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Now let's get started. Hello, hello. Hey, how's it going? Is this better? Yeah, that's no lag. Yeah, wow. Okay, great. I just tried a different computer. I have three computers right next to each other. Amazing. I'm going to DC after this. Oh, nice. Oh, I thought you were there already. No, no, no. My flight's 1 p.m., so I'll be right after this. Bye. dude i i really liked your let's start with your post on
sort of talking about the past versus the future. And I think it was really interesting. You know, we've had both nostalgia politics on the, certainly on the right with Make America Great Again, but also on the left too, right? and then you compared it to China. I think it's interesting. Let's talk about the role of nostalgia in politics and how should we think about the balance between past and future and what can we learn from China as well.
Right. So, so many people are hung up on this idea of having these great ancestors. And not just great, I mean, sometimes great individual ancestors, like my great-great-grandfather, you know, did this amazing thing. Like my friend is... A lot of people are hung up on the idea of this, or very interested, let's say, in the idea of their collective greatness of their ancestors. So my ancestors built the pyramids, my ancestors built the Parthenon, you know, my ancestors did this and that.
in China who think like, oh, China was great for 5,000 years or whatever. So if I work hard, you know, like I can build a great company. And if our, you know, our country's on the up and up, like growth trajectory is going to be great because we have this great civilization that's restoring itself. back to its 5,000 years of greatness, you know, whatever. And so I think that it's very motivating for a lot of people. And there's a lot of people who think like, you know,
The group I'm a part of has done so many great things. There's some Jewish people who think like, wow, Jewish people won so many Nobel Prizes. I could be a great chemist or something like that. Just this sort of... And, you know, it's... It's stolen valor in a sense. You didn't build that.
You didn't build the pyramids. You didn't build the Parthenon. You didn't do any of this stuff. You're just some schlub. You didn't win any of those Nobel Prizes. If Einstein and Feynman were smart guys and you're Jewish too, that doesn't make you smart. you know what your own IQ and capabilities are. That doesn't actually raise your...
But I guess maybe people imagine that there's some latent variable, there's some sort of undiscovered greatness that hasn't shown itself yet necessarily, but someday it definitely will because it must be there because my ancestors had it. I mean, you know how well you did on the SAT. You know how well you did on your college physics test or whatever. You know all these things and you know how good you are at starting companies or whatever. You can sort of find out, but I guess...
we don't completely know. Like there's always some possibilities, like maybe I could be good at this thing that I've never tried. And so, or that I've tried only a little bit or that I haven't finished trying yet or something. And so people, I think get the sense of confidence from, from this idea of ancestral great.
you know, like, because people always are looking to not just de-risk things, but de-ambiguitize things. People, you know, people don't want to feel like they're venturing into the complete unknown. And And yet that's what we're doing with modernity, right? Like we're in the complete unknown. Like if you look at China, the modern greatness of China is far, far, far, far, far, far, far greater than the greatness of Imperial China, of the Tang Dynasty or the Han Dynasty.
it's like those people compared to modern people were just like absolute barbarians living on dirt floors and just like you know like milton cows whatever like they were not They had nothing to do with what China's doing now with building AI and robot factories and stuff like that. It's just, it's unprecedented.
what china's doing now is unprecedented what we're doing now is unprecedented no one's ever been as great as us like it's it's not like you know the 50s were better than now they they weren't But, you know, this idea of greatness motivates people in the present. And so that's basically what I was talking about. Sorry for the long rant there. No, no. Rants are what become one of two is four.
How do you think China and the US sort of think about the past or future differently? Well, that's interesting. In China, there's definitely the sense of being the heir to this very, very long civilization, this old, old, old civilization. And there's this idea that this must make it Lindy.
Yeah, of course. Lindy means it's been around a long time, so it must be stable and resilient in some way. There's a lot of things that the concept of Lindy doesn't work for. For example, aircraft. You wouldn't want to fly on an old aircraft. Right? I'm flying a new Air Captain. But then... but then people think of like traditions or lindy whatever so but
Chinese people, in some sense, they wouldn't probably use the term, think that their civilization is Lindy. It's been around a long time, and so therefore, it was great before it could be great again. And I won't say all Chinese people think this, obviously, but then I would say that there are... a significant number of Chinese people who think this and for whom this is a motivating and inspiring idea. But the United States is different because the United States hasn't been around that long. So
When you talk to people from the United States and you ask, why is the United States great? You know, there's some people who will tell you that we were great a hundred years ago. And when Trump says, make America great again, he's talking about That's what he's imagining. 100 years is different than 5,000 years. So it's still relatively young. And you get other people who talk about America's European heritage. You'll talk about the greatness of old Europe.
or the greatness of Greece, Rome, we're, you know, lots of people, like that's one reason we had all these columns on all these buildings is because people thought that we were in some very real sense, the heir to Rome. the new Roman Empire. We're not like the Roman Empire.
They were very different. That's a very different civilization, not just in a different location with different people, but also with different institutions and just whatever. And I mean, frankly, we're a million times better than the Roman Empire. And so Dorkesh just did a really good podcast where he gets this guy to say, basically, the Roman Empire is technologically stagnant. They didn't have very good science, and that's why they never had an industrial revolution.
That's probably right. America was always a very progressive country hurtling into the future, powering forward the frontier of technology and science and what could be built. So we're just a very different country than the Roman Empire, but still a lot of Americans, I think, would derive this sort of sense of pride and personal inspiration from this notion that we're connected to the greatness of Rome.
Just while we're on the topic of contrasting the US and China more broadly, like in the last 10 to 15 years, last 20 years, have we converged more along? What is sort of, are we becoming more like each other? In what ways are we or are we not? How should we think about that? I think so, actually. America has some traditional culture, obviously, because our ancestors came over with German Christmas trees or Hamburg steaks or whatever. We have these ancestral things.
And, you know, of course, we're a blend of various different cultures. Americans are so out of context for those cultures. If you have people in Swedish villages, those villages have been existing for hundreds and hundreds of years, and local people just keep the culture going. In America, everyone's ancestors were displaced.
And so we lost a lot of our ancestral culture. So a lot of America is just created new. And so we're like, okay, well, we don't have this ancestral culture to root us in these ancient traditions. What do we do? Instead, we buy things.
we build new things. And so that's, you know, people denigrate it as consumerism, consumer capitalism. But then in a, I think in a very real sense, it's just modern culture. So we create like, you know, Just all the TV shows and movies and video games and all the consumerist pop culture. memes and internet sort of jokes. All that stuff is very real, modern, new culture that we created.
And so I think that in China, you had this very old traditional culture that was, I mean, really... thousands of years old it really was and so you had these these farming villages where just people could trace their lineage back even if half that was made up but it was really that what was true is that a lot of people had been sitting around in that same place for a long time doing kind of the same thing
you know, farming, essentially, in old Chinese culture. And that was very old. And then you had the communists. And the communists were like, no, this culture is holding us back. We can't modernize. We can't resist the foreign powers, blah, blah, blah, because of this backwards culture. And so they intentionally destroyed a lot of this culture. You know, they destroyed a lot of the...
now it's called Confucianism. I guess it was called Confucianism even then. Confucian stuff, Taoist stuff, Buddhist stuff, and then Chinese traditional religion, which basically is paganism. which was very strong in China up until recently. And in fact, you can still meet families of Chinese descent who do things that are connected to traditional Chinese paganism for their weddings or whatever.
And so, you know, the communists were like, we got to destroy this so we can modernize, just smash it, smash it, smash it. And it was such a totalizing movement, you know, communism, especially Chinese communism, was just like a go door to door and make sure everybody does everything different kind of move. right this micro level of social control
And so they really wanted to smash this old culture, and Mao really wanted to do that. So they didn't completely succeed, but they succeeded to a large degree. And what did they fill the void with? Well, then you had this era of rapid growth with Deng Xiaoping and his successors. You had this like, you know, sort of 40 years really of rapid growth well maybe 30 to 40 years of rapid growth and then during that time You had this consumer culture come up and sort of that replaced.
traditional culture for a lot of Chinese people. So if you look at how Chinese people and American people live and sort of go about their daily lives and think about the world, it's actually very similar. So I think that China would be more similar to us than say Germany is. because Germany has this ancient traditional culture that America doesn't really have, except for Christmas trees and some stuff.
but we're not so similar to Germany, but we're similar to China because we both got rid of our ancestral cultures and replaced it with mass consumerism. Fascinating. Speaking of consumerism, let's segue or pivot to sort of the tariff update. It looks like we haven't made a ton of progress. in terms of getting these these agreements are we still in perspective that
These tariffs are going to sort of remain, and that's going to significantly impact the economy. What are your sort of predictions looking forward based on what we've seen so far? Well, you know, so... We are not seeing deals being made, which that means that by, you know, early July, the quote-unquote liberation day tariffs are all going to come back. They're going to come back in force. That's going to be a much bigger shock than what we're seeing right now.
Unless something big changes, it looks like all those big Trump tariffs that he sort of backed off and put a pause on are going to just come right back in July. unless something happens and i can't tell you whether something happened but i will say that a lot of existing tariffs are now immediately causing a lot of existing disruption so there's tariffs on china which are pretty big there's 10 tariffs across the board on everything and then there's tariffs on specific sectors like autos
And, you know, some of the auto tariffs have been paused, but I think others haven't. So it's, there's a lot of chaos out there. We can talk about the impact of uncertainty, but if you just talk about the impact of the tariffs themselves, we're starting to see like, you know, Temu and Shane and today Amazon. putting sort of a tariff surcharge notifier on some of their products. We're already starting to see consumer prices go up.
after tax prices and then yeah the question is regarding china are we going to hold our posture and just sort of be at this detente with with china and both both suffer hopefully they suffer more than us or are we going to sort of you know do a deal or cave depending on your under one's position on the on the tariffs You know, Trump made all these noises like he was preparing to cave, like he was saying, oh, you know, we're going to.
actually, I'm not going to play hardball with them. And we're going to ideally reduce the tariffs to like only 45%. And he made all these noises like he was going to concede. But China is hanging tough and saying like, until America eliminates all tariffs on China, there will be no negotiation.
And so if you look at, and in addition, they've put export controls on us for rare earth metals, which they're now attempting to enforce through Korea. They're saying Korea can't ship any products, you know.
is not allowed to ship any products to america containing chinese rare earth so basically putting and trying to put an embargo on korean electronics exports to america we'll see how that shakes out we don't know how that's going to work yet i'll write about that export control stuff but then you know, fighting back pretty strongly and container ship bookings from China are just falling off a cliff.
you know it's like none of these container ships are being booked now these container ships are really slow they take you know and they take a long time for like load transit unload blah blah blah but now based on what we're seeing three weeks from now, we're going to see a major, major decrease. And we're already seeing decreases like the port of Los Angeles. Like I think traffic's down by 30% already. The port of Seattle the other day was like empty.
like we're seeing empty ports already and if you look at container ship bookings then we're going to see more emptiness in three weeks from now and we're already seeing trucking sort of falling off a cliff so trucking sort of orders bookings like basically you make a reservation to move things on a truck that's down to covid level Like height of COVID. We're looking at like height of COVID shit.
You know, the longshoremen union, not the not the smaller one on the East Coast that notoriously supported Trump, but the other bigger one on the West Coast is just screaming their heads off. They're like terrorists are screwing us because all these I mean, these guys are going to be furloughed or maybe laid off.
like, you know, dock workers, longshoremen, truckers, and these are all working-class men, and I would say more heavily weighted toward working-class white men, but... i know that doesn't matter anymore this isn't the 2010s okay so but let's just say working class men who were trump's strongest demographic is working class men right these guys are getting absolutely hammered by these by these tariffs already and it's gonna only get worse and so like
Trump just hammered the livelihoods of his biggest constituency. And I don't think that they, you know. They don't care. They just don't care. You know, that's their ideology. Like Mao's biggest constituency were small farmers. And yet, who got hammered harder than small farmers in the Great Leap Forward? Nobody. Mao hammered his own supporters for ideological reasons. And then everybody got really hungry and poor and mad. And then he turned them all on each other with the cultural revolution.
you know to sort of defray some of the anger from the great leap forward we're seeing trump sort of already truckers sorry i was going off on a tangent but truckers and you know dock workers are already seeing these negative effects today like see these negative effects when when all the shipments stop coming
which they're already starting to stop coming like it's a rolling thing gets worse every week like next week we'll be talking about this again we'll be talking about how bad it is how much incrementally worse it is but like it's bad and it's gonna get worse We'll continue our interview in a moment after a word from our sponsors.
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Well, no, I mean, like targeted tariffs, you know, if you said, okay, we're not going to allow China to sell us this product, this product, this product, this product, like that's what Biden did. It didn't do a damn thing. Like it didn't hurt because we said, okay, we're not, we're going to put a tariff on Chinese electric cars. It's really high.
And then, you know, maybe American consumers are theoretically hurt because, like, maybe you would like to try a BYD car. But in practice, BYD didn't sell as many cars.
And so we're like, okay, so we're never going to get this thing that we don't already have. So it doesn't really hurt anyone's existing livelihood. It doesn't cause losses from what we have today. And so then... or or chinese steel like people say china makes all this steel and it's true but but we don't buy any of it like china doesn't make any of our steel we buy our steel elsewhere
so yeah if we put if you put tariffs on like 10 chinese products that you know many of which we don't even buy many of already Like you're not going to see the livelihoods of the American blue collar men crushed. But if you put tariffs on like everything from China, you're going to see a lot of.
pain. And then if you put tariffs on everything from everybody, Canada, Mexico, Europe, Japan, all these places, you're going to see just utter devastation. Like what you're seeing now with trucker bookings being down to like COVID level. That's from part of the tariffs on China alone, plus 10% universal.
plus policy uncertainty. Already you're seeing this devastation from even a relatively low tariff on the on the world like 10 isn't that high like the dollar can move to theoretically move to compensate for that although it's not doing that yet because of capital flight but that's another story but but You're already seeing big pain from truckers and dock workers from just a small piece of the tariffs that Trump eventually wants to put on stuff. So it's just going to get worse.
you know, the productive capacity of countries like Europe and Korea and Japan and other places like that, like, I kind of do believe in that. I believe that they can produce things. I'm kind of bullish on Europe. I think that one thing we see historically is that when Europeans fight each other, they actually get serious. The Europeans are going to fight each other again, and this is going to make them build things.
When Europeans don't fight each other, they kind of just sit around and goof off. But then when it's time to fight, they really, really build. And so I think that the fact that America is not protecting Europe from Russia anymore is going to make Europe get serious and build things. Yeah. And so maybe to close this out, if Trump called you up and said, hey, help me get out of this mess while also help me saving face.
you know obviously this is a fantasy world but what would you say like i'd say that narrow the scope of of china tariff So if you can dramatically narrow the number of products that are subject to tariffs while keeping very high tariffs on a few things for, you know, for, for the sake of appearances. And you can still say tariffs on China are 100% because look, we put tariffs on like these 10 things. So you can still say tariffs are really high, but in practice, tariffs will be much lower.
So do that. And the things that you should put tariffs on are final goods that are like high tech, any high tech final goods. And then, so do that. And then, you know, now... deals, quote unquote deals with like Europe and Japan and all these other countries so that you Liberation Day tariffs never actually come back in July and say, oh, we made a deal. Look at this art of the deal, guys. You know, so I do those two things.
I would do those two things. And China's not going to come make a deal with you. And you can say, I stood firm against China. But in fact, so actually, one interesting thing is that this is what China's doing to save face. So China put retaliatory tariffs of 125% on American goods. and then quietly realized this was stupid and incredibly narrowed the scope of the tariffs. So now Chinese 125% tariffs are only on a few American goods.
because they realized like oh this is going to kind of screw us because you know we're going to make our imported components more expensive so so china did that so i would do that with chinese goods so just do the same face-saving thing that china just did like It's funny, I recently heard someone say that the idea of saving face is a Chinese idea, but I had always thought of that as an American idea.
Because honestly, I think it's just equally important in both countries. You don't want to look weak. Right. It's the same. Another similarity between the two, right? And they're really sensitive to shame, right? The shame of being sort of with Japan and stuff like this, right? Right. But like saving face is like, I have to prove that I was never wrong about anything. Even Deng Xiaoping said Mao was 30% bad, 70% good. It's obviously face-saving. Japan is different.
People just like admit they're wrong over anything and then apologize and like, you know, quit their job and then like get the same job again next week. I meant like, isn't China embarrassed about their history with Japan? It was sort of like embarrassed. Like they, they.
they want to return to glory or something like they have some historical shame over like sort of how they were treated i i'm not about that i'm not really sure we should we should get someone on to talk about that but then but like Yeah, it's saving face. Saving face is about saying you were never wrong. is about retroactively saying I was never wrong.
i was always right to do this you know i never made a mistake in the past you know rewriting history is like saving face and i think americans do this a lot and i think china does this a lot too and i think that trump needs to do that and china is doing that with the 125 percent tariffs they're like okay actually it's only on these
so trump that's what i would do if i were trump i would i would dramatically narrow the tariffs on china while keeping the tariffs on a few products the same so i can claim that i never change because most people are too out of the loop to really know whether it's like tariffs on like five things or tariffs on everything from China.
most people won't know the difference between that and you can always just make a claim and then like a couple of washington post economic supporters will say well actually the effective tariff went down and like five people will retweet that and like no one will care right so like you can you can make that claim
And then you could cancel the Liberation Day tariffs and say, Art of the deal, guys, Art of the deal. And so, you know, then do that. Like, that's what I would do to say face if I were Trump. And what do you say if someone was like, oh, but this is this is hurting China more than it's hurting us. And that's a good thing. And so we should be willing to take some.
short-term pain if they're going to take some bigger pain. This is like Peter Thiel's argument that he said in a podcast. Oh, but it's hurting us more than it's hurting China. How do we measure that? Oh, so we can look at the economic hit, like hit to growth. Employment, we can look at manufacturing, like whose manufacturing goes down worse. The fact is that we like.
We, there's this idea, everyone focuses on trade deficits and says that, you know, China is more vulnerable than us because we have a trade deficit with them. But you can't just look at it bilaterally because what China can do, so only, I think, 13% of China's exports officially go to us. Okay. And if you include value added components and materials and all those indirect exports, it's definitely, it's still lower than 20%. All China has to do to get around tariffs is find other buyers.
domestic or foreign like china can just you know how michael pettison all these guys have been saying china needs increased domestic demand Well, honestly, they can do that. They can say, hi, Chinese consumer, you've been stomped on for a long time, but now is your time to shine. Have a check.
here buy a thing buy a car buy a tv it's your lucky day chinese consumer and chinese you know china's consumption is a percent of its gdp is low they can just raise that they can say they can just like give people money to buy the things they produce And we call this the New Deal when we did it. And it worked. And then we had the 1950s and 60s where everyone's like, holy shit, I'm ripped.
I can have a car and a house and blah, blah, blah, and one factory income with, you know, going to work. You know, China can do that. They can just bring in the Chinese 1950s, okay, which is this massive consumer boom of domestic people consuming what they produce. Yeah, anyway, so they can do that. And they can also find new export markets that China can be like, hey, Brazil, heard you want a cheap car.
Brazil's like, sure, I'll take a cheap car. I could use that, you know, like driving through the streets of Rio in my cool Chinese cheap car. And then why not? And then they can go to Europe and Europe is like, well, fuck America, you guys hate us. Europe, you know, in some ways, I think Trump, the Trump administration hates Europe more than it hates anyone else.
like more than it hates immigrants, more than, well, I don't know, that's neck and neck right there. But then more than it, certainly more than it hates China, I think they hate Europe above everybody else. They hate Europe because they think Europe are traitors to their heritage. they think europe has betrayed western civilization by letting in the muslims and by embracing the you know whatever culture liberal culture but like primarily by letting in the muslims
you betrayed the heritage of the Crusaders. You know, like Pope Urban would be so sad if he could see you now letting in these Muslims. And then like, I think that's how JD certainly talks constantly when he talks about Europe. Trump hates Europe. Trump's people hate.
Well, the hatred seems mutual, right? Yes, the hatred is mutual. So Europe is going to take away tariffs on Chinese goods. Europe would be like, hey, we'll buy your cars. Build your factory here. We'll buy your cars. China would be like, okay. You know, BYD factories mushroom up in Europe and then Europe is driving all the Chinese cars. Guess what they're not driving? Tesla. So there goes a third of Elon Musk sales or something like that.
And so, like, that's what's going to happen. They'll sell to Europe. They'll sell to, you know, other Asian countries. They'll sell to India. India will block their stuff, actually. But then they'll sell to... Middle East, sell to Latin America, they'll sell to Southeast Asia, which is willing to buy literally anything China makes. And those countries are growing, and America's not growing.
We're not growing at all. We're going to shrink now. And so like this idea that America, of course, Canada and Australia and all those places, they'll buy Chinese stuff. Like America is not so irreplaceable.
But the biggest thing that will replace America in terms of Chinese demand is the Chinese consumer themselves. They're going to buy the Chinese stuff. This is what America did. So America... instead you know in the 1950s and 60s yes we had some exports we we exported like stuff to people but mostly we we built stuff for ourselves And China can do that too. There's nothing stopping China from making cars for China.
And they have a lot of people. They have four times as many people as we do. And they're poor. They could use a new car. They could use a, you know, they already got all these new apartments. China built all these massive amounts of new apartments. Well, now it's time for every Chinese person to have a car.
Now it's time for every Chinese person to have a TV. Now it's time for every Chinese person to have an AI-powered assistant in their home, which will also spy on them for the Communist Party, but they don't care because that's how they live anyway. It's time for China to get everything, air fryer.
That's the symbol of affluence in the modern day is an air fryer. Every Chinese person can get the newest, nicest phone. And service industries too. China can provide service industries to its own people too. All they need to do is get that flywheel of domestic demand going. Ultimately, China's exports are not that big compared to its economy. China's exports are...
well, I don't know, 15%, 17% of their economy, something like that. It's like, it's, it's higher than us, but it's like lower than most countries because China's just so honking big, you know, they sell stuff to China. China mostly sells stuff to China. Like you look at all these car imports, China's become the top car importer in the world.
but yet if you look at chinese car import china's car exports i'm sorry you look at china the car exporter right china's car exports are like the biggest in the world if you look at chinese car exports compared to like chinese domestic car consumption it's like tiny Like most Chinese cars are bought by Chinese people. And so... like this idea that trade deficits are everything, is wrong. They're a marginal thing.
you know and we've we've gotten so used to looking at trade deficits and surpluses these trade imbalances that we forget about well first of all we forget about like the the vastly larger amount of like balanced trade that underlies that but also we forget about just domestic stuff which is just bigger
You know, like these are not that open in terms of economies. China's economy is not on the margin. Maybe it was, you know, relied on American demand, but on like overall total, it did not like overall total. Most of what China makes is for China. And there was a brief time in the middle of the 2000s when their currency was very undervalued, when China's exports sort of became a very big part of their economy for like five years.
under Hu Jintao. And we over-index on that. We always think about that era because that was when American manufacturing employment crashed. That was the China shock. It only lasted a few years. Okay, but that's not where we are now. That's not what the world looks like anymore. You look at what China's making, it's mostly for China. And the second China shock is simply overflow from the vast amount that China's producing for China.
It's overcapacity. But anyway, so this is a long-winded way of saying that China's not that vulnerable to us.
We are vulnerable to China because of, not because of consumer products, you know, like we can get all our cheap plastic doohickeys somewhere else. It's no problem. Unless we tariff those places too. We're not vulnerable to that. What we're vulnerable to is imported components because China spent the last 15 years doing something called the Made in China 2025 initiative, where they basically reduced their reliance on American imported components and machinery.
They onshore that stuff, whereas we did not. And industrial policy, which the Biden administration was doing, was sort of the beginning of our equivalent, our weak belated answer to made in China 2025, we're going to become less vulnerable to China. Trump is not going to do that. Instead, he's just going to tariff the stuff.
that unfortunately tariffs are highly destructive not constructive they don't make factories appear so try to for example china makes like machine tools that we use to build things like tool and die makers show me an american tool and die maker you can't okay But you used to be able to, in 1990s, you could find a million American tool and dye makers. Now you don't find any because we just import those machines from China. What is going to create American tool and dye machines?
machine makers. Where are those companies going to come from? Well, we had a Biden administration approach we could do with use industrial policy to sort of like build these new ones. But Trump's policy doesn't actually do that. What Trump does is Trump says you can't buy this from China.
and just sort of hopes that this will result in all those tool and die makers suddenly rematerializing, but it won't. There's hysteresis, there's path dependence there. And those tool and die makers just don't appear. Well, you need industrial policy to rebuild them, to build a new tool and dye industry in America. And we're not doing that. Instead, what's going to happen is that people are just going to do without.
a lot of the stuff that American tool and die makers would have made and that Chinese tool and die makers were making, like, we're just going to do without the downstream stuff, so we're just going to be poorer. We're going to be poorer. That's our, that's going to be the result of the tariffs. Be poorer. Americans are going to be poorer people. And that's I don't like that. And I think Americans don't like that. And that's why you see Trump's approval ratings crashing.
even before the real economic pain has completely hit, like you see approval ratings crashing, I think you're going to see more. And we're going to really test this idea that Trump has this invincible approval floor of 35%. We'll continue our interview in a moment after a word from our sponsor. What does the future hold for business? Ask nine experts and you'll get 10 answers. It's a bull market. It's a bear market. Rates will rise or fall. Can someone invent a crystal ball?
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Download the CFO's guide to AI and machine learning at netsuite.com slash 102. The guide is free to you at netsuite.com slash 102. netsuite.com slash 102. I want to read a view that I heard. sort of a right-wing person say and i'm curious if you can assess i i know you're going to do that i'm curious if you can expose sort of the mistaken assumptions
in this sort of sentence. So he's basically saying, let me hear it. Yeah, someone was asking if he has the Navaronean view or Byzantium view on Tara. And he says he's the team percent view, which is we're resetting the global system away from WTO and China towards a new compact between the U.S. and our friends and trading partner.
We're going to reset the system with the U.S. in the lead and base the new order on conditions as they exist today, not in 1945, and with lessons learned from mistakes over the past 30 years, i.e. don't de-industrialize your country and outsource to your energy.
It's high stakes for sure and not easy and no guarantee. But if we accomplish it, then the 21st century will be another American century and we'll see innovation-led prosperity in the U.S. again, rather than the mirage created by financialization. Okay, so my question is, how are you going to do that? Like tariffs don't do that.
Like, you know, I believe that if you could have the credibility, so to do that, what you'd need would be number one, you'd need the credibility to negotiate that sort of. to negotiate that new system. When we had the Bretton Woods system that was a result of our negotiations with other countries.
When we had the WTO system, which was similar in some ways to Bretton Woods, but I won't go into that, we did that by negotiating with other countries. When we were going to do the Trans-Pacific Partnership, we were going to do that by negotiating with other countries before Trump killed them. The thing that you're talking about now, we'd need to negotiate with other countries, but the other countries don't want to negotiate with us to do anything like that.
Trump has antagonized and alienated Europe and our Asian trading partners and just everyone around the world. It's hard to say any country except Russia that has become more friendly to us because of Trump. how are you going to do that the thing that is described there how are you going to make this international system without you know when everyone hates you and doesn't want to play ball with you and your policies change every week and you just
vilify and attack other countries and threaten them and bully them. Who wants to be part of a system led by that shit? Like, so first of all, to do that, you would need a totally different attitude toward the rest of the world that the Trump administration has utterly failed to demonstrate now. So are you hoping that a future democratic administration will do this? Are you hoping that like Trump will just.
die of old age and JD Vance will come and do this. Like who's going to do that and how are they going to do that? And why will they totally shift from how we're behaving now toward the rest of the world? And why will that shift be credible? So that's my first question.
so who's going to do that the second is in terms of re-industrialization how are you going to do that because there's this there's this faith seemingly faith-based belief that tariffs will cause american factories to sort of sprout up from the plains like mushrooms after the rain But they don't. Tariffs don't re-industrialize you. They de-industrialize.
tariffs might be able to support specific sectors and support marginal industrialization of specific sectors if they're very targeted. But in general, if you just tariff everything, you're tariffing all the imported components. Like look at U.S. manufacturing. It's falling, you know, like new orders are falling.
CapEx is falling. Rapid deindustrialization is happening as a result of these tariffs. If you want the kind of thing you're describing in the thing you just read, you'd need something to re-industrialize America. you know and and tariffs are doing the exact opposite of that so what's your policy to do that you know biden had this industrial policy
Trump wants to cancel even that. Trump wants to kill the CHIPS Act, kill the IRA, kill all these things, and just replace it with nothing. Tariffs don't have the magical power to re-industrialize America. They instead are de-industrializing America. And so like, that's a simple blunt fact. That's reality. We can see how much we manufacture.
Okay, we can see new orders for manufacturers. They're falling off a cliff. We can see CapEx for manufacturers. It's decreasing and may soon fall off a cliff. We see like, how are you going to re-indust, how are you going to do any of these things described in that paragraph? Like you can say those. Those things sound good if, you know, I can write down, you know, like we're going to do this and this and this and it sounds nice, but how are you actually going to do it?
It seems like all the approaches that Trump is doing seem to me to be absolutely antithetical to the goals just described in the thing you just read.
And are you very confident that it's not only hurting us more than it's hurting China now, but in the future, that's going to be the case too? Like there's no world in which it hurts them more than hurts us. I don't know, but like... I don't think that... I mean... look at what Europe is doing right now with regards to us and China they're talking about dropping all tariffs on China which they were putting up during the Biden administration. Now they're talking about dropping all the tariffs on.
and having Chinese companies come in and build factories in Europe and sell this stuff to China. Whereas Europe has promised to put reciprocal tariffs on us if the Liberation Day tariffs go through and there's no hint of a deal. I look at how that's working out. How's that working out?
Like it's going in exactly the wrong direction for all the stuff that was just described in that, in that, was that an email or a blog post that you just read to me? That was a blog post. A blog post. Okay. But yeah, so I'm just saying like, if. If you look at what's actually happening on the ground, it's exactly the opposite of what's being described in that pose. And not just Europe, but I could then say the same things for other countries too, but Europe is just the biggest example here.
elon musk came out and said we need a full free trade zone with europe okay cool elon musk did that but is anyone in the trump administration listening to elon musk i don't think so and like i don't know so i'll be honest like We both know all the people on, like, the tech right.
I think that the tech right is living in a little bit of a fantasy world where they have these ideas for what American greatness could be like and the Trump administration just isn't listening to them. The Trump administration is listening to Navarro and Lutnik and Steve Miller. and all these people who fundamentally you know are a bunch of apparatchiks and cronies who you know who just
All they are is purely reactive and kicking against stuff they don't like. Europe, trade deficits, they're just kicking, kicking, kicking. And the tech right people are sitting over there on the West Coast dreaming these big dreams about an American-led, you know, sort of... New industrial order and a free trade zone with Europe and all these big dreams, build a bunch of nuclear.
like you see like sean mcguire he's saying we need all these nuclear plants in america well sure okay we need all these nuclear plants but what did trump just do trump gutted the the department of energy's loan program office which is the thing you need to build nuclear plants that's how nuclear plants get financed and no one's like
Are you going to do a Series A for a nuclear plant? No. You need massive government-based loan financing for nuclear plants. That's how China does it. That's how France did it. That's how every country in the world does it. And that's how we vote. And yet, you know, big government guarantees for underwriting the loans of GM and Westinghouse so that everyone feels safe lending to GM and Westinghouse. That's how you build nuclear.
Okay. But we're not doing it. We're doing the exact opposite. We just gutted the loan programs office and nuclear like loans and plans and all this stuff, which was not really undergoing a renaissance, but there were a few plans in the work of, let's say that's all ground to a halt. Like the, the tech, right. People are living in a fantasy world. And just because, you know, you get together and say, like, you know, you can post like big American flags and say, like, we're going to make.
America. Great. We're going to have a free trade zone with Europe and we're going to build a million nuclear plants. But then the Trump administration is doing the exact opposite. Like the Trump administration is not listening to the tech, right? They're just living in a fantasy world on the West Coast. And like or some of your crypto will go up and like now you can think okay well i i made out with a little bag of gold anyways but but ultimately
None of the things that these people are talking about, these big grand plans they're talking about are actually in the works. And all the stuff that the Trump administration is actually doing is exactly antithetical to these big dreams.
I think, going back to your earlier point, but related, I think there was a We've sort of taken our relationship with Europe for granted in the sense, I think there was this idea that we had a lot of room to negotiate because there's no way that they would sort of, you know, become allies with China or something because China is also antithetical to.
their values and everything they hold dear do you think this is an actual real threat like do you think europe would sort of partner with china and in trade or more broadly of course 100 100 they will try to partner with china china won't be as good a partner as we used to be but china will be a better partner than we are now and See, Europe's threat is Russia. China says they have a friendship with Russia, but in practice, they don't help Russia that way.
But, you know, they sit there and they buy Russian oil, but they buy it at a deep discount that sort of gouges the Russians. All right. And they don't, you know, they'll make some drones for the Russians, but they'll make drones for the Ukrainians too. They're making drones for both sides.
you know and they don't they're not making artillery shells for russia they're not sending guys to fight in russia i think there were a couple chinese mercenaries that popped up like china's government is not supporting but Europe wants to keep it that way. Europe can't fight against China and Russia together. They're just loose. but they can beat Russia as long as China doesn't help Russia.
So they want to keep Russia in their core or China in their corner as much as they can or neutral. They want to keep China neutral so that China doesn't jump in on the side of Russia and fuck them up and conquer Europe, you know, like because a China supported Russia could conquer all of Europe. A non-China-supported Russia can't do shit. Like you're just, you can sabotage some stuff and like take over some border territory.
But a China-supported Russia could stop. If you had the manufacturing might of China, and if China sent soldiers to fight with Russia, they could stop Europe. And so Europe knows this. Trump has already unilaterally, spontaneously defected from Europe and become allies with Russia. Okay. And all, you know, all the people we know on the tech right have talked themselves into being Russia.
when, you know, 10 years ago they would have despised Russia legitimately. And now they've all talked themselves into thinking that Ukraine is so horrible and evil and Russia's great. And yet, this is the attitude that has driven Europe away. this attitude and the attitude of the people on the right who want to punish Europe for letting in the Muslims. You know, they want to punish Europe for letting in the Muslims and they want to ally with Russia, you know.
for standing up for Western civilization and whatever. Russia stands strong for Western civilization while Europe are these corrupt, fallen individual blah, blah, blah. And so that attitude has just unilaterally driven Europe away, and it will drive Europe into the arms of China, even though China doesn't share European values, sure. It's not the best partner. If you look at Europe's history, they have partnered with the Ottoman Empire to block Russian conquest.
had tried to conquer bits of Europe, certainly, you know, in the Balkans and Austria.
right they tried to conquer parts of europe and they if they could have they would have conquered all of europe but then so they were obviously and obviously the ottoman empire didn't share many values with europe in the early modern period like they were islamic they were despotic they all this stuff they didn't share these values but Europe gleefully, gladly, and when I say Europe, I mean like France and all these other countries partnered with the Ottomans to balance out the Russia.
Okay, and they'll do the same with China today. That's what Europe does. Europe... knows how to balance the external powers against each other. And so Europe will do this. Us, you know, we were Europe's great protector until Trump got an office. And now we're not. Now we hate Europe and are trying to punish, punish, punish Europe for letting in the Muslims. And instead, we're trying to.
support Russia and like all the, you know, Tucker Carlson is just like a Russian propagandist. And, you know, David Sachs loves Russia and like... You know, just always the saying, Russia's our friend, Russia's our friend. Like, well, no, it's not. But even abstracting that, when you say that, what does Europe think? you know, Europe reads David Sachs's Twitter account and Europe is saying, oh,
Trump guy. Russia's our friend. Russia's America's friend now. And so Russia is, you know, Russia's Europe's enemy. China is not. China's simply, you know, a distant power. And America has chosen to make itself Europe's enemy. by allying with Russia. And we're driving Europe away by allying with Russia. We've become Russia's best friend and we just suck up to them constantly. Vladimir, stop! You know, we're just like, like Trump just begging Vladimir Putin, like...
Russia's this crappy, militaristic, medium-sized, barbarian country with a lot of oil, and Trump is just on his knees, sucking up to the despot of this mediocre country. all right i won't say russia is like nothing it's not you know but like russia's it's a it's a medium-sized mediocre barbarian militaristic nation
And Trump is just absolutely sucking up to them. And Europe can see that. That has driven Europe away from America into the arms of China. And that's not going to change. And that plus like Liberation Day tariffs on Europe.
Like every single thing we do is just like kicking Europe, kicking, kicking, kicking them in the face. And the idea is eventually they'll come crawling back to us because they're just our, they're our, they're our colony. Europe is our, is our satellite state. Europe is our like. You know, there are, there are like little bitch, you know, but they're not. They're not, okay?
they will gladly partner with China. I've actually heard people in the tech industry talk about Europe as being our satellite states, like Germany and France and Britain as being our satellites. Well, they're not. And we're going to learn that they're not. Europe is more united than it's been in its entire history. And that was to fight the Russians, and now it's to fight the Russians and the Russians' new buddy, the Americans. We have effected a realignment where our only ally is Russia.
America's only ally now is Russia. That is disastrous because Russia produces nothing except oil and like some artillery shells. Like Russia produces nothing. They are a medium sized, like militaristic barbarian power. And that's our only ally and friend in the world now. And people in the tech right supported that shift wholeheartedly. And that was stupid. That was very stupid.
And it's very difficult to get people to realize they were stupid and change tactic because of saving face, cognitive dissonance, and stuff like that. I am under no such constraint. I always thought this was stupid. So I'm just saying, sorry, guys, this failed. This is what happens when you make Russia your only friend. Yeah. Well.
to the extent of that is the outcome or becomes the outcome i agree that's that's a absolute disastrous outcome so hopefully there's still time remaining and you know sort of fences can be mended etc etc but You know what's, can I rant a little bit more here? the hard right, the alt-right, who thinks like
White people in Western civilization, that's the core thing that makes the world great. White people need to stick together. Why do we fight our white brothers in the Civil War? Why do we fight our white brothers in World War II? We should have all stuck together. Now we see why you did that. Okay. Because the reason we fight our white brothers. Okay. Is because. you're just contentious because the right fights other white people.
That's who the right fights, like Hitler. Why did Hitler lose and die and just go down in flames and end the era of German greatness forever? Why did that happen? Because he invaded the Soviet Union. Right? Because he invaded the Soviet Union. He fought white and fought Britain. Hitler spent all his time killing white people. Hitler killed 25 million white people. Okay? Even if you say Jews aren't white, Hitler killed 25 million white people. Non-Jewish white people.
All right. If you add Jews, he killed 30 million. And so I mean, we came up with this idea that the Holocaust was different than all the other genocides that Hitler was doing on just regular Slavic folk and just rando white people. We came up with the idea that these were two different genocides. Hitler just thought it was all of a piece. It's all part of General Plan Ost, you know, it's like, or however you pronounce that, like, I don't pronounce German, sorry, because we won the war.
But whatever this plan was, Hitler was the champion of white genocide. And Confederacy versus Union. The Confederacy was shooting all the white Union soldiers. They were shooting. They fired on Fort Sumter, bro. Like the right always fights white people and they're doing it again, man. They're fighting the Europeans, the white.
supremacist guys hate europe more than they hate anybody else they they hate the white people first and foremost because they always hate the like race traitors or internal enemies more than they hate like you know some random guys from like egypt isn't that true more broadly too like you know people in the middle east fight each other you know sort of yes in africa fight each other you know yes
Like, look at who China has killed over the centuries. It's almost entirely Chinese people. Look at who Middle Easterners fight. And like during the like Muslim era, there were absolute vicious genocidal wars between Muslim emirates like Tamerlane or whatever would just like build mountains of Muslim skulls.
And then he was like, I am the defender of the faith, the defender of Islam. Look at the crusades. You know, the crusades did a little damage to like the Turks, but then mostly this crusade sacked Constantinople. The Crusaders destroyed the Byzantine Empire by sacking Constantinople. They were like, ah, we'll just fight some Christians this week. Yes, everybody fights their own. And as my sister puts it, bitches fight for niches.
That's great. That's what she always says. Let's end on that. Because I'm 11 and you gotta catch this flight. But this is a great episode. As always, until next time. Thanks, man. All right, until next time. Econ 102 is a podcast from Turpentine, the network behind Moment of Zen, In the Arena, The Cognitive Revolution, and more.
If you like what you hear, subscribe and leave us a review in the App Store. You can keep up with both of our Substacks for written analysis of the topics we cover in the show at noahopinion.substack.com and eriktornberg.substack.com. Thanks for listening. Hey, listeners. Earlier in this episode, I told you about the Tools and Weapons podcast from Microsoft Vice Chair and President Brad Smith.
Tools and Weapons explores technology's impact on our changing world. To celebrate 50 years of Microsoft, Brad is hosting exclusive conversations with the company's CEOs, where they share their take on the company's legacy and its AI-fueled future.
In this clip, Bill Gates takes Brad back to the days when computing power was precious and explains why his and co-founder Paul Allen's idea about software was so revolutionary at the time. Find this in-depth conversation and many more by searching for tools and weapons with Brad Smith. Now, one of the interesting sort of recurring storylines from Lakeside and then your student years at Harvard was,
Computer time was scarce. It was controlled. It wasn't even necessarily for sale. So you all are always scrounging around one way or another, even at Harvard. You're sneaking Paul Allen, who's not a student at Harvard, into the Harvard Computer Lab. You get in a little bit of trouble. What was that piece of the experience like? Yeah, it's hard to think now when you let your personal computer sit there idle, you know, all those processing cycles. Back in my youth,
You know, hearing, oh, some lab had a computer that wasn't being used from midnight to 3 a.m., you know, I would get up and, you know, try to get in there and get access. So we did anything because they were kind of expensive, but that's... You know, we needed computer time to try out. our software development. And so that's when the microprocessor comes along. We say, wait a minute.
This whole thing about computing being expensive is going to come to an end. And maybe because we were so young or just the mathematical concept of exponential improvement. Somehow we saw that in a way, and Paul deserves credit because he was the one reading all the hardware and chip things and telling me. that Moore's Law was doubling every two years. And I was the one who said, wait a minute, you know, that's like the grains of sand on the chessboard. The numbers get very big very quickly.
And I literally used the word free computing, which will mean it'll be used. millions of times more. And the only thing that will limit that is what kind of software is available to help you get jobs done. And that's where we thought we could come in. And you and Paul... founded this company, Micro-Soft, micro for the microcomputer, soft for software, as you said earlier, on a dream. How would you define looking back? the way you all thought of that dream.
Well, it's crazy that the dream came true. I mean, now when I say a computer on every desk and in every home, people are like, Well, what's so revolutionary about that? You know, we made it, we actually made it come true. No, it's wild that... you know, take the seven most valuable companies in the world. I know all these people. It was car companies and oil companies. And now, you know, they're...
Way down the list and, you know, the company Steve Jobs built or, you know, Mark Zuckerberg, Jeff Bezos, people who came in a little later. but had this same dream that something magical was happening with software.