Speaker 1: Well, happy Monday, everybody. Welcome to another episode of the
Speaker 1: Chuck Podcast. So coming up, I got Orn Casts. Orn
Speaker 1: Cass is the chief economist and founder of the American Compass.
Speaker 1: What that is is, basically, I would argue the intellectual
Speaker 1: sort of the think tank that's trying to put an
Speaker 1: intellectual wrapping around trump Ism, however you want to call it,
Speaker 1: sort of this new populism that's on the right. And
Speaker 1: what interested me on mister Cass is that he is
Speaker 1: basically he is basically the godfather of these tariffs. Now
Speaker 1: he'll be the first one to tell you this isn't
Speaker 1: the way he would have implemented. In fact, he did
Speaker 1: a New York Times out ed that, which is what
Speaker 1: inspired me to put him on. As I've promised to you,
Speaker 1: even if I'm skeptical of an idea, that doesn't mean
Speaker 1: I don't want to have somebody on here making their
Speaker 1: case and let's work shop it and you know, let's
Speaker 1: have a back and forth. I think the conversation that
Speaker 1: I have with Orange Casts about the terriffs as they've
Speaker 1: been implemented versus perhaps how he would have implemented, we'll see,
Speaker 1: looks a tough argument to make, which is you got
Speaker 1: to sort of take some medicine for a while before
Speaker 1: the goal of what these tariffs are, which is to
Speaker 1: return some manufacturing back to the United States. It's going
Speaker 1: to take a while, and the question is whether you
Speaker 1: can get enough patients from the public to put this
Speaker 1: off and whether the theory is right. You know, can
Speaker 1: you really motivate certain industries that have decided to manufacture
Speaker 1: outside the United States to come back? Is there enough
Speaker 1: incentive to do that? I think we're all about to
Speaker 1: find out. Obviously, now a little point of order here.
Speaker 1: We did this interview before Donald Trump sort of flippantly
Speaker 1: said well maybe though maybe kids are for Christmas are
Speaker 1: going to have to go with fewer toys and the
Speaker 1: dolls might cost a little bit much. I will tell
Speaker 1: you that is what I think is going to be
Speaker 1: the most fascinating part. And I don't want to prejudge
Speaker 1: the conversation I have with Orang cast for you, but
Speaker 1: if I were in his shoes, I'd be worried that
Speaker 1: my theory of the case is may never get a
Speaker 1: chance to be tested because of the poor implementation by
Speaker 1: this administration, the haphazard way that they've been dealing with
Speaker 1: the tariffs, and the fact that there's I think the
Speaker 1: signal has been sent. Everything's kind of negotiable. And if
Speaker 1: that's the case, then how do you when does a
Speaker 1: company decide Okay, I'm finally going to bring everything here.
Speaker 1: But I do think politically this White House has done
Speaker 1: a terrible job communicating the tariffs in general, a terrible
Speaker 1: sort of preparing the country, preparing business for this. When
Speaker 1: you listen to mister cass there there was another way
Speaker 1: this could have been done, in an alternative universe, perhaps
Speaker 1: in a more transparent and methodical way that you try
Speaker 1: to implement something like this. There may have been poor,
Speaker 1: more political support, but it actually brings me to where
Speaker 1: I want to focus most of my opener here, which is, look,
Speaker 1: I've certainly given this Trump White House a hard time.
Speaker 1: I think it's been a terrible one hundred days for
Speaker 1: them politically, and a lot of Americans seem to agree
Speaker 1: that that's the case. I think that this White House
Speaker 1: is another huge problem in blind spot, and that is
Speaker 1: they only know how to communicate with their base, and
Speaker 1: they only seem interested in communicating with their base own
Speaker 1: the Libs. It still seems to be the mindset worrying
Speaker 1: about catering to the base and making them happy. I
Speaker 1: could argue that this firing of Mike Waltz in some
Speaker 1: ways is more of a response to the base than
Speaker 1: it is anything else. I guess he hasn't been fired,
Speaker 1: I should correct myself. He just was simply moved to
Speaker 1: another position, which you got to. You know, whatever you
Speaker 1: think of Donald Trump is at least he's showing some
Speaker 1: loyalty to Mike Waltz. Meaning here you got this guy
Speaker 1: to quit his seat in Congress. The guy who replaced
Speaker 1: him was literally sworn in three weeks ago, and now
Speaker 1: he could have been completely out of a job. Ambassador
Speaker 1: to the United Nations is not such a bad consolation prize.
Speaker 1: It's no National security advisor. That's arguably the second most
Speaker 1: powerful job in a West Wing after the chief of staff.
Speaker 1: It's certainly the second best office. But the lack of
Speaker 1: their lack of interest in trying to communicate with skeptics,
Speaker 1: not critics on the left. They don't want to communicate
Speaker 1: with their pure critics. That's a White House's prerogative. But
Speaker 1: if you're actually trying to make a political argument and
Speaker 1: win a political argument, you've actually got to try to
Speaker 1: communicate to skeptics, you know, whether it's people like I
Speaker 1: think the folks that are listening to this podcast who
Speaker 1: may be skeptic of this tariff regime but you know,
Speaker 1: really not happy with how it's been rolled out. It's
Speaker 1: been sloppy. At least make your case in a more
Speaker 1: logical way and try to talk to this crowd. And
Speaker 1: I don't think they've done a very good job of that.
Speaker 1: And that's the question I have. Are they even interested
Speaker 1: in it? You know, the Trump one point zero their
Speaker 1: communication shop seemed to be interested, and Donald Trump did
Speaker 1: it in his first term, trying to communicate with everybody.
Speaker 1: In fact, I think the great strength of Donald Trump's
Speaker 1: candidacy in twenty sixteen versus the other campaigns was that
Speaker 1: he was sort of agnostic when it came to the media.
Speaker 1: Sure he had opinions of who he thought was good
Speaker 1: to him and not, but he was willing to talk
Speaker 1: to anybody. I guess we're seeing a little bit of
Speaker 1: that in his decision to say yes to the Atlantic,
Speaker 1: And that is a reminder if you can get directly
Speaker 1: to the president, he'll give you time, even if he
Speaker 1: doesn't even if he doesn't like your outlet, because he's
Speaker 1: got that much confidence in himself, right he believes nobody
Speaker 1: can get the best of him. He believes he can
Speaker 1: survive in an interview, and as long as he's getting
Speaker 1: a chance to talk, he's okay with it. I wonder
Speaker 1: the question I have is a is he surrounded by
Speaker 1: a press staff that wants him to do that? Or
Speaker 1: is he surrounded by a press staff that is going
Speaker 1: to try to prevent him or block him from dealing
Speaker 1: with journalists that are neither anti Trumpers or pro Trumpers,
Speaker 1: but are essentially professional skeptics. And I've always said that's
Speaker 1: that's what I believe believe my job has been when
Speaker 1: it comes to covering policy, which is okay, show your work,
Speaker 1: be a skeptic about it, intrigued about it, cover it,
Speaker 1: kick the tires, do all the do all those things.
Speaker 1: But as a journalist, if you behave as a professional skeptic,
Speaker 1: then you're more likely to get more information and I
Speaker 1: think deliver a better report for the average American on this.
Speaker 1: But I do think the big you know, he's they've
Speaker 1: got to figure out how to how to communicate beyond
Speaker 1: their base, because right now it's not working for them politically.
Speaker 1: It may make them feel good, right, and if that's
Speaker 1: all the world that they live in, that's nice, But
Speaker 1: then they're going to get a shock to the system,
Speaker 1: as they already have been when they start holding elections. Uh.
Speaker 1: The Waltz. The way the President handled the Waltz situation
Speaker 1: is interesting, and I think the question is going to
Speaker 1: be what should what should we take away from this? Right,
Speaker 1: it wasn't a total like get out of here mindset,
Speaker 1: you know, poor old Ryan's previous was fired by tweet
Speaker 1: and was essentially it appeared essentially abandon after Air Force
Speaker 1: One landed at andrews Now. I don't think that's the
Speaker 1: way he felt at the end of the day, but
Speaker 1: it certainly looked that way, and that certainly seemed to
Speaker 1: be a look that the president back then didn't seem
Speaker 1: to mind the fact that he gave Waltz a sort
Speaker 1: of consolation prize. I think shows that he would like
Speaker 1: to have some loyalty. And it's probably smarter right if
Speaker 1: you don't do that. Who knows who knows who Waltz
Speaker 1: may talk to when you fire. Ask Pete Hegseth what
Speaker 1: it's like when you fire former staffers, and what happens
Speaker 1: when they start talking to the press. So I am
Speaker 1: intrigued by the decision that they have and they had
Speaker 1: this extra they had this extra job that they hadn't
Speaker 1: filled because of the narrow House majority and the decision
Speaker 1: to pull back the nomination, which, of course you an
Speaker 1: ambassador was originally supposed to go to at least Dephonic.
Speaker 1: But what's interesting, and as my one of my producers,
Speaker 1: Laurene Gardner put it to me, he says, I hope
Speaker 1: you can keep track of all of Marco Rubio's titles.
Speaker 1: Right now, he is the Senate confirmed Secretary of State,
Speaker 1: but he's also the acting administrator of the US AID.
Speaker 1: He's also the acting Archivist, and now he's also the
Speaker 1: National Security Advisor. Now a lot of people are making
Speaker 1: Kissinger comparisons, because the last person to hold both Secretary
Speaker 1: of State and National Security Advisor was Henry Kissinger to
Speaker 1: Richard Nixon. And that'll be an interesting question whether Rubio
Speaker 1: keeps this for a while, or whether the President decides
Speaker 1: to reward witkof his sort of personal negotiator from around
Speaker 1: the world, his special envoy for everything. Right, it wasn't
Speaker 1: just one thing he sent him to putin. He sent
Speaker 1: him to Iran, he sent him to Israel. So I
Speaker 1: think right now Witkoff is sort of his personal envoy.
Speaker 1: I can tell you from my understanding is that that
Speaker 1: Marco Rubio really has earned a lot of trust of
Speaker 1: Donald Trump. You know, when you start to look at why,
Speaker 1: why was Walt's sort of pushed out? Was he pushed
Speaker 1: out because of the Jeffrey Goldberg signal incident? Or was
Speaker 1: he pushed out because Magan never trusted him anyway? Because
Speaker 1: he was a well known sort of conventional or traditional
Speaker 1: national security Republican. What do I mean by that? Somebody
Speaker 1: pre Trump? Right? What there where the Republican establishment was
Speaker 1: pre Trump? Now, Marco Rubio is somebody that I think
Speaker 1: a lot of people, including myself, would have put him
Speaker 1: in that track. Even the way he uh, the way
Speaker 1: he ran the Intel Committee with Mark Warner when they
Speaker 1: were one would be chair, when vice chair, depending on
Speaker 1: which party was in charge, seemed to also indicate that
Speaker 1: he really was sort of more on the conventional side
Speaker 1: of of of where of American foreign policy, which which
Speaker 1: I'd say center left and center right, you know, both
Speaker 1: share share that philosophy. But as as people have told
Speaker 1: me who are close to this situation, that the more
Speaker 1: time that Trump has spent with Rubio and Rubio had
Speaker 1: proximity going for him. Right. Obviously, we know this was
Speaker 1: a nasty primary fight in twenty sixteen and there was
Speaker 1: no love loss between Marco Rubio, Little Marco and Donald
Speaker 1: Trump and the hands comment and all that business. But
Speaker 1: that over the four years Rubio became you know, worked
Speaker 1: really hard to regain Trump's trust. Now, for some of
Speaker 1: you that might be a huge turnoff. Some of you
Speaker 1: might think he's just being a hypocrite. And you know what,
Speaker 1: none of us know the motive for sure. But he
Speaker 1: became Secretary of State not because Donald Trump thought he
Speaker 1: owed the establishment wing of the party somebody to give
Speaker 1: a place to. He gave it to him because over
Speaker 1: time he started leaning on Rubio when it certainly came
Speaker 1: to do with anything having to do with form policy
Speaker 1: in Latin America. I mean, Donald Trump doesn't make any
Speaker 1: decision on Venezuela without running it by Rubio, and it
Speaker 1: was the case towards the end of his first term.
Speaker 1: So I won't be surprised if this relationship of national
Speaker 1: security Advisor and Secretary State is something that lasts a
Speaker 1: good six to nine months, which in a Trump white
Speaker 1: House would be a long time. Remember he went through
Speaker 1: four national Security advisors in his first term. He went
Speaker 1: through four chiefs of staff in his first term. So
Speaker 1: you're looking at about you know, you know, every nine
Speaker 1: to twelve months some sort of shift or change here.
Speaker 1: What's interesting about all the titles that Marco Rubio has
Speaker 1: is that it also gives Donald Trump flexibility. So we
Speaker 1: now see what he was willing to do with Waltz. Well,
Speaker 1: I don't want to totally kick him out of the
Speaker 1: administration because you never know if you create an enemy. Well,
Speaker 1: let's say he finally comes to the conclusion that hag
Speaker 1: Seth just can't manage the Pentagon. Well, now there's three
Speaker 1: titles he essentially can take away. Hag Seth is Senate confirmed,
Speaker 1: and so if you want to make him the National
Speaker 1: Security Advisor, he could. I don't know if that's what.
Speaker 1: If Trump wants hake Seth around that much, But maybe
Speaker 1: he gives hagg Seth the Administrator of Aid, maybe he
Speaker 1: hands him the archivist role, maybe he gives them an ambassadorship.
Speaker 1: But I wonder if this is going to be the
Speaker 1: new pattern of Trump where he finds a place when
Speaker 1: he decides someone isn't working in a position, rather than
Speaker 1: create an eventual source against his administration, which they're very
Speaker 1: paranoid about leaks that instead, you find a place within
Speaker 1: the administration, you keep this person in the tent. Just
Speaker 1: something I'm going to be watching for. And you know what,
Speaker 1: one thing we do know is Donald Trump doesn't like
Speaker 1: to feed the media beast. So even if he makes
Speaker 1: a decision to get rid of somebody, he'll delay it
Speaker 1: a little bit, just in time, so it looks like
Speaker 1: it's his decision. He doesn't want to look like the
Speaker 1: press pushed him on this. But the the uncomfortable aspect
Speaker 1: of this Waltz decision is that it does seem to
Speaker 1: be a victory for Laura Lumer, the person who came
Speaker 1: in and seems to have encouraged President Trump to do purging.
Speaker 1: And this is a question of whether who's allowing her
Speaker 1: to have his ear. Now maybe if he wants her
Speaker 1: to have his ear, there's nothing Susie Wilds can do
Speaker 1: about it, or there's maybe Mike Waltz did try to
Speaker 1: stop her, and that was part of the problem. But
Speaker 1: you know, it's my understanding that Lumer essentially has been
Speaker 1: doing vetting of any national security staffer and if they
Speaker 1: have any connection to people like Pompeo or Cotton or
Speaker 1: anybody she has deemed to be anti MAGA in the
Speaker 1: foreign policy world. It has gotten those staffers ostracized. And
Speaker 1: I'll tell you this, while he may have kept Waltz
Speaker 1: at least in the circle by giving him the UN ambassadorship,
Speaker 1: some of these other staffers are not going to like
Speaker 1: how they were treated and on this. So that's just
Speaker 1: something to watch for. There the other things I want
Speaker 1: to clean up from the weekend, including the last time
Speaker 1: I spoke to you and I talked about the first
Speaker 1: hundred days of the Democrats, I left out one other.
Speaker 1: You know, I think it's no doubt AOC probably of
Speaker 1: all the Democrats who are worrying about it, for their
Speaker 1: own first hundred days, she probably had the best first
Speaker 1: hundred days. But there's another Democrat that arguably had as
Speaker 1: good of a first hundred days, and maybe even a
Speaker 1: better one, and that's Abigail Spanberger. And some of you
Speaker 1: may say who is she. She is a former member
Speaker 1: of Congress who is the essentially the Democratic nominee for
Speaker 1: governor in Virginia, an election that's going to be held
Speaker 1: this cycle. So why do I say she's a huge winner. Well,
Speaker 1: Number one, the more unpopular first, you know, the more
Speaker 1: unpopular White houses in their first year after a presidential election,
Speaker 1: the better it is for the opposition party in the
Speaker 1: state of Virginia. We have seen a remarkable pattern something
Speaker 1: in like eight of the last nine Virginia gubernatorial elections
Speaker 1: where the party in the White House has lost the
Speaker 1: ubernatorial race in Virginia. The most recent example, Biden wins
Speaker 1: the presidency in twenty Republican Glenn Younkin wins the Virginia
Speaker 1: gubernatorial governorship in twenty one, Donald Trump wins the presidency
Speaker 1: in sixteen, Democrat Ralph Northam wins the governorship in seventeen.
Speaker 1: So now throw in Doje and Elon Musk, and I
Speaker 1: will tell you Spanburger, the question is and whether she's
Speaker 1: going to win this race. Barring some unforeseen event, the
Speaker 1: question is going to be whether she can win it
Speaker 1: by such a large margin that she changes she dramatically
Speaker 1: changes the makeup of the state legislature. Not a lot
Speaker 1: of swing districts in neither the Assembly or the state Senate.
Speaker 1: But she could have a large margin of victory because
Speaker 1: she's got a secret weapon in her hands, and that's
Speaker 1: government workers. When you follow Virginia politics, these off your elections.
Speaker 1: Government workers are sometimes the most difficult to engage in
Speaker 1: state elections. They're federal government workers, which means they're usually
Speaker 1: very focused on federal government politics, but don't always see
Speaker 1: themselves as Virginians. It's been one of the struggles Democrats
Speaker 1: have had, used to have a lot, and sort of
Speaker 1: they improve that over the years. I can tell you
Speaker 1: now federal government workers that live in Northern Virginia are angry,
Speaker 1: that are on fire. Some of them are no longer
Speaker 1: government workers, and that wasn't a choice. Some of them
Speaker 1: took retirement on purpose to avoid the dose thing. But
Speaker 1: I can tell you they're very engaged. You go around
Speaker 1: northern Virginia, you see a lot of signs of support
Speaker 1: our government workers, support your government workers. I think that
Speaker 1: makes what was already a difficult political environment for the
Speaker 1: Republican win some seers the lieutenant governor. It puts why
Speaker 1: I would say of all Democrats, probably nobody had a
Speaker 1: better first hundred days when you look about their near
Speaker 1: term goal than Abigail Spamburger. One other note that I
Speaker 1: want to touch on is Wes Moore in his announcement
Speaker 1: that he said he's not going to be a candidate
Speaker 1: for president in twenty twenty eight, and his decision to
Speaker 1: say it so early. Well, the only problem poor Wes
Speaker 1: Moore has. It's not his fault. But I'm old enough
Speaker 1: to remember when Barack Obama in twenty oh five, and
Speaker 1: I think he went on Meet the President early twenty
Speaker 1: oh six and said he was not going to be
Speaker 1: a candidate for president, and then by the end of
Speaker 1: twenty oh six came back on Meet the Press to say, well,
Speaker 1: I may have changed my mind. So the point is
Speaker 1: it's fascinating that he made the decision to announce it.
Speaker 1: Perhaps that's a way of keeping donors from calling him
Speaker 1: all the time. Perhaps he's worried that if people think
Speaker 1: he's looking too far ahead to the presidency that actually
Speaker 1: a re election campaign in twenty six might become problematic.
Speaker 1: Whatever the reason, or perhaps we should just take about
Speaker 1: his word. Maybe he thinks his family's too young to
Speaker 1: deal with as aential campaign in twenty eight he's certainly not.
Speaker 1: You know, he is somebody that has a long runway.
Speaker 1: You know, it's not as if the moment is gone
Speaker 1: for him in twenty twenty eight, but it's an if
Speaker 1: there is no Wes Moore candidacy in twenty twenty eight.
Speaker 1: I happen to believe if he runs, he's somebody that
Speaker 1: would say is going to be one of the be
Speaker 1: in the top tier. But if he doesn't run, that's
Speaker 1: short early on. It's a big help to a guy
Speaker 1: like Pete Bootages, right, he's the other veteran in the race,
Speaker 1: having served. Wes Moore having served, that was I think
Speaker 1: a big part of his his appeal to many people.
Speaker 1: That could be a little bit of a help to
Speaker 1: a guy like Pete Footage. And frankly anybody in the
Speaker 1: what I would say is in the establishment lane of
Speaker 1: the Democratic presidential race, whether it's Corey Booker, Pete Boutaggche,
Speaker 1: Gretchen Whitmer, but those that are sort of viting buying
Speaker 1: for the mainstream liberal support, no wesmore that that's that's
Speaker 1: a whole bunch of donors that are up for grabs.
Speaker 1: That's a whole bunch of operatives that are up for grabs,
Speaker 1: So an interesting decision. But I will promise you, Governor Moore,
Speaker 1: no one's really gonna believe you've taken yourself out of
Speaker 1: twenty eight until you say it again after your twenty
Speaker 1: sixth race, assuming you're successful in your reelection. All right,
Speaker 1: just wanted to get a couple of those things off
Speaker 1: my little my notepad of stuff that I keep. Hey,
Speaker 1: I got to mention this. Hey, I got to mention that.
Speaker 1: My pause for a break when we come back my
Speaker 1: conversation with orn Casts, all right, and joining me now
Speaker 1: is orn Cast. He is the chief economist, and I
Speaker 1: guess founder of American Compass is their chief economist. I
Speaker 1: hope I have that correctly, Oran and former Manhattan Institute fellow?
Speaker 1: Is that also correct?
Speaker 2: Also true?
Speaker 1: Which has been a long time of economic could How
Speaker 1: would you describe the Manhattan Institute. It's always been to
Speaker 1: me where a lot of what I would call center
Speaker 1: right conservatives end up, you know, sort of more in
Speaker 1: line with AI for those that are follow that world
Speaker 1: in DC. Is that is that a fair comparison?
Speaker 2: Yeah? I think that's right. They're they're outside the Beltway,
Speaker 2: so they're a little more eclectic to do a lot
Speaker 2: of urban policy and so forth, but definitely in that
Speaker 2: conservative think tank world.
Speaker 1: And uh it, how would I was going to describe
Speaker 1: you as sort of the one of the authors or
Speaker 1: godfathers of this tariff policy, or at least the initial
Speaker 1: policy that President Trump rolled out, but instead of me
Speaker 1: doing it, describe it in your words. What is you?
Speaker 1: What was your role in this during the campaign, and
Speaker 1: how much ownership do you take of this policy?
Speaker 2: Well, it's an issue that American Compass has been working
Speaker 2: on since since we started in twenty twenty. You know,
Speaker 2: generally speaking, we sort of see the excesses of globalization
Speaker 2: as one of the major problems with the US economy,
Speaker 2: something that is harmed a lot of workers in communities,
Speaker 2: something that both political parties that economists ignored for much
Speaker 2: too long. And so, you know, I think it's very
Speaker 2: important just to have a clear diagnosis of why this
Speaker 2: is a problem. Right, everybody said free trade was going
Speaker 2: to be great and and and why might that not
Speaker 2: be the case? And then to have a clear idea
Speaker 2: of Okay, well, then what would you actually do about it?
Speaker 2: Because it's you know, some people would say you sort
Speaker 2: of have a toothpaste out of the tube situation where
Speaker 2: you can't just go back on what we may have decided,
Speaker 2: even if it was it was a bad decision. And
Speaker 2: so you know, we have developed sort of a broad
Speaker 2: range of policies and a pretty comprehensive agenda, I think
Speaker 2: for what we call reindustrialization, which is the idea that
Speaker 2: we have to rebuild American industry for the sake of
Speaker 2: communities and good jobs, but also for the sake of
Speaker 2: economic growth, also for the sake of national security, and
Speaker 2: tariffs are an important.
Speaker 1: Piece of that.
Speaker 2: So the idea of a global tariff is one, the
Speaker 2: idea of confronting China in particular and decoupling from China
Speaker 2: to another, and then there's a lot of other stuff.
Speaker 2: So conceptually, I would say we are very much on
Speaker 2: the same page and been very encouraged by the direction
Speaker 2: the Trump administration has gone. In the specifics, I think,
Speaker 2: as we've seen there have been a lot of costs
Speaker 2: that I think are are too high and higher than
Speaker 2: they need to be, and that's where we would depart
Speaker 2: on the specifics.
Speaker 1: Look, the motivation for me to book you was your
Speaker 1: New York Times up ed that you know, look, I'm
Speaker 1: a skeptic that we can reindustrialize the way you say
Speaker 1: it is, but the way you outlined how you would
Speaker 1: have implemented this versus how it was done, you had
Speaker 1: a very sensible thing you you were trying you frankly,
Speaker 1: were trying to take into account there would be some
Speaker 1: shock to the supply chain, there'd be shocked to business planning,
Speaker 1: and in some ways you wanted to telegraph everything that
Speaker 1: was going to happen. But essentially by six months is
Speaker 1: the impression I got from your op ed that you
Speaker 1: were you know that none of these the s that
Speaker 1: you would you would lay it out what it was
Speaker 1: going to look like, but you would give at least
Speaker 1: one hundred and eighty days of breathing room, both for
Speaker 1: Corporate America to plan for this, but also to give
Speaker 1: room for some trade deals before the implementation. That isn't
Speaker 1: how it's been.
Speaker 2: Implemented, That's right. I think the you know, the phase
Speaker 2: in concept is a really important one because it goes
Speaker 2: to the heart of what do we actually expect tariffs
Speaker 2: to do? And at the end of the day, what
Speaker 2: matters for a tariff is not what is the value
Speaker 2: on day one, because no one can change how they
Speaker 2: do business on day one. On day one, it's just
Speaker 2: going to be something you pay. Matters is what is
Speaker 2: the tark going to be in years three through ten,
Speaker 2: Because the investment decisions that people make today are based
Speaker 2: on what they expect policy to look like over that timeframe.
Speaker 2: And so my view is that if you want to
Speaker 2: make this sort of long term structural shift in the economy,
Speaker 2: you want to keep the upfront costs as low as possible.
Speaker 2: You want to say, look, we are going to give
Speaker 2: a time, give time for businesses to adjust, for other
Speaker 2: countries to adjust, but we also want to be as
Speaker 2: clear and credible as possible. This is happening that if
Speaker 2: you don't start adjusting as quickly as you can, you
Speaker 2: are going to get hit. And so that's where I think,
Speaker 2: you know, some of what the administration has done in
Speaker 2: being quite sort of abrupt, and I think shaking people
Speaker 2: out of their stupor in a sense has been helpful.
Speaker 2: But when you think about, you know, across all of
Speaker 2: those trade partners, and we think about with China, you
Speaker 2: know what is going to be the key to the success.
Speaker 2: The key is that we have a credible and sustainable
Speaker 2: policy and that people really believe three years from now
Speaker 2: there are going to be high tariffs, and and that's
Speaker 2: where I think, you know, I think the Trim administration
Speaker 2: has already made some good course corrections, but especially in China,
Speaker 2: where where there's probably still more work to be done.
Speaker 1: Tell me how you got here intellectually? I mean, it's
Speaker 1: just you know, to think that you were met Romney's
Speaker 1: domestic policy advisor. This is a guy, and I think
Speaker 1: he's a you know, a free marketeer and every definition
Speaker 1: that that is probably even more libertarian maybe than most
Speaker 1: elected Republicans today, at least on this issue. So how
Speaker 1: did you get how did you get to where you've
Speaker 1: gotten intellectually?
Speaker 2: Well, it's interesting, that's I would say, that's just wrong
Speaker 2: about about Romney on a lot of issues. You know,
Speaker 2: that's actually right. I think he was a very sort
Speaker 2: of conventional pre Trump conservative on the trade issue. He wasn't.
Speaker 2: And that was really my entry point into it. I
Speaker 2: still remember the meeting when we we brought him the
Speaker 2: sort of standard briefing on you know, okay, here's what
Speaker 2: a Republican says about trade, and he kind of looked
Speaker 2: through it and said, yeah, that that's fine, But what
Speaker 2: are we going to do about China, And at that
Speaker 2: time that was sort of a very strange question to ask.
Speaker 2: I remember the senior economic advisors said, you don't do
Speaker 2: anything about China. What what's the problem? We have? Free trade?
Speaker 2: And you know, I think Romney brought a much more
Speaker 2: sort of pragmatic business view to the issue, which which
Speaker 2: in many cases argues for a very free market approach,
Speaker 2: but when it comes to China, really doesn't that that
Speaker 2: the kind of economic relationship we had with China was
Speaker 2: clearly just not a functional one if what you cared
Speaker 2: about was business success in the United States. And so
Speaker 2: that that kind of got me sent off on a
Speaker 2: journey to figure out, Okay, what what can we say
Speaker 2: about this? How would we approach it? And what I
Speaker 2: found was that in the right of center there was
Speaker 2: just nothing that what had you know, begun back in
Speaker 2: Meagan's day as as some kind of very thoughtful economic
Speaker 2: reforms had just sort of ossified into this kind of
Speaker 2: market fundamentalism that just well, free trade is always good
Speaker 2: and we don't have to think about it any more
Speaker 2: than that. It's interesting one of the one of the
Speaker 2: few guys the.
Speaker 1: Size of our economy though over the last basically since Reagan. Right,
Speaker 1: and you go and and in many ways, the Democratic
Speaker 1: you know, this is one of those cases I was,
Speaker 1: you know, you know, somebody's won an argument when somebody
Speaker 1: from the other political party starts making the same argument.
Speaker 1: Right and so right, the Democrats have essentially, at least
Speaker 1: Clinton and Obama have been more on the side of
Speaker 1: of opening opening trade barriers and things like that. So
Speaker 1: and certainly George W. Bush, I think uh was was
Speaker 1: part of that was part of that movement too. How
Speaker 1: do you do you believe we does our does the
Speaker 1: size of our economy indicate that that from a macro
Speaker 1: level was a good idea?
Speaker 2: No? Maybe, I'm by the question. I don't know what
Speaker 2: the size.
Speaker 1: How big our GDP is now and how big and
Speaker 1: how frankly the amount of people that have been lifted
Speaker 1: out of poverty worldwide that overall, this freer and open
Speaker 1: trade has been better for a greater number of people
Speaker 1: on the globe than not. I understand there have been
Speaker 1: winners and losers, but on the whole, how would you
Speaker 1: assess that?
Speaker 2: Well? I think if you're looking around the world, there
Speaker 2: are certainly a lot of people in China who benefited
Speaker 2: greatly from the Chinese Communist Party's exploitation of the global
Speaker 2: trading system. But I'm not sure what role that plays
Speaker 2: in the assessment that you'd want an American policy maker
Speaker 2: to have of the kind of policy that's good for
Speaker 2: the United States. And here I think it's really important
Speaker 2: to say that, you know, yes, the economy has continued
Speaker 2: to grow during the period of globalization, doesn't really tell
Speaker 2: you anything about globalistation. I mean, the economy was growing
Speaker 2: in the period without globalization as well, right. In fact,
Speaker 2: growth has slowed significantly over the past couple of decades.
Speaker 2: Productivity growth has slowed, we see investment declining. And so
Speaker 2: if you actually look at the tradition of American economic policy,
Speaker 2: you know, certainly, up until World War Two, high tariffs
Speaker 2: were the norm. The Republican Party began as the party
Speaker 2: of tariffs. And so I think it's a little bit
Speaker 2: lazy to say, like, well, but back then, I would
Speaker 2: argue the reconization must be a good thing. That doesn't
Speaker 2: an economic analysis.
Speaker 1: But I guess what I would argue is that, so
Speaker 1: take what why was the Republican Party? I would argue,
Speaker 1: why was the Republican Party a bit more pro tariff
Speaker 1: back in the early parts of the twenty century, pre
Speaker 1: World War Two, well, American business primarily made its money
Speaker 1: on Americans and primarily, you know, there wasn't nessus and
Speaker 1: in fact didn't want to see their business shaken up
Speaker 1: by outside by foreign forces. So in some ways there
Speaker 1: was It made sense to me that business policy, the
Speaker 1: pro business side of the argument, was to make sure
Speaker 1: American businesses were protected from its outside competition.
Speaker 2: I mean, I'm pretty sure Abraham Lincoln wasn't a tariff
Speaker 2: guy because that's what the US Chamber of Commerce told him.
Speaker 1: Oh I'm not saying that, but it was. In fact,
Speaker 1: then we weren't right, there wasn't really a global economy.
Speaker 2: That's my point. Well, that is certainly true to some extent.
Speaker 2: I mean, it's it's interesting to see actually that that
Speaker 2: you know, trade was in many ways much higher in
Speaker 2: the early twentieth century than in the mid twentieth century.
Speaker 2: My point is just that the sort of market fundamentalism
Speaker 2: and the assumption that free trade is always good regardless
Speaker 2: of how other countries are behaving. It is a sort
Speaker 2: of very weird and recent point of view that again,
Speaker 2: not even Ronald Reagan held. I mean, look at how
Speaker 2: Reagan approached the Japanese on a range of issues. It
Speaker 2: was always very well understood that free trade can be
Speaker 2: a good thing, That trade that actually entails the trade
Speaker 2: of things you make for things that others make, can
Speaker 2: benefit everybody, but that they are also an awful lot
Speaker 2: of ways that it can go wrong. And I think
Speaker 2: what we really lost, especially in the post World War period,
Speaker 2: when people sort of thought, well, you know, the US
Speaker 2: is now the loan superpower. It's in our interest to
Speaker 2: preside over this liberal world order that's going to benefit everybody.
Speaker 2: Of course, the real case for embracing China was that
Speaker 2: this was going to somehow lead them to liberalize and democratiz.
Speaker 1: Did that work? That's probably the biggest, Right, there's the
Speaker 1: biggest bipartisan foreign policy prediction failure. However you want to
Speaker 1: blump that in, is just that because that was the
Speaker 1: argument to give them a seat at the table. Wto right,
Speaker 1: that was the argument. Not the more they the more
Speaker 1: you introduce the market to China, eventually communism will disappear.
Speaker 2: Right, And so the question now if you if you just
Speaker 2: say okay, well, let's say you could go back from
Speaker 2: twenty twenty five to two thousand and say, hey, guys,
Speaker 2: if you do this, here's how it's going to look.
Speaker 2: This is what China is going to become. Would anybody
Speaker 2: would you know, would would the economists like Larry Summers
Speaker 2: who were pounding the table saying this is the most
Speaker 2: important thing we can be doing. Would they say, yeah,
Speaker 2: this is still a great idea, even if this is
Speaker 2: the direction China is going to go. There are a
Speaker 2: few sort of really crazy libertarians who would still say yes,
Speaker 2: free trade, no matter what. But I think virtually anybody
Speaker 2: would say no. It obviously makes no sense to try
Speaker 2: to pursue free trade in this way with such a
Speaker 2: totally incompatible economic and political system. And we are we
Speaker 2: are living with the consequences of that error, and I
Speaker 2: think fortunately we're now starting to unwind it.
Speaker 1: So I guess the thing that was sort of confusing
Speaker 1: about how this was rolled out is that was it.
Speaker 1: It felt as if this this terriff regiment was it
Speaker 1: was almost like implemented like a machine gun. You know,
Speaker 1: it hit everybody when really the real target. I mean,
Speaker 1: think about what we just spent the last ten minutes
Speaker 1: talking about China, right, this is really about China. This
Speaker 1: is about creating a fair trade relationship between the United
Speaker 1: States and China, the two largest economies. Is there a
Speaker 1: better way we could have kept our allies on our
Speaker 1: side on this? And are we risking China? You know,
Speaker 1: are we risking the EU ending up cutting a more
Speaker 1: a deal with China that we're going to regret they cut.
Speaker 2: Well, I mean, first of all, it's the EU that
Speaker 2: is going to regret if it cuts the deal with
Speaker 2: China like that. But I think we're broadly it's important
Speaker 2: to say that this isn't just about China. That you know,
Speaker 2: we were just talking about China for the last ten minutes,
Speaker 2: because I had been describing how you're going all the
Speaker 2: way back to twenty two twelve. That had been an
Speaker 2: issue that even somebody like Romney was starting to look
Speaker 2: at it and say, wait a minute, this is not working.
Speaker 1: But this seems to be the driver of tariff policies
Speaker 1: in both parties right now, is how do we deal
Speaker 1: with China?
Speaker 2: No, I should think that's certainly not the case when
Speaker 2: you look at the Trump administration's approach, and if you
Speaker 2: go back all the way to you know, the order
Speaker 2: that that they issued on day one America first trade policy.
Speaker 2: The focus was on balance and the idea that that
Speaker 2: balanced trade is a very valuable and productive thing, but
Speaker 2: that imbalanced trade, where we run massive trade deficits in
Speaker 2: the long run, is not a good thing. And China
Speaker 2: is the quintessential illustration of this. You look at the
Speaker 2: relationship with China and how imbalanced it is, and you say, oh, yeah,
Speaker 2: it makes sense that there's something wrong there.
Speaker 1: But well, they argue they have a bigger consumer market
Speaker 1: than we do.
Speaker 2: Right, you know, we can't have a bigger consumer market
Speaker 2: than we do.
Speaker 1: No, they don't, but they But that's always what I
Speaker 1: would say is in theory because of the size of
Speaker 1: their population, that is why so many American companies are
Speaker 1: fighting for an opportunity in there, because that's the I
Speaker 1: think I've always believed that's the payday they think they're
Speaker 1: counting on.
Speaker 2: That's right theory, the case for free trade. And again,
Speaker 2: if you go back to what people are saying in
Speaker 2: the year two thousand was yes, there are lots of
Speaker 2: jobs that will go over there where they will make
Speaker 2: things that we used to make for ourselves, but we
Speaker 2: will get just as many new opportunities to make things
Speaker 2: for that, and that just did not happen. That being said,
Speaker 2: even if you zeroed out trade with China and the
Speaker 2: US would still have a massive trade deficit. China doesn't
Speaker 2: even account for the majority of our trade deficit.
Speaker 1: How much of our trade deficit with everybody else is
Speaker 1: just simply we are the biggest consumer market there is.
Speaker 2: Well, why would that lead to a trade deficit.
Speaker 1: Well, we're going to consume more goods from the outside
Speaker 1: than a smaller country is going to be able to
Speaker 1: consume of our goods.
Speaker 2: Yes, but that's not I'm sorry, that's not how it works.
Speaker 1: That well, I understand that's not how it works, but
Speaker 1: it does seem as if the math on what's the
Speaker 1: trade deficit, I mean, the fact is we're going to
Speaker 1: have it.
Speaker 2: That makes no sense.
Speaker 1: Let me well, then walk me through this, walk me
Speaker 1: through the walk me through the math here on how
Speaker 1: you define a balanced relationship when it is not. You know,
Speaker 1: we're not always going to have an export that a
Speaker 1: smaller country is going to consume at the same levels
Speaker 1: that we might consume an export that they send us.
Speaker 2: I think that that can be very well true of
Speaker 2: very small developing countries. But we're not talking mainly about
Speaker 2: small developing countries.
Speaker 1: But we did slap a bunch of tariffs on those
Speaker 1: folks too.
Speaker 2: Yes, and and there are some very real problems with
Speaker 2: leaving them out. And one that we see is what's
Speaker 2: called transshipment, which is, if.
Speaker 1: We get that, the cheat, the cheating where they do.
Speaker 2: This.
Speaker 1: So I understand that at me.
Speaker 2: Yeah, okay, but this is what drives me nuts is
Speaker 2: the frequency was just like, well, let's find something to
Speaker 2: poke at and score a point on. And then you
Speaker 2: back and you're like, no, no, actually, I under standard
Speaker 2: does make it.
Speaker 1: No. I look, I understand the theory behind it, but
Speaker 1: I don't know if you can ever get to the balance.
Speaker 1: But anyway, go ahead. I'm sitting here talking over you,
Speaker 1: and that is not what I intend to do. I
Speaker 1: want you to explain your point of view here.
Speaker 2: Go forth. So let's focus on the other major companies
Speaker 2: like Japan, like Germany, the massive imbalances that we have
Speaker 2: with those countries, more recently with Mexico as well, in
Speaker 2: part because a lot that used to come from China
Speaker 2: started coming in through Mexico instead. Those imbalances are not
Speaker 2: explained by some theory of you know, we have a
Speaker 2: bigger consumer market than they do at the end of
Speaker 2: the day, if you go all the way back to
Speaker 2: Adam Smith, you go back all the way to the
Speaker 2: economists who first made the arguments about why trade works.
Speaker 2: The entire premise is that you are trading stuff for stuff, right,
Speaker 2: the word is trade. And so what's so important to
Speaker 2: recognize is if you say, well, okay, but why you
Speaker 2: don't need to have balance trade? It could be imbalanced
Speaker 2: and maybe you know, because someone's market is bigger than
Speaker 2: somebody else els it's important to recognize that it's not
Speaker 2: like they're just giving us the stuff. If we're not
Speaker 2: trading stuff that we make for stuff that they make.
Speaker 2: What we are trading instead is our assets. So what
Speaker 2: happens is countries like Japan and Germany and China send
Speaker 2: us enormous amounts of stuff that they produce, and instead
Speaker 2: of in return receiving things that we produce, what they
Speaker 2: receive from us are assets. They receive ownership of our
Speaker 2: corporations in real estate, they receive lots and lots of debt,
Speaker 2: meeting pieces of paper saying we will pay you for
Speaker 2: this someday. And there are lots of really interesting reasons
Speaker 2: why they like that trade as well, But the end
Speaker 2: result of it is therefore a double hollowing out. In
Speaker 2: the short run, you would say, hey, it's great, we
Speaker 2: got to consume a lot of stuff and didn't even
Speaker 2: have to make anything, but that comes at the expense
Speaker 2: of the strength of our economy, the opportunities for workers,
Speaker 2: kinds of investments we do or don't make. And then
Speaker 2: in the long run, of course, we've essentially mortgaged the future.
Speaker 2: We have handed over all of those future claims on
Speaker 2: our prosperity two other countries in return for the consumption today.
Speaker 2: And so you know, again, this is something that Warren
Speaker 2: Buffett actually wrote a fascinating piece about this all the
Speaker 2: way back in two thousand and three when these trends
Speaker 2: were first just emerging. But yeah, just in very common
Speaker 2: sense terms, if you want trade to actually work, it
Speaker 2: has to be trade. And that, I think is the
Speaker 2: core of the argument that the Trump administration is making,
Speaker 2: and one that's absolutely correct, is that we would love
Speaker 2: to have robust trade with Japan, with Germany, with the
Speaker 2: rest of the world broadly, but it needs if it's
Speaker 2: going to work, for the United States, to be the
Speaker 2: kind of trade in which other countries are buying things
Speaker 2: for us and we are in turn buying things from
Speaker 2: other countries.
Speaker 1: Let me go back to NAFTA, because there's it's clear, right,
Speaker 1: NAFTA's is frank I joke. It's a five letter acronym,
Speaker 1: but it's a four letter word in places like Iowa
Speaker 1: and Ohio. And you know this quite well. But there
Speaker 1: were two things that sort of came out of NAFTA.
Speaker 1: While while the industrial Midwest got it, the sun Belt
Speaker 1: benefited quite a bit. Right. There were winners and losers
Speaker 1: within it. And I think this is what makes I
Speaker 1: think trade deals very complicated for the United States. Because
Speaker 1: our economy is really diverse, because our workforce is really diverse,
Speaker 1: you can have these sort of different outcomes, and I
Speaker 1: think it's a challenge because you're going to pit one.
Speaker 1: You may end up you don't want to do this
Speaker 1: politically because this is a trap right where you're pitting
Speaker 1: one region against the other. Let's say we know what
Speaker 1: NAFTA is going to do to these industrial towns and
Speaker 1: Iowa and Ohio, I want to focus on those two.
Speaker 1: I know those two states better, and that's the only
Speaker 1: reason I'm doing it. Was there a better way to
Speaker 1: implement the vocational trading. Was there a better way to
Speaker 1: encourage domestic migration, which arguably has been a way that
Speaker 1: the United States has sort of you know, people have
Speaker 1: improved their lives in the past. What could we have
Speaker 1: done differently that would have minimized this impact on Iowa
Speaker 1: and Ohio that we ended up with without hurting the
Speaker 1: advancements that have been made in South Carolina, Alabama, you know, Tennessee,
Speaker 1: the states that have that have in Texas in particular,
Speaker 1: right that has benefited a lot from NAFTA. So, you know,
Speaker 1: how how how could we have done this better even
Speaker 1: if we decided to still produce proceed along this road
Speaker 1: of a of essentially a North America uh Trade Agreement
Speaker 1: pre trade agreement.
Speaker 2: Well, one element is I think we could have structured
Speaker 2: the differently. You know, we could have structured it certainly
Speaker 2: to provide much stronger, for instance, labor protections, so that
Speaker 2: the strategy did not just become investors are moving to
Speaker 2: Mexico because it's easier to exploit workers in Mexico. Uh.
Speaker 1: You know, if you think about what is the actual
Speaker 1: basis for union arguments at the time, they were just
Speaker 1: sitting there going. If you don't, don't we don't demand
Speaker 1: some sort of higher floor on wages in Mexico. This
Speaker 1: is you know, as Ross PuO famously once said, the
Speaker 1: giant sucking sound.
Speaker 2: Well and this again, you know, this is why I
Speaker 2: always prop on this question, like what is the actual
Speaker 2: theory of trade here? Why are we expecting it to
Speaker 2: be beneficial in theory. We expect it to be beneficial
Speaker 2: because we think there's value in specialization. If if there
Speaker 2: are things they can do more efficiently in Mexico and
Speaker 2: things we can do more efficiently here, that's great. We
Speaker 2: think there are benefits of scale. If we have a
Speaker 2: bigger North American market for everybody to sell into, we
Speaker 2: can make games from that. The problem is that when
Speaker 2: you look at where the actual what is actually driving
Speaker 2: investment and economic moves in trade, too often it's none
Speaker 2: of that at all. It's just investors and corporations saying, hey,
Speaker 2: we can exploit labor and pay people a lot less
Speaker 2: to do the same thing somewhere else.
Speaker 1: Hasn't this been a but hasn't this been what the
Speaker 1: entire twentieth century? I mean, you know, the first toys
Speaker 1: I had were made in Taiwan and firs, excuse me,
Speaker 1: made in West Germany. That's always my favorite of these
Speaker 1: little matchbox cards where you made in West Germany. I
Speaker 1: saved one because how often you're going to see that
Speaker 1: these days. Then things were made in Taiwan, right, then
Speaker 1: things were made in Japan. But the point is is
Speaker 1: that it feels as if this has been that this
Speaker 1: is what an industrial capitalism looks like. Right, There's always
Speaker 1: going to be some place that an industry finds to
Speaker 1: go to that'll be a cheaper way to make their widget.
Speaker 2: There's no reason that that should be the case. And
Speaker 2: again that's not the theory as it's soul. Right, go
Speaker 2: back to what economists say when they're saying we should
Speaker 2: do NAFTA, we should do wto. The arguments are there
Speaker 2: are some things that are going to be relatively more
Speaker 2: efficiently produced in those other places, but there are other
Speaker 2: things that are going to be relatively more efficiently produced
Speaker 2: in the United States. And so the game comes from
Speaker 2: the fact that, yes, maybe they're making the toy cars
Speaker 2: for us, and we are making the industrial equipment that
Speaker 2: makes the toy cars. Right, And again, there was a
Speaker 2: time when that was the case. I mean, you go
Speaker 2: back to the nineteen seventies, you know, sixties and seventies,
Speaker 2: the US essentially did have balanced trade. It is a
Speaker 2: much more recent phenomenon that in many ways was driven
Speaker 2: by the development strategy in these East Asian countries that said,
Speaker 2: the way that we are going to grow is by
Speaker 2: investing massively in very competitive export sectors. So we are
Speaker 2: going to we are going to such arrange our economy
Speaker 2: to hold down the cost of our labor and drive
Speaker 2: as much savings as possible into manufacturing growth that we
Speaker 2: can sell into the American market, because those Americans are
Speaker 2: sitting there saying, yes, please send us more cheap stuff.
Speaker 2: And so certainly it's it's important to say right like
Speaker 2: this is this is our own fault too.
Speaker 1: So I've heard you say that you think people would
Speaker 1: be willing to pay more if they knew it was
Speaker 1: made in America. I I I was raised by a
Speaker 1: father who's we were the last owners of a Zenith
Speaker 1: television because Zenith was the last TV that made that
Speaker 1: mostly had its parts made in America. Okay, even then,
Speaker 1: and I remember, but at some point it became an
Speaker 1: impossibility to even do that.
Speaker 2: Well, I think to be clear, I think the sort
Speaker 2: of would you pay more for something made in America
Speaker 2: is not quite the right question to ask. It reminds
Speaker 2: me of you know, I live in Massachusetts, and when
Speaker 2: you file your taxes, there's a little checkbox you can
Speaker 2: check if you just want to pay a higher tax rate.
Speaker 2: And you know, unsurprisingly not a lot of people check that.
Speaker 2: Trust people don't check that box. I know that's away. Yeah,
Speaker 2: not even people who believe that.
Speaker 1: Remember we used to have the contributing money to the
Speaker 1: Presidential Matching Committee fund. Sure that got a little bit
Speaker 1: more attention.
Speaker 2: But anyway, the right way I think to think about
Speaker 2: it is that there's a much more fundamental trade off
Speaker 2: going on between whether we want to have a robust
Speaker 2: industrial economy or whether we want to just encourage our
Speaker 2: corporations to go elsewhere and send back the cheapest possible stuff.
Speaker 2: And so, yes, one implication of making a different choice
Speaker 2: in that regard would be that some things might cost mole.
Speaker 2: But the choice you're making is not well, I feel
Speaker 2: good about it saying made in America, so I will pay,
Speaker 2: or the trade offf you're making is about the basic
Speaker 2: kind of country that you want to have, and I
Speaker 2: think the best way to think about that trade off
Speaker 2: is to recognize that we took one side of it
Speaker 2: back in you know, the nineteen nineties, and then two
Speaker 2: thousand we said making things doesn't matter. We want the
Speaker 2: cheapest possible stuff go. And we have now seen the
Speaker 2: results of that over the past few decades, and I
Speaker 2: think the vast majority of Americans are looking at as
Speaker 2: an at that as an unwise choice. And so my
Speaker 2: claim is not that people want to pay more to
Speaker 2: feel good about a made in America label.
Speaker 1: It's that you want to know they may say that,
Speaker 1: even if they say it in a poll, that's right,
Speaker 1: but that's not going to behave that way.
Speaker 2: The question is that what trade off do they want
Speaker 2: to make about the kind of nation we are?
Speaker 1: Right?
Speaker 2: And there I think it's absolutely correct that that most
Speaker 2: people regret the trade off that was made and would
Speaker 2: like to see us making a different one.
Speaker 1: So you believe you can still unwind this sure with
Speaker 1: how without too much damage to the economy? And I
Speaker 1: say this, how do you do it without? And let
Speaker 1: me give you an example. What happens to the Mercedes
Speaker 1: and BMW factories in the South, and what would happen
Speaker 1: to a foreign company that wants to make something here
Speaker 1: in the way you would implement tarif pols.
Speaker 2: Well, that's terrific, that's what we want more of. And
Speaker 2: again that's where I think you put China to the
Speaker 2: side where we need to more be decoupling from China.
Speaker 2: We don't need China setting up its factories in the US.
Speaker 2: But the auto industry, I think is actually probably the
Speaker 2: best illustration of what we're talking about here, because you
Speaker 2: have a very concrete case study going back to the
Speaker 2: early nineteen eighties when Ronald Reagan comes into office, and
Speaker 2: that's exactly when you had these cheaper, smaller, more fuel
Speaker 2: efficient Japanese vehicles flooding the market, posing sort of a
Speaker 2: mortal challenge to the big three in Detroit. Now, what
Speaker 2: did Reagan do? Did he say, Well, free trade is wonderful.
Speaker 2: So that's it. We're just not going to have an
Speaker 2: auto industry anymore. No, backed up by a threat, a
Speaker 2: very credible threat of tariffs coming from Congress, Reagan negotiated
Speaker 2: with the Japanese and the Japanese actually adopted what it's
Speaker 2: called a voluntary export restraint. The Japanese said, this is
Speaker 2: not sustainable. We don't want to go down the path
Speaker 2: of trade war and tariffs that were headed toward. We
Speaker 2: are going to tell our own producers stop importing into
Speaker 2: the US market and go set up shop in the
Speaker 2: US instead. And that is why Honda and Toyota and
Speaker 2: then Nissan moved into the American South, ultimately leading to
Speaker 2: tens of billions of dollars in investment, hundreds of thousands
Speaker 2: of jobs. And now you have, yes Japanese you know,
Speaker 2: name plates on a lot of cars driving around in
Speaker 2: the US. But the Toyota Camry has more American made
Speaker 2: content in it than a car from anybody coming, you know,
Speaker 2: any of the Detroit manufacturers. And so that I think
Speaker 2: is that is exactly what you see the Trump administration
Speaker 2: now trying to do with these negotiations. Say to these countries, Look,
Speaker 2: this old system of you just produce and we just
Speaker 2: buy and you get back kind of ownership of the
Speaker 2: United States is over. Let's talk about what you guys
Speaker 2: can do to actually move us toward a balanced trading system.
Speaker 2: And Stephen Mirian, who's the chair of the Council of
Speaker 2: Economic Advisors, gave a very good speech a couple of
Speaker 2: weeks ago at the Hudsons too, where he talked about
Speaker 2: exactly this set of things. This is a perfect example
Speaker 2: of what what these countries can do is tell their
Speaker 2: corporations and use policy changes in their own countries to say,
Speaker 2: we understand, we have reached the end of the road
Speaker 2: on this model because the US is not going to
Speaker 2: accept it any more. Go invest in the United States.
Speaker 2: And just like the Japanese could build cars every bit
Speaker 2: as effectively with the same quality at the same price
Speaker 2: in the United States as they've been doing in Japan.
Speaker 2: There's all manner of things that we are currently buying
Speaker 2: from abroad that could instead be built in the United States.
Speaker 2: We're seeing it right now with Chips TSMCT I want
Speaker 2: a semiconductor it's already in that. You know, commit about
Speaker 2: sixty five billion in investment. They've just announced another one
Speaker 2: hundred billion. The most fascinating thing is they've actually they've
Speaker 2: said so far the yield, the sort of quality and
Speaker 2: efficiency of their production in Arizona is higher than it
Speaker 2: is in Taiwan. So we can do these things. It's
Speaker 2: a question of whether it's the trade off we want
Speaker 2: to make and the policy we want to pursue.
Speaker 1: How about low basically low cost manufacturing, right, whether it's
Speaker 1: t shirts or trinkets or or whatever you want to
Speaker 1: look at. But I want you to answer that question.
Speaker 1: There's a lot of small business owners that are American
Speaker 1: business owners where they order most of their you know,
Speaker 1: here's an American business who's most of their inventory comes
Speaker 1: from Asia, but their parent American taxes all of those things.
Speaker 1: They're going to get hurt and a lot of these
Speaker 1: businesses are going to go under because they really don't
Speaker 1: have an alternative, even even if there's eventually an alternative
Speaker 1: way for them to stay in business. Right now, they're
Speaker 1: not right. It's the shock they're you know, our supply
Speaker 1: chains are really efficient and all of this stuff. What
Speaker 1: happens to that sort of low cost manufacturing product, and
Speaker 1: you know, the the hundreds of small, thousands of small
Speaker 1: businesses that are counting on that inventory coming from Asia.
Speaker 2: Well, I guess I would separate a couple of different
Speaker 2: issues there. One is I totally agree that you need
Speaker 2: that phasing period. You need to give companies a time
Speaker 2: time to adjust. And that's why I say, you know,
Speaker 2: high tariffs on day one, Yes, that causes some of
Speaker 2: those tiy.
Speaker 1: The way are you concerned that your idea here is
Speaker 1: going to get drowned by poor implementation.
Speaker 2: You know, that is a sort of endemic risk in policy,
Speaker 2: in the in the policy wonkery I have chosen to
Speaker 2: engage in for my career, I'm always, on one hand hesitant.
Speaker 2: I think you always have to accept imperfect implementation.
Speaker 1: I think it's all positions are imperfect by nature.
Speaker 2: That's right. The guy who kind of publishes his white
Speaker 2: papers and then says like, oh, well, that's not exactly
Speaker 2: what was in the white paper. Therefore, I, you know,
Speaker 2: disown it. I don't have a lot of time for
Speaker 2: On the flip side, I do think when you're at
Speaker 2: the level of sort of the core concepts of what
Speaker 2: are we trying to do here, especially in this sort
Speaker 2: of situation, you have to get the balance of costs
Speaker 2: and benefits right, Because I think the right way to
Speaker 2: think about this ultimately is we're talking about an investment.
Speaker 2: We're talking about what what kinds of costs should we
Speaker 2: incur in the short run because we think it is
Speaker 2: going to pay dividends in terms of something better in
Speaker 2: the long run. And when you're doing that, and whether
Speaker 2: you know, in the private sector, as well, if you're
Speaker 2: thinking about an investment, whether you keep the costs low
Speaker 2: upfront and whether you deliver those high benefits in the
Speaker 2: long run is what determines whether you're happy with the
Speaker 2: investment or not. And so here I think the right
Speaker 2: way to understand the risk or the concern is that
Speaker 2: if you pursue the policy in a way that adds
Speaker 2: a lot of unnecessary costs upfront, and if you do
Speaker 2: it in a way that does not deliver as many
Speaker 2: benefits in the long run because you don't create the
Speaker 2: certainty and so you don't get the investment, then it's
Speaker 2: just you're not going to be happy with the tradal
Speaker 2: And so I think even the way that Trump administration
Speaker 2: has implemented things so far, you can get some of
Speaker 2: that reshorting, you can get things brought back to the
Speaker 2: United States. But the way that I'm hoping, I hope
Speaker 2: people will think about it, and I'm encouraged to see
Speaker 2: the administration increasingly thinking about it, is to recognize that
Speaker 2: whether or not you're you're happy with the deal at
Speaker 2: the end of the day, whether or not it was
Speaker 2: a good policy to pursue depends on whether you do
Speaker 2: it on a way in a way that keeps those
Speaker 2: costs down and that maximizes those benefits. And so that's
Speaker 2: where that example of the small business is a really
Speaker 2: good one. Can you do this in a way that
Speaker 2: that doesn't cause those sorts of disruptions or at least
Speaker 2: minimizes those disruptions, and you can, and I think we're
Speaker 2: moving toward it, but I think certainly right now we
Speaker 2: are seeing too much disruption.
Speaker 1: How do you measure as an economist, how do you measure?
Speaker 1: There's certain parts of a free trade agreement that are
Speaker 1: as where the benefit is security, which is not necessarily
Speaker 1: a measurable right. You can't put a number on it.
Speaker 1: But look, you know, you know there's there's plenty of
Speaker 1: wars in our past that had been triggered by by
Speaker 1: trade disputes, so this is not an unusual thing. But
Speaker 1: good relations with a country on on the economic front
Speaker 1: can provide important security agreements. So maybe the point is
Speaker 1: is that a trade deficit might be worth it because
Speaker 1: of a security trade off. Right, how do you factor
Speaker 1: that in in into your thinking? Because you know that
Speaker 1: some of that is the motivation for some of the
Speaker 1: trade agreements that we do cut Like you know, I
Speaker 1: take the Colombian Free Trade Agreement. I felt like that
Speaker 1: was one that we escalated, and we accelerated as much
Speaker 1: of trying to make sure Colombia didn't slip. Right. This
Speaker 1: was a democracy that was on the move, coming towards us,
Speaker 1: if you will, right away from its from its from
Speaker 1: its from its drug past and things like that. So
Speaker 1: we were really trying to help them. How do you
Speaker 1: factor that into your equations of trying to come up
Speaker 1: with a fair with fair trade practices.
Speaker 2: It's a great question, but it's funny because I thought
Speaker 2: you were going to go in the exactly opposite direction,
Speaker 2: which is that a lot of the value of security
Speaker 2: for the United States is something that we don't take
Speaker 2: into account when we're doing our economic analyzes. Right that,
Speaker 2: in trying to value all the benefits of the cheap stuff,
Speaker 2: the costs of no longer being able to make essential goods,
Speaker 2: no longer being able to.
Speaker 1: The pandemic was an eye open look. The pandemic I
Speaker 1: think opened some people and more where China could have.
Speaker 1: You know, if they really wanted to make us suffer,
Speaker 1: they could have, right, and they chose not to because
Speaker 1: they were suffering. You know, they had their own issues.
Speaker 2: Well, so there's the sort of resilience point for all
Speaker 2: sorts of goods, and then there's specifically what you do
Speaker 2: to the defense industrial base. You know, we're seeing in
Speaker 2: the Ukraine context, our ability to even manufacture the kinds
Speaker 2: of weapons you know, you need to help support another
Speaker 2: country in a you know, limited land or elsewhere. You
Speaker 2: look at the sort of modeling of how long could
Speaker 2: the US actually sustain a conflict in the Taiwan Straits,
Speaker 2: for instance, what you see is, you know, and you
Speaker 2: look at our ability to build ships or maintain submarines
Speaker 2: or we've hollowed all that out, and none of that
Speaker 2: gets measured in the economic analysis of free trade either.
Speaker 2: So that being said, the point you make is also
Speaker 2: a good one, which is that there's real upside benefit
Speaker 2: to these kinds of trade agreements. And you know, I
Speaker 2: think the two things I would say about it. One
Speaker 2: is I think that's a perfectly reasonable case, but it's
Speaker 2: one that we should acknowledge and break out in the
Speaker 2: analysis that too much of the discussion in recent decades
Speaker 2: has just been Look, this is a win win win,
Speaker 2: like it advances this foreign policy objective that we have,
Speaker 2: but also it's really great for American workers, and if
Speaker 2: that's not actually true, then don't sell it that way.
Speaker 2: If you have a you know, we don't say we're
Speaker 2: going to go to war in this place, but that's okay,
Speaker 2: it's really great for the soldiers too. There's a baseline
Speaker 2: level of honesty that is necessary, among other things, if
Speaker 2: you want to sustain political support for making those kinds
Speaker 2: of trade offs. So if we want to say, look,
Speaker 2: we're actually going to use our economic policy, our trade
Speaker 2: policy to support developing countries that you know, we think
Speaker 2: that that really makes a difference for Columbia, That makes
Speaker 2: a difference from you know, some other country in our
Speaker 2: hemisphere that has real benefits for us. Great, but make
Speaker 2: the case on those terms, and then notice that that
Speaker 2: case doesn't hold up when you're looking at those situations
Speaker 2: where trade is actually causing us problems, which is with
Speaker 2: those other major countries, right, it's not our trade relationship
Speaker 2: with Columbia. Again, putting aside, if they become a way
Speaker 2: for other countries to cheat, that is causing the distress.
Speaker 2: And on the flip side, you can't say I don't think, well, look,
Speaker 2: obviously we have to treat Japan this way because you know, otherwise,
Speaker 2: I'm not sure what the otherwise is. I think the
Speaker 2: reality is that the.
Speaker 1: Well we certainly want. Look, we want Japan and our
Speaker 1: sphere of influence and not China's we want, but you know,
Speaker 1: in our sphere of influence, you.
Speaker 2: Know who else, you know, who else wants Japan in
Speaker 2: our sphere of influence and not China's Japan.
Speaker 1: I think they do, but we make it really hard
Speaker 1: for them. I mean, you know, eventually, money, whether we
Speaker 1: like it or not. You know, it's amazing how how
Speaker 1: the pocket book will change a voter's mind. Just look
Speaker 1: north of the border. Right in a ninety day period,
Speaker 1: we saw what happened north of the border. So you know,
Speaker 1: I don't know if anything should be seen as permanent
Speaker 1: when it comes to our some of these relationships that
Speaker 1: we have.
Speaker 2: Well, I certainly agree that the relationships aren't permanent, but
Speaker 2: I think that you can step back and assess the
Speaker 2: actual calculations that other countries are facing. And you know,
Speaker 2: I think the United States should treat allies barely and
Speaker 2: transparently and so forth.
Speaker 1: Shouldn't they get a better deal? In your mind? Is
Speaker 1: it should our allies get a better deal than those
Speaker 1: that are either unaligned or adversarial.
Speaker 2: Oh. Absolutely, that's a core premise of I think the
Speaker 2: direction we're headed, and it's right.
Speaker 1: Well, that was I think the frustration at first is
Speaker 1: that is not how the policy was initially rolled out,
Speaker 1: which I think is why so many of our trade
Speaker 1: closest trade partners freaked out.
Speaker 2: So I think that's a fair point about the freak out.
Speaker 2: I think it's important to say that in terms of
Speaker 2: where I think the administration is trying to go. And again,
Speaker 2: I think another fair criticism is they haven't been clear
Speaker 2: enough and conveying where they're trying to go. But you know,
Speaker 2: piecing together those comments they do make and the action
Speaker 2: that they've taken, it seems to me that the direction
Speaker 2: that they want to head is one in which there's
Speaker 2: a much better deal for countries that are sort of
Speaker 2: in the US sphere as opposed to those that are not.
Speaker 2: The difference from the past where I think we're really
Speaker 2: departing is that in the past, especially post Cold War,
Speaker 2: we didn't really ask much of anything because we were
Speaker 2: presiding over this liberal world order. Everybody got the full deal, right,
Speaker 2: China got open access to our market just as much
Speaker 2: as Japan did, and what we are starting to shift
Speaker 2: towards world where we say, actually, the US has some
Speaker 2: things that it wants to and those have to be
Speaker 2: fair and reasonable things. But I think the things that
Speaker 2: the Trump administration is gesturing toward are fair and reasonable.
Speaker 2: So take the balance trade point, Yeah, that seems pretty fair.
Speaker 2: The US isn't saying we demand that we now reverse
Speaker 2: things and we get to build up our industry at
Speaker 2: your expense. They're saying, let's have a trading relationship that
Speaker 2: isn't bigger thy neighbor. Let's have one where everybody can
Speaker 2: have a healthy manufacturing sector and trade stuff for stuff,
Speaker 2: and we will hold ourselves to that too.
Speaker 1: Do you accept the premise that the the more trade
Speaker 1: there is across borders, the less chance of war?
Speaker 2: Not necessarily. I think there are certainly situations where that
Speaker 2: can be a healthy thing.
Speaker 1: Because I don't let's the essential argument. Critics of this
Speaker 1: are making that, Hey, look at the post World War
Speaker 1: two right to now. You know, yes, there's certainly been
Speaker 1: pockets of up of you know, we've had a war here,
Speaker 1: war there, but we haven't had a global war. Right.
Speaker 1: Can you can you credit more open and for youer
Speaker 1: trade with that, I don't think so.
Speaker 2: I mean, most of that period you're referring to was
Speaker 2: the Cold War, where we didn't have open and free trade.
Speaker 2: Obviously we had two competing blocks, and there was a
Speaker 2: totally different set of security factors in particular that that
Speaker 2: sort of maintained that balance. Then we moved onto the
Speaker 2: post Cold War period where you know, I appreciate your
Speaker 2: sort of casual description of a war here and a
Speaker 2: war there.
Speaker 1: No, and I'm not trying to dismiss the smaller wars,
Speaker 1: but we haven't had a world war.
Speaker 2: Well, it's hard to it's hard to think of what
Speaker 2: a world war even would look like in a context
Speaker 2: where the US was so much more dominant than any
Speaker 2: other country. We had this period of hegemony and you know,
Speaker 2: kind of the unipolar era was was a very strange moment,
Speaker 2: and it's one that's that's we are moving on from
Speaker 2: as China rises into being a peer competitor. Now. I
Speaker 2: don't think that guarantees we have to have a war
Speaker 2: with China, right, we never really had a war with
Speaker 2: the Soviet Union. But I think you know, again as
Speaker 2: with the claim that like well, the economy is bigger
Speaker 2: so it must be because globalization is good. I think
Speaker 2: the idea that, like, well, we haven't had a world
Speaker 2: war since the nineteen forties, it must be because globalization
Speaker 2: is good is the sort of like comically over simple
Speaker 2: analysis that the exact same people making it.
Speaker 1: We must not be in the internet. You must not
Speaker 1: be in the internet, comically overly simplified arguments or what
Speaker 1: make the internet go for right?
Speaker 2: But this is my point, is that that it is
Speaker 2: the sort of capital v very serious people who are
Speaker 2: making this argument because it happens to prop up this
Speaker 2: ideological preference they had. If they had a different ideological preference,
Speaker 2: they would be laughing this argument out of the room too.
Speaker 1: Well, let me go with this because look, I think
Speaker 1: I think many Americans share the goal of yes, we
Speaker 1: want you know there. You know, I mean my dad
Speaker 1: grew up in Waterloo, Iowa, and you know Waterloo is
Speaker 1: I don't like it that one of their largest employers
Speaker 1: is a casino now right, It used to be in
Speaker 1: a meatpacking company. John Deere was not far away. John
Speaker 1: Deer probably makes as many tractors in China as they
Speaker 1: do in the United States these days. So I get that.
Speaker 1: And there's a there's I'd like to see that what's realistic?
Speaker 1: Because you talked about all the different things we could
Speaker 1: reindustrialize here, obviously we should prioritize what we plan to
Speaker 1: reindustrialize because we may not even have enough workers to
Speaker 1: bring everything back that maybe some people would like to
Speaker 1: see come back. So be realistic with me here, what's
Speaker 1: viable in reindustrializing in the United States and what probably isn't.
Speaker 2: It's a good question, and it's a place where I
Speaker 2: think ideally we actually do look more to the market.
Speaker 2: You know, this is one of the places where I
Speaker 2: think you still see a really interesting divergence between the
Speaker 2: kind of right of center focus on reindustrialization and the
Speaker 2: left of center focus, because there's obviously a lot of
Speaker 2: commonalities in some of the pushes on these fronts, but
Speaker 2: I think what you see from the left of center
Speaker 2: is much more a sense of, Okay, here's our list
Speaker 2: of the ten things we're going to reindustrialize, and here's
Speaker 2: kind of the program to do each of them.
Speaker 1: Right. Chips would fall into that. Right like that, Well,
Speaker 1: so right is right?
Speaker 2: This is the interesting point. Chips is sort of the
Speaker 2: one exception you've seen thus far where Republicans also, you know,
Speaker 2: is obviously not unanimous, but by partisan.
Speaker 1: It's a national I think there's a lot of national
Speaker 1: security woven into that, right, Yes, so it makes it
Speaker 1: it almost makes it easier to get the bipartisan support.
Speaker 1: That's right.
Speaker 2: There's both national security and there's an economic analysis where
Speaker 2: I don't think anybody doubts that chips are going to
Speaker 2: be very important to the next fifty years. And so
Speaker 2: I think that's what we want to see. Certainly, what
Speaker 2: I want to see is that kind of you know,
Speaker 2: it gets called industrial policy used in a targeted way
Speaker 2: for some things that we really know are important in
Speaker 2: a way that the market won't take into account. So
Speaker 2: chips is example. You now see the same thing with
Speaker 2: ship building. Conveniently enough ships to rhyme with chips. There's
Speaker 2: bipartis in legislation on that too, because again purely from
Speaker 2: a national security perspective, you do need to be able
Speaker 2: to build ships. And so I think we'll see some
Speaker 2: some targeted areas like that where.
Speaker 1: Basically the entire defense industrial complex arguably, you know, you know,
Speaker 1: we should always want that made everything made here as
Speaker 1: much as possible.
Speaker 2: Yes, And and an interesting corollary of that, we just
Speaker 2: did a big project on this, said American Compass, is
Speaker 2: that the idea that you can kind of just protect
Speaker 2: the defense industrial base but not the broader industrial base
Speaker 2: has has proven to be false.
Speaker 1: You don't think you can separate the two, and that
Speaker 1: that's a that might be a mistake because the left.
Speaker 1: What you're arguing here is defense is probably one of
Speaker 1: those areas whatever. But yes, let's do that, right, But
Speaker 1: you're saying you don't think you can disaggregate the defense
Speaker 1: industrial base from the from the commercial industrial base.
Speaker 2: Yeah, that's right. And ultimately, what we've seen is that
Speaker 2: when you try to, you end up with this set
Speaker 2: of companies that isn't being asked to actually compete in
Speaker 2: the market at all. They are only right and so
Speaker 2: the irony.
Speaker 1: Is, trust me, this is my beef with Boeing, right,
Speaker 1: you know what's you know, I think the reason why
Speaker 1: Boeing is producing has uneven products, right, Some products work well,
Speaker 1: some don't. The lack of competition, right. You know, when
Speaker 1: I was growing up, I think I'm a little bit
Speaker 1: older than you are. You know, we have three or
Speaker 1: four different plane manufacturers and they did have to compete
Speaker 1: for defense contracts and the Delta Airlines contract, right, yes,
Speaker 1: And now there's you know there's commercially, there's Boeing an airbus, okay,
Speaker 1: but on some of these defense things, and I think
Speaker 1: Boeing has been harmed by lack of competition, right, I
Speaker 1: think Boeing isn't as good because.
Speaker 2: Of Yes, totally agree. And so I think if if
Speaker 2: you if you buy into the Trump administration vision of
Speaker 2: where we're trying to go, which is we want to
Speaker 2: have an economic and security alliance. China is out. Countries
Speaker 2: that want to align with China are out, but market democracies,
Speaker 2: countries that would prefer to be with us to accept
Speaker 2: a commitment to balance trade, probably more security spending, except
Speaker 2: that they too are going to keep China out. That's
Speaker 2: a very big, healthy, robust market. And if we get
Speaker 2: everybody to agree in that context that we're going.
Speaker 1: Back to India specifically, is what makes India swing country.
Speaker 2: Here, by the way, that's right. And you know, both
Speaker 2: India and Japan are countries that especially strongly would like
Speaker 2: to not be in the Chinese sphere. And so I
Speaker 2: think that's actly right. If you know you have the
Speaker 2: North American core, you have Japan, Korea, India. I think
Speaker 2: you certainly have the Anglo sphere, United Kingdom, Australia, New Zealand,
Speaker 2: Europe you'd mentioned earlier. I think is a much more
Speaker 2: interesting case. We could do a whole separate discussion just
Speaker 2: about that. But if that is sort of your market
Speaker 2: and you have a commitment within that market to balance trade,
Speaker 2: at that point, I think you can mostly say, then
Speaker 2: go ahead, invest where you want to invest if there
Speaker 2: are things that are better made.
Speaker 1: So we may not re industrialize as that much here,
Speaker 1: but we may limit where companies do manufacture outside our
Speaker 1: sphere as long as they're manufacturing with in friendly territory essentially.
Speaker 2: Right, Well, you know, getting to balance trade would mean
Speaker 2: massive reindustrialization. You know, if we have a trillion dollar
Speaker 2: a year trade depsit now you're talking about it, trillion
Speaker 2: dollars a year more production to level that out.
Speaker 1: How long do you think it's going to take us
Speaker 1: to do that? I mean, is that a ten year
Speaker 1: project in your and that's realistic? Is ten years? Right?
Speaker 1: That's a that is a lot to ask the American consumer.
Speaker 2: It is a lot to ask. On the other hand,
Speaker 2: I would say ten years is not very long at all.
Speaker 1: I mean, keep in mind, to those of us that
Speaker 1: studied numbers, yes I agree with you, but the real
Speaker 1: world it's it's tough.
Speaker 2: I mean even keep in mind, ten years ago wasn't
Speaker 2: nineteen ninety five. Ten years ago was twenty fifteen. Right,
Speaker 2: if when Donald Trump had first come down the Golden Escalator,
Speaker 2: we were actually starting in on this project, we would
Speaker 2: already be at the end of the ten years and
Speaker 2: so I think.
Speaker 1: Well, some would argue TPP could have accelerated the isolation
Speaker 1: of China, but I don't want to start that debate.
Speaker 2: We'll do a whole other one on yours.
Speaker 1: I could do that that. I mean, I look at
Speaker 1: TPP as one of the great mistakes of what happens
Speaker 1: when populism hijacks both political parties. But you know, I'm
Speaker 1: I always saw TPP, not as a trade agreement, as
Speaker 1: a check on China, and I just think we blew it.
Speaker 2: I completely agree with that piece of the argument. I
Speaker 2: think the counter argument is that TPP would have sort
Speaker 2: of solidified the imbalance within the remaining block. That is,
Speaker 2: it would have entirely validated the approach of a Japan
Speaker 2: of a Korea to use trading agreements in a way
Speaker 2: that benefited their manufacturers at the expense of American producers.
Speaker 2: So again, last you said, very much more difficult conversation,
Speaker 2: I think, and.
Speaker 1: I'm well aware of time here. I've taken up a
Speaker 1: lot of it. Well says another forty five minutes. That's right.
Speaker 2: So just to wrap up maybe on to just on
Speaker 2: this point, you know, is ten years a long time, Yes,
Speaker 2: it's a long time. You know. The chips is a
Speaker 2: great example where we started back in twenty twenty with
Speaker 2: the idea of the legislation for what became chips and
Speaker 2: we are on track to actually, you know, we're just starting.
Speaker 2: Things are coming online now over a ten year window
Speaker 2: to really have rebuilt a chips industry in this country
Speaker 2: in a way that thus far consumers haven't been bothered
Speaker 2: by a at all.
Speaker 1: And so if you if you do things in a way,
Speaker 1: but it didn't end up punishing China the way we
Speaker 1: thought it would China. You know, it's you know what
Speaker 1: is it? Necessity is the mother of all innovation.
Speaker 2: Well, I think that's an important point actually, and it
Speaker 2: goes to the current conflict we have with China. Even
Speaker 2: just on these current tariffs, which isn't especially constructive, I
Speaker 2: would say on any side, which is that I don't
Speaker 2: think it's practical for the long term view to be that,
Speaker 2: you know, the US is going to pursue a policy
Speaker 2: that somehow you know, holds China down. China is going
Speaker 2: to develop and be successful in all sorts of respects.
Speaker 2: The US needs to focus on addressing its own problems
Speaker 2: in a lot of ways, I would say. And so,
Speaker 2: whether it is in chips, whether it's in some of
Speaker 2: these other areas, whether it's just an investment generally, if
Speaker 2: we can get back on a pathway to reindustrializing, and
Speaker 2: we can do it a way where the disruptions are manageable,
Speaker 2: and we can do it a way where we get
Speaker 2: to start seeing the benefits, I think that's I think
Speaker 2: that's a very popular project.
Speaker 1: Aar and I've really enjoyed this conversation. And I didn't
Speaker 1: even get to because I know you're also one of
Speaker 1: the folks that it's an advocate of of Whether you
Speaker 1: call it the baby bonus, childcare tax credit, you know,
Speaker 1: there's different names for it, but something to help families,
Speaker 1: to help young families. There's some fascinating policies that I think,
Speaker 1: you know, don't fit into the conventional left right argument
Speaker 1: that you come down on. And I just, frankly, I
Speaker 1: love having those conversations, and so I hope to have
Speaker 1: you back.
Speaker 2: I would love it. This was great, Thank you so much.
Speaker 1: All right, I hope you have a better understanding of
Speaker 1: the of what this tariff plan could have looked like.
Speaker 1: And we'll see if if you see a course correction
Speaker 1: or seem to think that we were in the middle
Speaker 1: of a course correction here and that perhaps not quite
Speaker 1: a do over, but perhaps the pullback. Now, let's see
Speaker 1: how all this goes. Does it give him an opportunity
Speaker 1: to do this in a more methodical way that maybe
Speaker 1: is slower in the implementation of the terrorists themselves, but
Speaker 1: actually brings business and brings the public along with I'm skeptical.
Speaker 1: One thing Donald Trump doesn't like to do is admit
Speaker 1: that he made a mistake. And he's been sort of
Speaker 1: playing whack a mole on this tariff business for some time.
Speaker 1: All Right, let me get you a few questions here,
Speaker 1: little ask Chuck, Ask Chuck. All right. This first question
Speaker 1: comes from Sarah and she writes, it feels like the
Speaker 1: guardrails of the executive branch have weakened, especially after the
Speaker 1: recent immunity ruling and various was it always this fragile? Also,
Speaker 1: what's your take on the rise of Resistance two point zero,
Speaker 1: whether it has real staying power? And then, on a
Speaker 1: lighter note, do you think Congress will ever address the
Speaker 1: chaos of the NCAA transfer portal? Love all of those questions. Look,
Speaker 1: you've heard me rail about the executive, the power of
Speaker 1: the executive branch. Ultimately, the courts are begging Congress to
Speaker 1: basically flex its muscles. I can't tell you if you
Speaker 1: go look at any John Roberts opinion, He in particular,
Speaker 1: he said, seems to reluctantly side with even though he's
Speaker 1: somebody that seems to always be in favor of giving
Speaker 1: more power to the executive or at least when in doubt,
Speaker 1: siding with the executive. He has been trying to remind
Speaker 1: Congress that if you know, they have a role here,
Speaker 1: if they choose to use it, if they choose to engage,
Speaker 1: And that's one of the questions I have. I'm a
Speaker 1: believer that everything is cyclical in American politics, and if
Speaker 1: you look in presidential elections. You know, we regularly pick
Speaker 1: a president who with the trait that we that you know,
Speaker 1: we pick a new president with a character trait that
Speaker 1: we think the last president was missing. Well, I think
Speaker 1: one of the other cycles we could go into after
Speaker 1: the you know, I think there's a lot of exhaustion
Speaker 1: from the from the from from giving so much power
Speaker 1: to the executive branch, that we may get a Congress
Speaker 1: that will finally, at some point, a bipartisan Congress that decides,
Speaker 1: you know what, let me go reread the Constitution and
Speaker 1: go look at Article one and strengthen Congress's role on everything.
Speaker 1: Especially with the way these tariffs have gone. It could
Speaker 1: be that tariffs is finally the straw that that sort
Speaker 1: of breaks the legislative back of Congress and finally gets
Speaker 1: members of Congress to sober up and take back control
Speaker 1: of the power that they already have. All they have
Speaker 1: to do is actually stop handing emergency powers over to
Speaker 1: the president. And see, you know, whenever they can't decide,
Speaker 1: it seemed they kick the can to the presidency. And
Speaker 1: this is, like I said, you can really this arguably
Speaker 1: began when all this trade authority was handed to the
Speaker 1: presidency in the early nineties both the Bush and Clinton.
Speaker 1: Then nine to eleven happens and more executive authority was
Speaker 1: handed to them by Congress, and then Democratic Congress gave
Speaker 1: it to Obama, Republican Congress gave more power to Trump,
Speaker 1: and we've seen it go over and over. This has
Speaker 1: been a now quarter century of this. At some point
Speaker 1: there will be a movement of congressional leaders in a
Speaker 1: bipartisan basis that I think shifts this back. As far
Speaker 1: as your other question about resistance two point zero, Look,
Speaker 1: I think we're going to see a thousand flowers balloon.
Speaker 1: I do think you're going to have some that's going
Speaker 1: to be extra resistancy, and you'll see the protest, and
Speaker 1: you'll probably see Bernie and AOC sticking to that world.
Speaker 1: Corey Booker, I think is certainly a stoutdblishing himself as
Speaker 1: more of a resistance Democrat. Ditto with Chris Murphy. But
Speaker 1: then you got your Gretchen wet Merger or Andy Basheer's,
Speaker 1: and then I got like Pete Bodagich, who I think
Speaker 1: believes his brand is not a resistance brand, that his
Speaker 1: brand is some way of a new kind of politics brand.
Speaker 1: Does the resistance get strong enough that it spooks those
Speaker 1: who are trying to be more unifiers from pursuing that message,
Speaker 1: or or is there an appetite even inside the Democratic
Speaker 1: Party for the type of nominee that is that is,
Speaker 1: you know, less antagonistic and a little bit more unifying.
Speaker 1: We'll see. As for the NCAA, Look, I think it's
Speaker 1: inevitable Congress is going to get involved. Universities get way
Speaker 1: too many too much federal funds for there not to
Speaker 1: be a for there not to be a technical reason
Speaker 1: for the federal government to insert itself. But a lot
Speaker 1: of members of Congress, you know, this college sports is
Speaker 1: parochial to them. You know, Mitch McConnell got very involved
Speaker 1: in getting Louisville into a major conference. For the longest
Speaker 1: time Louisville was not in a major conference. He tried
Speaker 1: really hard to force the Big twelve to take him,
Speaker 1: and eventually he seemed to get the ACC to do
Speaker 1: that so plenty. Mark Warner, when he was governor of Virginia,
Speaker 1: basically put a you know, hijacked the the Big East
Speaker 1: breakup where Miami, Boston College, and Syracuse We're going to
Speaker 1: go to the ACC. And he basically forced the University
Speaker 1: of Virginia to veto that move unless Virginia Tech were
Speaker 1: also brought aboard. So the point is it's good politics
Speaker 1: to protect your university from something, you know, from getting
Speaker 1: them sidelined, particularly in sports. So the point is it's
Speaker 1: inevitable the Congress is going to get involved into the
Speaker 1: NCAA mess. The question is when does that happen, not
Speaker 1: if it happened. Sarah, all right, I'm going to do
Speaker 1: one more question. I've gone long, but this was one
Speaker 1: about the media, comes from Jeff Polney says, does the
Speaker 1: media go too deep or far back into the backgrounds
Speaker 1: of political candidates and department nominees, thus causing quote normal
Speaker 1: people to avoid public service? Do we really need to
Speaker 1: know the high school nerdiness or that they drank in
Speaker 1: excess to excess in college if those are no longer
Speaker 1: issues with a person, Look, the answer, Jeff is I
Speaker 1: agree with you. You know, I do think one of
Speaker 1: the one of the things that I feel like has
Speaker 1: changed is that after you know, every we sort of overcorrect, right.
Speaker 1: So for the longest time, men in power who were
Speaker 1: taking advantage of women were just not getting punished, right,
Speaker 1: And so then we went and said no, enough of this, right,
Speaker 1: whether it's Harvey Weinstein, et cetera. Now it seems as
Speaker 1: if our culture has decided, all right, did we over
Speaker 1: cancel people? Did we cancel people too quickly? So you're
Speaker 1: starting to see a pull back there. We're probably going
Speaker 1: to see an overcorrection now it's too lenient, We'll probably
Speaker 1: you know, I don't think the public wanted, you know,
Speaker 1: sort of the the the culture of Pete hegseeth either
Speaker 1: and how and how he thinks about women in combat
Speaker 1: and women and in leadership roles. But I think the
Speaker 1: fair point that you have is that, look, when you
Speaker 1: have a democracy, it's of the people, and all humans
Speaker 1: are flawed, I know plenty. And I always joke one
Speaker 1: of the reasons why I'd never want to run for
Speaker 1: office is that I don't I don't want that kind
Speaker 1: of scrutiny, and I don't want to do that to
Speaker 1: my family. It's not fair to my family to get
Speaker 1: that kind of scrutiny. And that's a bummer, right that
Speaker 1: That's what you have to think about. You know, when
Speaker 1: you run for office, you're it's just not you who
Speaker 1: you're putting out there. Your kids could become targets. Your
Speaker 1: parents can become targets if they're still alive, aunts and uncles,
Speaker 1: colleagues at your work. So I would say that social
Speaker 1: media has certainly weaponized personal biography in a way that
Speaker 1: is ugly, and that is likely why we have the
Speaker 1: people who are willing to run for Congress right now.
Speaker 1: Right you sort of get what what the culture allows.
Speaker 1: And so if you if the quote normies don't want that,
Speaker 1: and the non normies are like, I don't care, let's
Speaker 1: you know, I'm gonna I'm gonna be who I am,
Speaker 1: and you know, whether that's a Marjorie Taylor Green or
Speaker 1: or somebody else that you have as your avatar for
Speaker 1: that for that kind of candidate. Yeah, you know, I
Speaker 1: I do think that. But here's the problem with the
Speaker 1: quote unquote the media. I think I think responsible journalists
Speaker 1: do have lines they won't cross. The problem is, you know,
Speaker 1: with oppo research these days, if somebody wants to politically
Speaker 1: try to kill a nominee using using you know, some
Speaker 1: ugly stuff in their background or with their family, even
Speaker 1: if a mainstream journalist says I'm not I'm not I'm
Speaker 1: not going to troll in that garbage. There's always some
Speaker 1: influencer who's willing to do it. And now that we
Speaker 1: have such you know that there is there is such
Speaker 1: a culture that rewards this. You know, it's gonna it's
Speaker 1: it's gonna be up to those in power to decide
Speaker 1: that they're not going to allow allow that kind of
Speaker 1: politics to win or the voters to do that. And
Speaker 1: you know it's you know, I do believe these things.
Speaker 1: Over time, the culture will reject it and will decide,
Speaker 1: you know, we don't care anymore. There was a time
Speaker 1: where the public cared if public officials smoked pot. Then
Speaker 1: Bill Clinton said I, you know, I did it, but
Speaker 1: I didn't Inhale, and they were like, okay. There was
Speaker 1: a time Gary Hart was sort of forced out of
Speaker 1: politics because of because he had an affair. Bill Clinton
Speaker 1: got caught having an affair and people rallied around his defense.
Speaker 1: And now you've got Donald Trump where we've decided that
Speaker 1: personal character is even less of a of a of
Speaker 1: a of a criteria to be president. So I do
Speaker 1: think in some ways culture dictates this more than anything.
Speaker 1: So you know, I wonder if now that we've gotten
Speaker 1: over this sort of over canceling under canceling all of
Speaker 1: this business. Do we see a surge of normal people
Speaker 1: suddenly come into the political system running for office that's
Speaker 1: that is neither sort of outliers in character, and maybe
Speaker 1: they're a little more comfortable saying, hey, that's none of
Speaker 1: your business, or leave my family alone. And for the
Speaker 1: most part, people will do that. So, like I said,
Speaker 1: I think this stuff cyclical. I'd like to think we're
Speaker 1: going to get back to some sort of equilibrium that
Speaker 1: maybe we realize, look, is the person qualified and do
Speaker 1: they have the character and temperament to do the job.
Speaker 1: Ultimately those should be you know, character and temper men
Speaker 1: are a big deal to me, and in fact, many
Speaker 1: times I vote as much on character and temperament as
Speaker 1: I do on substance or ideology, because you know, give
Speaker 1: me somebody with high character, even if I disagree with them,
Speaker 1: and ultimately I know I'm going to be okay. Give
Speaker 1: me somebody with low character who I may think I
Speaker 1: agree with all the time, and that makes me nervous
Speaker 1: because what are they willing to do in order to
Speaker 1: keep power or enact power? So ultimately, I'm a person
Speaker 1: who believes character and temperament should be arguably the number
Speaker 1: one criteria people take people use to decide who should
Speaker 1: be president, but that is not the majority opinion these days.
Speaker 1: All right, I'm going to end things there. I hope
Speaker 1: you enjoyed this episode. Good news is I'll have more
Speaker 1: common later this week, including a couple of people who
Speaker 1: have run for president before on both sides of the eye.
Speaker 1: With that tease out of the way, i'll see a
Speaker 1: sin until we upload again.
Speaker 2: Hey,