WEBVTT - Kopi Time E146 - Trade War with Deborah Elms 0:00:06.000 --> 0:00:09.340 Hello, this is COI Time, a podcast series on markets 0:00:09.340 --> 0:00:12.579 and economies from DBS Group Research. I'm Tammu Wei, chief economist, 0:00:12.728 --> 0:00:17.659 welcoming you to our 146th episode. Today, it's all about 0:00:17.659 --> 0:00:21.389 trade policy. We welcome back to the show Dr. Deborah Elms, 0:00:21.659 --> 0:00:24.649 head of trade policy at the Heinrich Foundation in Singapore. 0:00:25.020 --> 0:00:27.500 Prior to joining the Foundation, Deborah was the executive director 0:00:27.500 --> 0:00:29.340 and founder of the Asian Trade Center. 0:00:29.819 --> 0:00:32.490 She was also president of the Asia Business Trade Association 0:00:32.490 --> 0:00:36.418 and the board of director of the Asian Trade Center Foundation. 0:00:36.779 --> 0:00:39.089 Deborah Elms, great to have you back on COI time. 0:00:39.580 --> 0:00:42.259 Thank you. And can I just say what an amazing 0:00:42.259 --> 0:00:45.290 achievement it is to have 146 episodes under your belt. 0:00:45.729 --> 0:00:49.458 Uh, those 146 episodes stand on the back of illuminas 0:00:49.459 --> 0:00:53.240 like you. So thanks for your support, Deborah. Thank you. Uh, 0:00:53.380 --> 0:00:56.939 let's start with an assessment of US trade policy of 0:00:56.939 --> 0:00:58.130 the last 8 years. 0:00:59.060 --> 0:01:02.380 Did the narrative shift from Trump to Biden, or has 0:01:02.380 --> 0:01:06.649 it really been a single bipartisan threat of rising protectionism? 0:01:07.910 --> 0:01:12.559 I think there were signs of change happening even before 0:01:12.559 --> 0:01:13.330 Trump won. 0:01:13.959 --> 0:01:16.399 Uh, that came into office. And in fact, if you 0:01:16.400 --> 0:01:22.779 start looking back through 2010, 2011, Tea Party efforts in 0:01:22.779 --> 0:01:26.699 the US under the Republican Party, you still see, you, 0:01:26.760 --> 0:01:29.639 you begin to see really strong strains of what is 0:01:29.639 --> 0:01:33.639 now sort of called Trumpism, but they started back even 0:01:33.639 --> 0:01:36.839 before he, he made it into office. However, he has 0:01:36.839 --> 0:01:39.709 changed the narrative. He changed the narrative in his first term. 0:01:40.459 --> 0:01:46.959 From an acceptance of open trade, open markets, globalization more broadly, 0:01:47.120 --> 0:01:51.279 the US as part of an important network of all 0:01:51.279 --> 0:01:53.309 of alliances, um, 0:01:54.739 --> 0:01:59.699 Both for security and economic reasons, for raising living standards, 0:01:59.790 --> 0:02:03.410 reducing poverty, all kinds of things. Trump changed that narrative, 0:02:03.540 --> 0:02:05.330 and he changed it in a way that I think 0:02:05.330 --> 0:02:11.860 is durable and probably lasting, uh, particularly around the difficulties 0:02:11.860 --> 0:02:12.979 of keeping trade open. 0:02:13.369 --> 0:02:16.660 And so I think that narrative shift, which again was 0:02:16.660 --> 0:02:19.899 building up over time, really reached a tipping point, if 0:02:19.899 --> 0:02:23.570 you will, under Trump one, and it maintained um mostly 0:02:23.570 --> 0:02:26.720 intact through Biden and of course with Trump and again, 0:02:26.979 --> 0:02:31.490 we're pushing the boundary of even further in this new protectionist, 0:02:31.580 --> 0:02:35.940 isolationist America first law of the jungle kind of direction. 0:02:37.339 --> 0:02:40.089 I mean, I remember even back in the 80s and 90s, 0:02:40.130 --> 0:02:44.369 you know, Buy American movement was there with trucks that, 0:02:44.380 --> 0:02:46.979 you know, you bought Ford and you didn't buy Toyota. 0:02:47.220 --> 0:02:49.009 But then Toyota started getting made in the US, and 0:02:49.008 --> 0:02:51.850 I don't think people think of a Toyota truck as 0:02:51.850 --> 0:02:55.600 a Japanese truck per se, but I saw salvos of that, 0:02:55.610 --> 0:02:58.970 and of course I'm sure you know, and I always 0:02:58.970 --> 0:03:01.649 like to point it out to people that even the 0:03:01.649 --> 0:03:04.770 young Trump back in 1987 took a full page ad 0:03:04.770 --> 0:03:07.330 criticizing Reagan for being too nice to the Japanese on 0:03:07.330 --> 0:03:08.050 the trade front. 0:03:09.050 --> 0:03:11.550 Yeah, I remember those days quite vividly because I was 0:03:11.550 --> 0:03:15.550 at the time, obviously much younger and, you know, and 0:03:15.550 --> 0:03:19.940 a student going through the process of studying trade, and 0:03:20.190 --> 0:03:23.070 from my perspective, I also looked at US Japan disputes 0:03:23.070 --> 0:03:23.669 at the time. 0:03:24.160 --> 0:03:28.479 If you were to flash forward, many of Trump's specific 0:03:28.479 --> 0:03:32.320 complaints about China look exactly like Trump's specific complaints about 0:03:32.320 --> 0:03:36.520 Japan in the 80s and 90s. And I, I always 0:03:36.520 --> 0:03:39.360 sort of laughed in the first Trump administration, my dissertation 0:03:39.360 --> 0:03:44.169 was on this tool called Section 301 on unfair trade. 0:03:44.500 --> 0:03:46.750 And when I finished my dissertation, I thought, well, you know, 0:03:46.830 --> 0:03:48.309 I mean, it was an interesting thing to do, and 0:03:48.309 --> 0:03:50.309 I'm glad that I did it, but ultimately this is 0:03:50.309 --> 0:03:53.350 a pointless piece of research because we're never going to 0:03:53.350 --> 0:03:55.928 see Section 301 again. It's been retired, it's not gonna 0:03:55.929 --> 0:03:58.350 be in use. The United States has declared it's not 0:03:58.350 --> 0:04:00.630 using it, so really, why does it, you know, this 0:04:00.630 --> 0:04:02.949 was a lot of effort for not very much purpose. 0:04:02.990 --> 0:04:05.949 And then when Trump came back, came into power and 0:04:05.949 --> 0:04:07.869 suddenly we were using Section 301. 0:04:08.130 --> 0:04:11.300 I thought, holy cow, I had to dust off my dissertation, 0:04:11.589 --> 0:04:13.949 read up again on what the statute was, why did 0:04:13.949 --> 0:04:17.549 it work, review the whole set of cases. And I thought, 0:04:18.070 --> 0:04:20.549 who would have imagined at the time that I was 0:04:20.549 --> 0:04:23.190 writing this, that I would have to come back to 0:04:23.190 --> 0:04:25.149 this again as a live issue? 0:04:26.359 --> 0:04:29.869 There were you and I were at an event on 0:04:29.869 --> 0:04:31.750 US inauguration just a few days ago, and I remember 0:04:31.750 --> 0:04:35.070 you saying that we should stop saying unprecedented because just 0:04:35.070 --> 0:04:38.829 about everything that is happening is sort of so out 0:04:38.829 --> 0:04:43.709 of the realms of ordinary that it is by definition 0:04:43.709 --> 0:04:45.309 all of these things are a first and we just 0:04:45.309 --> 0:04:48.049 have to get used to this unprecedented stuff happening over 0:04:48.049 --> 0:04:48.669 and over again. 0:04:49.019 --> 0:04:53.190 But let me ask you for a report card. We've had, 0:04:53.480 --> 0:04:56.630 to your point, longer than 8 years of rising protectionism, 0:04:56.720 --> 0:04:58.958 but let's just take the last 8 years. Trump really 0:04:58.959 --> 0:05:02.719 sort of, you know, re-entered the discussion around protectionism. What 0:05:02.720 --> 0:05:05.730 has been the impact of these measures to restrict trade 0:05:05.730 --> 0:05:09.640 and investment? Has the US gained jobs and investment? Has 0:05:09.640 --> 0:05:11.200 China been hurt materially? 0:05:13.100 --> 0:05:15.619 Uh, I think if you say, what are the broad 0:05:15.619 --> 0:05:17.910 macro trends, and you would know this better than anyone, 0:05:17.970 --> 0:05:21.290 the broad macro trends look relatively unchanged. I mean, trade 0:05:21.290 --> 0:05:24.809 is at a global trade is at a higher level 0:05:24.809 --> 0:05:27.010 than it was pre-Trump. 0:05:28.079 --> 0:05:30.160 COVID, uh, the challenge we have in a little bit, 0:05:30.200 --> 0:05:32.799 a little bit on the data is, you know, COVID 0:05:32.799 --> 0:05:35.950 made a big difference on trade flows and trade patterns. So, 0:05:36.119 --> 0:05:39.890 COVID plus Trump creates a sort of confusion over what the, 0:05:39.920 --> 0:05:43.828 the information actually shows, but global trade remains intact and robust. 0:05:44.238 --> 0:05:47.290 But what has changed is the patterns of global trade, 0:05:47.350 --> 0:05:50.190 and it hasn't changed completely, but you can see, for example, 0:05:50.600 --> 0:05:54.869 That in the wake of Trump's first term, direct trade 0:05:54.869 --> 0:05:57.519 between China and the United States, especially as shown by 0:05:57.519 --> 0:06:00.799 trade in goods, has fallen off rather dramatically. But at 0:06:00.799 --> 0:06:04.760 the same time, trade in goods from other places into 0:06:04.760 --> 0:06:08.919 the United States has gone up dramatically, and part of 0:06:08.920 --> 0:06:11.549 that is the reshuffling of supply chains to take 0:06:11.920 --> 0:06:16.440 Into account restrictions on trade with the US. Part of 0:06:16.440 --> 0:06:21.029 it is markets and firms that are finding new opportunities. 0:06:21.119 --> 0:06:23.600 You know, absent to crisis, sometimes it's hard for a 0:06:23.600 --> 0:06:26.440 firm to say, this is the moment when I'm gonna 0:06:26.440 --> 0:06:28.359 spend a lot of money and a lot of resources, 0:06:28.480 --> 0:06:31.678 time and effort on new market. 0:06:32.720 --> 0:06:36.160 Exploration, developing my new markets, but in a crisis, then 0:06:36.160 --> 0:06:39.380 you suddenly can say, actually, this is the moment when 0:06:39.380 --> 0:06:42.469 we have to make that investment and look for alternative 0:06:42.880 --> 0:06:46.959 final markets for our products, new suppliers, new distributors, etc. 0:06:47.160 --> 0:06:49.920 and I think that's been happening as well over the 0:06:49.920 --> 0:06:50.750 last 8 years. 0:06:52.570 --> 0:06:56.570 Why was it not possible for the Biden administration to 0:06:56.570 --> 0:07:00.289 make a case for rolling back Trump era tariffs, even 0:07:00.290 --> 0:07:03.170 though inflation was such a big issue in 201, 202? 0:07:04.820 --> 0:07:07.660 Well, that's gonna be one of the many subjects for 0:07:07.660 --> 0:07:12.019 the next PhD dissertation. It's why is it that the 0:07:12.019 --> 0:07:17.649 Democrats have and Biden himself have been so spectacularly unsuccessful 0:07:17.980 --> 0:07:23.220 at explaining why trade and economic openness matters to average Americans. We, 0:07:23.299 --> 0:07:27.790 we just, we have done a terrible job of being pro-trade. 0:07:28.540 --> 0:07:31.779 In general, anyone who's pro-trade done a terrible job of 0:07:31.779 --> 0:07:34.410 explaining why this matters, and it's not just in the US. 0:07:34.660 --> 0:07:36.779 I mean, there is a quote that has, will stick 0:07:36.779 --> 0:07:39.660 with me till I die, that came from the Brexit 0:07:39.660 --> 0:07:42.779 period in which uh uh right after the Brexit vote 0:07:42.779 --> 0:07:45.700 for the UK to leave the European Union, they interviewed 0:07:45.700 --> 0:07:46.010 as 0:07:46.054 --> 0:07:51.125 A worker at a Japanese automaker in the UK that 0:07:51.125 --> 0:07:53.355 sells almost or at least it did at the time, 0:07:53.404 --> 0:07:57.795 sold almost all of their products directly into the European Union. 0:07:57.885 --> 0:08:01.244 And this gentleman, when asked about Brexit, said, What is 0:08:01.244 --> 0:08:03.605 trade to me? I don't own any stocks. 0:08:04.529 --> 0:08:07.089 And I thought, wow, we have lost the plot. When 0:08:07.089 --> 0:08:10.049 a guy who works for a Japanese company in the 0:08:10.049 --> 0:08:13.130 UK that exports all of the products does not see 0:08:13.130 --> 0:08:16.049 that he is a vital part of global trade. And 0:08:16.049 --> 0:08:19.328 so I think that experience is replicated over and over 0:08:19.329 --> 0:08:22.380 and over again, where people experience trade in every hour 0:08:22.380 --> 0:08:24.570 of their day, but they don't know that. They don't 0:08:24.570 --> 0:08:27.230 recognize it. And so that makes it easy for them 0:08:27.230 --> 0:08:29.959 to to to listen to someone who says, I will 0:08:29.959 --> 0:08:33.400 protect your back, I will save you from trade evil. 0:08:33.849 --> 0:08:36.589 And they say fantastic. And then when you say, but 0:08:36.590 --> 0:08:38.390 let's think about what you do and where you do 0:08:38.390 --> 0:08:40.190 it and why you do it, and actually, you know what, 0:08:40.270 --> 0:08:43.189 you need trade, both for your own personal life but 0:08:43.190 --> 0:08:46.750 also for your professional life. Your job depends on trade often. 0:08:47.669 --> 0:08:49.809 That's a hard lesson for people to get. 0:08:51.239 --> 0:08:52.950 Yeah, very much so. I've got to say, I mean, 0:08:53.099 --> 0:08:56.909 I was disappointed, but lately, Deborah, I've been sort of 0:08:56.909 --> 0:09:01.349 reading about the late 1890s when McKinley was imposing all 0:09:01.349 --> 0:09:03.859 those tariffs. I mean, there was this whole period between 0:09:03.859 --> 0:09:09.189 1892 and 1896 when the Democrats ran against tariffs, wanted 0:09:09.190 --> 0:09:12.109 to roll them back, but failed despite having the House 0:09:12.109 --> 0:09:15.218 and the Senate and grow Cleveland as the president because 0:09:15.219 --> 0:09:16.309 the regulatory. 0:09:17.049 --> 0:09:20.229 Lobbying was so much that whoever was getting protection under 0:09:20.229 --> 0:09:23.598 tariff basically said, All right, you may have run against tariff, 0:09:23.630 --> 0:09:27.630 but not my industry, keep my industry under protection. I'm 0:09:27.630 --> 0:09:31.280 not entirely aware if there was substantial lobbying done by 0:09:31.280 --> 0:09:35.989 American companies um in the Biden administration days to prevent 0:09:35.989 --> 0:09:38.909 Trump era tariffs from being rolled back, but are you 0:09:38.909 --> 0:09:39.710 aware of any such thing? 0:09:40.419 --> 0:09:43.039 Definitely. I mean, this is the problem with tariffs, is 0:09:43.039 --> 0:09:46.159 that it's very concentrated, right? So if you receive a tariff, 0:09:46.460 --> 0:09:49.449 in other words, you receive the protection behind the tariff wall, 0:09:49.780 --> 0:09:51.929 you're very aware of it and you're very delighted by 0:09:51.929 --> 0:09:53.979 that because it means that the competition is much less 0:09:53.979 --> 0:09:57.130 for you. You can charge whatever prices you want within reason, 0:09:57.140 --> 0:09:59.580 of course, but you, you, you have flexibility that you 0:09:59.580 --> 0:10:02.539 wouldn't have if you weren't sheltered behind this tariff wall. 0:10:03.080 --> 0:10:06.409 And so firms fight for that. And, and the most 0:10:06.409 --> 0:10:08.679 classic example, there are many in the US, but one 0:10:08.679 --> 0:10:11.570 classic example in the US is the steel sector. And 0:10:11.570 --> 0:10:14.289 if you look at who pushed hard to keep steel 0:10:14.289 --> 0:10:17.809 and aluminum tariffs through Trump, through Biden, and now into 0:10:17.809 --> 0:10:20.770 Trump too, it's steel and aluminum. And in fact, steel 0:10:20.770 --> 0:10:23.169 and aluminum tariffs, not only are they back on the 0:10:23.169 --> 0:10:26.169 agenda for Trump too, but there is an effort to 0:10:26.169 --> 0:10:27.209 try to raise them. 0:10:27.609 --> 0:10:32.119 Potentially, or to crack down on any kind of of 0:10:32.450 --> 0:10:36.489 assumed subversion of steel and aluminum to ensure that Buy 0:10:36.489 --> 0:10:39.729 American is only for American steel and aluminum, etc. etc. 0:10:40.460 --> 0:10:43.950 And when you do the research, uh, on how much 0:10:43.950 --> 0:10:47.589 does it cost per job saved to save these jobs 0:10:47.590 --> 0:10:49.510 and steel and aluminum, the last time that I saw 0:10:49.510 --> 0:10:54.510 the numbers come through, it was $300 850,000 dollars per 0:10:54.510 --> 0:10:58.590 job saved to keep steel working in the United States. 0:10:58.880 --> 0:11:00.789 So you say, wow, that's an awful lot of money 0:11:00.789 --> 0:11:03.829 that is going to protect uh not very many jobs. 0:11:04.409 --> 0:11:07.030 And it's likely to get even more expensive as you 0:11:07.030 --> 0:11:09.739 go forward in time and you continue to keep this protection. 0:11:09.830 --> 0:11:12.020 But you can imagine just to sort of wrap this up, 0:11:12.270 --> 0:11:16.829 if you're receiving $850,000 per job saved, you will fight 0:11:16.830 --> 0:11:20.309 hard to maintain that protection, because as soon as that 0:11:20.309 --> 0:11:21.000 protection goes away. 0:11:21.724 --> 0:11:25.075 You're then exposed to competitive forces that you may not 0:11:25.075 --> 0:11:29.684 be prepared for. And so the fight is brutal in 0:11:29.684 --> 0:11:34.844 Washington over reducing any kind of existing tariff preferences, even 0:11:34.844 --> 0:11:37.723 in sectors where the United States, for example, doesn't trade. 0:11:38.440 --> 0:11:41.020 It's really hard to get rid of a tariff once 0:11:41.020 --> 0:11:41.848 it's in place. 0:11:42.500 --> 0:11:45.459 Yeah, absolutely. And Deborah, on the issue of jobs, A, 0:11:45.539 --> 0:11:48.210 it is expensive to keep the jobs, but B, 0:11:48.869 --> 0:11:52.789 The US steel sector is not a job intensive industry anymore. 0:11:53.380 --> 0:11:56.780 The employment in the steel industry is like 75% less 0:11:56.780 --> 0:11:59.358 than it was 40 years ago. Production is more or 0:11:59.359 --> 0:12:02.659 less the same, so it has become immensely profitable. You 0:12:02.659 --> 0:12:05.340 could argue that they can actually produce more steel with 0:12:05.340 --> 0:12:09.340 less people and therefore it's more productive. But any favor 0:12:09.340 --> 0:12:11.419 to that industry is basically going to the owner of 0:12:11.419 --> 0:12:14.979 the capital, not necessarily to hundreds of thousands of workers 0:12:14.979 --> 0:12:16.940 because there aren't hundreds of thousands of workers working in 0:12:16.940 --> 0:12:18.020 the steel industry anymore. 0:12:18.820 --> 0:12:23.309 It's crazy actually how upside down policy, particularly from the 0:12:23.309 --> 0:12:27.309 United States, is to protect a relatively small number of 0:12:27.309 --> 0:12:31.229 jobs in manufactured goods, while ignoring, and I think for 0:12:31.229 --> 0:12:34.468 me this is the key second part, while ignoring the 0:12:34.469 --> 0:12:37.270 enormous number of jobs in the United States and most 0:12:37.270 --> 0:12:39.380 developed economies in the services sector. 0:12:39.809 --> 0:12:43.849 So Trump especially, more than anyone I can think of, 0:12:44.260 --> 0:12:48.530 is so fixated on trade and manufactured goods that he 0:12:48.530 --> 0:12:52.619 does not ever talk about trade and services. That's especially 0:12:52.619 --> 0:12:55.530 weird to me because if you think about Trump's own background, 0:12:55.700 --> 0:13:00.250 he is 100% services. His whole background, real estate, travel, tourism, 0:13:00.380 --> 0:13:04.539 golf courses, food and beverage, social clubs, whatever it is, 0:13:04.580 --> 0:13:07.669 those are all services sector jobs, services sector. 0:13:08.140 --> 0:13:13.010 Um, um, positions, and yet he has no interest in services, 0:13:13.020 --> 0:13:16.179 which is most of the jobs and most of the 0:13:16.179 --> 0:13:20.099 economic growth and, and the future for most developed world 0:13:20.099 --> 0:13:22.330 economies is in services. 0:13:23.700 --> 0:13:26.760 Deborah, I just want to add one story on the 0:13:26.760 --> 0:13:30.440 washing machine element because that was one area where we 0:13:30.440 --> 0:13:33.059 saw clear evidence of prices going up after the tariffs 0:13:33.059 --> 0:13:36.159 were imposed. I think the counter from some of the 0:13:36.159 --> 0:13:39.159 people in the Trump camp has been it's nonetheless forced 0:13:39.159 --> 0:13:41.000 LG and others to move some plants. 0:13:41.054 --> 0:13:43.405 To the US and created a few 1000 jobs. But 0:13:43.405 --> 0:13:46.284 I think that is one example where we actually have 0:13:46.284 --> 0:13:48.715 good data on what happens when you put up tariff 0:13:48.715 --> 0:13:51.565 and what what happens when you remove the tariff because 0:13:51.565 --> 0:13:55.284 just I think it was in 2022 or 2023 when 0:13:55.284 --> 0:13:59.244 the Biden administration allowed the tariffs to go down, washing 0:13:59.244 --> 0:14:02.054 machine prices fell for the first time since the tariffs 0:14:02.054 --> 0:14:05.085 were imposed. So this is one tiny example where we 0:14:05.085 --> 0:14:08.215 can see there is a link between tariffs and inflation, 0:14:08.224 --> 0:14:09.924 pretty quick and clear. 0:14:10.229 --> 0:14:13.809 But again, I'm sort of vexed why it was not 0:14:13.809 --> 0:14:17.489 something that was embraced broadly by the Biden administration. 0:14:18.609 --> 0:14:20.940 I can't, I can't really help you there, but I, 0:14:21.059 --> 0:14:23.890 I would say again, like who fought against washing machine 0:14:23.890 --> 0:14:28.260 tariff removal, washing machine companies and companies in the steel 0:14:28.260 --> 0:14:34.409 sector that supplied steel to domestic, potentially domestic washing machine manufacturers. 0:14:34.419 --> 0:14:39.380 And so you end up with protectionist industries supporting other 0:14:39.380 --> 0:14:43.020 protectionist industries in a sort of unholy alliance, I would argue. 0:14:43.489 --> 0:14:48.000 Of of restrictions for the purpose of maintaining those jobs, 0:14:48.010 --> 0:14:51.919 and there is a clear sense from especially the Trump administration, 0:14:52.049 --> 0:14:54.549 but also potentially from the Biden administration with their worker 0:14:54.549 --> 0:15:00.140 centered trade policy, that there is something uniquely valuable about 0:15:00.140 --> 0:15:01.450 a manufacturing job. 0:15:02.830 --> 0:15:06.909 Which is worth supporting. And so I think from the 0:15:06.909 --> 0:15:10.109 Biden side at least, they would say, even if it 0:15:10.109 --> 0:15:12.030 costs us money, even if we have to pay more 0:15:12.030 --> 0:15:16.190 for washing machines, it's worth it because it's important to 0:15:16.190 --> 0:15:19.390 keep manufacturing jobs in the United States and to keep 0:15:19.390 --> 0:15:25.030 those opportunities available for Americans who want to be in manufacturing. 0:15:25.530 --> 0:15:31.179 And so I think that's the, the, the slightly unusual 0:15:31.179 --> 0:15:34.380 orientation that the Biden team had, but the Trump team 0:15:34.380 --> 0:15:36.380 has it as well. And if you look at many 0:15:36.380 --> 0:15:39.500 of the statements across different people in the Trump administration, 0:15:39.580 --> 0:15:43.059 it's quite clear that they see a manufacturing job as 0:15:43.059 --> 0:15:47.549 more valuable than an alternative job, whether you're, I don't know. 0:15:48.109 --> 0:15:51.710 Doing education or you're, you know, in finance or whatever 0:15:51.710 --> 0:15:54.390 it is, you are not as valuable as a as 0:15:54.390 --> 0:15:57.830 an source of employment as a manufactured job. 0:15:58.510 --> 0:16:00.900 Yeah, it's odd because just like Trump, most of those 0:16:00.900 --> 0:16:04.260 people also are very much from the services sector, lawyers 0:16:04.260 --> 0:16:06.619 and techies, but somehow they're all in love with blue 0:16:06.619 --> 0:16:07.219 collar jobs 0:16:07.219 --> 0:16:07.460 in love 0:16:07.460 --> 0:16:09.969 with manufacturing. And if you say to them, do you 0:16:09.969 --> 0:16:13.130 want your son or daughter to be making washing machines, 0:16:13.140 --> 0:16:14.099 to be physically. 0:16:14.224 --> 0:16:17.775 The assembly line, making washing machines, they would say, No, 0:16:17.934 --> 0:16:20.284 I sent my kid to Harvard or Yale or something. 0:16:20.375 --> 0:16:22.455 I don't want my kid to be the one who's 0:16:22.455 --> 0:16:26.775 putting together the, the washing drum with the whatever wiring 0:16:26.775 --> 0:16:28.734 harness or whatever goes into, I don't even know what 0:16:28.734 --> 0:16:31.695 goes into a washing machine. Um, they would say no. 0:16:32.030 --> 0:16:34.700 You know, so it's, it's rare. I mean, I, I, 0:16:34.710 --> 0:16:37.669 my son is in manufacturing, and I will tell you 0:16:37.669 --> 0:16:41.989 that especially among my peers, that's very unusual to have 0:16:41.989 --> 0:16:44.789 a child that goes on and ends up in in 0:16:44.789 --> 0:16:46.700 manufacturing is very unusual. 0:16:47.260 --> 0:16:49.739 Um, and we could talk about whether that's a good 0:16:49.739 --> 0:16:52.099 thing or a bad thing. I don't think I'm just 0:16:52.099 --> 0:16:55.299 to be clear, I'm perfectly happy with manufacturing jobs. I'm 0:16:55.299 --> 0:16:58.099 not suggesting that they're horrible or they're all horrible or 0:16:58.099 --> 0:17:00.099 we shouldn't have them. I'm just saying that if you 0:17:00.099 --> 0:17:01.940 look at the structure of the US economy and you 0:17:01.940 --> 0:17:04.420 look at where most of the jobs are, it's not 0:17:04.420 --> 0:17:05.379 in manufacturing. 0:17:05.709 --> 0:17:08.879 And it's likely to be less in manufacturing the future 0:17:08.880 --> 0:17:11.530 for the reasons that you just indicated, as you move 0:17:11.530 --> 0:17:14.829 towards more automation in plants, you have fewer people who 0:17:14.829 --> 0:17:18.359 are on the assembly line, making the washing machines. You 0:17:18.359 --> 0:17:21.030 might have more people who are fixing the assembly line. 0:17:21.609 --> 0:17:23.838 My, my son does that. My son is in maintenance 0:17:23.838 --> 0:17:27.078 at the, at the Tesla plant in, in San Francisco. 0:17:27.288 --> 0:17:30.288 So he's working very hard on everything from the robots 0:17:30.288 --> 0:17:33.588 themselves to the assembly line production to make sure that 0:17:33.588 --> 0:17:37.609 it still works. But they're not, he's not putting the 0:17:37.609 --> 0:17:40.259 door on the car. The robot puts the door on 0:17:40.259 --> 0:17:41.578 the car, you know, and, and 0:17:41.625 --> 0:17:45.244 So there's jobs in this space, but they're either fixing 0:17:45.244 --> 0:17:47.775 the robot, putting the door on the car, or they're 0:17:47.775 --> 0:17:51.375 programming the robot, you know, or they're doing very simple 0:17:51.375 --> 0:17:53.785 things like, you know, bringing the steel to the beginning 0:17:53.785 --> 0:17:55.613 of the assembly line to make sure that it can 0:17:55.614 --> 0:17:58.285 then be stamped out and put into the vehicle. So that, 0:17:58.334 --> 0:18:00.613 I think the kind of jobs that are available in 0:18:00.614 --> 0:18:01.775 manufacturing are shifting. 0:18:02.729 --> 0:18:05.660 Absolutely. Deborah, I don't know if you've watched this documentary 0:18:05.660 --> 0:18:08.729 called An American Factory. It was on Netflix 4 or 0:18:08.729 --> 0:18:12.109 5 years ago. It is about a Chinese glass company 0:18:12.109 --> 0:18:16.020 opening up a plant in Dearborn, Michigan, and you see 0:18:16.020 --> 0:18:20.219 there that the Chinese engineers and technicians and foremen bringing 0:18:20.219 --> 0:18:24.930 their work practices to an assembly line manufacturing plant in 0:18:24.930 --> 0:18:29.459 the US and it is backbreaking work, although it is 0:18:29.459 --> 0:18:30.500 a very automated plant. 0:18:30.604 --> 0:18:32.395 And just like the Tesla plant you're talking about, there 0:18:32.395 --> 0:18:34.944 is a lot of robot arms doing things, but still, 0:18:35.194 --> 0:18:38.234 when you make a windshield for a car or a 0:18:38.234 --> 0:18:41.954 glass display for a phone, there is a very complex 0:18:41.954 --> 0:18:45.954 man-machine interaction. It requires a lot of mental equity, but 0:18:45.954 --> 0:18:51.834 also entails standing around machines hours at an end. So 0:18:51.834 --> 0:18:53.755 the one thing that you see in the documentary is 0:18:53.755 --> 0:18:55.944 that there are a lot of American workers who just 0:18:55.944 --> 0:18:57.025 don't have the health. 0:18:57.420 --> 0:19:00.880 To stand around in an assembly line using both their 0:19:00.880 --> 0:19:03.760 mind and their body for 8 hours, 10 hours a day, 0:19:03.839 --> 0:19:06.390 which is the minimum that the Chinese owners expect. 0:19:06.760 --> 0:19:10.599 Yeah, I mean, my son regularly will clock 18,000 steps 0:19:10.599 --> 0:19:13.469 in a shift, and his shifts are 12 hours. So, 0:19:13.520 --> 0:19:17.000 you know, an 18,000 step day every day that you're 0:19:17.000 --> 0:19:20.479 on the site is very challenging and you know, my 0:19:20.479 --> 0:19:21.510 son who's young. 0:19:21.814 --> 0:19:24.444 is already looking ahead and saying, you know, I don't, uh, 0:19:24.574 --> 0:19:27.255 this clearly is not for me, uh, a, a lifetime 0:19:27.255 --> 0:19:30.094 kind of a job because I, among other things, I'm 0:19:30.094 --> 0:19:33.094 not going to be able to do 18,000 steps as 0:19:33.094 --> 0:19:35.055 I get older. This is going to become more and 0:19:35.055 --> 0:19:38.034 more physically challenging. And so, you know, again, the sort 0:19:38.035 --> 0:19:40.935 of evolution of what it is that we're asking workers 0:19:40.935 --> 0:19:45.375 to do is also challenging. It's challenging for them, and 0:19:45.375 --> 0:19:48.535 they're gonna need, again, upskilling, reskilling, that's get you all 0:19:48.535 --> 0:19:49.175 into a 0:19:49.530 --> 0:19:52.079 Discussion about the changing nature of labor, but my point 0:19:52.079 --> 0:19:53.979 is mostly just to say. 0:19:54.609 --> 0:19:57.489 There are jobs in manufacturing, we should maintain some jobs 0:19:57.489 --> 0:20:01.189 in manufacturing for many, many reasons, but that's never going to, 0:20:01.329 --> 0:20:04.399 it's unlikely to be, I, I shouldn't never say never anymore. 0:20:04.609 --> 0:20:07.530 It's unlikely to be the growth sectors of the future 0:20:07.530 --> 0:20:11.429 for the United States or for other advanced industrialized economies 0:20:11.430 --> 0:20:14.449 because of many things that are happening, not the least 0:20:14.449 --> 0:20:17.050 of which is automation. Not, not so much by trade, 0:20:17.290 --> 0:20:20.569 by the way. It's much more automation of the existing factories. 0:20:20.609 --> 0:20:20.760 I'm 0:20:21.119 --> 0:20:23.760 People keep saying the United States doesn't manufacture anything. That's 0:20:23.760 --> 0:20:26.640 not true at all. The United States still manufactures an 0:20:26.640 --> 0:20:30.280 awful lot, and the United States is, in fact, incredibly 0:20:30.280 --> 0:20:33.599 successful as a manufacturing economy, but what it doesn't do 0:20:33.599 --> 0:20:37.339 is generate a lot of jobs in those manufacturing sectors. 0:20:37.359 --> 0:20:41.000 It does so through automation and through, um, you know, 0:20:41.079 --> 0:20:44.239 other kinds of, of procedures that make it easier to 0:20:44.239 --> 0:20:45.760 produce the thing that you want at the end of 0:20:45.760 --> 0:20:47.229 the day with fewer people. 0:20:47.920 --> 0:20:48.880 Right. Yeah, absolutely. 0:20:49.449 --> 0:20:52.180 Um, Deborah, I'm not sure the question I'm about to 0:20:52.180 --> 0:20:54.969 ask you is a hard question or an incredibly easy question, 0:20:55.140 --> 0:20:58.780 but here it goes. Trump 2.0, early days, but what's 0:20:58.780 --> 0:21:00.060 your sense of where we're headed? 0:21:01.349 --> 0:21:03.280 I think it's going to be very bad. I, I, I, 0:21:03.329 --> 0:21:06.469 I really, I am extremely alarmed about the direction of travel, 0:21:06.479 --> 0:21:10.099 and it's not just because I, obviously I'm not a 0:21:10.099 --> 0:21:12.329 fan of protectionism, and we're about to get a lot 0:21:12.329 --> 0:21:14.819 of it. I think it's because we're getting a lot 0:21:14.819 --> 0:21:17.979 of protectionism from the US, but it's going to be 0:21:17.979 --> 0:21:19.000 met by 0:21:19.420 --> 0:21:22.310