In this episode, Tucker Waldron talks with US Trade Rep. Peter Navarro about the failure of the current economic system and why it needs to be reoriented to a more productive and more productive economic system. Topics From Today's Episode: 1:00:00 - What is the failure point of the economic system? 2: Why does the current system fail? 3:30 - What are the failure points? 4:15 - How much wealth does the United States own? 5:40 - What does it have to do with trade?
00:03:30.880There's a data point called the international investment position of a country.
00:03:36.400And that is how much for us all Americans own throughout the entire world versus how much everyone else owns here.
00:03:44.880That number is a negative $23.5 trillion.
00:03:49.580And if you said, what was it 20 years ago, it was probably a negative $3 trillion.
00:03:55.620So we have transferred about $20 trillion worth of our national wealth, and I would say the future income of that wealth, overseas in return for current consumption.
00:04:09.200Can you explain that measurement one more time?
00:04:11.360It's what we own here versus what others own here?
00:05:59.840When he was worried about in 2003 that the number was a negative $2.3 trillion.
00:06:08.340So, since he sort of raised the red flag on this and said we've got to get back to balanced trade, the situation has gotten geometrically worse.
00:06:17.120So, that's the first condemnation of the current system.
00:06:21.100And we can talk at great length about that if you like.
00:06:24.640The second is this system has really slowed economic growth in the United States.
00:07:43.880We've also seen, like, a lot of the world's population move here.
00:07:47.740Like, the country's completely changed from 2000.
00:07:50.020Well, but, yeah, but the demographics is an interesting point.
00:07:53.840And I agree with what Vice President Manns talked about the other day about how one of the things about immigration is it does get you dependent on low wages.
00:08:05.140And when you depend on low wages, it tends to stifle innovation.
00:08:44.580We could say the same thing about rare earths.
00:08:46.760We didn't invent them, but we used to dominate that solar panels.
00:08:50.100We could go through all of these various things, nuclear energy, all of these things, where we have lost – not only lost our lead, have basically fallen out of the competition.
00:08:58.300But very importantly, the Australian Strategic Policy Institute, which is this wonderful institute that's supported by the government of Australia, but also private sector people, they track 64 what they call critical technologies, 64.
00:09:16.080The United States is behind China in 57 of the 64.
00:09:20.020And these are things like AI and robotics and the kind of things you need.
00:09:24.460And if you said, where were we 15 years ago, we were behind in three.
00:09:30.880So, you've seen this deterioration during this period of hyper-globalization or hyper-free trade or huge trade deficits.
00:09:37.900You've seen us actually fall behind technologically, but the fourth and by far most important ramification of this process is we've seen a real deterioration in the quality of life of our working class people.
00:10:09.220We have seen these people lose their jobs.
00:10:12.220We've seen their wages stagnant for 25 years.
00:10:15.800There was a bump in Trump one, but we're basically back where we were.
00:10:20.200You've seen them actually have shorter lives.
00:10:22.700Angus Deaton and Anne Case did a book called Desolate Despair that demonstrated that these people now live, on average, about eight years shorter lives because of alcohol and drugs and suicide.
00:10:40.340To give you an idea, when I was young, that differential was probably about a year.
00:10:53.980You don't have to drive very far in America to see devastated communities.
00:10:57.320All of this, the result of this failed attempt at globalization, this failed attempt at free trade.
00:11:04.860And another aspect of it is we have seen not only our workers been treated very badly, but the distribution of wealth in America has gone just like this.
00:11:14.340It's one of the great things about America, for me particularly growing up, but, I mean, even you, you're younger, was this notion that we're all middle class.
00:11:23.780Now, we weren't always really – we thought of ourselves.
00:12:14.640We find kind of combining these thoughts, and we get this from Angus Neaton, we find for the first time starting in 2000, when this explosion took place in hyperglobalization, we find that American children can no longer expect to live longer than N.B. Richard and their parents.
00:13:07.700And this – these crises that I've talked about, this transfer of wealth, the technology, the slow economic growth, but mostly the effect on our working people, that is why Reagan was elected.
00:13:22.360Very beginning of this, and we can talk history of that.
00:13:24.420And it absolutely is why Donald Trump was elected president.
00:13:27.840Reagan had these so-called Reagan Democrats that we all remember that.
00:13:33.160That was the beginning of those people because that was when we sort of reached the peak.
00:13:37.780By the time we got to the 2000s, these people were a movement, this populist movement.
00:13:43.260And they are the reason that Donald Trump is where he is.
00:13:47.520And to his credit, Donald Trump talked about this and worried about this issue since he was 35 years old.
00:13:55.880This is not – this is the – in my opinion, the essence of Donald Trump.
00:14:01.020Donald Trump's essence is we're getting – he says we're getting ripped off.
00:16:27.200What they cared about was price optimization and how much we could consume.
00:16:31.840And that's the opposite of what people like you and I believe in.
00:16:36.420Conservatives and a lot of labor Democrats believe we have to worry about values and preserving what's great in America.
00:16:45.560We're not interested in sort of the materialism of maximizing, optimizing prices and maximizing consumption.
00:16:52.860And that's more or less where that's – there's a combination of that.
00:16:56.820There's a combination of this financialization of America of taking profit out right away so that a few people get very rich regardless of the effect on others.
00:17:05.820If you think of the evolution, Tucker, it's – and we could talk from the beginning of time about trade and how it evolved.
00:17:16.040But for our purposes, you would think of it basically as America really from the early 1800s basically became wealthier and wealthier, largely behind the American system.
00:17:33.440And Alexander Hamilton kind of an idea of tariffs and subsidies, subsidies in the nation, in the nature of canals and roads and the like.
00:17:54.160Now we – and we can talk about that back and forth.
00:17:56.540And those were almost all Republican presidents during that entire period, only two Democrats during that entire period, between Lincoln and Franklin Roosevelt.
00:18:07.360And basically tariffs were a key tool and there were ups and downs in that.
00:18:11.140And we can talk about that if people are interested.
00:18:12.920But we got to the Second World War and then we had a different challenge.
00:22:03.280But this was like somebody just putting it on steroids and acted like – I mean, the only thing that they missed about the evolution of economics was human nature, right?
00:22:17.060So then you saw very bad things happen over a long period of time.
00:22:23.420You got to the point where you had – in 2016, you had President Trump, as I say at that point, had been complaining about this general notion since he was 35, since he was a kid.
00:22:36.120And he kind of gets a populist move and he's elected.
00:22:40.320And then we have whatever happened in 2020, a COVID thing that ends up affecting our election.
00:22:46.420And now we are again because we changed in Trump 1.0 or whatever the computer people say.
00:22:56.240We changed the way people think about these things.
00:22:58.880And they didn't really change back much in Biden.
00:23:02.540To Biden's credit, his people – I think some of his people were very good.
00:23:05.900But overall, they didn't make a lot of decisions to make better what we did.
00:23:11.960And now we're in Trump or we're in a position to actually make substantial changes.
00:23:17.780But the – and I know that's what you want me on here to talk about.
00:23:20.840But the most fundamental thing is the system has failed America generally and it's failed our working people dramatically.
00:23:32.480And that's been going on for – in an acute state for at least 25 years.
00:23:38.680So one of the first things that prisons do to dehumanize the inmates is take away their privacy, their frequent and random cell checks, body searches.
00:23:45.480They have their mail and phone calls monitored.
00:23:47.720So if you take away someone's privacy, you take away that person's freedom.
00:25:14.460To reach a team of licensed tax professionals that can help you reduce, settle, and resolve your tax matters, go to tnusa.com and check them out.
00:25:34.460The credit card companies are ripping Americans off and enough is enough.
00:25:39.100This is Senator Roger Marshall of Kansas.
00:25:41.820Our legislation, the Credit Card Competition Act, would help in the grip Visa and MasterCard have on us.
00:25:48.980Every time you use your credit card, they charge you a hidden fee called a swipe fee, and they've been raising it without even telling you.
00:25:56.460This hurts consumers and every small business owner.
00:25:59.400In fact, American families are paying $1,100 in hidden swipe fees each year.
00:26:05.880The fees Visa and MasterCard charge Americans are the highest in the world, double candidates, and eight times more than Europe's.
00:26:13.820That's why I've taken action, but I need your help to help get this passed.
00:26:18.220I'm asking you to call your senator today and demand they pass the Credit Card Competition Act.
00:26:24.960Paid for by the Merchants Payments Coalition.
00:26:26.920Not authorized by any candidate or candidates committee.
00:28:02.680You know, you do not get that sense in a pyramid-shaped social structure at all.
00:28:07.000And that's the biggest change of my lifetime is the end of the middle class as a majority and the end of the egalitarian spirit to find America, that Anglo-egalitarianism, which is not a feature of other countries.
00:28:51.280But in terms of what is causing the harm to the global economy, I would say, but particularly to America, the most important thing is not tariffs.
00:29:03.000Tariffs are the most visual thing, the easiest to see.
00:29:07.920But the real problem goes far deeper than that.
00:29:10.880So that if you end up with equal tariffs, you will still have a catastrophe for America.
00:33:46.920I mean, it's just there's a lot of reasons why that wouldn't happen.
00:33:49.260But what you need is you can't have countries have huge trade surpluses over long periods of time.
00:33:55.940You have to enforce and you have to penalize countries that have surpluses all the time and let countries that have deficits all the time get back to balance.
00:34:07.000If you do that, you then get the benefits of trade.
00:43:32.560And there was just a study by Gordon Hansen out of Harvard and some other people.
00:43:36.680Other jobs did come back, but they were jobs at the lowest level of health care and the like.
00:43:43.300In other words, they were – did employment come back?
00:43:46.360Yeah, but the people went from having the kind of job that I described, one that you could support your family and be proud of, to one where you really couldn't.
00:43:55.920Only three things are absolutely certain in this life, and you know two of them.
00:43:59.380First is death, second is taxes, and the third, unfortunately, is getting ripped off by your cell phone company.
00:44:04.480If you're a Verizon, AT&T, or T-Mobile customer, you know exactly what we're talking about.
00:44:16.160Pure Talk is an earnest friend of the show, and they are the answer.
00:44:21.080If you become a customer of Pure Talk, you get unlimited text, talk, and five gigs of data, which is enough for most people, on the country's most dependable 5G network.
00:45:32.740I've got to say, almost everyone on our team looks suspiciously well-rested every morning.
00:45:38.020It turns out most of them are using a product called Sambrosa.
00:45:41.200Sambrosa blends antihistamine with a syrup of herbs and honey, and is designed to help you sleep well, waking up, feeling refreshed and revitalized.
00:45:49.340And based on the sunny, cheerful faces of the people I work with, it works.
00:46:33.540And what I always say, Tucker, is we need a country where parents are hopeful for their children, but where children are proud of their parents.
00:46:46.260We need families where people work and do productive, good work, and they're proud of the work, and they feel better about themselves.
00:46:57.720And they project that to their children and to the community, to the Little League, to all these kinds of things.
00:47:03.840These people who worked in these factories in Asheville when I was growing up, and some of them, and some farmers, they were proud, hardworking people who, at the end of the day, you know, said, my dad is this.
00:50:42.960As you go to these cities and you say, it shouldn't be like this.
00:50:47.000And the kind of notion, Tucker, was that we were sort of taught at a period, well, it's, you know, the people were lazy or they were in unions and that was bad or that the managers were bad.
00:51:00.760It was the result of an economic policy, largely in other countries, and a defenseless kind of foolish notion of benign neglect in America.
00:51:14.200And all of these bad outcomes are the result of this.
00:51:19.240I don't want to simplify it too much, but it's a sad thing.
00:51:22.980And we now have a chance to turn it around.
00:51:26.440And is that going to create disruption?
00:51:29.380Of course, it's going to create disruption.
00:51:30.480And there's never been great change that didn't create disruption.
00:51:33.560But the price, which I don't think will be great, will be dwarfed by the benefit if we have people working class people in the middle class again and hopeful and dignified and staying married and innovating and doing the kinds of things that America needs.
00:51:56.860There's nothing I want more than that for the country, and you can hear the bitterness of my voice as someone who spent his life in D.C.
00:52:05.020But I just want to say once again that all of these changes were defended and explained by a whole, like, field of academic study and the propaganda that it supported coming from Washington.
00:52:17.140The free market think tanks, Cato, AEI especially, basically tried to tell you for 40 years as you watched your country die that this was all good.
00:52:51.820And then you have to try to chase that through the political system.
00:52:55.320And so you end up with the Chamber of Commerce of the United States in favor of these things that are quite harmful to the people that I care about and that the president cares about.
00:53:06.280And they're not against these things because they help those people.
00:53:12.960They're against them because the elites, the powers that be that are benefiting from the system, object to them.
00:53:20.400Now, on your question about economists, there are a growing number of economists who see this problem.
00:53:31.100They don't necessarily agree with me on the solution, right.
00:53:33.480But if you see, you know, Angus Deaton is one who would say we have to reevaluate whether the costs of this thing called free trade were worth the benefits.
00:58:39.020I want these people to make more money and do better and inspire their children and do all the things you do in a community to make the country great.
01:00:00.960So he has some things and in this case primarily – some others, but primarily this fentanyl issue with Canada and Mexico, mostly a Mexican issue.
01:00:55.880But basically to get us to balance, to offset all this unfair – not just tariffs, but unfair practices.
01:01:03.080And I think what you're going to see on April 2nd is an attempt.
01:01:08.800You're seeing the USTR and the Secretary of Treasury, USTR doing the kind of day-to-day work on Secretary of Treasury and Secretary of Commerce, recommending to the president a series of tariff increases.
01:01:25.660And now how – the form that takes, I don't think it's really been determined yet.
01:01:32.960I think the direction is, the need is, but I think you're going to have to have a system that says here are the issues that are part of this industrial policy that are creating this unfairness.
01:01:48.040And one of them is, as I say, taxes and value-added taxes.
01:01:51.380And if people are – so we can talk about that in a second.
01:01:54.320But – and then the notion that the president has is, well, we'll tariff people in order to get them back to whatever we think of as offset – enough to offset their unfairness.
01:02:06.160At some point – and he's right, of course.
01:02:08.640But at some point, you're going to have to simplify that because you can't have 4,000 tariff codes in 180 countries.
01:02:17.100You would need a supercomputer to decide what – you know.
01:02:20.600So at some point, there's going to be some synthesizing of it to sort of say, okay, if you're in these categories, if you have these things, you get this rate and that.
01:02:31.660And the important thing for people to understand, I tried to explain to people, it isn't like he's going to say, okay, here it's April 2nd.
01:02:40.040Now, going forward, everything is perfect.
01:02:41.820You're going to have to have adjustments.
01:02:53.160And one of the reasons that when we – when the president imposed tariffs in such a grand way, the last time – it never happened before.
01:03:01.000The reason that it didn't blow up really was that we let the steam out of the balloon.
01:04:19.500You know, there was this thing called concentrated benefits and diffuse payments.
01:04:24.580This guy Buchanan, who was the economist, and he basically talked about the political system.
01:04:29.720And he said that, you know, sort of things happen when the person who gets the concentrated benefit, he is more motivated to get his way and to push his way through all the people with diffuse payments.
01:04:46.240My hope is that we can kind of reverse that and push back on those people who have had the concentrated benefits and give more of the benefits to the people who, until now, at least, have been, you know, relatively quiet and just accepting of a pretty bad hand dealt to them.
01:05:03.980So of all the – I just want to go back to the downside for a second, short-term downside – of all the potential effects of changing our system to the one that you described, it seems to me that inflation is – certainly as a political matter and an immediate matter, the scariest.
01:05:22.640First of all, it's really easy to measure.
01:06:32.900So it's kind of a conundrum for the Fed.
01:06:34.920But set that aside, the notion is that you will increase production in the United States, you will maintain consumption at about the same, and that will not be inflationary.
01:06:50.400So that's our idea that there's a model that some economists use called the GTAP model, which, by the way, generally assumes you cannot get economic growth, that you're a full capacity, industrial capacity and full employment.
01:07:08.700So if you have a model like that, then that's going to show inflation.
01:07:13.180But I would suggest that the model is not predictive, and indeed the St. Louis Fed made the statement a few years ago that the predictive quality of this model is 0.0 percent.
01:07:24.620So a lot of the economists are using a model that's unhelpful.
01:07:28.740But so the notion is you're going to increase production, and that will happen, and that that is not going to be inflationary.
01:07:35.040The idea is that inflation is systemic, not individual prices, so you can't just stack stuff up.
01:07:42.840The other thing is, in the argument against inflation, is that we did it last time in a big way.
01:07:49.740All the same people said it would be inflationary, and we had no inflation, right?
01:07:53.580We had 1.3 percent, so we had no inflation.
01:07:57.860And then the final thing I would say, if the notion that economists use, which is that trade barriers create inflation, and that's the basic notion that you're talking about on their side, why is it that China has deflation and not inflation?
01:08:16.780Why is it that the country with the most trade barriers actually has no inflation at all?
01:08:22.300And if you look like at Germany, they have some inflation, but it's less than a lot of the rest of Europe.
01:08:27.300So it would suggest that there is not necessarily a relationship between tariffs and inflation.
01:08:36.380If you look at the president's program generally, all right, the program is going to be tax cuts, spending cuts, deregulation, more energy, and tariffs.
01:08:49.600Now, even all but a hardcore partisan would say the combination of that can't be inflationary, right?
01:08:59.780The combination of cutting spending, getting rid of regulation, increasing energy, those things can't be inflationary.
01:09:37.580One, we have a trade problem, and that problem is trade deficits, and it's having all the bad effects that I said on our people and on the wealth of our country generally.
01:09:48.620That is a problem that has to be resolved.
01:09:52.600Connected but independent of that is the question of the geopolitical competition with China.
01:09:59.380So I always start with you're either on one side or the other, and I put people in like three categories, Tucker.
01:10:09.860There are people that study the issue, and I'm going to go through the kind of litany in a minute.
01:10:15.220But to set it up, there are people that study this issue and say China is an existential threat to America.
01:10:22.780They are an adversary, and we have to make change, and I'm in that group.
01:10:26.720There's another group that studies it and says China is an existential threat.
01:10:33.660They're an adversary, but we don't need to do anything because it will all kind of be resolved through this or that.
01:10:40.500That's a group that was very popular in the 90s.
01:10:50.500The third group are people that study it and conclude that there isn't a problem, China is not an adversary, and there's no existential threat.
01:10:57.960That group is all invested in China, right?
01:11:00.740So you can kind of divide the world when you think – when you're talking to someone, which of these three groups are you in?
01:11:06.320If you're in the last group, then you're basically a compromised person because no rational person can look at the data, look at the facts, and conclude that China is not a threat and an adversary.
01:11:30.100We're not equipped for a confrontation with China, either economically or militarily, and so we have to kind of figure out how to deal with the inevitable.
01:11:38.820So, yeah, this is kind of the defeatist caucus, right?
01:11:45.520The one that is all over for the world.
01:11:47.980I generally find that group has a very large overlap with group three that I articulate.
01:11:55.680The people invested in China that are already going to make money.
01:11:58.620But for sure there are people – but I always say to them, you know, you can't say do nothing in the face of a crisis.
01:12:07.780If you say do nothing in the face of a crisis, then I have not convinced you that we have a crisis because it's irrational if you accept the fact that it's a crisis to say do nothing.
01:12:27.960Yeah, although there was a lot – there were a lot of differences and a lot of other things going on there.
01:12:33.180And when you mention that, I always think of Neville Chamberlain, who before he was prime minister, was chancellor of the Exchequer.
01:12:42.340And he approved the sale in the 30s, 180 or whatever it was, Rolls-Royce airplane engines to rearming Nazi Germany, which was just on his face, ludicrous.
01:12:56.180And his explanation was that trade, like religion, should know no boundaries.
01:13:02.560So, while rearming Nazi Germany was a threat, it was more important that we sell them things, even if they're going to use them to bomb us.
01:13:10.220I always – I don't know why, but when you mention England during that period, that's the first thing.
01:13:14.660Right, well, it's the capitals to sell you the rope.
01:13:18.200So, let's think of why I have this conclusion, and a lot of – none of this is going to be news, I don't think, to anyone who's listening.
01:13:29.520But one, China has the biggest army in the world, and they're drawing it.
01:13:33.540They have the biggest navy in the world.
01:13:35.440They are militarizing the South China Sea in a way we haven't seen since the Second World War.
01:13:40.000They're claiming shoals, building, you know, 18 inches of cement and having places that you can militarize and land boats on.
01:13:50.860They are asserting territorial claims all around them.
01:13:57.200I mean, it's not just Vietnam and Philippines, but it's also Japan, and you could just go all around them.
01:14:03.220They are engaging in espionage on a scale we haven't seen, the FBI says.
01:14:10.740They start a new Chinese espionage case every few hours, and they have thousands of them.
01:14:15.780They have suborned perjury from two sailors about last year and a month ago, two army officers to – not perjury, but espionage – to sell secrets to them.
01:14:32.140They are building nuclear silos all over the place.
01:14:36.720They have their diplomatic wolf warriors go around and do whatever they think is going to be disruptive of the United States.
01:14:42.640They're building military bases around the world.
01:14:46.180They have things like this thing that's on the news now, this shipping company at either end of the – shipping facility at either end of the Panama Canal.
01:14:56.320They're engaging in economic warfare with the United States in terms of stilling technology and technology transfer and all the kinds of other things of which we are aware.
01:15:08.240They are funding the war in the Middle East.
01:15:10.540They're funding the war in Europe just without question.
01:15:16.880They're selling all the fentanyl, at least the precursors of all the fentanyl that comes into the United States.
01:15:26.580And it's not like the people that are selling the precursors for the fentanyl are an odd group.
01:15:32.700There are big companies in China that are doing it, I would suggest, with the approval of the Communist Party because they don't have the problem at home.
01:15:39.420So, if you sort of set aside the diplomatic, the military, the economic, you put all these things back to back, and then you look at their own words where they talk about change not seen in 100 years and prepare for war and all these kinds of things.
01:15:54.040It's pretty clear that their view is they should be number one in the world.
01:16:00.580Their view is the world is better off with totalitarianism, politically, Marxism, and economically, communism, right?
01:16:10.520This is their scheme and that we're in their way.
01:16:17.020This centrality of China runs through their history for 2,000 years, and we are a problem.
01:16:27.700So, for all of those reasons, you have to realize we have a real existential threat, and we have to do something about it.
01:16:35.240And the first thing you do is you stop transferring hundreds of billions of dollars of wealth to people that they're using to build technology and military systems to defeat you, right?
01:16:48.160That's the first thing you do, and we are doing that.
01:16:51.340We are transferring hundreds of billions of dollars in trade deficit.
01:16:56.800We are transferring hundreds of billions of dollars in stolen technology.
01:17:00.500We are transferring money through this fence-all crisis that we have.
01:17:09.200If you look at all of these things, you have to stop that, right?
01:17:12.980It is like the first thing you do is you stop digging when you're in a hole.
01:17:17.460So, what we need, I would propose, is not no economic relationship.
01:17:22.520I'm not for decoupling, but I think we need strategic decoupling.
01:17:25.520I think we need balanced trade in areas that benefit America.
01:17:28.540I think we need independent technology going forward made with America and with America's allies.
01:17:35.000And then I think we have to regulate ingoing and outgoing investments so that it's in the interest of the country.
01:17:42.180So, I think we need a heads-up kind of a policy.
01:17:45.200We can't keep going on the direction of going.
01:17:53.360Howard, how do we regulate investment in China?
01:18:00.660Well, so the first question I would say, how does China regulate investment in the United States, right?
01:18:06.140They have a state body that says, this is in the interest of China.
01:18:09.440Therefore, you can invest in the United States because you're going to get data or technology.
01:18:12.680And inbound investment, if you try to invest over there, they've got people who sit there and say, is this in the interest of China?
01:18:18.600And they just stood up and said, is this in the interest of China?
01:18:20.540So, we really need, in terms of inbound investment, we need to take CFIUS, this group, this group at the Treasury Department, and expand their mandate and fill it through.
01:18:33.320Right, so you can't invest in Iran, you can't invest in Russia, you can't invest in Venezuela right now.
01:18:38.720Well, you can only invest in China if they determine it's in China's interest.
01:18:41.880No, but I'm just saying, like, we do have all kinds of controls about where Americans can invest their money, but they don't apply to China.
01:18:50.180Well, for sure, there's two sides to it, right?
01:18:54.580If the inbound has to be strengthened so that they're not buying into things where they can get data, which they can use to feed their AI or technology, not just military technology, I would say any high technology.
01:19:10.240And then outgoing, it should only be investments that are in the interest of the United States.
01:19:18.560What's going on now is you have a group of people on Wall Street who make money by funneling money to China, and that's – those people don't – I don't know which of the three groups they're in, but you can guess.
01:19:32.260But for sure, those people have to be stopped, right?
01:19:38.060And I'm not saying no investment in China, but it has to be something that's in our interest, not in China's interest.
01:19:44.040The howling that will occur if you try to restrict the ability of American citizens to get rich in China will be really loud.
01:19:54.160So I don't really think – the people who get rich in China are people who take your money and bring it to China, right?
01:20:03.760In other words, the bankers and the like.
01:20:06.620Then there are people who manufacture to sell in the United States or in other places in China.
01:20:12.420That group, that group, interesting, all has a half-life because as soon as China gets their technology, they don't need them anymore, and then they squeeze them out of the business.
01:20:24.440I could give you any number of cases in nuclear, and there's a company called Ball Corporation, which makes containers, and they were the biggest in the U.S., then the biggest in the U.S., and the biggest in China.
01:21:05.260One, the people who actually are making money are sort of financializers, if you will.
01:21:13.060Manufacturers will do it for a brief period of time until it falls off.
01:21:16.480And then the other thing I would say, for sure, there's going to howl, but I always say it's a little bit like Undertaker's being against cancer research, right?
01:21:51.440If you were to, this is obviously just broad strokes here, but if you were to radically reduce the amount of manufacturing that American companies outsource to China, could you take up that slack?
01:22:06.480How long would it take to replace that manufacturing with manufacturing?
01:22:25.220And my own view is that it going, for example, from China to Mexico could very well be in the interest of the United States, not if it's a Chinese company doing it.
01:22:34.880But, I mean, when a U.S. company brings a facility from China and puts it in Mexico and employs Mexicans, that's more in my economic interest as an American.
01:23:01.180So what has happened is we renegotiated USMCA and tightened it in a bunch of ways and really created the most pro-manufacturing, pro-America trade deal in history, right?
01:23:18.460We, for the first time, the president, it was one of President Trump's great accomplishments, the first time anybody to ever renegotiate a big agreement.
01:23:26.120They were sort of thought of as eternal, like marriage or religion or constitution or something.
01:23:35.340At the same time, we put tariffs on China, right?
01:23:39.340Unrelated, but we put tariffs on China.
01:23:41.180So what China was trying to do is figure out a way to get into the U.S. market without paying the tariffs.
01:23:46.840Now, a logical way to do that would be to move stuff to Mexico, and as part of that process, they are infiltrating the Mexican infrastructure, and the numbers are quite large.
01:24:02.620It's, you know, billions and billions of dollars of investment by China and this rhodium group and others who have studied it, say the numbers probably six or seven times what the public numbers are.
01:24:17.380So it's hundreds of billions of dollars of investment.
01:24:21.080The purpose of this really is to ultimately get to the U.S. market, but also to sort of infiltrate the system in Mexico.
01:24:29.020And I would suggest it's very bad for the United States, and it's very bad for Mexico.
01:24:34.060And ultimately, the president is going to have to deal with it, and I think he's aware of that.
01:24:38.580This is a freight train coming down the road.
01:24:41.480So if you take Chinese content and just, you know, substantially transform it, just, you know, paint it or something, and then bring it to the United States, that's very bad.
01:24:53.200So you've seen increases in Chinese exports to Mexico of 50 percent a year for a number of years.
01:25:00.860And a lot of that, I think, is fine against the United States and is dislodging other sensible investments.
01:25:07.660But also giving China some control over Mexico.
01:25:26.420It's a lot of things that they're doing that haven't even come on stream yet that are going to come down like a locomotive down the highway.
01:25:32.840And it's all bad, and we have to do something about it.
01:25:36.060And the reality is probably that's going to be tariffs, and it's going to be some way that you separate, like, U.S. companies and neutral countries, like companies like the Japanese who are operating down there and abiding by the USMCA and this whole Chinese infiltration that's coming in.
01:25:58.820One of the things I've learned from traveling is that a lot of other countries like dealing with China because they're easier to deal with.
01:26:06.360There's no lecturing about democracy or transgenderism, rights for various groups, whatever.
01:26:14.300They don't feel as manhandled as they do by, you know, their experience with American government officials.
01:26:23.940Would it be helpful for the U.S. government to take a less hectoring tone around the world?
01:26:29.920Well, let me say, first of all, they also like China, do business in China in many cases because they don't have a Foreign Correct Practices Act.
01:26:37.300Yeah, but, I mean, to some extent it's because they can influence you in ways personally.
01:26:43.020So there's a lot of what's going on in this Belt and Road is going in there influencing local officials who then take on great amounts of debt, put in a Chinese infrastructure, it goes to hell.
01:26:54.380So some of the advantage that China has is just pure old corruption, right, that we wouldn't want to be a part of.
01:27:00.000It is, but we also, it seems to me, hamstring ourselves by our posture toward other countries.
01:27:07.280Like, it is very off-putting to have American officials come into your country and start telling you that your, like, ancient way of life is immoral.
01:27:24.920So to one of President Trump's ideas, I don't know if it's been fully articulated, but it's very obvious from watching, is that we can reestablish some sort of economic relationship with Russia once this war is resolved, God willing.
01:27:58.620Because they're small, you know, they're a small, you know, they have GDP smaller than Canada, and they're basically, you know, people would, you know, get into basically a gas station, right?
01:28:09.060They're an energy producer and not much.
01:28:11.760There was a time when they were also very much at the cutting edge of technology, but I think that's kind of waned.
01:28:17.480And, you know, depending on, once again, this is sort of a little afeard from where I'm an actual expert.
01:28:26.320Unlike everybody else, I actually identify what I am and what I'm not.
01:28:30.480I find it's helpful to me, but not other people.
01:28:34.000But I do believe that depending on how the war is resolved, and it will be resolved, right?
01:28:40.300I mean, it's just there's no question the wars are not eternal anymore than trade agreements should be.
01:28:43.900But when that happens, I think you will see economic relations, you know, reestablish.
01:28:59.960But a lot of it is how it is resolved.
01:29:02.500If it's resolved in a way that Europe and others view themselves as still more or less being at war, then you're going to have a very slow recovery economically.
01:29:11.440If you view themselves as like we've turned a page and we're in a new decade, then my guess is you'll see people move more quickly.
01:29:17.380Yeah, the Europeans are grudge holders, I've noticed.
01:29:19.420First, okay, you said you're trying not to be partisan.
01:29:24.420I think you've done a great job because not all of these are partisan questions.
01:29:28.240But in practical terms, what do you assess the chances of the Democrats, any Democrats, supporting Trump on this program?
01:29:41.800I mean, traditional Democrats would have supported.
01:29:43.240Remember, the Democratic Party is a bunch of different things, like we are, I guess, and Labor Democrats should do that.
01:29:51.540Remember, when I was – when I renegotiated the USMCA, the president and I did, and then I worked its way through Congress.
01:30:00.060And during this toxic time of impeachment and all of this, we worked it through for months and months and months in Congress.
01:30:06.100And then the final analysis got 90 percent of the Democrats and 90 percent of the Republicans to vote for it in the House and in the Senate.
01:30:12.940It's one of these things that people don't remember, but it was – it was, you know, whatever the hell we had, 385 votes in the House for it.
01:30:46.020We have John Lewis, who was obviously not president at all, but who I admire as like the – he was then the last living civil rights person, someone who I greatly admire.
01:30:54.200And actually – I actually brought my senior political staff to meet him just – and they were just, you know, awed by him just to – and he talked for 45 minutes about the civil rights movement.
01:31:05.460And we just sort of say this – you are the last person that's going to be able to talk to the last person who did this.
01:31:11.660But he made the statement, for example.
01:31:15.020He said, you know, I fought NAFTA with every bone in my body.
01:31:18.640I fought it as hard as I could possibly fought, and I never thought we'd have an opportunity to correct it.
01:31:23.700But now we are, and I'm supporting this.
01:31:36.000But there were a lot of – Rosa DeLauro, I mean, very hard-left people who realized what we were doing was for working people, and that was their constituency.
01:31:51.760It's not like you have to go up and actually do the retail work.
01:31:55.540I spent a huge amount of time on the Hill when we were doing this, a huge amount of time.
01:32:01.680I addressed – twice I addressed the caucus of Democrats in the House, the actual – the caucus, you know, once with Rich Trumka, the head of the FLCIO, just he and I, and took questions from the Democrats.
01:32:18.240I'm sure that no one else in the – probably any – very many administrations from a different party has ever done that.
01:32:24.120So it requires sort of doing the spade work, but I really think it's worth it because this change economically is so important.
01:32:38.060I'm not saying don't do it unilaterally, Mr. President, using existing law.
01:32:42.840I'm not saying that because I'm not Pollyanna.
01:32:44.900I think it would be very hard to pass something.
01:32:46.700But you do want labor-democratic buy-in because that's how you make something permanent is you have the smart people, the caring people, the ones who care about working people.
01:33:01.740And there's lots of Democrats who do, lots of them.
01:33:04.740Getting those people to buy in I think is really, really important.
01:34:47.980But if that happens, it should be reflected in the market.
01:34:51.680And so, I think looking at a short term is very disruptive, very destructive, not right.
01:34:57.160Looking at a long term makes some sense, but it's not my metric.
01:35:00.980My metric after national defense, my metric is do – most Americans do relatively better.
01:35:09.720And if they – in real terms, and if they did, the country is better off and the economy has done what it is supposed to do.
01:35:18.040I actually – this is sort of in 1996 when Bob Dole, who I worked for, you'll remember, as chief of staff and he was chairman of the finance committee.
01:35:27.380I wrote a speech that sort of made this point that the purpose of an economic policy is to generate wealth for the midsection.
01:35:38.480The richer, they'll take care of themselves.
01:35:53.840And finally, I think when it was all over and we didn't really have a shout, at the end, he just said, I just got to keep Lighthizer from grunting, so I'll give this speech.
01:36:09.780There's like – there's kind of like different Bob Dole's when you live to be 97 or something.
01:36:15.700You have different – you know, you have the young Bob Dole, who I didn't know, and he went to war and got blown up and kind of gritted his teeth and fought back.
01:36:22.680And he lived in the basement of his house so they could rent the upstairs, you know, so they could live.
01:36:28.680And then you have this guy in the middle who was the guy I knew who was maybe the legislator of that time, the number one.
01:36:35.340You could make the case for a few other people, but I could – you could make the case for him being the number one legislator in that midpoint in American history.
01:36:41.140And then you have this older guy who, you know, who got the Eisenhower Memorial done and got the World War II Memorial and did all these wonderful things in this different way.
01:36:51.000So I had this middle – this guy in the middle.
01:36:53.180And he was a tough, hard, good, conservative guy.
01:36:58.280And I obviously was – had an enormous amount of affection when it's been a state close to him his whole life.