively literally any episode of

494
00:30:06,040 --> 00:30:11,240
Speaker 1: COOLSI Media's own Exitron's podcast Better Offline and will you

495
00:30:11,280 --> 00:30:14,120
Speaker 1: will hear a lot about this. But you know, this

496
00:30:14,160 --> 00:30:16,360
Speaker 1: has been that, like tech has been sort of the

497
00:30:16,440 --> 00:30:20,000
Speaker 1: escape strategy of the United States. Traditionally, it's going to implode,

498
00:30:20,040 --> 00:30:24,120
Speaker 1: it's going to do tremendous damage to everyone. But in

499
00:30:24,200 --> 00:30:27,240
Speaker 1: the remains of that, and in this world in which

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00:30:27,320 --> 00:30:30,120
Speaker 1: profit rates are declining, and in this world in which

501
00:30:30,240 --> 00:30:34,160
Speaker 1: increasing portions of the population are being spat out of

502
00:30:34,480 --> 00:30:39,280
Speaker 1: the capitalist production cycle, in which increasing percentages of the

503
00:30:39,320 --> 00:30:42,239
Speaker 1: world population are being kicked into an informal economy, and

504
00:30:42,360 --> 00:30:47,120
Speaker 1: in this world of generalized overproduction under consumption, what's happening

505
00:30:47,680 --> 00:30:50,640
Speaker 1: is that there is an enormous effort to get everyone

506
00:30:50,720 --> 00:30:54,040
Speaker 1: to think that this is because of very specific tendencies

507
00:30:54,080 --> 00:30:57,920
Speaker 1: of like the bad government over there, right that you know,

508
00:30:58,040 --> 00:31:00,720
Speaker 1: over capacity and steel. Oh, it's just because like the

509
00:31:00,760 --> 00:31:04,360
Speaker 1: evil communist government in China is cheating at capitalism by

510
00:31:04,360 --> 00:31:07,480
Speaker 1: giving their companies money, and so we're gonna do tariffs

511
00:31:07,480 --> 00:31:10,160
Speaker 1: on them instead of that. And again, like it's easier

512
00:31:10,200 --> 00:31:12,080
Speaker 1: for these academics to make this argument because there is

513
00:31:12,200 --> 00:31:16,040
Speaker 1: kind of stuff going on, right, because there is this

514
00:31:16,160 --> 00:31:18,640
Speaker 1: sort of cadure evaluation stuff, because there is to some

515
00:31:18,800 --> 00:31:22,360
Speaker 1: extend stay subsidization of steel production. They can present this

516
00:31:22,440 --> 00:31:26,360
Speaker 1: boogeyman to sort of pin what is really a global

517
00:31:26,400 --> 00:31:32,360
Speaker 1: overproduction and under consumption crisis onto just you know, it's

518
00:31:32,440 --> 00:31:34,160
Speaker 1: just as government we don't like, and then you can

519
00:31:34,200 --> 00:31:40,040
Speaker 1: sort of implement these ultranationalists tariff policies. It's a way

520
00:31:40,080 --> 00:31:45,680
Speaker 1: of deflecting the blame from capitalism onto another country and

521
00:31:45,800 --> 00:31:49,440
Speaker 1: using nationalism to paper over the actual economic contradictions of

522
00:31:49,480 --> 00:31:53,880
Speaker 1: capital And if you want to escape that, it's not

523
00:31:54,080 --> 00:31:56,800
Speaker 1: enough to sort of just get rid of Trump and

524
00:31:56,840 --> 00:31:59,400
Speaker 1: go back to the previous retrade regime. You have to

525
00:31:59,480 --> 00:32:03,560
Speaker 1: actually structurally change the thing at the center of all

526
00:32:03,600 --> 00:32:06,640
Speaker 1: of this, which is the wage relation. Right. You have

527
00:32:06,720 --> 00:32:12,920
Speaker 1: to fundamentally change the fact that this economy, the entire economy,

528
00:32:13,040 --> 00:32:16,120
Speaker 1: is based on there being classes of people who make

529
00:32:16,200 --> 00:32:19,240
Speaker 1: money from owning things and that there's an entire class

530
00:32:19,360 --> 00:32:22,880
Speaker 1: of people whose labor is stolen every single day so

531
00:32:22,880 --> 00:32:25,320
Speaker 1: that those other people can make money by owning things

532
00:32:25,640 --> 00:32:29,240
Speaker 1: who do all of the actual work. And that's what's

533
00:32:29,360 --> 00:32:34,200
Speaker 1: actually fundamentally at stake here. It is this question of

534
00:32:34,960 --> 00:32:38,200
Speaker 1: are we going to continue to do tariff bullshit? Or

535
00:32:38,240 --> 00:32:41,640
Speaker 1: are we going to take power from the people who

536
00:32:42,440 --> 00:32:46,040
Speaker 1: caused all of this? From Trump, from Elon Musk, from

537
00:32:46,120 --> 00:32:48,440
Speaker 1: all of the billionaires, from Feel, from all of the

538
00:32:48,480 --> 00:32:50,800
Speaker 1: tech billionaires that funded them, from all of the Republican

539
00:32:50,840 --> 00:32:55,600
Speaker 1: Party Cook Breathern networks. Are we going to destroy these

540
00:32:55,640 --> 00:33:00,640
Speaker 1: people completely by getting rid of the social relations of

541
00:33:00,800 --> 00:33:03,880
Speaker 1: capital that make this all possible? Or are we going

542
00:33:03,920 --> 00:33:07,840
Speaker 1: to sit here and let them continue to produce AI

543
00:33:08,000 --> 00:33:11,120
Speaker 1: videos of them shitting all over us while they take

544
00:33:11,200 --> 00:33:14,520
Speaker 1: all of our money and commit an ethnic cleansing and

545
00:33:14,680 --> 00:33:20,320
Speaker 1: continue to fund genocides abroad. It could happen here is

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00:33:20,320 --> 00:33:23,120
Speaker 1: a production of cool Zone Media. For more podcasts from

547
00:33:23,120 --> 00:33:26,920
Speaker 1: cool Zone Media, visit our website coolzonmedia dot com, or

548
00:33:27,000 --> 00:33:30,080
Speaker 1: check us out on the iHeartRadio app, Apple Podcasts, or

549
00:33:30,120 --> 00:33:33,280
Speaker 1: wherever you listen to podcasts. You can now find sources

550
00:33:33,280 --> 00:33:35,920
Speaker 1: for It could happen here, listed directly in episode descriptions.

551
00:33:36,280 --> 00:33:37,080
Speaker 1: Thanks for listening,