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The earnings just around the corner as well. Meta set to report earnings after the closing ballance. The industry faces continued regulatory pressure. Facebook co founder Chris Hughes, arguing in the US as a history of striking a balance between free markets and state capitalism, writes in quote, we organize many of our markets for the common good, choosing to cultivate them rather than plan them outright. The work is a craft, not unlike the work of a sculptor or painter.
Chris is the author of the new book Market Crafters, and he joins us now for more. Chris Camrnic good to see you, Thanks for having me. Let's start big and then we can get some meta anks.
Let's do it.
A secret source of the US economy, how would you describe it?
It's the dance between the private sector and the government. So I make the case that policymakers have often harnessed and guided markets toward public goals in order to make Americans richer, say for their lives, more economically stable. And there's a hidden history of US doing this from the
nineteen thirties all the way to present. It's a republican project as much as it's a democratic project, and we're going to have to pull out some of the lessons from that if we're going to rebuild on the other side of the chaos.
It's happening right now, so talk about the casts. So we're doing a good job of it right now.
Yeah.
I mean, someone said this is more like market crashing than market crafting, and.
That seemed apt to me. No. I mean, this administration is at.
Best impulsive and at worst completely disorganized. The way to do this in the right way would be to say we have a mission like bringing back manufacturing jobs or even the auto industry. Then you'd create trade policy tariffs that would be targeted not on avocados and cars, but targeted.
You do it in collaboration with allies, and.
You'd pair it with industrial policy investments to make sure that those plans can get online quickly and that they can do it cheaply. And there is a recipe for crafting a particular market along those lines.
This is just chaos. Use to use the word.
Where the tariffs are, whether they're on this week or last week, and people are trying to figure it out.
Taking a step back though further, there is this feeling about what the engine of US exceptionalism has been and it's been in the world that you co founded with respect to Facebook, which is big tech, and this idea that the technological expertise that has been cultivated in the United States has been superior and has been the reason
why so many people have wanted to invest here. Do you see that unable to continue in this certain sort of less predictable moment, or do you see that as continuing to chug along in a healthy way that does lead to some sort of evolution.
It is certainly on shaky ground, that's for sure. I think the story of.
American technical leadership is also one where we see private sector innovation as a critical engine of growth, paired with public sector decisions.
So I'll give a crisp example.
We've all been talking about semiconductors and chips for the last few years, and that's been incredibly important in bringing back advanced semiconductor manufacturing in the United States. However, the real story of how to support the high tech industry in the US starts more in the nineteen eighties with
Reagan era industrial policy. At that point, Japan's share of global semiconductor production was increasing quickly, and there was a man, Robert Nois, the co founder of Intel, who teamed up with other semiconductor producers to go to Washington say, hey,
we have a national security problem on our hands. The Department of Defense agreed, so did White House in Congress, and they came together to first do a structured trade policy on Japan to prevent them dumping in the market, and then secondly make a big public investment in semiconductor production. So at this moment when we could have lost that technical lead, an early important moment, we invested and it worked. A few years later, the United States retook its share
of global semiconductor manufacturing. So what I'm trying to say is it's not just a coincidence that we have these high tech companies now. And it's yes, it's partially because DARPA funded the Internet and this the lights are powered by the government, but it's actually something even more explicit product of market craft, and that should give us lessons for how we can do it in the future.
You said that the US is at risk of losing some of that tech dominance. What makes you feel that about the structure of current tech companies, in particular Meta. That makes you get the sense that maybe they're losing some of that innovation or some of that structure that allows them to lead.
It's less that I think that the tech companies are losing innovation and more that you have to have public policy to be fundamentally stable to encourage companies all across the supply chain to invest.
And I think that's truly what's at risk now.
I mean, you've seen virtually all the measures of investor confidence go down, consumer sentiment goes down, Inflation expectations are up, equity markets are down, I mean all, and there's a real fear that the FED won't be able to lower.
If inflation stays high.
So I think all of those storm clouds on the horizon are not just bad macroeconomically, but bad for our our technical companies and our leaders. It certainly makes it a much more challenging environment for them.
To succeed in.
If you're a sculptor, you'd be breaking metsa up right.
I wrote a piece six years ago arguing that Meta had abused its power and that it had illegally acquired WhatsApp and Instagram in order to consolidate its power. You have TC under Trump filed too on that same rationale. Several years ago. The Biden administration reorganized the case and continued to prosecute it. And as you know now, I mean, the case is ongoing in Washington with exactly these questions.
What is it about it that you think is illegal?
The decision now over a decade ago, to say Instagram is challenging our monopoly, our power in the social media landscape, particularly with photos and WhatsApp, later with messaging, and then to acquire those rivals and then do things like purposefully slow investment development, as the Instagram co founder testified just last week, that is against the law to acquire competitors, either to shut them down or to consolidate a monopolistic position.
It's quite clear now. The question is is what do you do now?
That was a long time ago, and so you know, in my view, I think it's important that you know, Facebook has to comply with the law despite making a decision years ago that was illegal.
And then the question will come to what is the appropriate.
Remedy in twenty twenty five, and we need to know more from the case to figure that out.
Is it incoherent to call some of the big tech companies in the US national champions and to try to hope that they're successful while trying to break them up and change their business model with elimination of revenues from places like China.
I understand why you say that it seems on the surface like they might be in conflict, but actually what I chart in my research is a long story of saying, wait a second, we want leading industries in the United States.
So we were talking a lot about tech.
But you can do it in fu finance, you can do it in energy. You can do it a whole range of markets. And in order to do that you need to use a few different tools simultaneously. One of them might be public investment, like in the IRA for climate or in the semiconductor example that we were talking about earlier. Another might be procurement, another might be reserve buffering,
and then another might be competition policy. So these things can work in concert as long as you have a clear mission, what is government trying to do, and if that's to spur in this moment AI research and development so that we can lead the world and take on China and be at the frontier that could be a very In fact, I think that would be a very smart mission to pursue.
But it has to be crisp and clear, and then you.
Can organize the institutions of American democracy to pursue that, and sometimes that might mean public investment and competition policy.
At the same time, this overlaps with the idea of tariffs as well, and the idea that it was a bipartisan effort to have specific tariffs on certain products going to China that were national security concerns are just outright bans of certain types of chips being sold to China.
Do you think that that is the appropriate policy in terms of limiting the amount of information or do you think that, as someone who's worked in the tech industry, the more cooperation open and transfer of information, the more innovation and the more people can kind of get ahead.
I don't think it quite works that simply. I think we have to be clear about what the goal is.
Is the goal.
Bringing back jobs in particular manufacturing industries, or is the goal onshoing semiconductor manufacturing for national security concerns, or is it just a broader goal of technical innovation and leadership, Like with the investment in INNAI and depending on what the goal is targeted, tariffs can have a place. I mean, we saw this on Let's just use the example of climate policy.
Bidenomics has gotten a bad.
Rep but obviously the IRA brought major investments in climate technology, not only from the public sector, but doubling the overall amount the private sector is investing as well. And that kind of investment I think can transform that industry. So there are bipartisan moments where people agree more so on semiconductors than on climate, more so on tech oversite and some other things, and I think those can be taken
advantage of. And you know, I charted the hidden history of how to do this because.
We do fail a lot of time.
You know, government, if it doesn't have a clear mission, if it doesn't have an institution charged with getting it done and the discretion to bring in the best minds, then it fails.
But when those ingredients are there, it succeeds.
And that's that's why I wrote the boking first with Chris. This was great and hopefully we can do it again soon for shore. Thank you, sir, Facebook co founder Chris Use that