Welcome back to a Numbers Game with Ryan Gradosky. I am your host and data guru, Ryan Grodski. If you can tell by the title, thank you for being here again. This podcast is now about three months old, and if you're enjoying my show, please like and subscribe and give me a five star review wherever you get to stream your podcast. It really means a lot to the show. I'm excited to announce that starting next week, we're going to start a question answer portion to the podcast. The last ten minutes or five minutes of every show, I'll be taking your questions on politics, the economy, stories from the campaign trail, who I hate in politics. I'll even try to answer your questions on sports, but keep those light and abbreviate it. Whatever you want to know, If I can answer it, I will, and I'll answer my most honest invest ability. Send your questions with the chance for them to being answered to my podcast. Email them to Ryan at Numbers Game podcast dot com. That's plural numbers, Ryan at Numbers gamepodcast dot com, and maybe I will be answering your questions next week. Okay, now to this week in nineteen seventy, Edwin Starr saying war, what is it good for? Absolutely nothing? But what about a trade war? That's the theme for this week's show. President Trump's latest announcement of new tariffs has the markets jittering, and even leaders in allied countries are attacking the moves. Democrats are calling the tariff's attacks on the working people, while Republicans are saying that it's just a negotiating tactic to get foreign countries to remove their tariffs on American made goods. So where is the truth within the narrative? Let's start off with some data and some history. Tariffs are attacks on imports and exports of goods, so it's worth looking at which countries are America's largest trading partners. As of twenty twenty four, America's largest trading partners is the European Union. We do about a trillion dollars a year in trade with them, Mexico at eight hundred and forty billion, Canada at seven hundred and sixty two billion, China at five hundred and eighty two billion, and then Japan at two hundred and twenty eight billion. These five countries are our largest trading partners, but the US has a negative trade imbalance with all of them. That means we import more than we export, and we're more dependent on them for their product than they are for hours. In the four countries and the European Union, which is not a country, it's a collection of countries. But within these five trading partners, our trade and balance is nearly eight hundred and thirty five billion dollars a year, with the largest trade imbalance coming from China at two hundred and ninety five billion. America's trade and balance is fairly well known at this point. We've had a long de industrialization process in many sectors of the economy and we've become a service based economy. I think it's pointing out that this isn't true for all nations. The United States does run trade surpluses with a bunch of countries like the United Kingdom, Brazil, Singapore, Australia, Columbia, and Saudi Arabia. We actually have a trade surplus overall with Latin America, and certain industries like agriculture, food, and petroleum have an overall positive trade surplus, meaning we shit more products than we take in in those sectors of the economy. The industries that we are most reliant on the world for are computers, minerals, transportation, apparel, and electrical equipment. Across the United States top thirty trading partners that we run a one point one five trillion dollars a year deficit. Now it's not like some developed nations, you know, don't run trade deficits. A lot of countries have trade surpluses, major countries like China. China runs a one trillion a nearly one trillion dollar year trade surplus. Australia has a about one hundred and forty billion dollars a year trade surplus. Even New Zealand and Italy run trade surpluses. So Trump is coming into office seeing these other countries in the world running positive trade surpluses and saying, why don't we have the same? It's not like that. We never did. Certainly, the America that Donald Trump grew up in didn't experience trade deficits for about a century. Between eighteen seventy and nineteen seventy I think it was nineteen seventy four, America had a steady trade surplus, on average about one percent of GDP per year. This all while the United States had very strong protectionist trade policies with large tariffs lobbied on foreign goods. Sometime in the mid nineteen seventies, America slipt into a trade deficit, but it stayed around one percent of GDP until the mid nineteen nineties. That's when America's trade deficit fell to four percent of GDP. What happened, President George HW. Bush signed the US into the North American Free Trade Agreement, which is NAFTA. The official estimates are that about between six hundred thousand and nine hundred thousand US manufacturing jobs moved to Mexico to take advantage of cheap labor and then sell those products that used to be made in America back to Americans. And they'd say, you know, you're making a huge deal. You're getting it for a cheaper price. That's a big win for Americans, but they were losing their jobs. Compounding this problem was at the end of Bill Clinton's presidency, when China was allowed to join the World Trade Organization and President George W. Bush made it a permanent most Favored trading partner. At the time, the US had an eighty four billion dollar trade deficit with China, which ballooned to nearly four hundred billion dollars by twenty seventeen. It is now on three hundred billion. It was part of this post Cold War strategy to invite China into the global economy while isolating Russia, believing China would be end up in seeing democracy and liberalism. And you can see how that turned out. Once China was open to the world markets, more than two point four million manufacturing jobs headed overseas in just two years. About thirty percent of those loss manufacturing jobs were caused by increased trade deficits, according to the study by the Aggressive Policy Institute, that would eventually increase to three point seven million lost jobs by twenty eighteen. The number of manufacturing jobs in the US fell from nineteen million in two thousand to twelve point six by two thousand and nine. Donald Trump is not what anyone would call an orthodox politician. He's changed his mind on oppositions over and over and over again, sometimes sometimes in the same speech several times. But one major consistency during his life is this feeling the United States and its people have been ill served by our free trade agreements and we had to pay yearly for them. That's the mentality Trump comes to the White House within today and twenty seventeen, when he almost immediately started a trade war with China. In twenty eighteen, Trump increased imports on Chinese solar panels and washing machine and then increased steel in illumine tariffs across the entire world, and America's trade deficit with China did decrease substantially, from four hundred and eighteen billion to at three hundred and seven billion in twenty twenty. President Biden actually kept most of those tariffs on China and even increased them slightly, which further reduced our trade deficit. But while our trade deficit with China's decreased, our overall trade deficit with the world increased by about one hundred and nineteen billion during Trump's presidency. So while he wasn't able to reduce the trade deficit, he did make good on one promise, so to bring back manufacturing. Between twenty seventeen and twenty twenty. I'm not including the COVID years because that's not the same thing. That wouldn't be fair, the economy added four hundred thousand manufacturing jobs. But all these trade wars during the first term, they didn't lead to the higher prices that many people fearmonger. A FactCheck dot org summary of Trump's first term in office found that he had one of the lowest inflation rates of any recent president, and paichecks, substantially for working class Americans, rose faster than the rates of inflation. So fast forward today, the stock market is turbuline. A lot of people are blaming Trump's whetic around tariffs, Many investors are nervous, and the media, who mostly Hey Donald Trump and Republicans are basically openly rooting for a recession. They're saying President Trump's going to destroy the economy and increase prices on vulnerable Americans because of his tariffs. And there's mixed signals in the market. You could basically choose your own journey depending on your political ideology. In Trump's favor is the fact that inflation has slowed since he came into office. His first full month in office, if you strip out food and energy costs, inflation is down significantly. Mortgages are down, gas prices are at a three year low. But working against Trump is the fact that the stock market's down big time since he was inaugurated. The Dow Jones is down nearly four thousand points since January twentieth. The Federal Reserve Bank of Atlanta expects the economy to contract by two point four percent in the first year. Most of the uncertainty of the market is coming from, allegedly from a rhetoric around Trump's trade wars, which gets us back to the beginning of the segment. Since he's been sworn in, President Trump has issued tariffs or threatened to issue tariffs against Canada, Mexico, Colombia, China, the European Union, and other countries in the world that have reciprocal tariffs. Democrats are blaming this and saying it's on Trump and saying that this is a tax on the working people. Republicans are saying, this is just a negotiating tactic and it will all go away. Remember, most countries in the world do have tariffs on American make goods. In the case of Columbia, Trump used the tariffs justice, that are the threat of tariffs justice make them take their illegal immigrants back, And no tariffs were ever sent. And that's where Republicans are saying, oh no, it's just a threat to make them change their ways. But what if tariffs aren't just a negotiating tool, but part of a broader policy around the idea of reindustrializing America and scraping back the decisions made in the nineteen nineties. Can tariffs be used as a force of good to bring back jobs and to sit there and get things made in America and less dependent on our world's largest adversary you're listening to It's a numbers game with Ryan Grodski. We'll be right back after this message, our guest. This week's articles are a must rate in my household. John Carty is an editor at Bripebar News who writes about tariffs and they stay the economy and says something that a lot of people in the mainstream media do not say. John, thank you for being out with me.

Welcome back to a Numbers Game with Ryan Gradosky. I am your host and data guru, Ryan Grodski. If you can tell by the title, thank you for being here again. This podcast is now about three months old, and if you're enjoying my show, please like and subscribe and give me a five star review wherever you get to stream your podcast. It really means a lot to the show. I'm excited to announce that starting next week, we're going to start a question answer portion to the podcast. The last ten minutes or five minutes of every show, I'll be taking your questions on politics, the economy, stories from the campaign trail, who I hate in politics. I'll even try to answer your questions on sports, but keep those light and abbreviate it. Whatever you want to know, If I can answer it, I will, and I'll answer my most honest invest ability. Send your questions with the chance for them to being answered to my podcast. Email them to Ryan at Numbers Game podcast dot com. That's plural numbers, Ryan at Numbers gamepodcast dot com, and maybe I will be answering your questions next week. Okay, now to this week in nineteen seventy, Edwin Starr saying war, what is it good for? Absolutely nothing? But what about a trade war? That's the theme for this week's show. President Trump's latest announcement of new tariffs has the markets jittering, and even leaders in allied countries are attacking the moves. Democrats are calling the tariff's attacks on the working people, while Republicans are saying that it's just a negotiating tactic to get foreign countries to remove their tariffs on American made goods. So where is the truth within the narrative? Let's start off with some data and some history. Tariffs are attacks on imports and exports of goods, so it's worth looking at which countries are America's largest trading partners. As of twenty twenty four, America's largest trading partners is the European Union. We do about a trillion dollars a year in trade with them, Mexico at eight hundred and forty billion, Canada at seven hundred and sixty two billion, China at five hundred and eighty two billion, and then Japan at two hundred and twenty eight billion. These five countries are our largest trading partners, but the US has a negative trade imbalance with all of them. That means we import more than we export, and we're more dependent on them for their product than they are for hours. In the four countries and the European Union, which is not a country, it's a collection of countries. But within these five trading partners, our trade and balance is nearly eight hundred and thirty five billion dollars a year, with the largest trade imbalance coming from China at two hundred and ninety five billion. America's trade and balance is fairly well known at this point. We've had a long de industrialization process in many sectors of the economy and we've become a service based economy. I think it's pointing out that this isn't true for all nations. The United States does run trade surpluses with a bunch of countries like the United Kingdom, Brazil, Singapore, Australia, Columbia, and Saudi Arabia. We actually have a trade surplus overall with Latin America, and certain industries like agriculture, food, and petroleum have an overall positive trade surplus, meaning we shit more products than we take in in those sectors of the economy. The industries that we are most reliant on the world for are computers, minerals, transportation, apparel, and electrical equipment. Across the United States top thirty trading partners that we run a one point one five trillion dollars a year deficit. Now it's not like some developed nations, you know, don't run trade deficits. A lot of countries have trade surpluses, major countries like China. China runs a one trillion a nearly one trillion dollar year trade surplus. Australia has a about one hundred and forty billion dollars a year trade surplus. Even New Zealand and Italy run trade surpluses. So Trump is coming into office seeing these other countries in the world running positive trade surpluses and saying, why don't we have the same? It's not like that. We never did. Certainly, the America that Donald Trump grew up in didn't experience trade deficits for about a century. Between eighteen seventy and nineteen seventy I think it was nineteen seventy four, America had a steady trade surplus, on average about one percent of GDP per year. This all while the United States had very strong protectionist trade policies with large tariffs lobbied on foreign goods. Sometime in the mid nineteen seventies, America slipt into a trade deficit, but it stayed around one percent of GDP until the mid nineteen nineties. That's when America's trade deficit fell to four percent of GDP. What happened, President George HW. Bush signed the US into the North American Free Trade Agreement, which is NAFTA. The official estimates are that about between six hundred thousand and nine hundred thousand US manufacturing jobs moved to Mexico to take advantage of cheap labor and then sell those products that used to be made in America back to Americans. And they'd say, you know, you're making a huge deal. You're getting it for a cheaper price. That's a big win for Americans, but they were losing their jobs. Compounding this problem was at the end of Bill Clinton's presidency, when China was allowed to join the World Trade Organization and President George W. Bush made it a permanent most Favored trading partner. At the time, the US had an eighty four billion dollar trade deficit with China, which ballooned to nearly four hundred billion dollars by twenty seventeen. It is now on three hundred billion. It was part of this post Cold War strategy to invite China into the global economy while isolating Russia, believing China would be end up in seeing democracy and liberalism. And you can see how that turned out. Once China was open to the world markets, more than two point four million manufacturing jobs headed overseas in just two years. About thirty percent of those loss manufacturing jobs were caused by increased trade deficits, according to the study by the Aggressive Policy Institute, that would eventually increase to three point seven million lost jobs by twenty eighteen. The number of manufacturing jobs in the US fell from nineteen million in two thousand to twelve point six by two thousand and nine. Donald Trump is not what anyone would call an orthodox politician. He's changed his mind on oppositions over and over and over again, sometimes sometimes in the same speech several times. But one major consistency during his life is this feeling the United States and its people have been ill served by our free trade agreements and we had to pay yearly for them. That's the mentality Trump comes to the White House within today and twenty seventeen, when he almost immediately started a trade war with China. In twenty eighteen, Trump increased imports on Chinese solar panels and washing machine and then increased steel in illumine tariffs across the entire world, and America's trade deficit with China did decrease substantially, from four hundred and eighteen billion to at three hundred and seven billion in twenty twenty. President Biden actually kept most of those tariffs on China and even increased them slightly, which further reduced our trade deficit. But while our trade deficit with China's decreased, our overall trade deficit with the world increased by about one hundred and nineteen billion during Trump's presidency. So while he wasn't able to reduce the trade deficit, he did make good on one promise, so to bring back manufacturing. Between twenty seventeen and twenty twenty. I'm not including the COVID years because that's not the same thing. That wouldn't be fair, the economy added four hundred thousand manufacturing jobs. But all these trade wars during the first term, they didn't lead to the higher prices that many people fearmonger. A FactCheck dot org summary of Trump's first term in office found that he had one of the lowest inflation rates of any recent president, and paichecks, substantially for working class Americans, rose faster than the rates of inflation. So fast forward today, the stock market is turbuline. A lot of people are blaming Trump's whetic around tariffs, Many investors are nervous, and the media, who mostly Hey Donald Trump and Republicans are basically openly rooting for a recession. They're saying President Trump's going to destroy the economy and increase prices on vulnerable Americans because of his tariffs. And there's mixed signals in the market. You could basically choose your own journey depending on your political ideology. In Trump's favor is the fact that inflation has slowed since he came into office. His first full month in office, if you strip out food and energy costs, inflation is down significantly. Mortgages are down, gas prices are at a three year low. But working against Trump is the fact that the stock market's down big time since he was inaugurated. The Dow Jones is down nearly four thousand points since January twentieth. The Federal Reserve Bank of Atlanta expects the economy to contract by two point four percent in the first year. Most of the uncertainty of the market is coming from, allegedly from a rhetoric around Trump's trade wars, which gets us back to the beginning of the segment. Since he's been sworn in, President Trump has issued tariffs or threatened to issue tariffs against Canada, Mexico, Colombia, China, the European Union, and other countries in the world that have reciprocal tariffs. Democrats are blaming this and saying it's on Trump and saying that this is a tax on the working people. Republicans are saying, this is just a negotiating tactic and it will all go away. Remember, most countries in the world do have tariffs on American make goods. In the case of Columbia, Trump used the tariffs justice, that are the threat of tariffs justice make them take their illegal immigrants back, And no tariffs were ever sent. And that's where Republicans are saying, oh no, it's just a threat to make them change their ways. But what if tariffs aren't just a negotiating tool, but part of a broader policy around the idea of reindustrializing America and scraping back the decisions made in the nineteen nineties. Can tariffs be used as a force of good to bring back jobs and to sit there and get things made in America and less dependent on our world's largest adversary you're listening to It's a numbers game with Ryan Grodski. We'll be right back after this message, our guest. This week's articles are a must rate in my household. John Carty is an editor at Bripebar News who writes about tariffs and they stay the economy and says something that a lot of people in the mainstream media do not say. John, thank you for being out with me.

Yeah, thanks for having me. Ron.

Yeah, thanks for having me. Ron.

So, my first question, I want to ask you about the market and Trump's tariffs. If you even listen to any major outlet, Trump's creating instability and we may be on the process of recession. I mean, I've heard of this from people on CNN or MSNBC all the time, and the Federal Bank of Atlanta has decreased GDP expectations. You had a different take in Wipe Oart Business Digest, which, by the way, bright Our ripe Oart Business Digest is fabulous. It's amazing you say that any accusation that tariffs are all to blame or quote laughably lazy end quote, and what you're really seeing is selective retreat of high risk, high valuation stocks. Can you explain that?

So, my first question, I want to ask you about the market and Trump's tariffs. If you even listen to any major outlet, Trump's creating instability and we may be on the process of recession. I mean, I've heard of this from people on CNN or MSNBC all the time, and the Federal Bank of Atlanta has decreased GDP expectations. You had a different take in Wipe Oart Business Digest, which, by the way, bright Our ripe Oart Business Digest is fabulous. It's amazing you say that any accusation that tariffs are all to blame or quote laughably lazy end quote, and what you're really seeing is selective retreat of high risk, high valuation stocks. Can you explain that?

Yeah? So, first of all, it would it makes sense for there to be a selloff in the end of February beginning of March based on tariffs. Everybody knew Donald Trump was bringing tariffs to the table, so and we knew that. You know, maybe you didn't know he was going to win the election, so maybe you didn't know it last August. But the market did really well between November and December and January. So why the sudden panic? The tariff narrative doesn't really make sense, it is I think it is a little bit and I in the the bright Our Business not just piece you related to. I end up with a quote from Michael Lewis's book Liars Poker, where when clients would call up and say, like, why is the market selling, and they had no idea what it was selling, they would always blame the Arabs that was their go to thing. There was the Arabs are selling, that's what's bringing it down. The best part about that was that it was there was no way to disprove right it was there. Nobody knew why the market was doing anything. But also nobody knew why that what Arabs, you know, made oil money, was doing with its money, And so you could just say the Arabs are selling and people would say, Okay, that makes sense. Tariffs are the new Arabs. They are what the media goes to when it wants to explain what's going on in the markets. I think what's really happening are two things. One is a rotation out of the stocks that were really hot over the last couple of years. Now, that should be expected when you have a very different government coming in, right that the stocks that did well under Biden should not necessarily be expected to do really well under Trump. And not just under Trump, but under a Republican House majority, a Republican Senate majority, and all of the regulators changing hands. You would expect there to be some change a lot of these stocks. Like I mean, people, even before the election, we're starting to worry about the valuations. You have these stocks where we're training get multiples to earnings that were incredible, and I think what we're seeing is those coming down, right, and a lot of.

Yeah? So, first of all, it would it makes sense for there to be a selloff in the end of February beginning of March based on tariffs. Everybody knew Donald Trump was bringing tariffs to the table, so and we knew that. You know, maybe you didn't know he was going to win the election, so maybe you didn't know it last August. But the market did really well between November and December and January. So why the sudden panic? The tariff narrative doesn't really make sense, it is I think it is a little bit and I in the the bright Our Business not just piece you related to. I end up with a quote from Michael Lewis's book Liars Poker, where when clients would call up and say, like, why is the market selling, and they had no idea what it was selling, they would always blame the Arabs that was their go to thing. There was the Arabs are selling, that's what's bringing it down. The best part about that was that it was there was no way to disprove right it was there. Nobody knew why the market was doing anything. But also nobody knew why that what Arabs, you know, made oil money, was doing with its money, And so you could just say the Arabs are selling and people would say, Okay, that makes sense. Tariffs are the new Arabs. They are what the media goes to when it wants to explain what's going on in the markets. I think what's really happening are two things. One is a rotation out of the stocks that were really hot over the last couple of years. Now, that should be expected when you have a very different government coming in, right that the stocks that did well under Biden should not necessarily be expected to do really well under Trump. And not just under Trump, but under a Republican House majority, a Republican Senate majority, and all of the regulators changing hands. You would expect there to be some change a lot of these stocks. Like I mean, people, even before the election, we're starting to worry about the valuations. You have these stocks where we're training get multiples to earnings that were incredible, and I think what we're seeing is those coming down, right, and a lot of.

Tech stocks to yes.

Tech stocks to yes.

Right.

Right.

So that's the other part of this, right, Why would these tech stocks plummet because of tariffs? That doesn't really make a lot of sense. They're not the ones who are going to be hit either with our tariffs or even with the retaliatory tariffs. So what you know, what's going on there. It's a convenient narrative, but it doesn't match the details to what the market's doing. Right.

So that's the other part of this, right, Why would these tech stocks plummet because of tariffs? That doesn't really make a lot of sense. They're not the ones who are going to be hit either with our tariffs or even with the retaliatory tariffs. So what you know, what's going on there. It's a convenient narrative, but it doesn't match the details to what the market's doing. Right.

And during Trump's first term, when he did tariffs on China, there was a lot of stories in the mainstream media, and I'll just to read you a few headlines. MPR said Trump's steel tariffs on and aluminum tariffs could raise the price of beer, candy, and cars. Market Watch said, yes, coke will cost more under Trump's steel tariffs. CNBC said, Campbell says tariffs will make soup cans more expensive. Fast forward to today and you're seeing basically the same headlines, but in place is down and the core producer price index for final demand last month to climb by point one percent. So did I don't think that it did. And maybe I'm wrong though, but I don't remember coke and tuna and all the rest of the can foods spiking and why and how is inflation actually decreasing Trump's first full month in office?

And during Trump's first term, when he did tariffs on China, there was a lot of stories in the mainstream media, and I'll just to read you a few headlines. MPR said Trump's steel tariffs on and aluminum tariffs could raise the price of beer, candy, and cars. Market Watch said, yes, coke will cost more under Trump's steel tariffs. CNBC said, Campbell says tariffs will make soup cans more expensive. Fast forward to today and you're seeing basically the same headlines, but in place is down and the core producer price index for final demand last month to climb by point one percent. So did I don't think that it did. And maybe I'm wrong though, but I don't remember coke and tuna and all the rest of the can foods spiking and why and how is inflation actually decreasing Trump's first full month in office?

Right, So you're absolutely right. All of those stories were amazing. I actually it led me to track what was going on with consumer prices every month throughout throughout the entire first Trump administration. So I became an expert in the way all of these inflation things work because I was very curious, Look, there's all these claims going to push up prices. I didn't think that would happen. Uh, And it didn't. It just I mean, the price of the can of coke didn't go up by very much at all during the Trumpet minute. The aluminum tariffs did push up the price of aluminum. I'm like, don't get me wrong, Like the price of aluminum and the price of steel went up. So why didn't cars get more expensive? Well, the main reason is because they didn't give people more spending power. What causes inflation is an increase in the money supply. That so you have money growing faster than the amount of goods out there, so that doesn't happen. So where did the where who paid for them? Well, for the steel and aluminum tariffs, I'll say it was the companies like Coca Cola, They and Campbell's and Ford Motors. They actually ate into their profits a little bit. But guess what that policy was coupled with a massive corporate TAXI the tax cut. So yes, they suffered a little because of tariffs, but they got a much bigger boost. So overall the companies were better. We actually protect our feel a woman of industry, so none of the like the horror stories that were going to happen. And in the end, by the way, a lot of those outlets, I remember the Washington Post actually wrote a whole article about this. At the very end they finally admitted, oh yeah, it turned out the tariffs didn't cose inflation.

Right, So you're absolutely right. All of those stories were amazing. I actually it led me to track what was going on with consumer prices every month throughout throughout the entire first Trump administration. So I became an expert in the way all of these inflation things work because I was very curious, Look, there's all these claims going to push up prices. I didn't think that would happen. Uh, And it didn't. It just I mean, the price of the can of coke didn't go up by very much at all during the Trumpet minute. The aluminum tariffs did push up the price of aluminum. I'm like, don't get me wrong, Like the price of aluminum and the price of steel went up. So why didn't cars get more expensive? Well, the main reason is because they didn't give people more spending power. What causes inflation is an increase in the money supply. That so you have money growing faster than the amount of goods out there, so that doesn't happen. So where did the where who paid for them? Well, for the steel and aluminum tariffs, I'll say it was the companies like Coca Cola, They and Campbell's and Ford Motors. They actually ate into their profits a little bit. But guess what that policy was coupled with a massive corporate TAXI the tax cut. So yes, they suffered a little because of tariffs, but they got a much bigger boost. So overall the companies were better. We actually protect our feel a woman of industry, so none of the like the horror stories that were going to happen. And in the end, by the way, a lot of those outlets, I remember the Washington Post actually wrote a whole article about this. At the very end they finally admitted, oh yeah, it turned out the tariffs didn't cose inflation.

I remember one time we were at a bar and you said to me something to the effect of like, there will never be like a twenty dollars can of tuna, because no one's going to pay that. So what there is is there's always just a limitation in the amount of money willing to be purchase. And so because they don't have that much money, they're not going to buy that. They'll never charge that much, right.

I remember one time we were at a bar and you said to me something to the effect of like, there will never be like a twenty dollars can of tuna, because no one's going to pay that. So what there is is there's always just a limitation in the amount of money willing to be purchase. And so because they don't have that much money, they're not going to buy that. They'll never charge that much, right.

Well, And so one way of thinking about this is business has already charged as much as they can. It's not like they're sitting around and being like, man, i could probably charge everybody two bar dollars, but I'm not going to unless my costs go up, Right, That's not the way it works. They charge the maximum they can to get the most sales they can make, and unless something has enabled their customers to pay more, they're not going to charge more they can, right, So it doesn't work. And by the way, competition works it this way too. So if you have a Target and a Walmart in your town, and you put a tariff on China, right, and suddenly you know, Target and Walmart are paying a lot more for all the stuff on their shelves because they're getting a lot of it from China. And they raise prices. No, because if Walmart raises prices, everybody buys that stuff from Target. If Target raisess prices, everybody buys that stuff from Walmart. So and both of them know that they're in fierce competition for market share, so they actually neither of them raise their price because they know that would give their competitor the opportunity.

Well, And so one way of thinking about this is business has already charged as much as they can. It's not like they're sitting around and being like, man, i could probably charge everybody two bar dollars, but I'm not going to unless my costs go up, Right, That's not the way it works. They charge the maximum they can to get the most sales they can make, and unless something has enabled their customers to pay more, they're not going to charge more they can, right, So it doesn't work. And by the way, competition works it this way too. So if you have a Target and a Walmart in your town, and you put a tariff on China, right, and suddenly you know, Target and Walmart are paying a lot more for all the stuff on their shelves because they're getting a lot of it from China. And they raise prices. No, because if Walmart raises prices, everybody buys that stuff from Target. If Target raisess prices, everybody buys that stuff from Walmart. So and both of them know that they're in fierce competition for market share, so they actually neither of them raise their price because they know that would give their competitor the opportunity.

And if you look at trade deficits, and I mentioned trade up is earlier in the podcast. If you wrote a column which was very interesting because if you, if you listen to like more of I would guess the you know, classic framework tiers, trade deficits are not a bad thing because we get cheaper prices. So what does it matter, you know, if we outsource all of our goods you wrote, all of our production. Rather, you wrote in a column that trade deficits are actually responsible for more big government. Well, explain that because it goes against a lot of conventional thinking. And you wrote between nineteen seventy four and twenty twenty four, that fifty year period, America ranked up twenty trillion dollars in trade deficits.

And if you look at trade deficits, and I mentioned trade up is earlier in the podcast. If you wrote a column which was very interesting because if you, if you listen to like more of I would guess the you know, classic framework tiers, trade deficits are not a bad thing because we get cheaper prices. So what does it matter, you know, if we outsource all of our goods you wrote, all of our production. Rather, you wrote in a column that trade deficits are actually responsible for more big government. Well, explain that because it goes against a lot of conventional thinking. And you wrote between nineteen seventy four and twenty twenty four, that fifty year period, America ranked up twenty trillion dollars in trade deficits.

Yeah, I think people don't even have an idea of the scale of the trade deficits that we've been running. First of all, the economic theorists would tell you that that shouldn't even be possible, right, that trade deficits. Maybe you'll run one one.

Yeah, I think people don't even have an idea of the scale of the trade deficits that we've been running. First of all, the economic theorists would tell you that that shouldn't even be possible, right, that trade deficits. Maybe you'll run one one.

Year, but then the next year, your you know, prices will adjust and you'll sell stuff to other things to run fifty years of trade deficits means that something has gone wrong.

Year, but then the next year, your you know, prices will adjust and you'll sell stuff to other things to run fifty years of trade deficits means that something has gone wrong.

Somebody is either taking advantage of the system or your being played for the sucker, or both. And that's what's happened. So to your point of how it feeds big government, So one of the things that happens is when you have a lot of income leaking out. Remember, everybody in the US's income is based on somebody else's spending. So when we are spending more money on buying foreign products and anybody is buying our products, incomes must be declining because it means that we are not spending enough to support the level of income we have. So what happens when incomes are declining, either lots of people start losing their jobs, or what actually happens is the government growth. The government fills in the hole created by the trade deficit. This is why you've had an enormous run up in budget deficits while you had an enormous run up in trade deficits. They are complementary. So a lot of these people consider themselves libertarians and small government advocates who would say, oh, don't worry about the trade deficit, they're wrong. The trade deficit is one of the primary causes of the growth of government in the United States. It's one of the reasons the government has grown so large, and it's also why we can bring it down under Donald Trump, because if we bring down the trade deficit, the demand for a larger government will go away.

Somebody is either taking advantage of the system or your being played for the sucker, or both. And that's what's happened. So to your point of how it feeds big government, So one of the things that happens is when you have a lot of income leaking out. Remember, everybody in the US's income is based on somebody else's spending. So when we are spending more money on buying foreign products and anybody is buying our products, incomes must be declining because it means that we are not spending enough to support the level of income we have. So what happens when incomes are declining, either lots of people start losing their jobs, or what actually happens is the government growth. The government fills in the hole created by the trade deficit. This is why you've had an enormous run up in budget deficits while you had an enormous run up in trade deficits. They are complementary. So a lot of these people consider themselves libertarians and small government advocates who would say, oh, don't worry about the trade deficit, they're wrong. The trade deficit is one of the primary causes of the growth of government in the United States. It's one of the reasons the government has grown so large, and it's also why we can bring it down under Donald Trump, because if we bring down the trade deficit, the demand for a larger government will go away.

Well, So, during Trump's first term, the trade deficit with China did decrease, I think one hundred billion dollars, but trade deficits overall increased by one hundred billion dollars. So what was missing from the calculation the first time? And what in your might if you were advising the president, what would you say would need to be recalculating or to overall reduce our trade deficit, not with just one specific country.

Well, So, during Trump's first term, the trade deficit with China did decrease, I think one hundred billion dollars, but trade deficits overall increased by one hundred billion dollars. So what was missing from the calculation the first time? And what in your might if you were advising the president, what would you say would need to be recalculating or to overall reduce our trade deficit, not with just one specific country.

Right well, so I would put it into its one. We do need to reduce our trade deficit with one specific country, meaning China. China is a bad actor in the world. They and we need to dress China. I would like to see right now, Frankly, the Trump administration is way too optimistic about our future with China.

Right well, so I would put it into its one. We do need to reduce our trade deficit with one specific country, meaning China. China is a bad actor in the world. They and we need to dress China. I would like to see right now, Frankly, the Trump administration is way too optimistic about our future with China.

They are I agree, I agree with you. Yes, they think.

They are I agree, I agree with you. Yes, they think.

We're going to work it out and China will become like a nice country, you know, and well.

We're going to work it out and China will become like a nice country, you know, and well.

This is the overall philosophy American foreign policy for the last thirty five years. It's just be nicer to China and they they will catch up to us.

This is the overall philosophy American foreign policy for the last thirty five years. It's just be nicer to China and they they will catch up to us.

It's never worked. No, it's never worked. And the Trump administration has a slightly different view. They don't want to just be nicer, but they still think that through tariffs and through diplomacy that they will change China. So this is actually not just fifty years. There was a really interesting book whose name I forget, but it was written by a guy who used to be a big shot at Merrill Lynch that basically showed that for one hundred and fifty years, this has been the Western delusion about China, that we were going to trade change China. You know, Christian missionaries going over there believe were going to change China. All through our history with interactions with China, we thought, well, you know, they're a brilliant, sophisticated culture. They'll see the glories of the ways of the West and they will come along. It turns out Chinese aren't like that at all, like their ways. It's I mean, that's how they're going to be right, They're going to be Chinese forever. That's wrong. So, but I do think that the eventually we're going to have to say that we need to cut most of our trade off with China, that we cannot be economically dependent on them. I don't care if they're going to make the tiny little hotels for Monopoly games, fine, cool, whatever, But but for anything that's important, including like stuff like just household furniture, we should not be getting it from China and there and there may be a little short term adjustment in that where the trade deficit doesn't go down but it relocates. Right, I would rather buy stuff from India than buy from China. I think that's actually proper.

It's never worked. No, it's never worked. And the Trump administration has a slightly different view. They don't want to just be nicer, but they still think that through tariffs and through diplomacy that they will change China. So this is actually not just fifty years. There was a really interesting book whose name I forget, but it was written by a guy who used to be a big shot at Merrill Lynch that basically showed that for one hundred and fifty years, this has been the Western delusion about China, that we were going to trade change China. You know, Christian missionaries going over there believe were going to change China. All through our history with interactions with China, we thought, well, you know, they're a brilliant, sophisticated culture. They'll see the glories of the ways of the West and they will come along. It turns out Chinese aren't like that at all, like their ways. It's I mean, that's how they're going to be right, They're going to be Chinese forever. That's wrong. So, but I do think that the eventually we're going to have to say that we need to cut most of our trade off with China, that we cannot be economically dependent on them. I don't care if they're going to make the tiny little hotels for Monopoly games, fine, cool, whatever, But but for anything that's important, including like stuff like just household furniture, we should not be getting it from China and there and there may be a little short term adjustment in that where the trade deficit doesn't go down but it relocates. Right, I would rather buy stuff from India than buy from China. I think that's actually proper.

Hey, we'll be right back after this. So I was when I was talking to a congressman US senator like last week, and I just said to them, you understand that if the Defense Department of the Pentagon said, hey, we're only going to buy medical equipment that is one hundred percent made in America, well guess what, all of our medical equipment they will relocate overnight to the United States. Because the most lucrative thing on this planet is a government contract. Everyone's dying for one. So if you said, hey, we're only to buy aspirin from you know, America, then we'll just start making it. Do you really agree with that assessment or it's okay, totally.

Hey, we'll be right back after this. So I was when I was talking to a congressman US senator like last week, and I just said to them, you understand that if the Defense Department of the Pentagon said, hey, we're only going to buy medical equipment that is one hundred percent made in America, well guess what, all of our medical equipment they will relocate overnight to the United States. Because the most lucrative thing on this planet is a government contract. Everyone's dying for one. So if you said, hey, we're only to buy aspirin from you know, America, then we'll just start making it. Do you really agree with that assessment or it's okay, totally.

Crazy that we have these things where and Asper's a great example, but you could go through so many things where we're actually dependent on imports for things that we need for national security, and it makes no sense at all. If a world war broke, we would very quickly discover that we're not getting that stuff from abroad anymore. You know that we would be even from people who want to descend it to us, right. Submarines would be sinking the ships. We cannot be dependent.

Crazy that we have these things where and Asper's a great example, but you could go through so many things where we're actually dependent on imports for things that we need for national security, and it makes no sense at all. If a world war broke, we would very quickly discover that we're not getting that stuff from abroad anymore. You know that we would be even from people who want to descend it to us, right. Submarines would be sinking the ships. We cannot be dependent.

Well, we had COVID and there was no baby tile in all in America because there was a shortages, mass shortages or there was no baby food like I mean, there was issues with major major things because about and we had Pete footagees as Secretary transportation, which is the second worst thing next to COVID. So a lot of Republicans in defending Trump on tariffs make the comment that it is just a tool to you know, to basically pressure it's a negotiating tool, just to pressure other countries. And we saw in the case of Columbia where they weren't taking their illegals back, so he threatened tariffs, and then they started taking their legals back. I understand that. But it is more than a tool. It is a policy though, an economic policy.

Well, we had COVID and there was no baby tile in all in America because there was a shortages, mass shortages or there was no baby food like I mean, there was issues with major major things because about and we had Pete footagees as Secretary transportation, which is the second worst thing next to COVID. So a lot of Republicans in defending Trump on tariffs make the comment that it is just a tool to you know, to basically pressure it's a negotiating tool, just to pressure other countries. And we saw in the case of Columbia where they weren't taking their illegals back, so he threatened tariffs, and then they started taking their legals back. I understand that. But it is more than a tool. It is a policy though, an economic policy.

Right.

Right.

Could you explain why it is not just a tool that could actually use as a positive policy because they always have a worse rap in the entire world.

Could you explain why it is not just a tool that could actually use as a positive policy because they always have a worse rap in the entire world.

Yeah, they do. And so what I would say is it's really good to look at tariffs in three different ways. One is the one you were just talking about, which is as diplomacy. We can use the the the world's desire to have access to our consumer market as a tool. We can say, look, if you do the things we're requiring you to do, take back your illegals, help us in some other issue, then you can still have access to the US markets. If you're not going to help us out, you're not going to get access. So that's so that's the diplomacy tool. Number two I think is creating a better trade deal for the US. So this is more of I would say, like what we'll get to ride it as classic protectionism, which is to say, look, but it's not classic protectionism. But the rest of the world runs a mercantilist against the US. Their economies depend and this is true of China, but it's true of Germany. Frankly, it's true for countries all over the world. Their economies depend on them being able to produce more than they can consume. So that would be a dumb thing to do if they didn't have what Scott Besse, Treasury Secretary, called the buyer of first and last resort, meaning the United States, we're the dumping ground for the excess production of the rest of the world. That they keep their citizens employed, they keep their incomes up, they keep their welfare states so lavish because they can sell stuff to us, what we're saying, and they won't buy it from us, because then they wouldn't run this imbalance. It allows them to support their their lavish social states and the way they want to.

Yeah, they do. And so what I would say is it's really good to look at tariffs in three different ways. One is the one you were just talking about, which is as diplomacy. We can use the the the world's desire to have access to our consumer market as a tool. We can say, look, if you do the things we're requiring you to do, take back your illegals, help us in some other issue, then you can still have access to the US markets. If you're not going to help us out, you're not going to get access. So that's so that's the diplomacy tool. Number two I think is creating a better trade deal for the US. So this is more of I would say, like what we'll get to ride it as classic protectionism, which is to say, look, but it's not classic protectionism. But the rest of the world runs a mercantilist against the US. Their economies depend and this is true of China, but it's true of Germany. Frankly, it's true for countries all over the world. Their economies depend on them being able to produce more than they can consume. So that would be a dumb thing to do if they didn't have what Scott Besse, Treasury Secretary, called the buyer of first and last resort, meaning the United States, we're the dumping ground for the excess production of the rest of the world. That they keep their citizens employed, they keep their incomes up, they keep their welfare states so lavish because they can sell stuff to us, what we're saying, and they won't buy it from us, because then they wouldn't run this imbalance. It allows them to support their their lavish social states and the way they want to.

Yeah, you know it's my have cousins and they who live in England and they when they come to America, they like load up on Twizzlers because our candy is so expensive in the UK. They're like, no, it's like twenty pounds to buy twizzlers and they're like, we have then that was my first likely was like, oh, it's not just you know, you just move abroad and it's the same exact thing as here. They do have immense tariffs on non American and we have those are favorable products in Canada and Canada like they have their own television system where you only have Canadian TV shows, so they have the Canadian version of Blues Clues that only kids could watch it with the American version and protect their industries. Can you explain, Because I understand tariffs on China and on Mexico, I don't understand them as heavily on Canada. And I think that's where a lot of people are having a lot of questions. Can you explain why we're pushing tariffs on China? I sorry, in Canada? And what's the end goal?

Yeah, you know it's my have cousins and they who live in England and they when they come to America, they like load up on Twizzlers because our candy is so expensive in the UK. They're like, no, it's like twenty pounds to buy twizzlers and they're like, we have then that was my first likely was like, oh, it's not just you know, you just move abroad and it's the same exact thing as here. They do have immense tariffs on non American and we have those are favorable products in Canada and Canada like they have their own television system where you only have Canadian TV shows, so they have the Canadian version of Blues Clues that only kids could watch it with the American version and protect their industries. Can you explain, Because I understand tariffs on China and on Mexico, I don't understand them as heavily on Canada. And I think that's where a lot of people are having a lot of questions. Can you explain why we're pushing tariffs on China? I sorry, in Canada? And what's the end goal?

Yeah? So actually this is this fits in perfectly because the third branch of trade, of tariffs but also of trade barriers in general, is very important national security industries. So the main tariff Donald Trump wants to put on Canada actually as very little to do with I mean, look, some of it is they treat our Gary farmers unfairly. They they do, you know, so we would like them to change that. But the main thing is we actually have industries that we absolutely need to be American industries steal and aluminum. Right, those are the two big metals tariffs. When Trump first put those on and they apply it to Canada and Mexico, a lot of people's objection was like, well, why would you need to do that, Why do we need a steal industry at all? We could just buy all the steel we want from Canada. There are ally there are our neighbor. You know, what's the big deal? You know, how could they be a national security threat? We're never going to war against Canada. That sounds really plausible until you see what just happened. Right, We had to dispute over other parts of trade with Canada, and Canada said they you know the whatever they call it, the Premiere of Ontario, Right, it's the governor, right they governor.

Yeah? So actually this is this fits in perfectly because the third branch of trade, of tariffs but also of trade barriers in general, is very important national security industries. So the main tariff Donald Trump wants to put on Canada actually as very little to do with I mean, look, some of it is they treat our Gary farmers unfairly. They they do, you know, so we would like them to change that. But the main thing is we actually have industries that we absolutely need to be American industries steal and aluminum. Right, those are the two big metals tariffs. When Trump first put those on and they apply it to Canada and Mexico, a lot of people's objection was like, well, why would you need to do that, Why do we need a steal industry at all? We could just buy all the steel we want from Canada. There are ally there are our neighbor. You know, what's the big deal? You know, how could they be a national security threat? We're never going to war against Canada. That sounds really plausible until you see what just happened. Right, We had to dispute over other parts of trade with Canada, and Canada said they you know the whatever they call it, the Premiere of Ontario, Right, it's the governor, right they governor.

Yes, Yes, it's a federal system, so it's different.

Yes, Yes, it's a federal system, so it's different.

Yeah. But he said, look, uh, we're going to raise your electricity prices and if you keep going, we'll cut you off from electricity. That actually ironically proved Donald Trump's points about steel and aluminum that Canada is not a reliable supplier of these things. If we have a dispute, they are more than willing to attempt to shape our policy with our dependency on there. So look, Canada is we Let's say we go to a war that Canada doesn't support, Right, do you believe that Canada will continue to supply us with steel that we use to make tanks to invade a country that Canada doesn't want us to. Let's go even the other way. What if we decide we don't want to fight a war that Canada wants to and they say, uh, you know what, since you're not willing to use the steel you buy from us to invade I don't know, Ukraine, wherever, Uh, We're going to cut you off from steel until you adopt the policy that we think you should. That they will do this, And by the way, I'm not mad at them about that, right, Well.

Yeah. But he said, look, uh, we're going to raise your electricity prices and if you keep going, we'll cut you off from electricity. That actually ironically proved Donald Trump's points about steel and aluminum that Canada is not a reliable supplier of these things. If we have a dispute, they are more than willing to attempt to shape our policy with our dependency on there. So look, Canada is we Let's say we go to a war that Canada doesn't support, Right, do you believe that Canada will continue to supply us with steel that we use to make tanks to invade a country that Canada doesn't want us to. Let's go even the other way. What if we decide we don't want to fight a war that Canada wants to and they say, uh, you know what, since you're not willing to use the steel you buy from us to invade I don't know, Ukraine, wherever, Uh, We're going to cut you off from steel until you adopt the policy that we think you should. That they will do this, And by the way, I'm not mad at them about that, right, Well.

It's been international interests. That makes sense. But you know what, I just I just thought of something while you're talking, and I'm looking at as we're speaking. You know, Canada, for Canada has had one of the sharpest demographic changes of any nation in the history of the world. Under Trudeau's leadership. Trudeau has like wildly changed the demographics of Canada in a fundamental way by opening the floodgates to Asian immigrants. I think that your population increased by like twenty five percent and like in a matter of a decade, all through sheer immigration, primarily from China and from India. And if we are ever in a conflict with those nations, it would not I mean, they have they have a Chinese Canadian leader, a prime minister. I guess maybe it wouldn't be unforeseen that they would sit there and put pressure on us not to maybe be supportive or be you know, unsupportive, you know, in that case, because I think people have very fixed opinions of what the world looks like from whenever they were coming up and growing up in the world. So you think that everyone in Canada looks like the cast of Ship's Creek. But it's just you know, but it's it's changing remarkably over the course of you know, the last decade, even and I.

It's been international interests. That makes sense. But you know what, I just I just thought of something while you're talking, and I'm looking at as we're speaking. You know, Canada, for Canada has had one of the sharpest demographic changes of any nation in the history of the world. Under Trudeau's leadership. Trudeau has like wildly changed the demographics of Canada in a fundamental way by opening the floodgates to Asian immigrants. I think that your population increased by like twenty five percent and like in a matter of a decade, all through sheer immigration, primarily from China and from India. And if we are ever in a conflict with those nations, it would not I mean, they have they have a Chinese Canadian leader, a prime minister. I guess maybe it wouldn't be unforeseen that they would sit there and put pressure on us not to maybe be supportive or be you know, unsupportive, you know, in that case, because I think people have very fixed opinions of what the world looks like from whenever they were coming up and growing up in the world. So you think that everyone in Canada looks like the cast of Ship's Creek. But it's just you know, but it's it's changing remarkably over the course of you know, the last decade, even and I.

Would say even with so you're right about demographic shifts could definitely change the attitude of their nation. But also look nations change over time. Even without that, we fought too, Like our closest ally in the world right now is probably you know, the UK and Canada is you know there they claim they're independent. But whatever, when when the King of England wants to he gets to wear his you know, his Canadian outfit because they're still in the Commonwealth. So uh so the UK, we fought two wars against the UK and you know we we fought it for our independence and then they invaded us again. Right so this idea that like that, well things will never change is wrong. Right now, close allies with people who are our bloody enemies, and we can and look and we fought alongside the Soviet Union in World War Two. They were are you know, they were the allies helped to save Europe and now they are. Then they became our enemies for a century and now weirdly enough people think they are the Russia is our enemy again. But I will say that the world is a changing place. Relying for things that you absolutely need, you should not rely on somebody who's your ally today because you do not know that they will be your ally.

Would say even with so you're right about demographic shifts could definitely change the attitude of their nation. But also look nations change over time. Even without that, we fought too, Like our closest ally in the world right now is probably you know, the UK and Canada is you know there they claim they're independent. But whatever, when when the King of England wants to he gets to wear his you know, his Canadian outfit because they're still in the Commonwealth. So uh so the UK, we fought two wars against the UK and you know we we fought it for our independence and then they invaded us again. Right so this idea that like that, well things will never change is wrong. Right now, close allies with people who are our bloody enemies, and we can and look and we fought alongside the Soviet Union in World War Two. They were are you know, they were the allies helped to save Europe and now they are. Then they became our enemies for a century and now weirdly enough people think they are the Russia is our enemy again. But I will say that the world is a changing place. Relying for things that you absolutely need, you should not rely on somebody who's your ally today because you do not know that they will be your ally.

Yeah, it's such it's such a good point. You know, if you look at the life of like Winston Churchill, he was born in Queen Victoria's you know empire. The sun never set on and by the time that he died, it was a dwindling Yeah, nation of just an island.

Yeah, it's such it's such a good point. You know, if you look at the life of like Winston Churchill, he was born in Queen Victoria's you know empire. The sun never set on and by the time that he died, it was a dwindling Yeah, nation of just an island.

I mean, you could imagine somebody saying, very very seriously, why do you need your own steel industry? Stalin can make your steel. It's in his name. He's the man, you know, like, he's the why do you need this? Right? Yeah, no, we need.

I mean, you could imagine somebody saying, very very seriously, why do you need your own steel industry? Stalin can make your steel. It's in his name. He's the man, you know, like, he's the why do you need this? Right? Yeah, no, we need.

Well, so I have one bigger kind of I think about this all the time. So when Trump was president, the first time, we brought him four hundred thousand manufacturing jobs, but they were very He was at a very laissez faire approach to reindustrialization. Basically, if the jobs are going to Nevada or Texas, Arizona, great, as long as they're coming stateside. President Biden when he was president, believed in more of a place based economy through reindustrialization like the chipsack or the infrastruction during Jobs Act. He wanted certain jobs to go to certain places, and he was very much heavily focused on having the weight of the government go to like Ohio or go to usually On. Ironically, you pushed them a lot on swing states because he thought that he was running for reelection before that plan was reaborted. That plan was aborted. But what is your opinion of a place based economies versus more of a laissez faire approach, because I don't see how you revive like the places that were devastated by NAFTA and the WTL bringing in China unless you have a place based economy.

Well, so I have one bigger kind of I think about this all the time. So when Trump was president, the first time, we brought him four hundred thousand manufacturing jobs, but they were very He was at a very laissez faire approach to reindustrialization. Basically, if the jobs are going to Nevada or Texas, Arizona, great, as long as they're coming stateside. President Biden when he was president, believed in more of a place based economy through reindustrialization like the chipsack or the infrastruction during Jobs Act. He wanted certain jobs to go to certain places, and he was very much heavily focused on having the weight of the government go to like Ohio or go to usually On. Ironically, you pushed them a lot on swing states because he thought that he was running for reelection before that plan was reaborted. That plan was aborted. But what is your opinion of a place based economies versus more of a laissez faire approach, because I don't see how you revive like the places that were devastated by NAFTA and the WTL bringing in China unless you have a place based economy.

Well so, I think actually, inevitably in modern economies you will have a place based economy. Ironically enough, Paul Krugman's done a lot of work on this, which is that when you have geographic concentrations of talented people who know certain industries very well, it adds to it. China does this all the time. China's like benefits. If you ask, like Apple, why do they make stuff in China, they don't say it's because it's cheaper to make in China. They say it's because of the geographic concentration of people who can make iPhones in that area. What they are worried about is like, can we get that to happen here? The question is, and I don't think I have a clear answer on this, is how much of that can you do just through a free market? Meaning will that happen inevitably? You know that you. It happened to Detroit more or less through a free market. There was some state intervention there, but meaning you know, if you were going to start a new car company, you started it in Detroit because that's where all the people who knew how to build cars work. So I do think that there is a way of doing it, maybe with less intervention. On the other end, I'm not opposed to the intervention if we if we need to, let's do it. The thing that Biden did, and you point you pointed this out that bothered me was we shouldn't be doing it with an eye to rewarding our favorite constituencies or trying to steal the other parties constituencies, because I think it doesn't work out. You end up building factories in places nobody wants to go.

Well so, I think actually, inevitably in modern economies you will have a place based economy. Ironically enough, Paul Krugman's done a lot of work on this, which is that when you have geographic concentrations of talented people who know certain industries very well, it adds to it. China does this all the time. China's like benefits. If you ask, like Apple, why do they make stuff in China, they don't say it's because it's cheaper to make in China. They say it's because of the geographic concentration of people who can make iPhones in that area. What they are worried about is like, can we get that to happen here? The question is, and I don't think I have a clear answer on this, is how much of that can you do just through a free market? Meaning will that happen inevitably? You know that you. It happened to Detroit more or less through a free market. There was some state intervention there, but meaning you know, if you were going to start a new car company, you started it in Detroit because that's where all the people who knew how to build cars work. So I do think that there is a way of doing it, maybe with less intervention. On the other end, I'm not opposed to the intervention if we if we need to, let's do it. The thing that Biden did, and you point you pointed this out that bothered me was we shouldn't be doing it with an eye to rewarding our favorite constituencies or trying to steal the other parties constituencies, because I think it doesn't work out. You end up building factories in places nobody wants to go.

No, I agree with you there. It's just a greater idea of how do you fix places where without you know, I think that there's a fairy tale in people's minds that like Arizona, just all of a sudden, everyone was like, let's move to the desert, when in fact we were putting enormous amount of our rocket business in Arizona, and the federal government played a huge part in making that state thrive.

No, I agree with you there. It's just a greater idea of how do you fix places where without you know, I think that there's a fairy tale in people's minds that like Arizona, just all of a sudden, everyone was like, let's move to the desert, when in fact we were putting enormous amount of our rocket business in Arizona, and the federal government played a huge part in making that state thrive.

Houston, Texas. I mean, people, yeah, talk about Texas. It's if it's this giant free market state. Florida by the way, you know, I.

Houston, Texas. I mean, people, yeah, talk about Texas. It's if it's this giant free market state. Florida by the way, you know, I.

Like, yeah, Huntsville, Alabama, these places that were revived in part because of the federal government. So if we're going to put in this immense effort in and that's why I said at the center, bringing this immense effort in, and we're going to say, hey, let's recontract it, well, okay, we could probably make aspirin in Youngstown, Ohio. We could probably go to these places that was devastated by NAFTA, you know, a GAD and the WTO and China. So why not put it in places that have been utterly just gutted, not like by like constituencies, but by people who really they're in dying towns, and unless the federal government gets involved, they're only you know, eggsit out is through fetanol or depths of despair. In some way, That's what I think about conflict.

Like, yeah, Huntsville, Alabama, these places that were revived in part because of the federal government. So if we're going to put in this immense effort in and that's why I said at the center, bringing this immense effort in, and we're going to say, hey, let's recontract it, well, okay, we could probably make aspirin in Youngstown, Ohio. We could probably go to these places that was devastated by NAFTA, you know, a GAD and the WTO and China. So why not put it in places that have been utterly just gutted, not like by like constituencies, but by people who really they're in dying towns, and unless the federal government gets involved, they're only you know, eggsit out is through fetanol or depths of despair. In some way, That's what I think about conflict.

I think you're hitting out something really important. The other thing is there's actually excess labor in some of these places, meaning look, if you try to build your aspirin factory in San Francisco, nobody shows up to work at So you need the aspirin factory to be in Youngstown. You need the aspen factory to be in places that have lost jobs, because that's actually where the opportunity to build new industries is.

I think you're hitting out something really important. The other thing is there's actually excess labor in some of these places, meaning look, if you try to build your aspirin factory in San Francisco, nobody shows up to work at So you need the aspirin factory to be in Youngstown. You need the aspen factory to be in places that have lost jobs, because that's actually where the opportunity to build new industries is.

All right, John, I could talk to you all day, but we do have to go where can people read your stuff? How can they read your great tweets and everything like that? Give them on your plug.

All right, John, I could talk to you all day, but we do have to go where can people read your stuff? How can they read your great tweets and everything like that? Give them on your plug.

Yeah, So the first thing to do is go subscribe to bright Oart Business Digests. It's free. It shows up in your mailbox every day you can get You can read it at brippart dot com slash Economy as well. But you really should subscribe because uh it you know, like you don't even have to look for it. It gets pushed to you. It's terrific and we don't spam you with junk. So like you get to read bripe Oart Business Digest, the uh you can follow me on X. I am at Carney c r n E Y got to sign up early, so I got you know my.

Yeah, So the first thing to do is go subscribe to bright Oart Business Digests. It's free. It shows up in your mailbox every day you can get You can read it at brippart dot com slash Economy as well. But you really should subscribe because uh it you know, like you don't even have to look for it. It gets pushed to you. It's terrific and we don't spam you with junk. So like you get to read bripe Oart Business Digest, the uh you can follow me on X. I am at Carney c r n E Y got to sign up early, so I got you know my.

Name instead of the legions of other carnies.

Name instead of the legions of other carnies.

Yeah, yeah, believe me, I still get people reaching out to me every now and then trying. And when when Mark Carney just got you know, became the uh Prime Minister of Canada, people were tweeting.

Yeah, yeah, believe me, I still get people reaching out to me every now and then trying. And when when Mark Carney just got you know, became the uh Prime Minister of Canada, people were tweeting.

At me because they thought, well, he must be important enough to have it.

At me because they thought, well, he must be important enough to have it.

That's so funny.

That's so funny.

Yeah, it's me.

Yeah, it's me.

I actually woke up though when I guess it was Sunday morning when the when the Canadian Liberal Party had made him officially the thing, and there were people like congratulating at Carney.

I actually woke up though when I guess it was Sunday morning when the when the Canadian Liberal Party had made him officially the thing, and there were people like congratulating at Carney.

As a I was like, oh, last night must have been much weirder than I thought. Do I have to move?

As a I was like, oh, last night must have been much weirder than I thought. Do I have to move?

That's so great, John Carney, thank you so much for being on the podcast. Thanks Ron, thank you for listening this week's episode of A Numbers Game. Please like and subscribe to the iHeartRadio app, Apple podcast, or wherever you get your podcast, and send us an email for next weekend. We'll hopefully get to your question.

That's so great, John Carney, thank you so much for being on the podcast. Thanks Ron, thank you for listening this week's episode of A Numbers Game. Please like and subscribe to the iHeartRadio app, Apple podcast, or wherever you get your podcast, and send us an email for next weekend. We'll hopefully get to your question.