China is growing by leaps and bounds in terms of manufacturing. What does that actually mean? How should the United States orient its national security strategy to stop China? And what does that mean for Russia? We ll get into the weeds on all of this.
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00:00:53.000The United States right now is facing down an existential threat.
00:00:56.000That existential threat, of course, does come from a lack of willpower.
00:01:01.000It comes from a doubt about what America is.
00:01:04.000But in terms of foreign policy, that existential threat comes from a team-up that has been growing.
00:01:09.000That team-up is between China, which is really the sponsor state of the anti-American bloc, along with its friends like Russia and Iran.
00:01:17.000The existential threat doesn't mean that China is going to attack the United States.
00:01:20.000It does mean that as the United States recedes from the world, as Russia expands its sphere of influence in Eastern Europe, as China expands its sphere of influence, not just in the Far East, but also in Africa, across the rest of Asia, into South America, the United States is going to be in the unenviable position of having to withdraw from the world.
00:01:41.000And a United States that is no longer able to guarantee freedom of the seas, a United States with no economic allies, a United States that is sort of a secondary partner, as opposed to China being a primary partner for all the rest of these countries, is a United States that has an economy that is shrinking, a United States that is forced within its own borders.
00:02:02.000There is this bizarre notion that has arisen on the right that if the United States were to be essentially autarkic, if the United States were to withdraw from the world, the rest of the world, suddenly things would get better, that the amount that we expend in foreign aid, for example, or military expenditure is a complete waste of money.
00:02:18.000If we just spend that money at home, then magically everything gets better.
00:02:22.000The problem, of course, is that the world is interconnected.
00:02:25.000The reason that you are able to obtain better, cheaper products that make your life easier every single day is because the interconnection of world trade makes that possible.
00:02:34.000And that, of course, is only possible because of the power of the United States economy and the power of the United States military.
00:02:42.000Well, because China seems to be posing a broader and broader threat.
00:02:46.000And yet, there is a bizarre unwillingness on the left to acknowledge the threat that is China.
00:02:51.000And on the right, there seems to be an unwillingness to deal with the actual realities of what it would mean to face down China in a responsible and coherent fashion.
00:03:01.000So, the Wall Street Journal reported yesterday that China is actually growing at the expense of the rest of the world.
00:03:09.000According to Greg Ipp, writing for the Wall Street Journal, who has contributed more to the rest of the world's growth this year, China or the United States?
00:03:16.000The answer is the United States, and it's not even close.
00:03:19.000Even as the U.S. rolls out tariffs, its imports are up 10% so far this year from a year earlier.
00:03:24.000And as China moralizes against protectionism, its imports are down 3% in dollar terms.
00:03:30.000The U.S. figures might be an anomaly reflecting people attempting to get around the tariffs by importing product before the tariffs went into effect, but China's are not.
00:03:37.000In the past five years, its export volumes have soared while imports have flatlined.
00:03:41.000China is swallowing up a growing share of the world's market for manufactured goods.
00:03:47.000Beijing is pursuing a beggar thy neighbor growth model at everyone else's expense.
00:03:53.000According to economist at Goldman Sachs, 1% more output in China in the past would raise the rest of the world's output by 0.2% as it pulled in imports because we would then export to China.
00:04:04.000But as China has raised its own tariff barriers, instead, the relationship has turned negative.
00:04:09.000China's growth is now being driven by its leadership's determination and capability to further advance manufacturing competitiveness and boost exports.
00:04:17.000So, for the rest of the world, theoretically, that could be a good because that means cheaper stuff coming into the United States.
00:04:23.000But there's also a problem in that they are emptying out our manufacturing sector.
00:04:27.000Okay, but what this has led to in the West is the bizarre perception that what we ought to do is radically increase tariffs, not just on China, which would be retaliatory and worthwhile, but on every place else.
00:04:39.000And that, of course, is a gigantic mistake.
00:04:42.000And this leads to questions about the overall policy of the United States vis-a-vis China.
00:04:47.000What exactly are we trying to do vis-a-vis China?
00:04:49.000Now, I've made the case that if you wish to face down China, you have to do a few things.
00:04:53.000One is you need closer relationships, not more attenuated relationships, closer trade and security relationships with other countries surrounding China, including Japan, South Korea, Taiwan, India.
00:05:07.000You need better relations with those countries so as to box in China and essentially isolate China.
00:05:12.000If China wants to cheat, if they don't want to play by the rules, if China wishes to beggar its neighbor, let them pursue an autarkic economic policy.
00:05:19.000The thing about autarky is that it tends to make the country pursuing it poorer over time.
00:05:24.000Initially, it looks like an explosion of economic activity.
00:05:28.000But over time, as countries start pouring resources into less efficient modes of manufacture in order to do it at home rather than to import those products from abroad, they tend to empty themselves out.
00:05:39.000And this is the common pattern in economics.
00:05:42.000Every mercantilist or fascistic economic system that has worked like this shows very good early growth numbers.
00:05:48.000And then that growth curve eventually peters out and the country ends up with economic stagnation.
00:05:56.000If you go back prior to World War II, this happened in Germany.
00:05:58.000One of the reasons that Germany, under the Nazis, had to become an expansionist power is because Germany tried to pursue economic autarky in the 1930s.
00:06:07.000And they saw for a brief moment in time, a gigantic manufacturing boom, people getting off of the unemployment lines, moving out of the Weimar Republic era.
00:06:16.000But as it turns out, they were doing that, again, based on state expenditures that actually made them less economically viable over the long term.
00:06:24.000And so then they had to turn to actual physical territorial expansionism.
00:06:28.000Autarky very often turns into a necessity for expanding your access to resources, which leads actually to invasions of other countries.
00:06:36.000It is not a coincidence that countries that tend to embrace a very mercantilistic policy, an economic policy that focuses on let's build everything right here at home.
00:06:46.000When they can't, they then have to expand their own territorial borders or the places under their immediate dominion.
00:06:52.000Free trade generally means that you don't have to invade other places because you can trade with those other places.
00:06:57.000Already coming up, how do we stop China?
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00:09:29.000So, when you look at China, how would you stop China?
00:09:31.000Well, you need to do a few things, as we say.
00:09:33.000One, build up better security and economic relationships in the Far East.
00:09:37.000Also, build up better security and economic relationships, yes, with Europe.
00:09:41.000And that means that we can use tariffs as a way to force the Europeans to get rid of their non-tariff barriers.
00:09:47.000One of the ways I would be forcing the Europeans to pay their fair share is by using things like tariffs in order to push the Europeans to pay their fair share when it comes to, for example, the price of pharmaceuticals.
00:09:57.000Europe pays far less than what the actual market rate should be for pharmaceuticals.
00:10:02.000And then the United States ends up paying for that via our taxpayers and via our consumers.
00:10:08.000And that's just the way that it works.
00:10:43.000You need to treat them like the adversary they are.
00:10:46.000You need to build out other lines of supply.
00:10:50.000You need supply chains that are diversified.
00:10:52.000So we're not as reliant on China, right?
00:10:54.000These are all the things you would need to do.
00:10:55.000You would need to cut off China's allies at the knees.
00:10:58.000So if Russia is expending extensive resources in Ukraine, for example, and it's hollowing out their economy, if it's making them poorer, if it's making them more dependent on China, if in fact Russia is adversarially connected with China against the United States, which again is the philosophy of Duganism, which is the sort of guiding light of the way that Vladimir Putin thinks, if we believe, as we should,
00:11:21.000that Russia is a geopolitical adversary of the United States, then obviously we should be pursuing an attempt to get Russia to stop invading Eastern Europe.
00:11:32.000And that means supporting allies in the region to the extent necessary to stop the Russians.
00:11:37.000Because it's not as though Russia and China aren't talking to each other.
00:11:40.000They are talking very extensively to each other.
00:11:41.000If we are attempting to form a better relationship with India, then we should be attempting to form a better relationship with India.
00:11:47.000Should be trying to make trade relations with India so beneficial to India that they don't want to trade with the Chinese.
00:11:53.000There are natural differences in opinion between China and India, which have nearly come to blows several times over the course of the last several decades.
00:12:00.000India and China are not working hand in glove.
00:12:03.000They have actual territorial conflicts.
00:12:06.000We could be attempting to pry India out of China's sphere of influence.
00:12:10.000These are all things that a responsible foreign policy would do.
00:12:13.000And then we certainly would not be shipping many of the most important components in the battle for the future to China.
00:13:02.000I know it's a weird idea, but China is in steep demographic decline.
00:13:06.000China had one child policy for decades.
00:13:09.000That means they do not have enough human beings in China, even though it's got a billion people.
00:13:13.000They do not have enough human beings to actually be able to generate the economic growth necessary to pay for their gigantic redistributionist schemes and mercantilist ideas.
00:13:24.000They have a massive demographic problem.
00:14:52.000But what that means is that the final result has some good stuff and it has some incoherent stuff.
00:14:58.000But the overall sort of takeaway from the national security strategy is an incoherence that I think China and Russia and Iran and other parties are going to try to take advantage of.
00:15:09.000So to use China as sort of the chief example, there's been a lot of talk in the defense establishment about the shift from, for example, the Middle East to focus on China, something with which I totally agree.
00:15:21.000The Middle East is not nearly as important geostrategically to the United States as it once was because we are now energy independent.
00:15:28.000The Middle East is still quite important because obviously when you are talking about the price of global oil, for example, and the Middle East provides a heavy share of that, whatever happens in the Middle East has other ramifications, but it's not nearly as vital as it was in, say, the 1970s when the vast bulk of oil was coming via OPEC.
00:16:00.000So the national security strategy at one point suggests that there ought to be regional balances of power.
00:16:06.000Quote, we will work with allies and partners to maintain global and regional balances of power to prevent the emergence of dominant adversaries.
00:16:13.000I do not know why we should pursue regional balances of power rather than strengthening our allies.
00:16:19.000I don't want Ukraine to have a balance of power with Russia.
00:16:27.000I don't want Iran to have a balance of power.
00:16:29.000That's not something I'm interested in, right?
00:16:31.000Because balance of power suggests that if, for example, Saudi gets too strong, you then have to turn around and strengthen Iran, which makes zero sense at all.
00:16:39.000So again, there's a bit of incoherence here.
00:16:41.000But with regard to China, the national security strategy released by the White House says a few things.
00:16:47.000It says, President Trump single-handedly reversed more than three decades of mistaken American assumptions about China, namely that by opening our markets to China, encouraging American business to invest in China, and outsourcing our manufacturing to China, we would facilitate China's entry into the so-called rules-based international order.
00:17:06.000Donald Trump did, in fact, reverse the bipartisan consensus that was false, a total lie, that us integrating China into the world economy would somehow benefit us, but not benefit China because benefit because eventually China would be sort of undermined politically by economic growth.
00:17:22.000China did not make the mistake that Mikhail Gorbachev made in the USSR.
00:17:26.000If you believe that the USSR should have been upheld, then what you would say to Gorbachev is you don't want a sort of political loosening along with economic loosening.
00:17:36.000China allowed some economic loosening, but maintained strict political control.
00:17:41.000The national security strategy says China adapted to the shift in U.S. tariff policy that began in 2017, in part by strengthening its hold on supply chains, especially in the world's low and middle income countries, among the greatest economic battlegrounds of the coming decades.
00:17:54.000China's exports to the low-income countries doubled between 2020 and 2024.
00:17:58.000The United States imports Chinese goods indirectly from middlemen and Chinese built factories in a dozen countries, including Mexico.
00:18:04.000China's exports to low-income countries are today nearly four times its exports to the United States.
00:18:09.000Going forward, we will rebalance America's economic relationship with China, prioritizing reciprocity and fairness to restore American economic independence.
00:18:16.000Trade with China should be balanced and focused on non-sensitive factors.
00:18:21.000Rebalancing trade with China, boxing China in, would be a good thing.
00:18:25.000However, it's the next part of the national security strategy that starts to get dicey.
00:18:30.000Quote, the United States must work with our treaty allies and partners, who together add another $35 trillion in economic power to our own $30 trillion national economy to counteract predatory economic practices and use our combined economic power to help safeguard our prime position in the world economy and ensure that allied economies do not become subordinate to any competing power.
00:18:49.000America First Diplomacy seeks to rebalance global trade relationships.
00:18:53.000We have made clear to our allies America's current account deficit is unsustainable.
00:18:57.000We must encourage Europe, Japan, Korea, Australia, Canada, Mexico, and other prominent nations to adopt trade policies that help rebalance China's economy toward household consumption because Southeast Asia, Latin America, and the Middle East alone cannot absorb China's enormous excess capacity.
00:19:10.000Okay, so this is talk about trade deficits.
00:19:12.000And the basic idea here is that the United States has to rebalance our trade relationships with Japan and Europe.
00:19:18.000Now, as we've talked about on the show, trade is mutually beneficial.
00:19:23.000As an economic matter, put aside national security for a second.
00:19:26.000If you and I trade, both of us benefit.
00:19:29.000It's a voluntary exchange of goods, a voluntary exchange of money for goods or services.
00:19:34.000Both of us benefit or we wouldn't be doing it.
00:19:36.000The idea that the fact that we run, for example, a trade deficit with Ethiopia is inherently economically problematic for the United States is ridiculous.
00:19:44.000The GDP per capita in Ethiopia is like a thousand bucks a year, and they're exporting us coffee.
00:19:49.000Us buying good coffee from Ethiopia does not beggar the United States.
00:19:54.000And this is where the America first tariff policy toward the rest of the world actually ends up achieving the reverse of what it wants to with regard to China.
00:20:02.000As I said at the top, if you want to box China in, we need better trade relationships with Japan, Australia, Europe, Canada, Mexico.
00:20:11.000Otherwise, you know what they're going to do?
00:20:13.000They're going to trade more with China and less with us.
00:20:19.000The national security strategy laid out by the White House simultaneously argues: quote, we should form coalitions that use our comparative advantages in finance and technology to build export markets with cooperating countries.
00:20:30.000America's economic partners should no longer expect to earn income from the United States through overcapacity and structural imbalances, but instead pursue growth through managed cooperation tied through strategic alignment and by receiving long-term U.S. investment.
00:20:44.000Now, what you're talking about here is we should form coalitions using our comparative advantage in finance and tech, but we should also prevent other countries from building their manufacturing capacity to make t-shirts and such.
00:20:58.000Okay, none of this is going to result in the thing you want it to result in.
00:21:04.000All righty, coming up, we'll get to the president's decision to allow NVIDIA to sell certain types of sophisticated microchips to the Chinese.
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00:23:49.000Chinese industrial production broke records this year as its factories churned out more cars, machinery, and chemicals than ever before.
00:23:55.000Despite the disruptions of tariffs, the country's trade surplus in goods has set a record as growing shipments to Asia, Europe, Latin America, and Africa offset the hit from Trump's levies on direct sales to the United States.
00:24:06.000Chinese companies that built their business around low trade barriers to sell into the U.S. have adapted and in some cases are bouncing back.
00:24:12.000In May, Chinese-owned e-commerce giant Timu's business model of serving up affordable household goods, beauty products, and clothes to American consumers looked all but finished.
00:24:21.000Today, Timu is once again among the most downloaded apps in the United States, and business is booming.
00:24:26.000Well, because if you're worried about affordability, I know there are a lot of people on the right who are up against the American desire for cheap products.
00:24:32.000We used to just call that affordability.
00:24:34.000Americans do like products better and cheaper.
00:24:42.000China has reported a goods trade surplus of more than $1 trillion for the year through November.
00:24:47.000Manufacturing output in the first 10 months of the year was up 7% compared with the same period in 2024.
00:24:54.000China's on track this year to post a surplus in manufactured goods of around $2 trillion.
00:25:01.000Now, again, some of this is China subsidizing its manufacturing capacity at the cost of massive debt.
00:25:08.000But part of this is because the United States decided that we were going to go to tariff war, not just with China, but with everybody.
00:25:14.000And it turns out everybody else still wants cheap goods.
00:25:17.000It turns out everybody else is happy to shop in China if they want to.
00:25:23.000Not only that, if we're looking at ways to box in China, I have to say, I do not understand for the life of me why we are allowing NVIDIA to export the H200 chip to China.
00:25:34.000President Trump says the United States will receive a 25% cut of whatever China buys.
00:25:39.000But the whole point is that once China has widespread access to those chips, they will buy some and then they will steal the IP and make others.
00:25:48.000Not only that, China's way out of the box.
00:25:51.000We've talked about their problems with debt.
00:25:52.000We've talked about China's problems with human lack, right?
00:25:56.000They don't have enough human capital because they killed half their population through the one-child policy.
00:26:01.000They have an aging population, a hugely aging demographic.
00:26:11.000AI means that you can actually increase your productivity numbers without as many employees.
00:26:19.000That the computers and the robots do all the work.
00:26:22.000The chief beneficiaries of that are places like China, which actually are lacking human capital, lacking human beings, and have heavy debt problems.
00:26:29.000So why are you allowing them the possibility of winning an AI race that not only has consequences economically, but also has consequences in terms of military power?
00:26:38.000All the next wars in human history are going to be AI-powered wars, drone-on-drone, AI assessment against AI assessment.
00:26:47.000Whoever has the best tech is going to win.
00:26:50.000That is going to be the next step in human warfare because it will be robot warfare essentially.
00:26:59.000But this is one area where America first really should kick in.
00:27:01.000It shouldn't kick in with regard to tariffs on Japan.
00:27:04.000It should kick in with regard to why are we selling H200s to the Chinese, even if it delays them by six months.
00:27:11.000That is a national security consideration.
00:27:14.000The H200 has higher performance, according to the Wall Street Journal, than the H20 that NVIDIA was previously allowed to sell.
00:27:20.000It's not as powerful as the company's top Black Welt products released this year or the Rubin generation of chips coming next year.
00:27:27.000With that said, some of what's going on here is pure bulk.
00:27:32.000Now, yes, more sophisticated chips mean greater efficiency.
00:27:34.000But if you're China, you could brute force this thing theoretically if you have enough of these chips that you can string together.
00:27:41.000According to the Wall Street Journal, the exports could also help Chinese tech giants that have struggled to get top chips to train their models.
00:27:47.000Jensen Huang, who's the head of NVIDIA, has argued that the company should be allowed to compete in the Chinese market because China has many of the world's top AI researchers and the U.S. should want them using American technology.
00:28:09.000The attempt, NVIDIA was trying to sell a slimmed-down black wealth chip to China.
00:28:13.000So if Trump's initial critique of the sort of globalist trade regime is rootless corporations attempting to make money at the expense of American security, I mean, this one is like top of the list.
00:28:29.000If you want to box in China, you have to stop them from winning the AI race.
00:28:34.000As Stu Wu at the Wall Street Journal writes, with one unorthodox deal, President Trump instantly reshaped the U.S.-China technological cold war.
00:28:41.000The fear among his critics, he just helped Beijing catch up.
00:28:45.000He handed China's AI industry what it couldn't build itself, the high-end semiconductors needed to rival America.
00:28:52.000And again, one of the problems here is that the reason this happened is because of the trade wars.
00:28:59.000President Trump may have made concessions in these wars on the chips because the Chinese have so much control over rare earth minerals where we didn't game out.
00:29:08.000Again, I said we have to build alternative supply lines and then box China in.
00:29:12.000If you don't build out those alternative supply lines, China has a pressure point, which it used.
00:29:16.000Also, China has manufacturing advantages in places like pharmaceutical.
00:29:20.000Jamie Dimon of J.P. Morgan Chase, he pointed out that we currently rely on China for 90% of our pharmaceutical ingredients.
00:29:29.000It's not just about China, but we rely on single parties for things we need for F-35s and nuclear submarines.
00:29:37.000So the resilience, we rely on China for something like 90% of the ingredients go to our pharmaceuticals and 90% of our penicillin.
00:29:47.000Again, if we are going to go to conflict with China, which we should, then we should be smart about it.
00:29:52.000Phil Graham and Donald Boudreau, both economists, they are writing in the Wall Street Journal today about world trade and the fact that world trade is growing in the absence of the United States.
00:30:04.000They point out the current trade diversion began when Mr. Trump's first term tariffs led China to shift its exports to other countries.
00:30:10.000Under Mr. Trump's second term tariffs, Chinese exports to the United States fell by 69% from February through September, but Chinese exports to other regions rose.
00:30:18.000Over these same months, Chinese exports to Association of Southeast Asian Nations, that's Asian member states, were up by 61%, to Japan and Korea by 41%, to Africa by 35%, to the EU by 28%, to India and Latin America each by more than 10%.
00:30:34.000As trade is diverted around the United States, other countries will continue to specialize in producing goods and services for which they have comparative advantage.
00:30:42.000This specialization and the trade that sustains it will enhance efficiency and fuel economic growth in those trading nations.
00:30:48.000America's economy will become increasingly isolated to our own detriment.
00:30:51.000Before tariffs, well over half of U.S. imports were inputs used by American producers.
00:30:56.000Keeping tariffs high will deny these producers access to many of the world's lowest caught inputs.
00:31:01.000Instead, U.S. producers will become less efficient and less competitive on the world market.
00:31:07.000And by the way, as we simultaneously cut ourselves off from world trade, which is a mistake, we are going to have to scale up our military.
00:31:16.000And there's very little in the actual national security strategy with regards to what it looks like to scale up our military.
00:31:22.000In fact, again, there's this sort of peculiar isolationist streak that runs through a national security strategy that seems to ping pong between a Reagan-esque peace-through-strength policy that President Trump historically has supported and a bizarre sort of isolationism that suggests that America needs to move away from its attempts to provide a muscular supporting presence to allies around the world.
00:31:46.000We may be falling behind China in terms of military capacity.
00:31:50.000According to the New York Times today, the Trump administration wants to increase defense spending in 2026 to more than a trillion dollars.
00:31:58.000Much of that money will be squandered on capabilities that do more to magnify our weaknesses than to sharpen our strengths.
00:32:38.000This is a point being made by people over at Palantir, for example.
00:32:42.000Meanwhile, to pretend that China does not have an overall strategy is, of course, silly.
00:32:45.000China is very strategic in its overall game plan.
00:32:49.000China has been using for years its Belt and Road Initiative in order to make inroads in Africa and in South America.
00:32:56.000You know, when the national security strategy focuses heavily on the Western Hemisphere, what we should recognize is that the threat to the United States is not chiefly Venezuela.
00:33:21.000The Europeans deserve to have their knuckles wrapped.
00:33:25.000The Europeans have lived high on the hog by not paying their own defense bills for decades.
00:33:31.000And they simultaneously have imported an enormous number of people from areas of the world that seek to undermine European civilization.
00:33:38.000That critique from JD Vance, that critique from the administration, totally correct.
00:33:43.000However, however, if you wish to instill in the Europeans a new backbone, if you wish to do a spinal injection on the Europeans, you need to point out who their enemies are.
00:33:56.000And yes, of course, they have internal problems, real internal problems, serious internal problems, but to pretend that the United States ought to take a sort of neutral position between the Europeans and the Russians is not so.
00:34:09.000The Russians have overtly made clear their strategy for decades under Vladimir Putin, and that is to expand their sphere of influence to play at being a great power, despite the fact that the Russian economy is smaller than the economy of the state of Florida or Italy.
00:34:23.000And they want to do so at the expense of the Europeans, because what the Russians do not lack is stones.
00:34:38.000It requires that the Europeans and the United States actually work together to stop Russian predations.
00:34:44.000And yet if you look at the national security strategy, Russia barely earns a mention.
00:34:48.000Quote, should present trends continue about Europe, the continent will be unrecognizable in 20 years or less.
00:34:54.000As such, it is far from obvious whether certain European countries will have economies and militaries strong enough to remain reliable allies.
00:35:01.000Many of these nations are currently doubling down on their present path.
00:35:03.000We want Europe to remain European, to regain its civilizational self-confidence, and to abandon its failed focus on regulatory suffocation.
00:35:09.000Yes, agree with all of that, but the strategy continues.
00:35:12.000This lack of self-confidence is most evident in Europe's relationship with Russia.
00:35:16.000European allies enjoy a significant hard power advantage over Russia by almost every measure save nuclear weapons.
00:35:21.000As a result of Russia's war in Ukraine, European relations with Russia are now deeply attenuated, and many Europeans regard Russia as an existential threat.
00:35:29.000Managing European relations with Russia will require significant U.S. diplomatic engagement, both to reestablish conditions of strategic stability across the Eurasian landmass and to mitigate the risk of conflict between Russia and European states.
00:35:43.000The United States should not pretend to be a neutral broker between Russia and Ukraine.
00:35:48.000We have a very strong, yes, there's massive corruption in Ukraine.
00:35:51.000Also, there's massive corruption in Qatar, in Saudi Arabia, in a wide variety of nations that the Trump administration has quite warm relations with.
00:36:00.000The idea that we ought to play a neutral role with regard to the Russians or that the Russians are about to flip and suddenly become a pro-American power.
00:36:10.000The Russians are adversarial to what they call Atlanticist interests, which is predominantly the United States.
00:36:17.000So when the national security strategy says it is a core interest of the United States to negotiate an expeditious cessation of hostilities in Ukraine in order to stabilize European economies, prevent unintended escalation or expansion of the war, and reestablish strategic stability with Russia.
00:36:33.000What does strategic stability look like when Russia is an aggressive power?
00:36:37.000The Trump administration has quite properly called the Europeans on the fact that they have continued to purchase Russian gas.
00:36:46.000But what we should be doing is providing them American LNG.
00:36:50.000We should be strengthening our relations with them in the face of Russia's increasing predations because, of course, Russia and China are working in tandem.
00:36:58.000According to the new national security strategy, quote, the Trump administration finds itself at odds with European officials who hold unrealistic expectations for the war perched in unstable minority governments, many of which trample on basic principles of democracy to suppress opposition.
00:37:12.000Okay, yes, there are problems in places like France with suppressing the right.
00:37:17.000There are problems in places like Romania with suppressing.
00:37:22.000To somehow call the Europeans on the quote-unquote suppression of minority political rights while making room for the Russians where there are no minority political rights.
00:37:31.000You find yourself flying off a fourth story balcony if you oppose Vladimir Putin in Russia is kind of absurd.
00:37:37.000A large European majority, says the national security strategy, wants peace.
00:37:41.000Yet that desire is not translated into policy in large measure because of those governments' subversion of democratic processes.
00:37:49.000Okay, this is the reverse of what the actual situation is.
00:37:57.000Yes, the Europeans, there are many Europeans on the right who would like to cut a separate peace with Russia.
00:38:03.000No, that would not be good for the United States if Russia somehow earns itself a gigantic chunk of Ukraine and another invasion of Ukraine in the next five, 10 years.
00:38:13.000The notion that we ought to be chiding the Europeans on their democracy, but not chiding, we should chide everybody, but chiding the Europeans and not chiding the Russians and pretending neutrality.
00:38:22.000I mean, I can see why the Russians are trying to expand their foothold in Ukraine.
00:38:29.000I mean, what guarantee could a United States that puts out that in the national security strategy give to the Ukrainians to get them to stop fighting?
00:38:36.000Like, what security guarantee would be trustable under those circumstances?
00:38:40.000You can see why Vladimir Zelensky, again, none of this excuses the corruption inside the Zelensky regime in Ukraine.
00:38:58.000Because he doesn't have any security guarantees from a country that is attempting to equate Russia's predation with European multi-party democracy, which is not even remotely on the same scale as what's happening in Russia.
00:39:10.000Donald Trump Jr. in Qatar, of all places, which, yes, is a terror-supporting slave state.
00:41:27.000Human rights organizations report migrant workers make up over 90% of Qatar's population and 95% of its labor force.
00:41:34.000And many low-paid workers experience serious abuses under or linked to the Khalafa, the Kafala sponsorship system.
00:41:40.000Documented problems include passport confiscation.
00:41:44.000That is where a foreign worker shows up and their boss takes their passport so they can't leave.
00:41:48.000So now they're stuck there and they can't get out.
00:41:50.000Restrictions on changing jobs or leaving the country, unpaid or delayed wages, debt bondage through recruitment fees, which can amount to conditions resembling de facto slavery or indentured servitude for some workers.
00:42:02.000And Qatar uses that money in order to apparently pay pretty much everybody to head on over to Qatar.
00:42:08.000And Qatar uses that money to pay for a gigantic propaganda operation in the West, to pay for its sponsorship of soccer teams in London and ownership of half of the assets in the UK, and also to pay people to come over to Qatar and talk warmly about how magical Qatar is.
00:42:25.000Donald Trump Jr. in Qatar, which again plays a, shall we say, middle role between the United States and adversaries of the United States, including places like Russia, he suggested in Qatar that the United States may walk away from Ukraine.
00:42:42.000Because of the war and because he's one of the great marketers of all time, Zelensky became a borderline deity, especially to the left, where he could do no wrong.
00:43:09.000What's good about my father and what's unique about my father is you don't know what he's going to do.
00:43:14.000The fact that he's not predictable, he's not following the playbook of every clown who's, again, been a bureaucrat for decades, you don't know.
00:43:25.000Now, again, I believe that President Trump will do the right thing with regard to Ukraine because there's one thing he doesn't want, which is the perception of American weakness, including, for example, Russian troops strolling through Kyiv because of a cut-and-run strategy in Ukraine.
00:43:38.000I will say that the disproportionate focus put on Ukrainian corruption sitting in Qatar, one of the most corrupt states on planet Earth.
00:43:46.000It is legitimately a dictatorial monarchy, is pretty astonishing.
00:43:52.000And if you think that America's enemies don't take no, they absolutely do.
00:43:59.000Now, again, some of what's going on with regards to China has political considerations attached in the United States.
00:44:04.000One of those political considerations has been Chinese restrictions on soybean exports from the United States to China.
00:44:10.000Just another reason why a free trade system promoted by the United States, yes, using tariffs to ratchet down tariffs that other countries have put on us, would be superior to throwing up tariffs on the entire world and then having to cut deals with the Chinese.
00:44:24.000So America's farmers, particularly soybean farmers, have been harmed by the trade war between the United States and China.
00:44:31.000President Trump says that soybeans are now being exported to China.
00:44:36.000Since my successful meeting in South Korea with President Xi, purchases have been made and soybeans are being exported out of the United States to China as we speak.
00:44:46.000And I say that our soybeans, I told this to President Xi, our soybeans are more nutritious than competitors.
00:44:56.000Somebody said, is that a Trump statement or is that real?
00:44:59.000In fact, you know who asked me that question?
00:45:11.000But the reality is that if we have to cut deals on NVIDIA chips so we can open up their markets on soybeans, that seems like a bad deal to me.
00:45:18.000It also means that because of all of the tariff conditions, and again, it's not just us tariffing other countries.
00:45:24.000It's also just the broiling economy that's forcing a bunch of other countries to try and now make common cause with other countries.
00:45:31.000As trade shifts away from the United States, in other words, as that happens, we have to keep bailing out farmers.
00:45:36.000So yesterday, President Trump announced a farm bailout.
00:45:40.000What we're doing is we're taking a relatively small portion of that, and we're going to be giving and providing it to the farmers in economic assistance.
00:45:53.000And as you know, the farmers like me, because, you know, based on voting trends, you could call it voting trends or anything else, but they're great people.
00:46:05.000So we're going to use that money to provide $12 billion in economic assistance to American farmers.
00:46:13.000Okay, so again, those are some of the consequences that happen when, in fact, you have mercantilistic policy on all sides, is that you require payoffs.
00:46:23.000Now, what does all this mean for affordability?
00:47:06.000At the same time, the only way that people are going to feel the dynamism of the American economy is if we actually allow for the dynamism of the American economy, broad scale.
00:47:15.000That doesn't mean picking and choosing winners and losers.
00:47:17.000It doesn't mean taking stakes in private companies.
00:47:19.000It means allowing the economy to roar.
00:47:25.000And by the way, liquidity is not going to be the problem because apparently the expectations for the rate cut are really, really, really high from the Federal Reserve.
00:47:33.000According to Axios, The likely outcome of a two-day Federal Reserve policy meeting that concludes Wednesday would be one more rate cut that will probably last for a while.
00:47:42.000The final signals from Hawks, Doves, and Fed leadership all point to an accord of sorts that the Federal Open Market Committee probably will cut its interest rate target by a quarter point on Wednesday while signaling a high bar for when it may do so again, which again makes sense.
00:47:55.000I mean, I'm not sure that I'm even in favor of the rate cut at this point.
00:47:58.000It seems to me that there's plenty of liquidity in the economy.
00:48:02.000With that said, liquidity is not going to be the problem.
00:48:05.000The problem is going to be how do we outcompete everybody else?
00:48:11.000Other things the GOP could do right now, obviously cracking down on welfare fraud would be a big one.
00:48:16.000The president is focused a lot on illegal immigration, but the actual bigger story with regard to Minnesota is the gigantic presence of huge bags of government cash inevitably leads to fraud.
00:48:29.000They do not achieve the goals that they seek, generally speaking.
00:48:33.000A fascinating story from the Wall Street Journal today talking about the sort of welfare fraud that is actually far more common than what we saw in the Somali community in Minnesota.
00:48:43.000And that is people just lying about their conditions in order to achieve welfare.
00:48:46.000According to the Wall Street Journal, diagnosis rates of autism among children have more than tripled over the past 15 years.
00:48:52.000One reason which Minnesota's welfare scandal lays bare with shocking details is Medicaid fraud and abuse.
00:48:58.000Medicaid pays healthcare providers big bucks to diagnose and treat children with autism, sometimes tens of thousands of dollars a month for a single child.
00:49:06.000Yet states rarely verify that kids who are diagnosed actually meet the medical criteria for the disorder or that they get appropriate treatment from qualified specialists.
00:49:14.000The result, children covered by Medicaid or the government-run children's health insurance program are two and a half times as likely as those with private coverage to be diagnosed with autism.
00:49:23.000Many lower-income kids are labeled autistic merely because they have behavioral or developmental problems.
00:49:28.000So if you want to look at the tremendous number of increased autism diagnoses, one of the reasons for that, of course, is because if you pay people more based on their diagnosis of autism, you're going to get more autism diagnoses.
00:49:41.000In Minnesota, the number of autism providers soared 700%.
00:49:45.000Payments to them increased 3,000% between 2018 and 2023.
00:49:52.000All of this underlines broader problems with America's social welfare industrial complex.
00:49:56.000Liberals measure success by how much money is spent rather than outcomes, and they accept waste and fraud and abuse.
00:50:02.000This is particularly true in our disability system, the number of people claiming disability in the United States.
00:50:06.000You think disability, you think some dude racked up his back and legitimately can't work anymore.
00:50:11.000Somebody lost a leg in a coal mining incident.
00:50:13.000Disability now applies to tens of millions of people, most of whom are not in any real sense disabled.
00:50:20.000But they can claim disability with very little evidence, and now they are on the government dole.
00:50:26.000Giant sacks of cash at home bankrupt the economy.
00:50:29.000They are a drag on the economy, of course.
00:50:33.000You know, the generalized fact is that if you want to increase the dynamism of the American economy, you need to jettison the ballast.
00:50:43.000And there are ways around some of the ballast.
00:50:45.000For example, if you let the market work, so one sort of green shoot in terms of letting the market work.
00:50:54.000According to Peter Loftus, reporting for the journal, drug makers are moving to sell their medicines directly to patients, abandoning the middlemen they've long relied on.
00:51:01.000The shift is a huge departure from how pharmaceutical companies, including Eli Lilly, Novo Nordisk, and Pfizer, have sold drugs for decades and threatens the multi-billion dollar business of firms that have traditionally filled prescriptions.
00:51:11.000It's saving some patients hundreds of dollars off the cost of prescriptions because companies have been lowering the prices for drugs sold directly.
00:51:18.000In the meantime, drug makers who've been rolling out the services in recent months see a big opportunity to boost sales, though they risk losing revenue if they don't offset lower prices by selling to more patients.
00:51:28.000According to Pratabh Kedikar, the chief executive of pharmaceutical consulting firm ZS, for the first time, pharma is looking to end, sorry, for the first time, pharma is actually looking end-to-end at the full patient journey.
00:51:40.000So you can see it in the weight loss market, where people are actually selling directly to consumers.
00:51:47.000Now, that is actually a good thing because if you move through an insurance system, then very often you're paying way too much, or the insurance company is giving you a fake bill.
00:51:55.000They then negotiate it down and they pay it.
00:51:58.000They'll tell you that it costs them a thousand bucks for a dose.
00:52:00.000And then they're not actually going to pay a thousand bucks.
00:52:02.000They go and they negotiate it with the provider.
00:52:07.000And then they are reporting that they're getting a certain level of discount.
00:52:12.000So for example, one person gets his health insurance through a Medicare plan that doesn't cover the weight loss drug Zepp bound.
00:52:21.000He said, quote, it was $1,050 at Costco when I started and the vials weren't available.
00:52:25.000As soon as it was offered at $550 in the vial, I switched.
00:52:28.000And then he used the savings to help his daughter-in-law pay for her prescription for the drug.
00:52:34.000Again, let the markets work, the price goes down.
00:52:36.000Don't let the markets work, the price goes up.
00:52:40.000This also applies to things like H-1B visas.
00:52:42.000I know this is very controversial stuff now because we're supposed to believe that illegal immigration and H-1B visas are perfectly coincident.
00:52:50.000It is absolutely not the same policy question.
00:52:53.000For the 1,000th time, there are fixes we can make to the H-1B system.
00:52:56.000If you want the educational level to be higher for people coming in, fine.
00:53:01.000If you want to make people pay a fee, depending on the company that's applying, open, open question.
00:53:09.000But to pretend that raising the cost to bring in additional labor doesn't impact the price on the other end is obviously untrue.
00:53:16.000And so one of the factors in healthcare costs, particularly in rural areas, is that many of the healthcare providers in rural areas of the United States, places where many Americans who have graduated medical school don't want to move, are being filled by people who are actually on H-1B visas.
00:53:32.000According to the Washington Post, after President Trump signed an executive order restricting H-1Bs in September, soaring costs are roiling rural healthcare facilities that have long struggled to find staff.
00:53:42.000The fee increase for visa applicants, coupled with broader crackdowns on legal pathways for foreign-born workers, threatens a growing industry and jeopardizes patients who need timely care, according to some labor experts and immigration lawyers.
00:53:52.000Again, these are open questions, but pretending that economics are not a matter of trade-offs.
00:54:04.000I know that when we talk policy, some people's eyes glaze over because it's more fun to talk about the Rockham Stockham robots of politics.
00:54:12.000But the reality is that once you are in power governing, things better get better and more solid.
00:54:18.000That is going to be the question for Republicans in 2028.
00:54:20.000It is much easier to campaign when you're out of power than it is to campaign when you are in power.
00:54:25.000That is just the reality of the situation.
00:54:27.000And so if the Republicans wish to be victorious in 2026 and 2028, they're going to need to deliver.
00:54:33.000They've already delivered on many fronts.
00:54:35.000They're going to need to deliver in even broader fashion on economic affordability, which means really economic robustness, and a national security strategy that strengthens our allies at the expense of our enemies.
00:54:48.000Alrighty, coming up, we will talk about Jasmine Crockett, the crazed Democrat from Texas, now wants to run for the Senate.
00:54:54.000We'll see how it goes for her, Cotton.