258 - Richard Wolff: Donald Trump’s Tariff War Dissected

38:50They're going to take steps. Do we know in advance what steps they're going to take? No, they don't. they have now a problem all right here's some of the things they are thinking of doing and that's going on in all imported company importing companies right now number one can we fake it can we sneak our way around and not pay there are a lot of ways of doing that and they're exploring everyone. Are they held back by legality? I could stop here and laugh for half an hour, but I won't because you're all smart enough to understand. Number two, they'll say, ooh, can we replace the thing we're importing with something else?

39:46So we don't need to import this anymore. This might take the form of finding a substitute in a country that either has no tariff or since Mr. Trump enjoys giving some countries high tariffs and other countries low tariffs, they will go and look for a country that has a low tariff attached to it and get whatever they're bringing in from that country instead of the one hit with the higher tariff. In other words, they'll solve their problem by shifting their source of their tariffed input from one place to another. Wow. Let me continue. They might, they might decide, if they could get away with it, to raise the price to the wholesaler that they sell products to, or to the retailer if they sell to the retailer, they might raise the price to them to recoup what they have to pay in a tariff.

40:56Might they do that? Yeah, then, but only then, would we as consumers be footing the bill for Mr. Trump's tariffs. And what would that mean? That would mean an inflation, which Mr. Trump promised he would correct, whereas the tariff might be so handled by importers as to make Mr. Trump a liar, a promiser that couldn't keep and didn't keep his promises. Now, I'm not done. They might decide to—most companies produce an array of products. You may not know about it, but they don't typically produce just one product. And the reason for that is you never put all your eggs in one basket. You don't want to make your success as a firm dependent on one product.

41:58That's very dangerous. Something go wrong with that product, you're sunk. So you typically develop, hopefully, you know, things that you can do with workers that are already working for you on the major product, but they can now do a side. And you can explore some of these side products might be more profitable in the long run than the one you started with. General Motors bought the Frigidaire Corporation when they figured out they could make more money with refrigerators than they could with automobiles. And that happens to every. Okay, so now these companies hit with a tariff because what they're producing has an imported component will shift.

42:46And you know what they'll do? They'll go and produce instead a product that doesn't have that imported component. It has maybe none, or it has one that comes from a source with a lower tariff. We have no idea what combination of these strategies these companies will take. But it's worse because I haven't yet introduced what they cannot afford not to consider, which is retaliation. Why come to the United States in the year 2025, move production from China, India, Brazil, wherever you are, which is expensive, which is risky, and which takes time, to move into the United States. Once you have a consultant like me explain to you you're moving to the country that the rest of the world is learning to hate, you idiot, don't do that.

43:50Because if you need to export, you'll be an American exporter. you locate here. That's what ostensibly Mr. Trump wants companies to do. They're not going to do it. Maybe if he had imposed a tariff all at once, uniform, here it is, but he has shown the world that the tariff will go up or it'll go down at the whim of Mr. Trump. He will impose one, then he will relax one. He'll do what they cutely call a carve-out, in which the company in question is exempted from the tarot. He did that with Apple telephones in India, or they're negotiating it. So you don't know, you're not going to move your factory to the United States when you don't even know whether the export from the United States that you will be producing here will be retaliated against the brook.

44:52You can't do no no vice president of the company for location is going to do that. It'd be fired and rightly so. So it doesn't work. You know the old argument was if the government intervenes in a very complexly market-based system, that intervention ramifies. It's like dropping a stone in water and all the ripples go. And which ripple gets in what corner of the pond? You don't know that until you've thrown it in there. But you're not going to make big investments. you're not going to fulfill the fantasy stories that Mr. Trump and his advisors concoct. It isn't going to happen. And it's going to take a long time for Americans to see that it isn't going to happen.

45:46Let me remind people again, history as a good teacher.

45:57That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18+. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more.

46:29Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs. Every one of the last dozen presidents has at one time or another said, It's a tragedy what's happened to the coal industry here in the United States. And every one of those presidents promised to bring coal back. If I were a president with graphs, I'd show you the graph of coal production in the United States.

47:17Right across all 12 presidencies, one direction. Found! But the president went to the coal fields and gave speeches and the coal miners applauded, he's gonna bring back coal. Did he bring back coal? No. Did Biden? No. Did Obama? No. Did Bush? No. But they've learned that's what American politics is. You promise what people want to hear, because following up and keeping track almost never happens and can be dismissed by impugning the objectivity of the poor folks who make these unpleasant realities. But everything I've said is well known in the economics field and has nothing to do with my critical attitude towards the United States.

48:17My critical attitude comes in when you talk about the collapse of an empire. For most Americans, that remains a taboo they cannot cross. And so they won't go there. We're big, we're strong, our economy is in great shape. That's a joke. Not a good one, but a joke. I hope you'll permit me this digression just because it's fascinating. It hadn't ever really occurred to me that coal has been such a talking point, especially for 12 presidents. Why is revitalizing the coal industry always this important political point? point. Is it because coal is really that vital to our economy relative to other sectors?

49:05Or is it because coal workers, coal miners really are representative of the lower class in the zeitgeist or something like that? No, it's mostly very mundane. Coal is concentrated in certain parts of the United States. And so if you have a political race that typically hangs on at the presidential level on a few so-called swing states, then you might spend an awful lot of time on what is a relatively small part of your economy because they happen to be located politically in a way where if you could get them on your side you sneak through you get 51 percent of that state which in our crazy system gives you the whole state's electoral votes you know it's different in europe mostly because they have a proportional representation so every you get as many seats in the in the parliament in europe as you get votes if you get eight percent of the votes you get 8 % of the seats.

50:15Here, if you get 8 % of the votes, you get 0 % of the seat. All the seats go to whoever wins the election. If you have more than two, you have a runoff. And whoever wins, even if the people that are no longer allowed to run, got 10 % of the vote, in Europe they then get 10 % of the seats in the parliament. They don't lose their power because of the rules because that would in the European mind undercut democracy. If 10 % of the people want this party they don't just want it to vote they wanted to have a voice in what happens in that society. For them democracy requires that even in this country we admit it because in many Many of our primaries, if you remember, for example, when Bernie Sanders and Mrs.

51:15Clinton were competing, in certain states you have proportional. If Bernie got 38 % of the vote, he got 38 % of the delegates to the convention. In other words, the voices who voted for him got not only the vote, but got the vote at convention that at least theoretically selects the candidate. In Europe, most of the countries of Europe, maybe even all of them, have proportional representation because it is fundamentally undemocratic not to. By that standard, you and I are having a conversation in a fundamentally undemocratic society heaven forbid

52:02and that's why the coal miners play that role and they're not the only ones there are you know if you go to utah you have to say things that appeal to mormons because in in that state they are such a preponderance are them in the big america the morons no but if things are tight and you need the electoral votes you know let me give you an example that is a little uh more stark the people of of washington dc are more numerous than the populations of vermont and wyoming vermont and wyoming have each two senators and one or more congresspersons representing them So their voices are heard. The people of Washington, D.C.

52:57have no senators and no congressperson. I mean, what's that about? Well, by the way, think about it. Because if you answer that question honestly, then you will know why Mr. Trump would want to select the creation of a police state, because that's what he's done, in Washington. Why would he do that and say it's about crime when crime has been falling there? What in the world are we witnessing here? For me, these are all signs of a declining empire. And they ought to be understood. good, because the further along that road you go, the harder it is to stop the process or to reverse it. Adolf Hitler was a supporter of the great German Reich, the German word Reich, which is roughly translated as Empire.

54:11We're bringing the Reich back. Translates from the German, we're bringing the empire back. Sounds a little like Maga done it. And he took over cities and states. And he federalized. And he had his own army confront the locals, take over from the… Look, we're not there yet. But you'd have to be very strange not to see where this is going. He publicly announces, the way Hitler used to, that if he doesn't like the outcome of the election in New York City, he will intervene to prevent the one who got the most votes from becoming the mayor. Why? Well, he's a Muslim. Oh, where is it written that you can't run for office in America and be a Muslim?

55:11Nowhere, but it doesn't matter. He is beginning to make the rules, and he's making the rules in a form that rejects all the democratic procedures, the real ones and the purely performative decorations on our tree at some point americans are going to say something hitler's effort didn't end well no it didn't uh besides the i mean you keep giving me digressions to latch on to besides the obvious reason that dc isn't a state is there a simple story from your perspective to explain why, given the size of its population, it doesn't have representation in Congress and in the Senate or the House? I think it's, for me, obvious.

56:10So here we go. The majority of people for most of the last century, the majority of people in Washington, D.C., have been black. Even today, when gentrification has forced poor black people out of that city, the proportion of the black people is at least 40, maybe higher percent. I don't have the population figures in my head. And what that means, given who works for the federal government and therefore lives in that area, that if you gave statehood, it would be another democratic state. And that has freaked the Republicans out, and they don't want it. And they have done everything they need to prevent it.

57:02And they've made common cause with people who don't want the city of Washington to be represented by black people. And believe me, part of the motivation for what he's doing now is a pandering to the white supremacists in his base. And they see this as the powerful white president taking over from the crime-ridden black people. it's sad it's tragic but that's that's why we've had this bizarre denial of these people of a real vote look we could go on have a conversation about puerto rico also i'd love to hear about that i imagine it's a similar story yeah it's a similar story that's why the white president goes there after their worst hurricane and lets himself be photographed throwing paper towel rolls at the people he's the charitable white guy from Washington come down to the brown island when it's in distress does he do anything for that I'm mad at all.

58:27How does he justify the horrific... Puerto Rico is the poorest place in this country. If you look at statistics for poverty, it's a race every year between New Mexico, Mississippi, and Puerto Rico. Who's at the bottom? Have you done something about this? No. We did that was the statistic 10 years ago 20 years ago 40 years I could go on This country watches these problems liberal people Wax poetic about it and a proposed a program And it goes nowhere and then the Republicans defund it And then we're back to square one Meanwhile, 10 years have passed, a new crop of liberals opens up and does it all again.

59:25It's an amazing, you know. But you know, as it becomes understood and as it becomes known, that's also contributing to the decline of the empire. That's why Mr. Trump and the people around him need to shut down the programs that talk about it. You know, the 1619 program the New York Times had around education, around race, that had to be shut down because it actually talks about that part of our history when we had an active slave system in a large part of our country. What did that mean and what were its consequences? and what are its legacy? Oh no. Other countries have, you know, reconciliation processes.

1:00:18South Africa very dramatically, China very dramatically, where the oppressed from the past have a chance to confront who oppressed them and try to find some new way to live, given what happened. But we pretend we don't have that. What we did to the native population that we Europeans found here, come on, where's the reconciliation process going on? Where is it? Why isn't it there? What is it about that? How do you condemn Israel in Gaza when it's doing to the Palestinians what the Europeans over two centuries did here. We live in a country that has many things in its closet, many skeletons, and is very afraid.

1:01:19And you know the old rule about the skeletons in the closet? No. It's scary if you open the door, how many of them will come out. But if you keep the door shut, when eventually somebody does open the door, whoa, will you have an accumulation of skeletons. So why don't you do it now before you accumulate more? Might even help you avoid accumulating more if you did that. I enable you. The whole, I mean, I don't want to take you away from your topic. You know, we are a settler colonialism. We came here, we Europeans, and we settled in somebody else's country. And when they objected, we killed it in huge numbers.

1:02:10That's what the Israelis are doing. And what is it about the bizarre alliance of the United States and Israel when the whole rest of the world says this is genocide this is unspeakable the interesting question why would the united states want to ally itself in that way we don't ally ourselves with hardly anybody we i thought we were the king of the hill what do we need this little corner seven million people Israel has fewer people than the city of New York. What is this? Why are we being looked upon in the whole world as the funder and armor of what they're doing in Gaza? Which is correct. They're not the only ones, but they're the major ones.

1:03:07So, whoa! Why isn't that question being asked? How could you wrap that in a taboo so that anybody who raises the question risks losing their job. What? What? Suppose I wanted to ask a question about our policy toward Portugal. No one cares. And I'm not saying that's good, but it's a reasonable question if you're interested in Portugal. There's a phenomenon going on. It's sad because if you are in any way connected to or part of the Jewish community, you have to realize, I'm sure they don't, but you have to if you're not crazy, that this is a change in the position of the Jewish people in the world that I don't see they'll ever overcome.

1:04:03from being the victims of a Holocaust, they have become perpetrators. And that's how the world sees it. And it's close enough that it's going to be haunting them forever. And there'll be tremendous bitterness. I remember years ago being brought short in a conference by a professor of African American studies, who was himself an African American. And he was part of a conversation about the Holocaust, the German Holocaust. And he said, you know, I'm jealous. We had a Holocaust for several centuries called slavery in Africa. And it was a genocidal, you know, destruction of enormous portion of our people who are rendered slaves.

1:04:56And nobody wants to talk about it anymore because there's a more popular recent example. And then he mentioned the Holocaust. And he said, I don't want to get into counting bodies, but we lost 6 million people. What's going to happen now is everyone's going to go to the most recent horror show. And that's going to have the Jews, not as the victims but as the victimizers and that's going to be very difficult for the jews but unavoidable and that'll happen to the jews whether they were israelis or not it'll happen everywhere and then the question why is the united states lined up in this way why do we keep seeing Mr.

1:05:45Netanyahu able to continue despite statements by American leaders that they don't like this, that don't want this, they think it's excessive. Let's take Mr. Biden and even Mr. Trump at their word. Why then do they nonetheless fund and arm the whole process? They couldn't continue without the United States. Everybody knows that. So what is it?

1:06:18Anyway, I don't want to distract you from where you want this discussion to go. Well, there is one new tariff question that comes to mind because I haven't looked into this, but I'm wondering, is Israel exempt from these new tariffs, potential new tariffs? I don't know what the latest word is. Initially, no. My understanding was that they were also The only country that I think has no tariff yet attached to it is Russia. And the reason is because they are sanctioned. You know, a sanction isn't so different from a tariff. A sanction is a direct interference by the United States government in the private market.

1:07:07Let me give you an example. Most Americans believe that it is part of the very Constitution of the United States to respect private property. Okay? When the Russians invaded Ukraine in February of 2022, shortly thereafter, the United States, with its European allies, seized about$300 billion worth of reserves owned by the Russian government as a backing for their currency reserves. Now, that's violating the rule of private property. No war had been declared between the United States and Russia, or between any country and Russia other than Ukraine. And so this was non-combatant, non-warring parties taking the wealth of a country involved in a war with somebody else.

1:08:19Now, what's going on here? Well, the answer is, in the American government mentality, and I'm talking now about the Biden government, but it doesn't really matter. The idea was the way you're going to get Russia to withdraw from Ukraine is by punishing it economically, taking advantage of the fact that Russia is smaller economically than the United States by a lot, smaller than the United States by population, therefore even more small relative to the United States and its major allies, the so-called G7. And so the plan was, we're going to hit them with the mother of all sanctions. I believe that's a quote from Senator Lindsey Graham, the mother of all sanctions.

1:09:24And the biggest part of that was that the Europeans stopped buying oil and gas that are two of the most important exports of Russia in the modern world. You know they are the second or third richest oil-producing country in terms of how much oil they have under their soil. So they were punished. And statements were made by Mr. Biden and his advisors. This will bring the ruble, will become rubble, like that one. Russia will be brought to its knees, other remark. None of that happened. The ruble is fine and Russia's economic growth is faster than the United States. for the last two to three years of the war.

1:10:20What was the mistake then? You misunderstood it. You haven't defeated Russia. Russia's winning the war. Ukraine is losing the war. Everybody in the world who pays attention knows that. So what happened? Well, here's the answer. The United States didn't understand that the world has changed, which is another way of saying the empire is declining and the response of the United States is denial that what I just said is true. And therefore we don't have to think like that or worry about it. It's not happening. It's a non… what is that lovely phrase? It's a nothing burger. You know, it doesn't count.

1:11:02Well, what Russia did, to explain to everybody, what Russia did proved the decline of the American Empire. Russia found others to buy the oil and gas that they could no longer sell to Germany and the rest of Europe. Because the Germans couldn't get cheap energy from Russia, their economy collapsed. They're in recession now. From being the country whose economy was the motor of Europe, they're now the caboose that's dragging the rest of Europe down. What happened? Did the Germans suddenly become goofus? No, they lost cheap energy. It wasn't the only reason. The Chinese, which was a big market for German industry, doesn't need Germany anymore.

1:11:58They do it themselves. Between losing the market from Germany and losing the cheap energy from Russia, Germany is last week's wonder bread, is done. If you look at their government, you will watch chaos disintegrating literally in front of you, especially now with Mr. Mertz, who used to be the German man running the Black Rock administration for the United States. In any case, here's the truth of it. Russia found other buyers for oil and gas. Who are the other buyers? India and China. And what's their relationship to Russia? They're part of the BRICS. Russia, China, India have built up an alliance that allows them to the United States.

1:12:49You know what that means? The empire is over. It can't handle this. It is making one strategic miscalculation after another. You should have understood what the Russians can do with their allies, India and China. But you didn't. You were sure you could stop the Russians, but you couldn't. And now you're sitting here about to go to Alaska and have yet another conversation with Mr. Putin where he basically tells you you can't do what you used to do. You're not what you were in the 1960s, 70s, 80s. You were at that point something tremendous that came out of World War II while the rest of us were trying to fix all the war damage.

1:13:43You were dominant. The dollar had to be the world currency but it doesn't anymore and it isn't anymore and you've got to understand it because if you don't you're going to be defeated like you are in ukraine you know the united states entered vietnam the enemy was the communist party of vietnam that war happened now that war is over the united states left who has run vietnam since that war the communist party of vietnam we lost they won if you go to afghanistan we fought the taliban who has run that country since the united states was driven out the taliban they won we lost i could go on. At a certain point, the message has to sink in.

1:14:41We're losing in Iraq. We're losing in Ukraine. What does that mean? You're going to really attribute each of these to some special circumstance, or you're going to have the courage to ask, is there something going on? I think I've discussed with you before, Russia's part of the BRICS. The United States is 4.5 % of the world's population. The current membership of the BRICS is over half the population on this planet. We are 4.5%. They are half. And they have China in their half. And they have Russia in their half. and they have India in their hair. Holy mackerel. We are becoming a mouse pretending to joust with an elephant.

1:15:35And that's not going to come out real well. For the mouse. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18+. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs.

1:16:12It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs. You say we've lost in Afghanistan. We lost Vietnam. We're losing in Iraq. I'm wondering how you think or how you look at whether or not we are winning or losing with Israel, and whether or not it's a Pyrrhic victory, even if militarily, I guess it might be considered successful in some ways.

1:17:06Well, what we have with Israel is a very bizarre relationship. Here is a country 7 or 8 million Jewish residents, roughly the same Palestinian, but in an apartheid arrangement. For all practical purposes, Israel is now, you know, a military garrison trying to or in the process of destroying gaza and eventually apparently taking over gaza expelling the population lord knows where and in the process becoming isolated in the whole world the rest of the world looks upon and has voted in the u.n repeatedly against what the Israelis are doing. Only in Israel is there a part of the population for whom these issues, none of them matter, because they are in a religious la-la land.

1:18:21They are reclaiming the territory God gave them. They believe that. And they are smiting the awful enemy who is on their land as they conceptualize it, and they're going to fight to the last person. That they have internalized the Bible, the Old Testament particularly, in a certain way that makes all of that okay to do. But nobody else in the world agrees with them. Now, that might make other people stop and wonder about their own reasoning. There are other ways for countries afflicted by disagreement in their midst to resolve their problems, other than one of them killing the other. unless unless you be confronted with people unhappy with what I'm saying this has nothing to do with defining a political group like Hamas as a terrorist group if that's what you want to call them and saying that they will not be allowed to function or that's part of what gets negotiated You know, it's just, this has been worked out in every other part of the world, sooner or later, one way or another.

1:19:58There's no reason to assume that it can't be done in Israel. Nothing that I see gives me reason to believe any of that. So this is the demand of people who don't want to negotiate with the Palestinians, don't want to work out an arrangement. They want the Palestinians out there. That's why I use the example of settler colonialism here in the United States. The Europeans who came here did not want to work out a relationship with the indigenous people. it wanted them gone and so it killed them or banned them into reservations maybe the israelis are planning to do that i don't know and i also know that the only thing that has prevented the rest of the world from stopping this process is they haven't figured out how to do it Israel is a society that is committed to war.

1:21:08Even though inside Israel there are enormous disagreements, much more disagreement is allowed in Israel among the Israelis about politics and their war than we are allowing in the United States. Our government is so deeply hung up on what's happening that it punishes Mr. Trump particularly, but Mr. Biden did it too. It punishes people who are critical of the Israeli behavior. You know, it used to be that a few European governments, not all, but a few followed the United States. They've now abandoned the United States too. France, Germany, and Britain, have all announced, basically, they're about to recognize the Palestinians as a separate state, as a separate nation, which the Israelis fought very hard to prevent them from doing.

1:22:07That failed too. The United States is completely isolated around this issue, and it gets worse each day with the killing of the Palestinians on and on and on. They're the ones who die in huge numbers and the Israelis don't. And everybody sees that. Everybody understands that. And the United States might wish that that weren't the case. I might wish it. But that doesn't make it so. And so the question is, what are you doing? And the answer is, we are isolating ourselves. We are making the whole world teaching them the lesson. If what Israel is doing strikes you as outrageous, inhumane, genocide, whatever word you like, then it follows that the United States, in your mind, is complicit with what you call it because nobody else is funding them comparably and nobody else is arming them comparably the germans just announced last week that some of what they used to give the israelis then i don't give them anymore you know i rest my case why would the United States want to ally itself with a tiny country that is now completely isolated in the world.

1:23:45Hardly anybody gives it any support except the United States. I am persuaded that long after you and I have passed on. Historians will be, you know, banging their own heads trying to figure what the hell was going on there. Is it really the circle of the money? You know, in many European places, the following cartoons circulate. Mr. Netanyahu arranges to give a lot of money to American politicians. They vote to make sure that the United States funds and arms Israel. Israel uses the money that they get to fight the war to pay the politicians in America who keep the money coming. In other words, this is a circle of money.

1:24:49That's how they in their minds explain this question, why is this bizarre outcome happening? And then, you know, I've learned a lot from a professor, I don't know if you've interviewed him, at the University of Chicago, John Mearsheimer, and he's a big political science professor, a very well-known but a critic of the United States' position in the world and of Israel's. And he's written some of the best material about the influence of Israel in the United States. You might want to, if this is a topic you're interested in, you might want to get it. Here's, in my judgment, the most knowledgeable about this question of Israel-American relationship of anyone I know.

1:25:49I would really like to get back to some of the initial threads you opened our conversation with about the tariffs. And before we get to some of the other threads, I just wanted to make sure that we had all of the major real problems that the tariffs are meant to solve on the table. And two that stood out to me were one, taxes aren't generating enough revenue to cover necessary government spending or are growing debts. Then the other is that we're interested in bringing manufacturing back to the United States. Reindustrialization is a priority. Are there any other major problems that the tariffs are at least purported to help us solve?

1:26:46No. There are none that are purported to help us solve. And those are mostly problems that the government of the United States and, by the way, the mass media and the academic establishment rarely admit, not never, but rarely. The most obvious in my mind is the problem of inequality of wealth and income. We are now an extremely unequal society in terms of the distribution of wealth and income. And, you know, we have whatever it is thousand billionaires in our country and all the rest of it uh we allow the stock market is sustained in recent months maybe even recent years by a handful of high-tech companies uh you know everybody knows their name you know apple computer and amazon you know who the key billionaires are that run the economy because when mr trump was inaugurated they were sitting right behind him on the dais.

1:27:58Not the greatest soldiers, not the greatest thinkers, not the greatest artists, not the greatest athletes, the richest men. They were sitting there. Symbols like that tell you a lot. That's who… and so it's wonderful that Mr. uh elon musk possesses two or three hundred billion dollars hard even to imagine what it means that he can throw 200 million dollars at mr trump to help him win the election that no one no other candidate had such a you know sugar daddy etc etc that's not admitted it as a problem or to be more let me be fairer there are some people i remember listening to a very nice speech uh by janet yellen who used to be the head of the federal reserve used to be treasury secretary here in the united states wasn't she a classmate of yours yeah she was years ago she was a classmate of mine at yale university we got our phds in economics around the same time, in the same classes.

1:29:13And she gave a good speech about inequality of wealth and income. And it ended with a bit of a punch to it by saying that we better take care of it or it could come back to haunt us. Or some words like that. I don't remember her exact words. Well, what is Mr. Trump saying or doing about that problem? Answer, absolutely nothing. It's a non-issue. He doesn't suggest that tariffs will address it, and they won't. It's not that he should. He shouldn't say that. He doesn't say that, but he doesn't say it out of some care about being precise in his answers. It's because the inequality of wealth and income is of no interest to him.

1:30:04He assumes it. It's the basis of who he is and what he does. He surrounds himself with the richest people he can find. You know, Elon Musk was given extraordinary power, having been unelected by anyone for anything. But it being rich, which seems to have been his great attraction for Mr. Trump. And when that attraction faded, they parted ways, bitterly, apparently, and so forth. So that's a problem that they don't deal with. Here's another one. We live in a capitalist system, which, according to the National Bureau of Economic Research, a governmental or quasi-governmental research agency that all economists use all the time.

1:30:55I have many times. My colleagues do, too. sort of like the Bureau of Labor Statistics and other important sources of economic information, according to them the capitalist economy of the United States and indeed elsewhere in the world, and they monitor this, has an economic downturn on average every four to seven years. By downturn, I mean a period of months, at least, or sometimes of years, during which unemployment goes up, bankruptcies go up, and the economy experiences what can be called recession, depression, downturn, catastrophe, crisis. I mean, the vocabulary is immense because this has been haunting capitalism throughout its history of at least the last three or four centuries.

1:31:56The capitalist system has tried to overcome this, to figure out a way to stop having—some of them are short and shallow, you know, like the one in 2020. It wasn't shallow, very deep, but lasted a very short time. The 1930s was deep and lasted a decade, and everything in between we've had. And if the most recent was 2020, which it was, and if on average they happen every four to seven years, and if it's now 2025, guess what? We're due for the next one. And the financial press right now has an article at least once a day, either in the Wall Street Journal or the Financial Times or any of the others, in which some writer is talking about the signs of a recession coming down the pike.

1:32:54Of course, you should. We know. But isn't that a problem? That every four to seven years you have millions of people losing their job? Tens of thousands of businesses going belly up so that you can walk down the major avenues of New York City and see one empty storefront after another? Isn't that a problem? Shouldn't we be talking about it? Shouldn't we have some programs in place to deal with that problem? problem, having been very unsuccessful for the past centuries in dealing with it. Oh, but maybe that lack of an ability to solve the problem explains why it's so important not to talk about it, because it's like that interest that we pay to the People's Republic of China.

1:33:52it. It's too difficult for Americans to understand that they are all funding the Red Army. It's too hard. So it's too hard. So here's what we're going to do. We're going to normalize the cycles. We're going to say, oh yeah, the recession's coming. We're going to say it the way we say, whoa, it's cloudy. There may be a rainstorm. Do you stand there and shake your fist at the heavens? No, you go get a slicker and you go think about and talk about something else. That's what we do. We have these enormous economic problems. We have just, give me another one, we have just three weeks, I should explain.

1:34:35Three weeks ago, I spent some time in Montreal, Canada. I like that city. It's a very pleasant place. And I made a point. My wife and I both made a point. to kind of draw out the Canadian individuals we bumped into about everything that's going on with Mr. Trump and the so-called hostilities with Canada. Are you aware of this? How do you feel about this? So here's my conclusion. I talk to a lot of people. We have made enemies out of friends. That was the uniform theme. They like the United States. They like to travel there. They like to be tourists there. They like in the winter to go to Florida or some other warm place in California.

1:35:28It's exciting for them. All of that. But they're not going to go anymore. They don't want to be beaten over the head by an ICE agent because they're Canadian, because they've immigrated, even if it's only for a few weeks, into the... They said it in more colorful language, which I will spare you, but it is unmistakable. And it was everywhere. It was... Nobody was personally unfriendly to me. I was treated lovely. So was my wife. No problem. No problem. But if you think those people have not heard that what they thought was an ally of theirs isn't, is actually an enemy with feelings of hostility and that they wonder, they asked both my wife and I, do you agree with that?

1:36:30And you could see the worry in their eyes that we might say, yes, we do. We didn't, but they didn't know that. And so they were guarded. You could see when I asked what they thought, they wanted to see where I was coming from before they ventured. I had to show that I'm not there to attack them or to be in any way other than learning. And that's what I would say. I want to learn what the effect has been. Once they heard that, you know, they believed it, at least in most cases, they were quite forthcoming and told me that they really felt that their society had to focus itself elsewhere. And when I say, what does that mean?

1:37:19we have to deal with China we have to deal with Europe we have lots of the things they need and want which we should sell to them and with the money we get we can buy from them the thing we don't need the United States we don't want it we're afraid if we do business with the United States what will Mr. Trump do next? Take advantage of what we're not doing. Three people said to me, I'm not going to Florida. I said, oh, what are you doing? I'm going to Cuba. Okay, that was their adjustment. Cuba, 90 miles away from Florida, has lovely beaches, and it's warm and they're going to do their winter vacation in Cuba.

1:38:11Let me drive it home. The attack on Canada will deprive, you know, some hotel in Florida of a business that will instead be business for a hotel in Havana. That's a consequence that has to be factored in. Otherwise, you begin to pretend that it isn't happening. We naturalize the cycles. We will not face them. And we don't really face the inequality of wealth and income either. And that is corrosive of society. I remember having a teacher of mine give us readings many years ago, first from Plato and then from Aristotle, about why they didn't like markets. the two of them and they and it was they they have quite a bit about that and they didn't like markets here was the quote they destroy the social cohesion of communities by dividing people into those who make money through the market and those who don't that's interesting that's the argument.

1:39:28And how many people who revered Plato and Aristotle as, you know, foundations of Western civilization or whatever, however you're going to put it, how many of them are aware that neither of these people liked markets? They were both against them. They had different ways of handling their antipathy, but they were both very clear. No market idolatry there. I mean, I could go on. There is the market. What about the market? We have...

1:40:27When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Almost the only remaining largely private medical care or health system in the world.

1:41:06And we pay more for our health care than all these other countries. And our outcomes, if you rank them, as the World Health Organization and others have done, are very mediocre. We had a mediocre longevity. We have mediocre number of times in a hospital, mediocre child, the death before age one. The measurements of our health, mediocre. The cost we pay, way beyond everybody else. Okay, I got news for you. As an economist, as a professor of economics, if we're paying more than everybody else and we're getting mediocre, it's a problem that an economist would be asked, well, this is not acceptable.

1:41:58Either we pay less or we get medical care. How? Why is it that we're in this bad position and how do we get out of it? We don't have that. We do not admit. We tell each other stories about how you can get really good care in some of our leading hospitals. You can't. That's not an answer to the problem. It's an observation that enables you to pretend that the problem is somehow overcome or solved because rich people can go to Mount Sinai Hospital in upper New York City and get good care. They can. But 70, I believe my memory is right, 77 % of young men and women in America who are given a physical exam by the American military are told, you are not eligible to be in the military, Air Force, Marines, Army, Navy, because you're not physically fit.

1:43:16Whoa, isn't that a problem? And not just a problem of diet. That's a problem of physical energy. It's a problem of how you take care of your body. It includes your diet, for sure. but how much time do you spend as a couch potato how much time they'll fill in the blank these are these are problems real problems people kind of half know but we don't have mr trump could care less nothing doesn't do anything doesn't talk about it doesn't seem to understand it or doesn't agree with anything I just said, I wouldn't even know. He's loudmouth all the time, but not about these things. The tariff. How does the tariff affect these issues?

1:44:11He has no idea. And that's because it would be very, very complicated to try to figure out what putting these tariffs will do to the upbringing of our young people to give them better body health as they grow. Every other society I know thinks about it, works at it. We don't. We are the place that produces the worst diet imaginable for a well-off country. I'm not talking about poor countries that literally don't have the food. I'm talking about countries that have the food but insist on processing it so it is full of fat and sugar deprived of any nutrient. We all know the story. We all know it and we march like robots to early death because we don't as a society deal with it.

1:45:19We have an immense debate about vaccines, led by a person who has given us many reasons to think there might be somebody better than him to be in charge of all of this. To be skeptical about vaccines, fine. To think that sometimes they're pushed when they shouldn't be? I'm assuming that's true, and it would be good to ascertain them. But this wholesale, that becomes religion again. And I thought we didn't want that kind of thinking to be governing these kinds of questions. Otherwise, we would go back and make sure never to eat meat on Friday. I'd like to return to two things you said a little bit earlier.

1:46:10You just said that, or he mentioned that elon musk donated something 200 million dollars to trump's campaign and then wielded a very outsized influence in the government for a period of time right and earlier right at the beginning of our conversation you said with regard to the tariffs that so long as trump keeps the people who run the society happy he'll he'll get away with it and that he has taken care of them. And last when we spoke in New York City, I had a conversation with Chris Hedges right afterward. And one of the topics in our discussion was the deep state and how Trump is afraid of them, beholden to them.

1:46:57And what I was wondering is when you referred to the people who keep the society running that Trump has to keep happy? Were you just referring to the Elon Musks or who did you have in mind there and how is he keeping them happy? Well, my answer to that question is that I understand class as a fundamental institution of modern society and that it has been that way for quite a while. that slavery is a system in which the two great classes are the masters and the slaves and feudalism which at least in europe came after slavery is a system in which you had two great classes lords and serfs and that capitalism which emerges out of those first two slavery and is a system where the two great classes that confront each other are employers and employees.

1:48:08Each of those is quite different from the other, but they also have something in common, which is that the people at the top are small in number and the people at the bottom are not small in number. The slaves are many, the masters few. The serfs are many, the lords are few, and the employees are many and the employers are few. According to the United States Census now, three percent of Americans are employers and that includes self-employed. The other 97 percent are not. And for me, that's where I start. When I say the people who run this society, I mean the class. And that's the class of employers.

1:48:59So if you like, it's those 3%. And what they want is the freedom to buy and sell and produce. The freedom of free enterprise. the freedom of free enterprise hustling in the market to make the biggest profit they can. They love that. That's the capitalism they have, and that's the capitalism they want. One of the things they want from the government is a whole array of services. They want the government to protect them from other countries with the military. They want the government to protect them from their own workers. That's the police and when needed the military. They want the government to help them navigate the seas to buy wherever what they want to buy is cheapest and to sell wherever they want to sell it for the most money.

1:50:06They want the seas to be open. They want the trading to be free and all the rest. In order for the government to do those things, the government has to get money. It has to be able to do that. The employers want many other things. If trouble happens, they want to be able to call up the police department who comes over with people to help them solve the problem, whatever that might be. They want a system of weights and measures so everybody who trades a pound of something knows what a pound is and uses the same scale to come to a conclusion. In other words, to avoid warfare among them, which economics would normally have if there weren't some institution preventing that.

1:51:02So they have all these ideas. the government should have laws should have a system of making laws that people will observe it has to keep a mood in the country to avoid us killing one another and on and on and on but they don't here comes the punchline they don't want to pay for this they never have They've wanted the mass of people to pay for it. They've worked very hard to try to get the mass of people to believe that what the government is doing is for everybody, so that everybody has to pay because they don't want to pay. Having that in the background, now let me tell you what Mr. Trump did.

1:51:51during his first time as president he didn't get much done but the single most important piece of legislation during the first term of mr trump during those four years was the tax reduction act that was passed in the congress in december of 2017 okay mr trump boasted with some truth that this was one of the biggest tax cuts for business and for rich people in american history not something i would boast of but he did because that's who he is. And the American business community loved it. For big corporations, they were literally being given billions, with a B, billions of dollars of tax relief.

1:52:55Wow. Even for medium and small businesses, it was a reduced tax bill. And that meant the little business person had more money left over after the tax bill was paid more than he used to have because the taxes were brought down. The only thing that the lame Democratic Party, lame then, lamer now, the only thing they got in exchange for letting all that happen, for not calling the American people into the streets. Because remember, 2017, when they got this big tax cut, the United States had just come off 40 years of redistributing wealth from the bottom and the middle to the top. Never did a ruling class, never did an employer class need a tax cut less.

1:53:59They had just had a spectacular run. The stock market from 1980 to 2010, we've never seen a stock market go that fast, that high. They didn't need a tax cut. He gave it to them anyway. And all the lame Democrats got was that there would be an end to this tax cut. When? In the year 2025, and we're talking back 2017. So eight years into the future, on the 31st of December, New Year's Eve, those tax cuts would expire. When he ran for office this time, and that was last year, right, 2024, Mr. Trump promised that if they would elect him, if they would give him the donations he wants, he would extend that bill so it didn't expire on the 31st of December, and he would add even more tax cuts, and he did that.

1:55:12That's what the big beautiful bill that you all heard about a few months ago, that's what it was. Canceling the expiration of the 2017 tax bill on the 31st of December of this year and giving them a few more tax cuts. That's why the rich are happy with him. And what does he do with all the money he's not taking from corporations and the rich. Here we go. Number one, he's cutting back programs. That was Elon Musk's job. Cancel. Claim it's all about efficiency. That's as true as saying taking over D.C. is about crime. That isn't true. That is, to use a technical term, bullshit. What the president is doing is cutting out the public programs.

1:56:18Then he goes to the universities. I'm not giving you money anymore the way I used to for research in medical things, in psychology, and you name it. And you know what? I'm accusing you of anti-Semitism to justify this. Again, that's got the same truth value as blaming crime for taking over the city of Washington, D.C., or crime for deporting poor immigrants in cruel, hostile ways. Who's really fooled by all of this? But I'm not done. not only did he give them the extension of that tax bill cut of 2017 and not only did he give him more taxes but he did this fake game of efficiency in the government and then he did another one the tariffs you see the tariffs hit the business men and women now you might have thought But gee, they would be pushing him not to do that.

1:57:32They don't want to pay the taxes. And they don't. And they are pushing it. But they don't push too hard. Because whatever they lose from the tariff is more than offset by the cut in taxes. If he hadn't extended that law, gotten rid of the December 31st expiration date, they would have seen a big increase in taxes. and he delivered for that they won't see it they'll get tax cuts and yeah they'll have to navigate in the way i talked with you about a few minutes ago they'll have to navigate around those tariffs buy from somebody else fake it in one way or another and they will find those ways but that's a relatively small price to pay for a huge tax cut they had the last eight years and now indefinitely into the future.

1:58:31He took care of them. So even though they don't like the tariffs, and they don't, American business as a whole is against the whole tariff regime. They don't like it. But they're not going to do anything about it. They're not going to undercut Mr. Trump's position, which they could and which they may still do, unless he is making himself too difficult so that his tax cuts aren't enough to offset what he's costing them with messing up the world trade system the way he is. They see him as a grandstanding politician. They know what that is. They see it. They don't like it. The United States Chamber of Commerce is against the whole tariff regime and has said so in his first time in office and has said so again.

1:59:32So it's not as though all the businesses are saluting, but they get enough from him to let him go. So he wants to beat up on non-white people. Okay. He wants to grab the power of Washington. Okay. He wants to invade Los Angeles when no one in Los Angeles wants or need it. Okay. They will let him go until they won't. And even though they won't say it, I'll say it for them. Who am I talking about? The employer class. Here's what I'll say on their behalf. Watch out, Mr. Trump. You're on a leash. and the leash lets you do what you're doing now. But do too much more of what you're doing now and we will yank you back and suddenly you'll be the little loud circus barker that you always were.

2:00:37Mr. Trump fears that because somewhere he knows. Just like most of you watching, you know too. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs.

2:01:20It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. I get so many headaches every month. It could be chronic migraine, 15 or more headache days a month, each lasting four hours or more. Botox, Autobotulinum Toxin A, prevents headaches in adults with chronic migraine.

2:01:57It's not for those who have 14 or fewer headache days a month. Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection, causing serious symptoms. Alert your doctor right away as difficulty swallowing, speaking, breathing, eye problems or muscle weakness can be signs of a life-threatening condition. Patients with these conditions before injection are at highest risk. Side effects may include allergic reactions, neck and injection site pain, fatigue and headache. Allergic reactions can include rash, welts, asthma symptoms and dizziness. Don't receive Botox if there's a skin infection.

2:02:25Tell your doctor your medical history, muscle or nerve conditions including ALS Lou Gehrig's disease, myasthenia gravis or Lambert-Eaton syndrome and medications including botulinum toxins as these may increase the risk of serious side effects. Why wait? Ask your doctor. Visit BotoxChronicMigraine.com or call 1-800-44-BOTOX to learn more. Trump has these two major problems facing him. One is covering government spending and the debt that we owe. Another is reindustrializing the United States. You laid out why his proposed means of solving these problems strikes you as nuts. If he were not beholden to his political base or to the employers of this country, is there a strategy that you believe he could follow that could solve these problems?

2:03:25Absolutely. If he weren't who he were, if he were somebody else, reminds me of a wonderful line in one of Woody Allen's films. somebody asks the woody character uh is there anything you would like and he says no i'm pretty happy anything you would want not you know maybe to be somebody else yeah you know it's a very woody allen yeah no that's great if trump was somebody else what could he do but let me be the economist who is also if you like the child in the room in the moment when the child to everyone's amazement says something truly profound as children often do understand without all of the charades the rest of us learn So here would be my solution.

2:04:33The United States could easily be interrogated by a good government, by a good Mr. Trump. What are your needs? What are the needs of this country? And by that I mean we need to wean ourselves off of ecologically damaging institutions, procedures, systematically. You know, it's the greening of America that we have fancized about that we all know we need. We need to produce food, for example, that is healthy and safe. There shouldn't be two qualities of food, organic and deadly. So if you're poor, you buy deadly because you can't afford the enormous price increase for a proper tomato or a proper banana or a proper hamburger or what it is.

2:05:32Stop all that. Meet the needs of the people. Everybody needs a certain amount of living space. No 25 people to a studio apartment. No homeless people. We need adequate housing, nicely arranged with land outside for children to play it and for people to congregate socially. Let's build that for our people. And let's do it in a way that meets yet another need, namely the need for people to have meaningful work in their lives that earns them enough money to partake of the healthy food, the socially conscious housing, and all the rest. And let's give them a job that elevates them as a human being and does not demean them.

2:06:41And here's what I mean. A job that is interesting, a job that explores different skills you have that does not have you do the same work all day long. And it should be in the framework of what is called a worker co-op. So that you and the others working with you, whatever your workplace, a factory, an office, a store, that you work out with your fellow workers what you're going to produce, what technology going to use, where you're going to do the work, and what you're going to do with the output that you collectively produce. How are you going to interact with other enterprises and with the larger community?

2:07:28All of that is a process of working it out with your fellow workers in what will come to be known as our community. We can do all of that. We have the materials, we have the land, we have the population, we have the resources, and we are very good technologically as a people. We can solve the problems that will arise in such a system, but they'll be okay to arise because the very process of collectively identifying them and working out their solution will bring us together when we live now in a society that is tearing us apart. And I think that's what a leader would do who wasn't tied down to serving the employer class with everything else.

2:08:28Who cares? When Mr. Trump is done with whatever his version is of policing Washington. All the poor people that will be rousted out of the tent cities they now occupy, they'll go somewhere else. They won't lie down and die. Some of them will be put in prisons where their situation will get worse. Some of them will scatter to the suburbs of Maryland and Virginia and bring their problems with him because what he's doing in Washington solves nothing. That kind of behavior never has and doesn't now. I'm reminded of a few years ago when that Trump-like person, Rudy Giuliani, was the mayor of New York and the police, Some of them went around the city chanting, it's Giuliani time.

2:09:32And Giuliani said, as Trump did yesterday, that the police should do what they have to do. When you do that, you just make the problem worse. You pretend at a solution, but you make the problem worse. and to say to the proposal I just made, oh yeah, that sounds good. Well, if it sounds good, why not try it? What Mr. Biden did for this country, what Mr. Trump did, what Mr. Obama did, look where it's gotten us.

2:10:16Let me close on this point this way. In many ways, we are like the culture out of which the United States came, namely that of Great Britain. But Great Britain, which has many of the same problems we do, their empire collapsed earlier than ours. They have been in a declining empire for much longer than we have. So they can teach us something. Their standard of living is now among the worst in Europe. It used to be among the best. But things have gotten so bad that they too have had it with the dead hopeless behavior of their two major parties. They don't call them Democrat and Republican. They called them the conservatives and the Labor Party.

2:11:16And the Labor Party there had a different voice. A little bit like the Democratic Party here had Bernie Sanders. And over there, the name of the fellow was Jeremy Corbyn. And the new Labor Party did like the Democrats here. They kicked Corbyn out. they did that here too but they didn't kick him out of the party they just put him in a corner and wouldn't let him be other than that remarkable grandpa from vermont that we know so here's what they did a few weeks ago jeremy corbyn and a young non-white woman who's a member of the parliament in England representing the Labour Party. They announced they're breaking from all that, that Britain needs a new beginning, and they formed a new political party.

2:12:20They've given it a tentative name called your party, because they don't want anyone else other than the people who gather around it to decide what its name will be. And in the first 10 days of that party's announced existence, 300 ,000 people signed up. That's where we are, folks. Britain is our future. they have carved out the path we are now following we ought to pay attention we might learn something that will make it less difficult to follow that path than it has been for britain rick as always the time blows by when we talk and thanks a lot for it this has really been great

2:13:27I see you. Avatar Fire and Ash is now streaming on Disney+. It's the film critics are calling the best Avatar yet. Go, go, go, go! A true epic and completely jaw-dropping. This is the only purest thing in this world. Return to Pandora on Disney+. It will be an adventure for the whole family. And watch the Oscar-winning phenomenon at home. This is sick! Avatar Fire and Ash now streaming on Disney Plus rated PG-13