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November 13, 2024 32 mins
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Episode Transcript

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Speaker 1 (00:01):
Als media.

Speaker 2 (00:05):
Welcome to it happened here, a podcast that's about trade policy.
Now I'm your host, Via Wong. This is amazingly going
to be the fun one of all of these episodes.
It's about working tariffs, so it's gonna be a long week. Yeah. Yeah,
that was the voice of the singular Garrison Davis, the
one the only Yes. Hello, I'm excited to hear about tariffs.

(00:29):
It's tariff talk here and it could happen here one
of my favorite favorite topics. I guess now, all right, Garish,
you're putting you on the spot. What is a tariff? Uh,
it's basically googling tariff. No, A tariff is when Trump
says China's bad, so he makes China pay extra money

(00:51):
to sell their goods to Americans, and luckily China pays
for all of it, and the American consumer gets off
with a boot sting economy. That's at least what I've heard. Yeah, so,
unfortunately for every one, I don't know, I guess I
guess there's some acceleration this. Two are probably really excited
about this, most certainly.

Speaker 3 (01:11):
But the way this actually works is Okay, So the
government sets up a tariff and that means if anyone
is bringing a good into the US, they have to
pay the tariff on it, and that money goes to
the government. So okay, that There's been a long history
of tariffs in the US. This was a huge domestic
policy think, particularly in the eighteen hundreds. That's really fucking boring.
The incredibly short version of it is that the thing

(01:34):
about tariffs is that, especially like tariffs on a specific sector,
is that they're good for you manufacturing that thing kind
of mostly, and they're bad for anyone trying to buy
that good because it's now more expensive. So Trump's plan,
and we're going to get into a bit more detail
about this, because there's parts of Trump's tariff plan that
everyone seems to have forgotten about for some reason that

(01:55):
I don't know why they've forgotten about.

Speaker 2 (01:57):
But the basic plan is to impose something like a
ten to twenty percent tariff on all goods that enter
the US from anywhere. There's specifically one for Mexico, but
the numbers on what the Mexico tariff is changes every
time he opens his mouth. Sometimes it's like twenty five percent.
There's one where it's like two hundred and fifty percent,
of course, two interchangeable percentages. Yeah, and then for China,

(02:22):
it's supposed to be a tariff of somewhere between sixty
sixty percent is the most commonly sided number. But he's
also set one hundred percent tariff once again basically the
same thing. Yeah, and so you know, part of what we,
unfortunately the rest of us who live in the normal world,
have to do is figure out what is actually going
to happen if we get, for example, twenty percent tariffs
on all goods entering the US and a sixty percent

(02:44):
tariff on goods from China. So the first thing you
need to understand. I think most people kind of get
this now. But the thing about a tariff is that
you pay for it. So the way that it works
in general is that this is just an additional cost
for the company that's doing it, that's doing that like
moving the good around, right, and so they are almost
always going to just pass that cost directly on to you. Obviously,

(03:07):
sometimes we've talked about pricing, the way that pricing works
a lot on this show. Companies tend not to want
to raise prices, largely because of their effects on consumer
happiness and brand loyalty. And stuff like that.

Speaker 3 (03:19):
So sometimes people will just eat shit on it. But
if you're talking about a sixty percent tariff, like you,
the sixty percent tariff is going to be paid for
by you.

Speaker 2 (03:26):
So that means that anytime we buy something that's either
from Mexico or China or any of the other countries,
that this will be applied to the easiest way for
these for these companies to get around the tariff is
just to pass off the cost to the consumer.

Speaker 3 (03:41):
Yeah, and it's actually worse than that because and this
is something I don't think people really understand when you
think about global trade, right, people tend to think about
trade as something that happens between countries, and this is
something that was an old you know dream, like the
anti globalization movement. People sort of understood this and kind
of don't now. Trade doesn't actually really happened between countries.
Most trade is one company, an international company, moving a

(04:05):
resource from one country to another. Right, So, like trade
is fucking Amazon moving something from a warehouse in one
country to a warehouse in a second country.

Speaker 2 (04:14):
Right now. I've seen a lot of people and this
ranges from like very very serious sort of you know,
news sources and economists trying to sort of just directly
model what the price increases are going to be have
since people be like, oh, your shirts are going to
cost sixty percent more, or physical video games will stop
existing because they're too expensive, and who gives a shit?

(04:34):
Why are we even trying to do sectoral modeling of
the impacts of this. If you try to impose a
sixty to one hundred percent tariff on goods from China
and a twenty percent tariff on all goes into the country,
the economy will collapse. I don't know why everyone is
pretending that this won't fucking happen. We're going to get
into it a second. I guess the reason why people
are pretending this is happening because the way they're doing

(04:55):
the modeling kind of assumes that it won't, which is baffling,
incomp handsible nonsense. Well, and that's especially amusing because the
seemingly biggest issue this year around politics has been inflation,
which has impacted every country around the globe. The US
is actually whether it decently well, although there's been a

(05:15):
catastrophic failure in communicating that and listening to the actual
complaints from people on how they're still struggling with rising inflation,
but still a big reason why Trump was elected is
because he simply is not Joe Biden, and he's not
from the Biden Harris administration, and there's this perception that
he will be able to fix the economy, he will
be able to get around inflation lower prices, when seemingly

(05:40):
his main economic proposal will lead to what's probably going
to be an economic collapse if it happens in the
brutality of which he proposes. And there's another element of this,
right when I say that the likely result of Trump
actually trying to implement his tariff policy is a global
economic collapse, there's another part of this that everyone seems
to have forgotten. And I don't know why they've forgotten this.

Speaker 3 (05:59):
I guess it's because nobody he actually reads any of
the things that Trump puts out on his website.

Speaker 2 (06:03):
Which is true. No one actually reads that stuff. It's nuts,
especially his own supporters. Yeah, a majority of his own
supporters do not pay attention to like Daily News.

Speaker 4 (06:12):
Yes, and now I remember this because I did an
episode about these tariffs, like like six months ago, and
one of the things about this, he has a thing
called Agenda forty seven, right, which is his agenda for
what he's going to do when he takes.

Speaker 2 (06:23):
Power, which no one has cared about. And now everyone
is going through and posting policy proposals from like fucking
two years ago with the headline breaking news Trump announces
new plan, Like, no, he hasn't. This is our old plans.
This stuff is like two years old. He's been openly
talking about all that. Yeah, frages, And one of the
important parts of this, I'm just gonna read this quote
because it is a part of this has been ignored

(06:44):
by every single fucking analysis I've seen, from like fucking
the Center for American Progress, who obviously we're gonna screw
this up, to like Stamford's labs, Like everyone who's been
writing about this has just ignored this part, which is
quote as one of his top economic priorities, President Trump
will stop the flow of American jobs overseas by passing
the Trump Reciprocal Trade Act. Under the landmark legislation, if

(07:05):
any foreign country imposes a tariff on American made goods
that is higher than the tariff imposed by the US,
President Trump will have the authority to impose a reciprocal
tariff on that country's goods. Okay, So what this would
do again is that any country that has a tariff
already or imposes a tariff. And this is important if
we get into a trade war where countries start imposing
tariffs on each other in retaliation for their other terrorists,

(07:27):
which is what happens when he did this trade war
with China in like twenty eighteen twenty nineteen. That means
that we're also going to impose a tariff, which means
that the tariff rates don't stay at ten to twenty percent,
they cyclically spiral upwards. That's just like an escalating series
of terroriffs.

Speaker 3 (07:42):
Yeah, and the thing is right, the policy process that
they have on his page are like, well, okay, we're
going to do this, do like a presidential Act, right,
But the thing is the president actually has really, really,
under a number of different acts, has extremely wide discretionary
authority to set tariffs as long as he can basically
sort of like cobble together.

Speaker 2 (08:00):
There's some kind of bullshit excuse.

Speaker 3 (08:01):
For it, and at that point you're lying on the
Supreme Court to stop literally anything that Trump does, Like
I don't give a shit, Well, I mean I don't know,
maybe someone will like go up to like can Clarence
Thomas and go like, hey, if we do this like
importing new like windshield wipers for your RV is gonna
cost ten million dollars more or whatever. But like there's

(08:21):
there's no shot of this stuff getting stuff. And the
thing is right, the reciprocal tariff stuff. He could just
do this through his existing Terriforf authority. He doesn't actually
even need to pass upthing through Congress. Who's actually be
I think tricky for him, but he doesn't need to
do You.

Speaker 2 (08:34):
Know what we need to do right now, Tomia just badly,
badly cut to a bunch of companies that are going
to be absolutely fucking eviscerated if this goes through. That's right,
Donald Trump stands for anti capitalist action. He's going to
destroy free trade. So enjoy these ads when you still can. Okay,

(09:02):
we are back Miah. Let's hear how Trump is going
to perfect the capitalist economic system by a series of
escalating tariffs that will destroy the economy and in doing so,
but about in the opportunity for Marxist to size power
and change the world economic system. Yeah, so I'm going
to read another quote from that same agenda forty seven thing. Quote.
For example, food items like cereals, your other preparatory goods

(09:24):
are tariffed at thirty two point nine percent by India
and nineteen point five percent by China and only three
point one percent by the US. India applies a tariff
of twenty five point three percent on transportation equipment, while
the US only terrorists goes at two point nine percent. Now,
those exact numbers are debatable, but it doesn't matter because
these these are going to be vibes based ones, based
on how pissed off Trump is at a country. Yeah,

(09:45):
as Trump is usually a vibes based guy. Yeah, especially
when it comes to the economy, especially when it comes
to like these numbers he's pulling out like between sixty
to one hundred percent. He doesn't know what any of
those numbers means. He's just thinking of a number and
saying it out loud.

Speaker 3 (10:00):
And the thing about all of these things, right, even
just the base twenty percent, or let's let's go to
the lowest numbers he's talked about, which is a ten
percent tariff on all goods and a sixty percent tariff
on Chinese goods. Right, that in and of itself blows
a smoking crater in the world economy. And none of
the assessments that you will read are talking about this.

(10:21):
One of the things that they will mention that is true,
but they're not, you know, getting to the importance of
is that this affects stuff that's made in the US.
Because the thing about things that are made in the
US is that they're made from components that are from elsewhere,
because that's how international supply chains work.

Speaker 2 (10:35):
Oh wait, even though we have, through tariffs, moved all
manufacturing of Toyota into the United States, you're saying that
still some of the materials are not all solely made
him produced within the country, and it actually requires unfeign trade. Yeah,
and part of the problem I think of, like, Okay,
so if you logically think out the conclusions of what
that means, right, Okay, first mistake, Abia that you're trying

(10:59):
to solve this problem through.

Speaker 3 (11:00):
Well, but here's the thing, right, Obviously Trump is not
going to think through this, right, But I kind of
expect people who are like writing about this for a
living to do mildly better than this.

Speaker 2 (11:10):
And possibly some of the people that he like hires
onto his cabinet and team. Maybe, but we'll.

Speaker 3 (11:15):
Say, you know, I'm not talking about like his critics.
Oh sure, sure, one of the numbers will see all
the time. The Center for American Progress has this line
of how the terrofts will function as a tax that
costs the America you conceive for like seventeen hundred dollars
a year.

Speaker 2 (11:26):
Right, which was the line that Kamala used pretty often. Yeah,
framing his tariffs as like a sales tax.

Speaker 3 (11:32):
This is fucking horseshit. The only way you can think
that the net effect of this would just be a
seventeen hundred dollars tax is if you don't understand how
the economy works at all. Right, So I went there
and read this, and the way that they model it
is just by like they find the like net dollar
value of imported goods and then apply a tax to it,
and then try to figure out like how much of

(11:53):
those goods that the average person would buy in a year,
and then increase the price. But and this is something
that's very at the end of the analysis, right right
at the very end, there's little section where they say
that they assume this would have no other effects on
the economy. This is unbelievably fucking stupid. I can I
emphasize enough?

Speaker 2 (12:09):
Can you explain why that doesn't make any sense? So? Okay,
So here's the thing.

Speaker 3 (12:12):
Right, prices go up, now people can buy less things.
What does that do to the economy, Well, it slows
its growth rate. Right, companies start to go out of business.
And we're gonna get me into more of the ways
that this plays out in a second. Right, But a
bunch of a bunch of people in a bunch of
places fucking lose their jobs because suddenly the reduction and
consumer demand means that there's a fucking reduction necessary production.

(12:34):
And this has cyclical effects throughout the entire economy as
more and more people fucking lose their jobs.

Speaker 2 (12:39):
And also, you know the thing, the thing about those
people who lose their jobs is that that also fucking
reduces demand because those people are now even less able
to afford the stuff that's been increased by inflation prices,
and this this spirals through the entire world economy. In
order to.

Speaker 3 (12:55):
Understand what exactly this is going to do, I think
we need to understand why, you know, because like if
Kamala Harris, I don't know if it makes any difference
in the election. But Kamala Harris walks of the stage
and says this is going to cost you seventeen hundred dollars.
She does not walk on the stage and say this
is going to cause an economic collapse, right. And I
think the reason that happened is because we've gotten into
this place where nobody fucking understands how the economy works

(13:17):
at all, in a way that's even worse than it
was even in like the twenty tens. Like in the
twenty tens, I think people sort of had a vague understanding.
The thing that was happening to the economy was uberization,
whatever you call it, was the expansion of gig work. Right,
There was sort of an understanding and a focus on
the very sort of low level parts of the economy,
like what are you a poor person doing for your job?

Speaker 2 (13:38):
Right? Does how does your income work?

Speaker 3 (13:39):
And not purely on these sort of like high finance
or in the case in the case of what's been
happening here, everyone has been unbelievably completely focused on like
the Chips Act and like state led industrialization and all
that stuff is fucking bullshit. It's it basically hasn't done
anything yet, it's not going to do anything for like
a decade, and it's not mostly what's going on in

(14:01):
the economy. I've been holding my tongue on this for years,
but the people who have been writing about the economy
don't understand how the fuck it works because they've been
completely myopically obsessed with the idea that we're in this
new era of state capitalism and no like the actual
thing that's been happening in the economy. And I think
if you are like a person who buys stuff, you

(14:22):
probably understand this. But for some reason this has never
made it to like economists or like people who fucking
write about the economy for a living. Is consumer to
manufacturer sales. So this is stuff like Temu. This is
stuff like san who she I mean invented It's a
strong word, but they're one of the first people who
sort of popularized this model, right, And this is the

(14:43):
thing where you have a platform that lets people like
nominally buy directly from the factories or from you know,
the people who are producing fruit, right, And these factories
aren't producing goods until basically either people order the goods
or like analytics tells them to order it, so they
don't have a lot of the problems that other kind
of like distribution bottels have. For you have a bunch

(15:05):
of good sitting in a warehouse, like, you just don't
have that because you don't start production until your sort
of orders.

Speaker 2 (15:09):
Come in, your analytics come in. And the theory here
is you can reduce costs by eliminating the middleman. But
of course a new kind of middleman emerged, and that
is the drop shipper god. So the drop shipper is
just someone using the consumer to manufacturer pipeline right the
platforms that are supposed to let you the consumer sort
of just like buy directly from the thing and cut

(15:30):
out milmen. It's just someone doing that but then turning
around and selling you the result. And this has become
just utterly fucking ubiquitous in the American economy. It's sort
of like an integral part of the American scam economy
now too, as the American economy has been increasingly sort
of riddled and consumed by scams and riddled and consumed
by sort of like people trying to capitalize on like

(15:52):
some fucking meme or some political thing.

Speaker 3 (15:54):
You know, you have all these people doing like drop
ship t shirts right where they can immediately come in
and sell all of this stuff.

Speaker 2 (16:00):
These like short lived like trend meme based either like
fashion or even like goods. You know, you can talk
about like the amount of like content creator merch that
is all funneled through these like drop shipping companies.

Speaker 3 (16:11):
Yeah, and it's also what's been It's a thing that's
enabled like fast fashion to function.

Speaker 2 (16:16):
In the way that it is right now, right absolutely.

Speaker 3 (16:18):
And this has become what consumption is in large swaths
of the world is from this sort of like direct
to consumer drop shipping shit, right.

Speaker 2 (16:27):
Yeah.

Speaker 3 (16:27):
Now, the thing about about these drop shipping things is
that their profit margins are really really low. They don't
make that much money, and in fact, a lot of
these things like hemorrhage money until they've basically you know,
they do the thing that Amazon did, right, where like
you lose money for a million years, but then eventually
you have enough market chourney you start making money again.

Speaker 2 (16:43):
Yeah, because you make it so all your competitors basically
can't function because you have prices that are so low.
And then when you're the only one in the game
with a sizeable power influence, you can raise prices and
then you make tons of money. Also the Uber model,
although Uber still is improfitable. Yeah well so yeah, Uber
will never make any money. Right.

Speaker 3 (17:00):
But the other thing here that's important is that, you know,
so the margins of a company like Temu, right, which
is like probably the biggest of these sort of companies.

Speaker 2 (17:08):
Now, are low. But Tamu technically has tech money, Like
they have money to back them up. Right, you know,
who doesn't have an unbelievable amount of just like capital
sitting around that they could just instantly pull from if
suddenly there is I don't know, a sixty percent fucking
price shock. Oh wait, it's all of the fucking manufacturing
you know, like tiny manufacturing firms that these drop shipping
things use to produce all their stuff. Right.

Speaker 3 (17:30):
That infrastructure is very fragile. It's it's margins are very bad.
And oh guess what happens to that shit if you
impose sixty percent terraces on it?

Speaker 2 (17:39):
Right, it just shuts down because that's the easiest option, right.

Speaker 3 (17:42):
Yeah, And you know, and presumably I think one of
the other parts of this would be part of the
reason that this has been happening is that all of
this office are being imported like under terriff loopholes, but
like that loopholes not hard to close, right.

Speaker 2 (17:55):
What terraf loopholes are you referring to? Oh yeah, so
I talked about this the ten we episod. So those
loopholes on American teriffs were like, if you're bringing stuff
into the country that's below a certain value, it has
to be above like a six hundred dollars something to
like trigger a threshold to like activate the teriffs applying
to it. So people just ship a bunch of like

(18:16):
one billion boxes individually that are like five hundred and
ninety nine dollars to go under the thing. So you're saying,
I can still maybe buy my new Sonic the Hedgehog
PS five game though, that should be fine. I'll be
totally good. Oh god, okay.

Speaker 3 (18:32):
So the other part of this that's important, right, So
this is the kind of I don't know if news
the right word, but this is the kind of recent
part of the economy that's incredibly dependent on Chinese supply chains, right,
that gets just liquefied if these terrorifts go through. These
are enormous companies that you know are going to just
eat shit and those companies eating shit have the sort
of effects we talked about earlier, right, which is it

(18:53):
caused people to get fired, it causes growth collapses, it
causes cyclical decreases in people's ability to buy thing, and
then also like demand decreases because people can't buy things.

Speaker 2 (19:04):
But this is like the new school supply chain stuff. Right.

Speaker 3 (19:07):
Temu's a product of really the last six or seven years,
and it really only functions the way it does now
in last about four but the previous two eras supply
and logistics, right, which is sort of Walmart and Amazon
are both also almost completely dependent or Chinese supply chains.

Speaker 2 (19:23):
Right.

Speaker 3 (19:23):
Yeah, there's a good JD super article which is they're
like a business intelligence website, right. You know, it talks
about how Walmart imports seventy percent of all of it's
goods from China.

Speaker 2 (19:33):
Yeah, that tracks seventy percent seven zero, right. And the
reason that it works like this is because Walmart's entire
business model, all of their supply chains, all of their logistics,
everything that they do, right, was designed basically hand in
hand to be integrated into Chinese economic production. And you
can't just move that shit instantly. Right.

Speaker 3 (19:53):
And this is also true, something like Amazon right, where
Amazon like sixty three percent of independent sellers on Amazon
this is from the same source are Chinese. Right, So
what you're dealing with is vast parts of the American economy, right,
the parts of the American economy that you interface to
buy things are based on goods that are suddenly going
to have like sixty to one hundred percent tariff stapled

(20:15):
onto them. Now, the thing that people have been talking
about as the like, oh well, here's the thing that
will happen instead instead like instead of the thing that's
pretty obviously going to happen if this happens, which is
just the decount of bubble we're in pops and everything
starts to go to shit, people have been like, oh, well,
this will just accelerate the shift of production of goods

(20:35):
out from China. And like I've been talking about this
for like a fucking decade, right, Like the journal Chwung
is something that I talk about a lot that I record.
People really has been talking about this for literally ages
and ages and ages. So people have been trying to
move production out of China for ages. I mean, like
one of the first big attempts to do this was
in twenty eleven when there is there's a series of

(20:56):
riots in China and people tried to move production of
goods out of and they couldn't do it. And the
reason that they couldn't do it was because you have
to find a country that has both like a relatively
skilled and educated labor force and also has the infrastructure
to be able to like match Chinese production. And so
I mean they we're talking about things like they have
to have like a functioning electrical grid that is stable enough.

Speaker 2 (21:19):
For production to function.

Speaker 3 (21:20):
And this rules out an enormous number of countries and
it's it's just really really hard. And yeah, like Chinese
capital has been moving away from its sort of old
centers and the prop of delta to.

Speaker 2 (21:30):
Places like Vietnam.

Speaker 3 (21:31):
Right, But and this is the fucking big one, right,
A lot of a lot of what's been happening for
the people have been talking about this thing called quote
quote unquote decoupling, which is which is the separation of
the US and Chinese economy so that they're not like
they're trying with each other. People think this is good
for ideological reasons, or they think it's just something that's happening,
and it's not it's not happening. You know what else
isn't happening. It's us not plugging these products and services.

Speaker 2 (21:54):
I think we do legally have to plug them. So
here they are. Here's the plugs for the products end services.

Speaker 3 (22:10):
All right, now that you've decoupled yourself from your money
to buy these products and services, let's let's talk a
little bit more about why decoupling is fucking bullshit. One,
and I've been to something I've been saying on the
show for years, like people have this sort of fantasy
that what's happening is that, Okay, instead of making your
thing in China, you make your thing somewhere else. And
this means that American companies no longer have the supply
change running through China. That's not what's happening at all.

(22:33):
On the financial front, what you have is actually increasing
integration as China attempts to sort of like you know,
has been lifting restrictions on the ownership of different types
of corporations to make it easier for foreign owners to
actually come in and invest and put capital in China.

Speaker 2 (22:46):
Right.

Speaker 3 (22:47):
The second thing that's happening is a lot of these
supposedly like we're cutting China out of the supply chain.
Things have been a bunch of Chinese companies starts starting
to set up production in Mexico. Now, the thing about that, right,
if Mexico was supposed to be the fucking panacea forgetting
it out of these tariffs, remember that Trump was talking
about two hundred percent tariffs on Mexico, and that's the
country that's supposed to like fucking get us out of

(23:08):
this mess by like, Oh, we'll be fine because like
production will just shift away from China to like to
where like a lot of a lot of the assumptions
I was reading was like people were talking about, oh,
the production will like twenty five percent of production will like.

Speaker 2 (23:18):
Shift to Canada. It's like, no, it won't.

Speaker 3 (23:20):
Just Canada doesn't have the fucking production facilities to do
They're like, what are you talking about, Like.

Speaker 2 (23:24):
Canada doesn't have the population to do that. No, it doesn't.
This is this sort of problem, right, you know.

Speaker 3 (23:30):
On the one hand, you know, China has been de
industrializing for like a decade and a half now, right
and kind of slowly, but there's the percentage of the
population that's working in manufacturing has been steadily decreasing for
years and years and years and years. But the problem
is that when you move production out of a place,
you actually have to have a second place to produce it,
and there just haven't been right like you, it's it's

(23:53):
pretty easy to move low end manufacturing. This is what's
been happening, right, Like really cheap garment stuff, for example,
has been has a moving to places like.

Speaker 2 (23:59):
Bangald in Vietnam for a while. But once you start
getting into the stuff that China produces like the most
of right, which is things like fucking cell phones, sort
of mid tier commodity production that gets way way, way,
way way harder. No, but the Chips Act will save us. Me.
I heard it from everyone on the television. I just
got this.

Speaker 3 (24:16):
This is the sort of thing about this, right is
if you look, if you read the analysis that people
are doing of this, they just sort of assume that
you can just like, oh well, like naturally a bunch
of the consumption that Americans are doing will stay the
same because they'll go buy goods that aren't produced in China.
It's like, okay, like where where are you finding these
goods from? Like what production facilities are you? Just like
suddenly that have just been like sitting there fallow are

(24:38):
just suddenly gonna like a peer out of nowhere, And
the answer is like, that's not gonna happen, And it's not.
It's not going to happen, partially because they don't exist.
Partially because again, the immediate consequence of this is a
massive economic labs. China's economy has already been slowing for
the like basically, I mean it's been slowing.

Speaker 2 (24:55):
Since like two thousand and eight. Really wow, I see.

Speaker 3 (24:57):
That's an eleven kind of but it's especially been slowing
in the past two or three years because of sort
of cover restriction stuff and also just a kind of
lackluster rate of returns on their own like they had
their own version of the two thousand and eight housing
bubble and that's annihilated and an unbelievable amount of money
because it turns out investing in real estate doesn't work

(25:19):
as his basis for your economy. But like that's the thing, right,
If the Chinese economy fucking goes down, right, that's like
that's seventeen percent of the world's GDP. Seventeen yeah, of
the total GDP, right, And it's like the economy isn't
national in a way where you can have an economic
collapse in another country, in just a country that's that
large and ignore it. And the thing I want to

(25:39):
close on, and the reason we know that this is
true is that it is actually possible kind of to
restart america domestic manufacturing, right. Reagan was able to do
it in the eighties. And Reagan did it through this
thing called the Plaza Accords where he basically he didn't
literally put the prime ministers of Japan and West Germany
at gunpoint, but he basically put them at gunpoint and

(26:01):
force them to increase the value of their currencies so
that the US currency would devalue, which would admit which
makes it like a more competitive export economy. And this
actually brought back American manufacturing for a while until it
had to all be reversed under the Clinton administration and
the reverse Plaza Accords, because the problem was when you
sort of nuked the zero sum manufacturing of a country
like Japan, their fucking economy didn't work anymore. And in

(26:24):
order to sort of bail out the Japanese economy and
stop just a sort of world running economic collapse, it
would have just like tore the absolute shit out of
the economy. The US had to fucking reincrease the value
of its currency and lose its whole domestic production base.

Speaker 2 (26:36):
Right. You can't actually increase a production base in the
world right now without decreasing it somewhere else, and that
has sort of staggering ripple economic effects for the entire
global economy, which is why even if Trump's plan worked
somehow and didn't immediately cause an economic collapse by like
the direct effect on American consumers, it would cause another
economic collapse by the effect on fucking people in China.

(26:59):
So well, Mia, I think you might be overreacting here
a little bit, because at least food will be available, obviously,
and I learned this on X My main source for
news is that agriculture almost all done in the States,
so we should be fine, Like, we'll still be able
to eat food, right, I say, staring.

Speaker 3 (27:20):
No to the voice, No, you can't, because, unfortunately, think
about American agricultures. It's all fucking mechanized agriculture. The thing
about mechanized agriculture is that you need the mechanized part,
and that's all fucking produced either in other countries or
the John Deere fucking like, tractor factories in the US
are all unbelievably reliant on a bunch of parts that

(27:42):
are made overseas.

Speaker 2 (27:43):
So also, we do import a great deal of food,
well we do. Yeah, even just talking about the food
that we produce here, right, Like, that's also gonna be fun.
I wonder, I wonder where your strawberries in November are
coming from. I think the other thing to keep in
mind here is that this is only one aspect of

(28:05):
how Trump will impact the economy. Obviously, his immigration policies
could serve a similarly large financial problem if a whole
bunch of agricultural jobs suddenly kind of vanish, and farms
and other processing plants just to go out of business
due to a lack of workers. And even some people
on Trump's team have started to acknowledge this, mostly Elon Musk,

(28:29):
who has openly said that Trump's term will involve some
quote temporary hardship, so between tariffs and mass deportations. Like,
even people on his team know that this is going
to damage the economy, especially in the short term, if
not the like forever term. Yeah, and yet he was
still elected as the economically viable candidate.

Speaker 3 (28:51):
Yeah, and I think the last part we should say,
and this is it's not that you can't like fucking
obliterate a giant portion of the American economy is still
come out extremely popular because because you've crushed the American
working class like that, that's what Reagan did, right, Like
Reagan and the Vulgar Shocks did this enormous. I mean,
just put a crater in the American economy in Reagan's

(29:11):
first term, Like there's skyrocketing unemployment, just like real, real
sort of economic devastation. But the thing about the Vulgar
Shock was that the way he blew up the economy
was really really good for people who like fucking owned assets,
like people who like owned bonds, like people like people
who held other people's debt. He was great for those people.

Speaker 2 (29:31):
And like the burgeoning investment economy which now kind of
dominates our entire economic system. Yeah, and it was incredible
for those people. And so it was fine.

Speaker 3 (29:38):
But the think about this economic collapse that this is
also going to just absolutely fuck up the days of
a bunch of extremely wealthy and influential capitalists. So including
by the way, Elon Musk, who's Tesla's are produced.

Speaker 2 (29:51):
In China, like he has a gigafactory. He's a gigafactory
in shing John. So we'll see if Trump actually is
able to implement this stuff. I think he able to
on a policy level. It's just politically, can he actually
do these tariffs? Yeah, it's it's it's unclear. It's also
unclear what exact numbers he's gonna run with. A ten
percent tariff will still be bad, but it's nothing compared
to one hundred percent tariff. I think Trump by and

(30:13):
large just says whatever comes into his head without thinking
through the actual logistical ends of what he's saying. And
I think most Trump's supporters do not take him literally
as a person, at least they don't take what he
says necessarily literally all the time. They take him seriously,
but perhaps not literally.

Speaker 3 (30:30):
Yeah, so we'll have to see how this actually plays out.
If it does play out in the ways that Trump
has said that it is going to play out, it
is going to just unbelievably tank the economy in ways
that absolutely suck. So, yeah, that's that's happening here in
the future. Maybe that's the name of the podcast, right.

Speaker 2 (30:52):
So stock up on your PS fives now. Before they
get harder to buy, and it'll be fine, Yeah, they'll
be There'll be nothing bad that happens to the economy
as long as you have your PS fives. Yeah.

Speaker 3 (31:04):
People always want fucking books to the end of episodes,
so I'm just putting books at the end of episodes.
This is my plugging Chwang Chua Andng. We'll help, We'll
put it in the description. It's a bunch of stuff
about Chinese economics. Mostly it's a sort of economic history
of visionally the socialist period and the transition to capitalism.
But it also has a bunch of very very good stuff.
I'm trying to understand the Chinese economy. And so if

(31:25):
you want to be about ten years ahead of like
guys you write for the economists, if you read Chwang,
you will end up being like ten years ahead of
those guys.

Speaker 2 (31:34):
So yeah, great stuff.

Speaker 1 (31:41):
It could happen here is a production of cool Zone Media.
For more podcasts from cool Zone Media, visit our website
cool Zonemedia dot com, or check us out on the
iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts.
You can now find sources for it could Happen here.
Listed directly in episode descriptions. Thanks for listening,

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