Making Sense - Sam Harris - #447 — The Unraveling of American Power

00:00:00.000 Welcome to the Making Sense Podcast. This is Sam Harris. Just a note to say that if you're

00:00:11.740 hearing this, you're not currently on our subscriber feed, and we'll only be hearing

00:00:15.720 the first part of this conversation. In order to access full episodes of the Making Sense

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00:00:26.240 it's made possible entirely through the support of our subscribers. So if you enjoy what we're

00:00:30.220 doing here, please consider becoming one. I'm here with Peter Zion. Peter, thanks for joining

00:00:39.240 me again. Hey, it's great to be back. Well, so first, you've been on the podcast several times,

00:00:43.360 and most people will have heard about you, seen you somewhere, if not here. But remind people

00:00:49.040 briefly what you do, what's your day job when you're not doing podcasts like this? My job is

00:00:53.860 to take demography and geopolitics and use it to paint a picture of the future and then show how

00:00:59.480 it matters to the people who happen to be in front of me. So most of my clients are in the world of

00:01:03.560 finance or manufacturing or agriculture, some sort of economic association or business, and I help

00:01:09.060 them navigate the crazy that is to come. Speaking of predicting the future, and actually on points that

00:01:16.940 matter, at least to me and a few of us, last time you were on the podcast, you told me that there was

00:01:22.060 no way that Trump was going to win the 2024 election. So I have to ask you what the fuck 0.99

00:01:26.080 happened right at the top here. Yeah, fair enough. Sorry, I slept that day. My general feeling was 0.98

00:01:31.920 that it was going to be America's independence that decided how things were going to go. Not people who

00:01:36.020 said they were independent, but really were Republicans and everything but name, but the

00:01:40.160 actual 10% of the electorate that splits their vote because they had decided the last seven

00:01:45.860 election. So it felt pretty safe to me. And in the post-election polls, it looks like that group

00:01:52.740 decisively voted against Trump. Everyone else shifted, however, with one exception, Washington

00:02:00.060 State. Every state in every demographic shifted substantially towards Donald Trump and allowed

00:02:06.680 him to win with the margin that he got.

00:02:08.660 Well, how would you rate his second term so far? We're going to talk about tariffs and foreign

00:02:15.000 policy and supply chain and specifics like China, but what most concerns you? Have there been any

00:02:21.620 pleasant surprises? How would you rate the last 10, 11 months?

00:02:25.080 I usually try not to be critical of presidents in their first terms because they're learning. It

00:02:30.380 takes time for the policies to kick in. The world doesn't move on a dime. Second term is different

00:02:36.040 because they should have learned from what happened in their first term. And by that measure,

00:02:39.960 it has not gone well. Most of the stated aims of the Trump administration, things like reshoring,

00:02:46.700 manufacturing, increasing its defense position, have actually taken the country in a significantly

00:02:51.000 different direction. And I have not seen an unraveling of national power on the scale since

00:02:56.640 the Soviet breakdown. So, so far, very impressed with how much damage is being done. 0.78

00:03:03.880 This is some combination of Zimbabwe-Argentine economic policy, maybe with just a dash of

00:03:12.400 French statism thrown in.

00:03:13.880 All right. So let's talk about the unraveling. What are you seeing? Because so over right of

00:03:19.880 center in Trumpistan, I can imagine many people believe that the tariffs are working. We're

00:03:26.920 on-shoring American manufacturing. We're building up our manufacturing base. Jobs are going to be

00:03:32.340 returning as a result of all this. We have China right where we want her. And it's really just a 1.00

00:03:39.180 picture of American strength. I mean, you know, Trump is the kind of guy you just can't screw

00:03:44.860 around with. Finally, we have a president like that. How are you not seeing this?

00:03:49.880 Let's start with the tariffs. When you do a flat tariff and you tax things at the border,

00:03:55.100 no matter what they are, you need to break down manufacturing into two broad categories.

00:04:00.340 First, you have your simple products, things like plastics or furniture, textiles, where there's

00:04:05.860 only a half a dozen manufacturing supply chain steps. And in a high tariff environment, it's

00:04:10.560 relatively easy to relocate some of those steps within the tariff wall. So we are seeing significant

00:04:16.060 build out in the United States for things like furniture and glue and paints and all that kind of

00:04:20.500 stuff. More complex manufacturers, the hundreds or thousands of steps are very different. So here's

00:04:26.560 automotive, aerospace, electronics, computing. When there are thousands of steps and you only produce

00:04:32.280 say half of the steps in country, you have to pay the tariff every time an intermediate product crosses

00:04:37.080 the border. And the end product ends up costing significantly more. So simple math, it's easier to

00:04:43.780 take the steps that are within your tariff zone, move them outside of your tariff zone, and then you only

00:04:47.920 have to pay the tariff once. So what we're seeing right now is a steady de-industrialization of the

00:04:53.640 value-added, high-skilled labor-intensive jobs, and instead replacing them with much lower value-added

00:05:01.940 jobs and things like plastics, or maybe things that are automated because our labor force is too much.

00:05:07.000 So we've seen contraction in the manufacturing sector for the last six months. And the number that I pay

00:05:11.820 attention to the most right now is called industrial construction spending. It's a data point put out by the

00:05:16.560 Federal Reserve. And it's been negative since tariff day. So people are finishing the industrial

00:05:21.580 projects they had started before April, but no one's really launching much that's new.

00:05:28.120 So what are you expecting to see in the economy over the next 12 months as a result? I mean,

00:05:32.740 is this synonymous with inflation, what you just described?

00:05:35.860 Well, if you go back to before April, we knew we were preparing for the fall of the Chinese system. 0.54

00:05:43.620 We were preparing for the end of globalization. We knew we needed to expand our industrial plant,

00:05:48.460 probably needed to double it, and probably needed to increase the power plant by 50% to go with that.

00:05:53.520 There's no way you do that on anything less than a 40-year time frame without a lot of inflation. And I

00:05:58.380 would argue we needed to do it in the next five to six years. So inflation was already part of my

00:06:03.080 forecast. But now we have de-industrialization going on on top of that. And so if we can't turn this

00:06:10.140 around and get back to building things again, and that requires a very different federal policy,

00:06:14.760 we're going to enter a period where we're going to lose the products from abroad at the same time,

00:06:19.060 we no longer are producing very many of them here. So we have to still go through that industrial

00:06:23.440 build-out, but now against a backdrop of goods shortages. So the debate now is, do you want high

00:06:29.320 inflation plus productivity or high inflation plus a goods shortage? Neither of these are pretty.

00:06:35.940 Hmm. So obviously there's been a huge build-out with respect to data centers for AI.

00:06:41.400 And progressing.

00:06:42.260 Yeah. I mean, that's the one thing that has been a bright spot for the market. It remains to be

00:06:49.560 seen whether it's a catastrophic bubble in the end, but-

00:06:52.660 It's definitely a bubble, let's be clear. Whether it's catastrophic, yeah, who knows?

00:06:56.560 Yeah. I mean, and it can be a bubble. I mean, we should be clear, it can be a bubble without AI

00:07:01.100 itself being a bubble, right? I mean, it could be this over-investment and a build-out even if AI

00:07:05.700 is in fact the future, right?

00:07:07.940 Well, there's a lot of unknowns in that statement, so I don't want to overly come down on one side or

00:07:12.960 the other. 15 years ago, 10 years ago, people were aware of large language models, but I don't

00:07:18.060 think there was anyone in the AI space who really thought that LLMs were the thing that was going to

00:07:22.920 break open, and here it is. So expecting the model we're on right now to be what we use in 5 years or 10

00:07:29.600 years or 15 years is a bit of a stretch from my point of view. Technology doesn't go in a straight

00:07:33.420 line like that. Also, LLMs require a massive amount of processing capacity with graphics processing

00:07:40.440 units, and GPUs are the most advanced chips that humans make, and GPUs cannot be made without a

00:07:46.600 fully globalized system. So I actually look at today's build-out and like, this is great because

00:07:51.680 every data center needs power to go with it. We need the power regardless, and if we're entering a

00:07:56.520 world where globalization breaks down, we won't be able to make the GPUs, so anything that's installed

00:08:01.340 now is all we have. So while I'm not a believer in the trajectory that we're on, I have no problem

00:08:07.960 with any of the steps we're taking right now. Do you think we're in the process, however gradual,

00:08:13.880 of on-shoring our dependence on Taiwan, or is that not in the cards? No. There's 100,000 manufacturing

00:08:21.300 steps for high-end semiconductors. The FAB facility is an important one. It's an unavoidable one,

00:08:27.180 but there's another 40,000 that are like that. And once you actually have your FAB facility,

00:08:33.800 the next step down is testing and packaging, incorporating into components. We do very little

00:08:39.240 here. I'd argue that's much more important. And on the front end is the design and the logistics.

00:08:44.380 We do do that. That's the highest value-added part of the process. So this obsession with FABs is

00:08:50.560 actually taking one of the lower value-added steps that's most capital-intensive and putting

00:08:54.600 at the center of the conversation. And that's just bad reasoning from my point of view. We should be

00:09:00.060 focusing on things that are downstream, closer to the end consumer, if you're worried about national

00:09:05.120 security. Well, so I want to talk about national security and foreign policy and talk about China

00:09:09.500 and Central America, South America. But just to close the loop on this, what do you think,

00:09:15.480 if this process of what you're calling deindustrialization continues apace for

00:09:19.820 the rest of Trump's term, what are you expecting to change over the course of four years?

00:09:26.940 I mean, there's so little with this administration that goes in a straight line. So that's a really

00:09:30.980 loaded question. Key thing to remember is that Donald Trump still hasn't fleshed out the government.

00:09:35.520 He fired the top several thousand positions, filled very, very few of them, and then surrounded

00:09:40.060 himself with a cabinet that has very little technical experience in anything. So if you think back to

00:09:44.800 Obama, we had a cabinet that was all academics that had never done anything in the real world.

00:09:50.300 Now we have ideologues who have never done anything in the real world. So to expect to get good advice

00:09:56.880 going to the president, even if he was open to hearing it, is pretty thin. And we've now had

00:10:01.500 major policy changes on drug policy, on illegal narcotics, on the Red Sea, on Israel, on Ukraine,

00:10:10.560 on vaccines, on tariffs, because, and I quote, it's what I feel. We get no straight lines on that.

00:10:17.340 And so you can imagine what's going on in the business community right now. This is the reason

00:10:20.960 why industrial construction spending is falling. No one knows what policy set is going to be tomorrow

00:10:26.140 or next month or next year. And without some degree of continuity or some degree of guide,

00:10:31.020 everything is up in the air and everything is on hold. So if this sort of ambient chaos holds,

00:10:36.480 and we just hit our 600th tariff change since January 20, no one's going to put money to put

00:10:43.140 anything in the ground because they don't know if it's going to be worth their time.

00:10:46.120 So what's going on with Venezuela and Mexico? I know you focused on cartel violence. Yeah.

00:10:53.220 Trump has obviously been threatening to deal harshly with the cartels. I think it remains to be seen

00:10:59.120 what he's intending with respect to Venezuela. But how do you view our ramping up hostilities on both

00:11:06.540 those fronts? Well, let's start with the understood reality on the ground. Venezuela is a very weak

00:11:12.540 state where the state security services have been so focused on crushing political dissidents for so

00:11:18.000 long that they've lost control of large tracts of territory. And so some of the cocaine smugglers in

00:11:23.020 Colombia have now used Venezuela as a way to get their stuff to the wider world. It's a minority. It's less

00:11:27.860 than 10% of the flow. Most of it still goes north into Central America and ultimately Mexico,

00:11:33.760 especially Mexico before coming north to the border. But there is a flow that goes through

00:11:37.720 Venezuela. I'd argue most of that flow eventually goes into Europe as opposed to coming to the United

00:11:42.920 States, but it is real. And there is a degree of collaboration among members of the Maduro government

00:11:48.800 in facilitating those flows. I don't know if calling the cartel is the right term. That implies a degree

00:11:55.340 of overarching control that probably doesn't exist, but it is a problem. So anything you want to do

00:12:01.800 against Venezuela on a state security point of view, there's an argument to be made there.

00:12:06.360 However, the Trump administration has yet to brief Congress about any of the details.

00:12:10.440 So none of the intel that supposedly identified the ships has ever been shared with Congress. And

00:12:17.060 what I'm hearing from the military is that there really wasn't any ever. And that's before you

00:12:22.160 consider the legal implications of some of the specific decisions. We had both Trump and Hagseth

00:12:28.120 brag about performing war crimes the week of Thanksgiving, because if you take out an enemy

00:12:35.380 combatant and they've been completely disarmed of any sort of offensive capability, and then you shoot

00:12:41.860 them, that's a war crime. Every treaty the United States has ever signed on international law 0.65

00:12:46.580 codifies that. And so now they're backtracking. It's like, well, maybe that's not what we meant.

00:12:51.680 In addition, we now have the USS Ford down there, which is our top super carrier, badass piece of

00:12:57.460 military equipment. And it was only on the Monday after Thanksgiving that Trump convened a national

00:13:02.860 security meeting with the Joint Chiefs, Secretary of Defense, Secretary of State, to begin the discussions

00:13:09.260 about what the goals in Venezuela are. So to this point, the policy has been, let's shake some sabers and

00:13:18.320 see if Maduro will just leave. Now they're starting to have the early discussions about what the policy

00:13:24.620 might be. Very much, of course, on the wrong side of the card.

00:13:29.780 Yeah, it's remarkable that the, these kind of extrajudicial killings of people on boats in the

00:13:36.260 Caribbean is, I mean, it's being kind of roundly condemned, but on its face, it seems like it's,

00:13:43.900 has to be in violation of some law or past practice because, I mean, we don't even kill

00:13:50.780 drug smugglers when we catch them and convict them of drug smuggling. I mean, that's not a capital

00:13:56.220 offense. And yet now we're simply annihilating people who are alleged to be smuggling drugs. And we

00:14:03.440 have been shown no evidence that that's even true. And as you just pointed out, there's this recent

00:14:08.220 case of this really patent war crime where we've bombed the boat. Now people are scrambling in the

00:14:15.940 water and we bomb them again just to make sure everyone is good and dead. I mean, that is a,

00:14:20.380 just a, unambiguously a war crime. But I mean, the whole idea that we can be just killing people 0.92

00:14:26.580 who are suspected of smuggling drugs. Well, has that been a past practice? Is that in line with

00:14:33.400 any of our laws? It's certainly not officially. I'm never going to say that it wasn't done because

00:14:37.080 there's a lot of that happens with covert action in Latin America that, you know, maybe is distasteful,

00:14:41.140 but it's not technically illegal by U.S. laws. And the, the, really the limiting factor here is the

00:14:47.240 War Powers Act. So that was something that was put in place by Congress bipartisan in the aftermath of

00:14:52.420 Vietnam, uh, passed by a two thirds vote, president vetoed it. It overcame the veto. It was like the

00:14:58.480 biggest overcome of the veto that we've ever had in modern history. Every administration since then,

00:15:04.280 including the Trump administration, has said that the War Powers Act is unconstitutional. It's an

00:15:09.300 unconstitutional check on presidential authority, but it has never come up to the courts. And Congress

00:15:16.260 since then has never called the president to account. So either the president has presented

00:15:22.520 his case after 30, 60, 90 days to justify, and then Congress votes to authorize the military action.

00:15:29.540 That's for example, how Iraqi freedom happened, or the president is done within 30 days and folds the

00:15:35.480 situation down. This is the first time that the War Powers Act has been directly challenged over that

00:15:41.400 30-day threshold. But Congress has done nothing. And unless and until Congress actually decides to

00:15:48.600 act, technically it's legal. Doesn't mean it's right, doesn't mean it'll work.

00:15:53.620 Congress has been sitting on its hands on, uh, virtually every question. What about Mexico? What's

00:15:59.220 happening with our posture, uh, vis-a-vis the cartels? And, and, uh, what are the implications of

00:16:05.380 that? Uh, this, this is actually more of a Biden administration question than a Trump administration

00:16:09.340 question. Um, under the Biden administration, um, a significant amount of progress was made at

00:16:14.720 cracking down on the Sinaloa cartel, which for most of the last 15 years has been the most powerful

00:16:19.800 organized crime group, not just in Mexico or in the United States, but in the world. And there was a

00:16:24.940 general agreement that it was the most effective of the drug smuggling organizations because El Chapo ran

00:16:30.740 it as business. But El Chapo was eventually arrested and has now been put away. And combine that with the

00:16:38.600 effects of the last five years prosecution of his old organization. Um, his son's basically running

00:16:44.140 the place like, um, Uday and Cuse, if you remember those Iraqi assets. And has it been two years? Is

00:16:50.260 it only a year? Relatively recently, one of Los Chapitos, that's one of El Chapo's sons convinced the

00:16:56.940 guy who was the chief accountant of the organization to get in a plane and fly to El Paso to look at some

00:17:03.140 real estate and the DEA was waiting. So we basically had a shattering of the organization

00:17:08.920 top and there is no longer one Sinaloa cartel. There's like a dozen and they're fighting one

00:17:13.900 another. That sounds great. But the second largest drug trafficking organization in Mexico,

00:17:21.160 in the world is called the Holisco new generation cartel. And they are an order of magnitude more 0.96

00:17:25.980 violent. And now they are the most powerful entity and they are taking over a lot of former Sinaloa

00:17:30.680 territory. So by taking out the big bad, we've helped inadvertently to create a new big bad that

00:17:36.440 by many measures is a lot worse because Sinaloa, their kind of guiding idea was you don't shit 0.99

00:17:43.400 where you sleep. You bribe local law enforcement. So they're on your side. Holisco, their idea is that 0.99

00:17:49.760 the shit is the point. And so the first thing they do when they go into a new territory is shoot the 1.00

00:17:53.900 mayor, shoot the police chief, randomly shoot a bunch of people in town. So everyone knows who's in 0.85

00:17:57.640 charge. And so nobody stands against them. Different model, a lot more violent, not as

00:18:02.500 effective in the long run, but it generates a lot more activity that we are now seeing among other

00:18:09.880 things in the murder rate in Mexico. So has the Trump administration done anything new on that

00:18:15.620 front? I know he's said that he wants to send in SEAL Team 6 to deal with the cartels. Have we done

00:18:21.460 anything that's actually changed our posture with respect to them? Not hugely from my point of view.

00:18:26.300 And I don't see that as a reason to love or hate the Trump administration. The core problem is

00:18:31.160 demand drip. And as long as Americans like their cocaine, you know, this is going to happen. 0.85

00:18:35.360 And we've discovered that if you take out the kingpins in the case of the Sinaloa,

00:18:39.300 you create a more fractious environment where there's a lot more competition.

00:18:43.200 That's, for example, one of the reasons why fentanyl has risen. Cocaine requires a supply chain

00:18:48.020 that involves a half a dozen different countries. And it takes about four man hours between the

00:18:52.460 the fertilizing, the growing, the processing, and the smuggling for every dose of cocaine.

00:18:57.620 Well, fentanyl, you can buy a bunch of precursors on the open market, make a batch of a million doses

00:19:03.820 in your garage in a week. And it takes four man seconds to get the fentanyl in. So we've,

00:19:12.960 by cracking down on cocaine to agree, we've inadvertently created a new product set.

00:19:17.300 And taking out cartel leaders will have absolutely no effect on that. And one of the things we've

00:19:23.280 ironically seen with the border is by stopping the flow of illegals, it's made it very, very, 0.91

00:19:29.700 very easy for all the drug smugglers to just ship stuff in containers. So again, I don't blame Trump

00:19:35.960 for that switch. This is one of those things that as long as people want their narcotics,

00:19:41.520 there is going to be an economic pipeline of some form for it.

00:19:44.440 What do you know about the recent pardoning of the former president of Honduras who was a

00:19:50.320 convicted drug smuggler?

00:19:52.640 If you'd like to continue listening to this conversation, you'll need to subscribe at

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00:20:14.440 Thank you.

Making Sense - Sam Harris - December 04, 2025

#447 — The Unraveling of American Power

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