November 19, 2025 • 39 mins
Economist Justin Wolfers joins hosts Heidi and Joel Heitkamp to break down the current state of the American economy under recent administrations. They discuss inflation, rural financial challenges, the impact of tariffs and trade, and how government policies shape economic opportunity across the country.
Listen for a clearer understanding of how economic decisions in Washington directly affect rural communities and everyday families. Heidi, Joel, and Justin provide honest analysis, practical advice, and a fresh perspective on building confidence and hope in rural America’s economic future.
Join us on The Hot Dish every week, where we serve up hearty conversations that resonate with every corner of the country.
The Hot Dish is brought to you by the One Country Project, making sure the voices of the rest of us are heard in Washington. To learn more, visit https://onecountryproject.org or find us at https://onecountryproject.substack.com/.
- (05:02) - Justin Wolfers explains what a K-Shaped Economy is and how it affects Americans
- (14:29) - Heidi and Joel Heitkamp discuss the dire political consequences of policy shifts
- (23:52) - Justin discusses how there is a global shift away from U.S. trade due to tariffs
- (28:21) - Justin details how global stocks are outpacing the U.S. market and why
- (37:28) - Joel, Heidi and Justin describe a shared fear of the long-term impact of Trump's policies
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Transcript
Episode Transcript
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(00:05):
Welcome to the Hot Dish, comfort food for rural America. I'm Heidi
Heitkamp. And I'm Joel Heitkamp. Today we get a chance to and we're
delighted to visit with Justin Wolfers. Now, Justin is a
professor of economics and public policy at the
Ford School of Public Policy at the University of
Michigan. He's a senior fellow at the Brookings Institute and a
(00:26):
contributor to the New York Times, the Wall Street Journal, and he's a
regular on CNN. Justin, welcome to the Hot Dish,
mate. This is exciting. Well, it's exciting as all get out for Heidi.
Heidi's only got, what, a hundred questions for you, Justin.
Yeah, I think, you know, Justin, I'm kind of an econ geek.
I think that one of the big mistakes that our political party, the
(00:49):
Democratic Party, has made is not paying attention to what's been
going on. I think Biden completely missed what was going on with
inflation, with people's real life inability to make
ends meet. I think Trump's doing a little bit of that. But before we get
there, when I was in the Senate, Trump was elected, and
you know, that was always every day. It was the best economy
(01:11):
in the history of the world. Look what we've done. Look what we've done. And
this was even before COVID and I went to my
leadership and I said, that is absolutely not true. It's not
the worst, but it's anemic. But yet he gets by with it
day after day by basically saying it over and over again.
And that's why it's so important to have people like you on podcasts like this.
(01:33):
But also speaking kind of publicly about what is the
state of the American economy and what can we expect in
the next three years in terms of the direction that this administration's
taken us. So if you could just kind of comment on, you know, kind
of where Trump's economy is right now and what you think some
of the pitfalls are going to be kind of going forward. Yeah,
(01:56):
I want to tell a sort of optimistic story. I agree with you,
Heidi, that we on the center left should be
not only economically literate, but truthful. And sometimes the glass is half
full. I'll tell a more sympathetic story for
you, which is that President Trump inherited a pretty strong economy
that we had largely recovered from COVID and there was
(02:19):
a lot of bad stuff in the system from COVID The
unemployment rate was quite low when he came to power, and the
economy has not dramatically shifted. Inflation had
fallen and had fallen to around about 3%, which is almost acceptable.
And what's happened since is actually just a really hard story.
It's hard because there's been so much that's happened
(02:42):
in trying to keep track of it all. And
some of those things actually distort the way that economic data ends up getting reported
and so on. So I'd say let me start at the top line and say
it's a B+. It's a B with a lot of risk and,
and a lot more downside risk than upside risk. So most people
who want jobs can find them at the moment. Big part of that
(03:03):
at most means not everyone. The cost of living is
rising, but it's not rising at tragically high rates, but it's
rising at concerningly high rates.
But the president has thrown a lot of mud at the wall, mud of the
form that you think might hurt an economy. And so even as the hard
data continue to look, okay, that's the B.
(03:24):
If you ask people how they're doing, and here it could be
regular folks listening to the podcast or it could be CEOs.
Actually, their answers are unbelievably
miserable. They're sort of recession level miserable.
And so if your sense of how the economy's going comes from asking people,
you would say it's going absolutely terrible.
(03:47):
And then if you talk to my tribe, the economists, we'd say
he's put in train a whole lot of things that are really going to hurt
the economy. So it might be a B plus today, but gee, look out
because the future might be not even in the B range.
Well, it's like that old story, how did you go bankrupt?
A little bit at first, but then really fast. And
(04:09):
so a lot of what you're seeing right now in those
numbers is again, this growing gap between
affordability for people in the lower half of our
income category and the, you know, kind of this K
shaped. And if you could just comment on, because as a lot of people are
hearing about the K shaped economy, if you could just comment on
(04:31):
what exactly is that and how does that drive
something like the University of Michigan Index of Consumer
Sentiment? Yeah. So let's start by explaining what a K shaped economy is.
First of all, there's a whole lot of economists on Wall street and you get
quoted the most if you come up with the catchiest name. And one of them
came up with this idea K shaped. And the reason it's catchy is because
(04:52):
it's so confusing. What does a letter K look like? Well, the leg
stands up tall. That's where we were and then you've got these two other things
coming out at different angles. One's going up and one's going down. And that's the
story that the one that started at the top, which is in our case, the
wealthy are doing pretty well, that stocks have been rising, their
portfolios are worth a lot. They've gotten all these tax cuts from their one big
(05:13):
beautiful bill. Life's pretty good if you've got a lot. The other
part of the K, the lower part, kicks down, which is, is
this a recession for working and middle class Americans?
I'm pretty sure Joel's going to talk about, is it a recession for rural folks?
And so if what we see is some doing well and some doing poorly, we
(05:33):
call it a K shaped economy. I'm somewhat
concerned about that and I understand the political salience of it, but actually
I'm not as convinced that the differences are that large.
I would simplify things. I'd say when you pass a budget
that gives huge tax cuts to the rich and nothing to the
poor, when you pass a budget that cuts Medicaid, that only
(05:56):
hurts the poor by cutting Medicaid, and when you impose a new
tax policy, that's tariffs, and tariffs are regressive and they hurt the poor
rather than the rich, then you help the rich and you hurt the poor.
The problem with the rhetoric of a K shaped economy is it sounds like the
economy's doing the work. The economy's not doing the work. The President's doing the work.
And the President's party, they're the Anti Robin Hood. And that's what
(06:18):
we're seeing around us right now. You know, Justin, I don't want to play poker
against you because clearly you know what I do or what I'm about to do,
and that's to talk about the rural economy. You know,
we can talk about 3%, we can talk about all of that. But I think
to understand it and to get back to the rural economy, maybe in just a
step, you gotta, you gotta let me
(06:39):
know, what did he do? Which is gonna, you know, make us
sit there and wonder why we're not even at a B. Let's look
forward because it's forward where my fears lie.
Look, we're only a few months into the Trump administration. Economic
data lags. We don't know what the President's agenda is going to wreak
upon the economy, but we have a lot of fears. So I want to
(07:02):
take the question in two parts. One is the short to medium run.
So tariffs are immensely destructive.
Statement Number one, particularly, it
can at times, if we're tariffing the inputs that farmers use,
could be a big effect on the rural economy. We also know
that this immigration crackdown is a huge shock
(07:25):
at a moment when we might not be ready for it. If there's something
we learned from COVID it's that you can't just unplug an economy and plug
it back in and hope that it's going to work really well the second time
that we want to be a little more gentle in what you're doing.
And so it's creating, I think, incredible tumult there. And
so you've then got. So all of that, I
(07:46):
think, sort of has led people to be somewhat worried about the medium run.
We use words like recession. Are we concerned that there may be one around the
corner? I actually want to focus you even further
down the road than that. And this is unusual, and I think it's a politically
difficult conversation to have. But I want you to take a step back
and think, what is it that makes America rich? There's a deep
(08:08):
question. Why is America rich in the country that I was born in, Papua New
Guinea poor? The answer, according to most economic
research, is the quality of our economic and political institutions, that we
respect the rule of law, that we have contracts that are
respected, that we have a functional government, that we have useful infrastructure.
And on and on the list goes. The United States has that poor countries
(08:30):
don't have that. That's the foundation of our prosperity.
The President is undoing many of those important
institutions. The President has fired the head of
the Bureau of Labor Statistics, potentially leading, sending the signal.
Don't tell the truth when you're in government. The President has had a go
at Jay Powell and the Federal Reserve over and over again. This has been a
(08:53):
fed that, love it or hate it, has done better than most other Federal Reserves
around the country, around the world. When the CEO of
Intel walked into the White House, he walked out having accidentally left 10%
of his company behind. And that's not a sign of a healthy
democracy. When you talk to business executives around the country,
(09:13):
they talk about Trump a lot. Do you remember in the old days
when business people would get together, they would not talk about the president because
the president was some boring guy in Washington. They're
worried, do we have the right bathroom policy to please the president? Do we buy
our imports from the right country to please the president? Does the president think that
Coca Cola should use the right sweetener? Which sweetener does the president think
(09:35):
Coca Cola should use? The President's intervention in every aspect of
corporate life has come to dominate the operational
roles of executives. They're focused now on pleasing
Washington rather than their customers. Well, it's not
really pleasing Washington, it's pleasing one man in Washington. And
maybe it's one of the things. If you give them a nice Rolex watch, I
(09:57):
guess with some gold bar, you get a really good trade deal. That's what I
heard. It's absolutely the case. And it's worse than that. Cause you could say,
well, if that's the price of doing business, then just everyone turn up with a
watch and you'll be fine. The problem is
that the President is mates. He calls in,
let me go back a step. What was his previous job? He used to run
(10:17):
the Trump Organization. He's a bloke in an office in New York. And
you know, some guy would come in and say, hey, Trump Vodka's doing well. Let's
do more Trump Vodka and go, oh, yes, let's do that. And then have another
CEO come and say, oh, well, our downtown golf property's working well. Let's do more
of that. And he thought his job was to manage each of these
executives, and it was. When he ran the Trump Organization, he now
(10:37):
governs as if his job is to manage
the country's CEOs. He calls in Tim Cook whenever he feels like it.
He calls in the head of OpenAI. He calls in the head of Coca Cola
and tells them that they should be using real sugar. The problem
is, the good thing is each of those guys, they bring in a Rolex or
a bar of gold and the bloke's happy and he lets them go on. The
(10:59):
problem is, think about who doesn't have access to that. It's
the young companies, it's the entrepreneurial companies, it's the small companies.
And to borrow a phrase from my Republican friends, it's the
unborn, which is tomorrow's superstar company
hasn't been born yet. And it can't thrive if its existing
rivals is getting protection from a White House that's giving out favors like that.
(11:22):
And so the reason this is a difficult economic story to tell is it says
that the damage being done by the White House is not something that's going to
show up in next quarter's GDP or next year's federal budget. It's
going to show up as lost opportunities in 10 or 20 years time. It's going
to show up as the company your kids don't have an opportunity to go and
work for, because the company never grew because it got
(11:44):
bullied by the existing, you know, by Apple or by
Coke or the existing companies that have an in with the White House.
There's a deep sickness at the heart of crony capitalism. It
means that you're not focused on building a better mousetrap, you're
focused on bringing a better Rolex. And that
is what I worry most about. Well, I was
(12:06):
talking right after
the whole thing with intel and with Nvidia and these
interventions that we've never seen before. And I said, okay, let's flip the
switch. Let's assume it's a Democratic president. And he goes
to the head of Starbucks and says, hey, you know, you can't grow
coffee in our country. We're going to tariff coffee
(12:28):
1000% if you don't allow unionization in every one of your
shops. And those same people who have tolerated this
and the lack of resistance because everybody has
become transactional without thinking about what does the future look
like. The real question becomes just how do you put it back?
How do you go back to the norms that were established for
(12:50):
capitalism and that everybody kind of played by
the rules with fudging a little bit on the guardrails? But not like this.
Not like this. So I worry deeply about this, Heidi, and
I'm going to show you how upside down the world is. Where's Ronald
Reagan? And that's kind of crazy. I'm a center left economist.
(13:11):
We know where your politics lie. But Reagan would have been against
every word of this. Reagan believed in
markets. Reagan believed in competition. Reagan believed in trade.
Reagan believed in immigration. And so what's happening is the voice of
Reagan is gone. And guess who the faint echoes of Reagan are today? It's
you and I, quite literally the people standing up for
(13:32):
Reagan's ideas. Center left economists.
Well, think about this. Think about the fact that for years we said
that the era of big government is over and Trump, with one
magic wand, has brought big government back
to the front. And you can't say it any other way, that this is
government intervention in almost every aspect of civil
(13:55):
society that we have never seen before. And then the question
becomes, does it establish a new norm? Absolutely. So
you're absolutely right to say this is the most interventionist government of my lifetime.
It's not only taking 10% of
intel, it's calling the University of Michigan and telling it who
to hire and what should be on our syllabus. We have some brilliant
(14:17):
academics here. We don't need Washington telling us how to teach.
And we're doing that throughout the economy. We're telling Apple where to put their factories.
We're messing with American soybean farmers in all sorts of ways.
We're changing the cost of the inputs. We are forcing companies
to build where they don't want to build. And on and on it goes. And
Heidi, you're happens next is I think, the
(14:39):
deepest and most important question, and I don't know the answer because
my Republican friends haven't thought through the next stage of this game, which is
there'll be a Democratic administration in the future. What I hope they
do is put in place great institutions and great policies and build wealth and
prosperity for all of us. But if they don't
feel the guardrails of the past is binding them anymore,
(15:02):
that could create all sorts of other problems, different problems, right.
Maybe we'll end up nationalizing industries that are treating
Democrats the wrong way. Who the hell knows? So
I don't know how I can persuade Democrats to fix this problem, because
politics can't be that asymmetric. You guys get to do whatever you want when you're
in, and we'll play by the rules when we're in. I think
(15:25):
I don't have an this is why I don't sleep at night.
Heidi. In my
fantasies, the Republican Party that
I grew up understanding, the party of Reagan
comes back to life and we go back to it wasn't a perfect
politics, but I will take the Clinton, Bush, Obama years
(15:48):
over the current madness any day of the week. And I say there's an economist
thinking about our economic future. So you're right. I'm
going to bring in rural economy. You talked about 3%. It
isn't 3% here. If you look at fertilizer, if you look at the
of equipment, if you look at everything else that goes with it, it's
far exceeding 3%. If you look at immigration, I don't think people
(16:10):
understand how much immigrants play a role
in the rural economy and in the labor force. And so,
you know, between tariffs, which have been devastating
to the rural economy, and just this philosophy
that you can pay them off, because really, you know, that
happened in the first Trump administration when it came to soybeans.
(16:32):
Wilbur Ross said, hey, just pay them off. And he gave a buck. I think
it was a buck 62 to every farmer per bushel of
soybeans. And what did that do to our soybean market? We lost a
bigger share to Brazil. Here we sit again. Here
we sit again. The amount of trade that we're going to do with
Argentina with the worthless bonds that they have or the worthless
(16:53):
money that they have. You know, granted, 40 billion,
you know, is it that big a deal, the amount of cattle, you know, those
type of issues. But it doesn't change what
farmers think in regards to how they can
farm. So the rural economy. And I would also add this,
Justin, that a lot of the people that I talk to every day on
(17:15):
my radio show buy their insurance off the exchange.
They do. You know, they've got five employees, they've got
themselves. They don't have a wife that goes to town. Not to sound
like a complete sexist, but that does happen where her only
goal is to find a job that provides them health insurance and maybe make a
buck or two. But if you look at the rural economy, there aren't a lot
(17:37):
of pickups getting sold, There aren't a lot of tractors getting sold, and there
aren't as many soybeans is getting sold as what there should be. And so
I'm curious what your thoughts are on that. I want to
introduce another word that is uncomfortable for an economist to talk about,
but I think is a key part of all this is actually just the word
competence. We've had Democratic and Republican
(17:59):
leaders for hundreds of years, and they've mostly been competent,
and that's fine. Some of them I agree with, some of them I disagree with.
Who cares? The problem of competence really comes to the
fore for a lot of the issues you just described. So let's start with
soybeans and then go to health insurance. So with soybeans,
last time around, Trump started a trade war with China. China retaliated
(18:20):
by not buying soybeans. Trump backed down, went to China and said, how
can we get you to do this? And got commitments from China to buy
brickloads of soybeans. Over the ensuing
two years of that agreement, China actually bought fewer
soybeans than it had before. The agreement
delivered zero to the American people. It
(18:43):
delivered a lot of headlines to the president, who got to say he solved a
problem he caused. But the guy's just not very good
when he's in a room. He got totally played by the Chinese.
This isn't the first time. Well, luckily, we all learn from history. So
we come forward. He starts a new trade war. China decides that the
easiest thing to do is go after the soybean farmers. Trump realizes
(19:04):
this is politically unsustainable. He goes to China, and you know what? He's come back
with a set of promises that are completely
unenforceable. And China will buy whatever the Hell, they want going forward. He got his
positive headlines, he's fine. And soybean farmers,
the new set of commitments, by the way, is a commitment to buy fewer soybeans
next year than they were buying in 2019. So it's actually not
(19:27):
even to get back to where we were. And they've shown they don't necessarily need
to live up to these commitments. And so that sector
just got flattened for literally no reason and no
upside. And that's not about left
or right. It's not about rural versus cities.
That's just about incompetence. That's just being bad at your job.
(19:49):
And then you went to health insurance next, right? So health insurance.
We have been told that Obamacare is a problem and that
I have a plan that's coming out in two weeks for
literally 10 years in a row. And we finally
got the Trump healthcare plan last week. Do you know what
it is? Assume we have a well functioning health
(20:12):
insurance market and go buy your own goddamn health insurance.
I teach Economics 101. You will
not pass my class. You can't just say,
in a world in which our health insurance markets are wildly
dysfunctional, let it rip. Capitalism
(20:33):
will fix it. There are thousands of health
economists around the world who've studied this. It's one of the most complicated,
messed up, difficult markets to make work. And his
answer is, we're walking away. You guys figure it out.
Yeah. Let me throw one else, one other thing at you,
(20:53):
Justin, and that is going along with your whole
kind of pattern there. We're scared about
infrastructure. That's what we're scared about. Number one,
we've got the Biden Bill, which, you know, Kamala Harris never had the
foresight to actually talk about in terms of infrastructure and how that affects
rural. But this area is the one that really
(21:15):
scares the hell out of me and a number of my buddies at Farm.
And that's the fact that every time he pokes
China, China goes to Brazil and now Argentina.
And the next thing you know, China is actually making an investment
into those countries. They're actually building ports that they own,
they're actually building rail that their part ownership up.
(21:38):
Once that infrastructure is in place, what will
that do to the ag market as a whole? And you
mentioned the troubles coming 10 years down the road. This is an example
to me of, of what you were getting at. Yeah. So
you framed that as being a question about infrastructure. And I have to say back
to you, of course we had infrastructure week and we had it every week for
(22:00):
it literally became a joke. Right. A meme. Things going
wrong. Next week's infrastructure Week,
and he failed to deliver. But I understand your question actually as
being one about isolationism. So Trump has a
notion that America is big, we're the 800 pound gorilla, and all we need to
do is beat our chest and then people will pay us tribute. That's sort of
(22:22):
the underlying idea behind these trade wars.
We can get more out of these other characters. The thing
is, actually, America's a much smaller part of world trade
than I think the President understands. Let me try and
explain why. First of all, we are, what, $340 million people in
a world of $8 billion, you might say, well, we're really important because we're
(22:44):
rich. We are, but so are lots of other countries and increasingly so is China,
which is a cool billion right there. And the
other thing is the US Economy is actually a remarkably closed economy compared to
other countries, which means we're actually a relatively small part of global
trade. And so his idea was, I'm going
to beat my chest and if you can't do business with me, that's such a
(23:06):
big threat that you're definitely going to come and pay me tribute instead.
We've discovered that when we show ourselves to be an uncooperative,
unwilling, uncertain, unclear trading partner,
folks go looking somewhere else. It's the middle school lunchroom all
over again. If you act like a jerk at the middle school lunchroom,
people go sit at another table and the rest of the world is sitting at
(23:28):
these other tables. And Joel, you're describing infrastructure
investments to help the rest of the world get on without the United States.
And those are really smart investments for those other countries to be making because we've
shown ourselves to be an unreliable partner. And so I
absolutely agree that this is going. Once you
show yourself as an isolationist once, everyone's always going to be worried
(23:50):
that you're going to revert to that again in the future. The American people, we,
the voters, have shown ourselves to be unreliable because we
elected an unreliable leader who wanted to isolate us from the rest of the
world. We cannot easily unring that bell. And
that's leading the rest of the world to make a lot of investments that exclude
the United States. Supply chains are getting rewritten right now.
(24:11):
Remember after COVID, we all talked about friend shoring and onshoring and moving business to
more reliable places. Right now, the number one conversation happening in
businesses elsewhere is how they can non usshore. We've got to come up
with a catchy word for that. And so, yeah, That's a real
risk. To play devil's advocate and just have
you explain a little bit. It seems like every other week he announces
(24:33):
some big investment that a foreign company is going to make in the
United States. You know, billions here and billions there. And no one's brought this
amount of investment. Saudi Arabia is in town. They're clearly there
trying to. In town trying to
amp up their munitions and
continue that, which is an odd relationship that they have
(24:56):
with the President of the United States. So if I'm devil's
advocate, I say, hey, he's doing deals. People are coming to the United
States to build factories, to do the kinds of things that we want them to
do. Yeah. So this the answer. The truth here is
strange. It's bizarre. And I've never been in a situation like this.
The numbers that he's describing are literally made up.
(25:19):
No, no, that'll drop. No,
no, that wouldn't happen. Come on.
But, Heidi, I'm not used to saying that because there were norms
in American politics where you might cherry pick your truth, but you
always told the truth. But so Trump has this
running tally of how much money he's made from other countries. So first
(25:42):
of all, you don't make money from other countries, but that's a whole different question.
So, for instance, let me tell you, I think. I can't remember the exact number.
It might be $600 billion. It might be a trillion. Where he said, the European
Union, as part of their trade agreement, have committed to invest $600 billion in
the United States. I think that's the number. You read the trade
agreement and it just says European
(26:03):
companies. First of all, the European Union can't do that.
The European Union is a government. A government doesn't send money
around the world. So what the trade agreement actually says is European
companies will think about locating in the United States.
They'll think about it. They'll think about it. It's like
China. They'll think about buying soybeans. They'll think about. The European Union literally
(26:26):
cannot even force companies to do that because it's not a.
The German government would have to do that. The French government would have to do
that. And so that $600 billion is part of his number,
which, last I checked, the White house website was 17 trillion, but actually I heard
overnight it raised to $21 trillion. It's actually really interesting.
It always moves with his feelings. But I cannot tell
(26:48):
you enough. I cannot enforce this enough to your audience.
This is not a partisan talking point. This is a fact. The fact is he
made the number up, you can go and
look for it, and you can go and find it. And the other thing is,
not only is the number made up, it's implausible. Let me
explain. Every year in the United states, we produce $30 trillion
(27:10):
worth of stuff. The president says we have 21 trillion
being invested. Now, the total amount of stuff we produce
is the total amount we spend on investment, plus the total amount we spend on
consumption. So if the pie is 30
and 21 of it is building factories, that means that
Americans are getting by on a very small amount of money. Like you and I
(27:31):
can't afford dinner tonight. There's so little being spent on consumption. The number
doesn't make sense on its face. Yeah, well,
you know, none of this actually makes sense, whether it's stopping.
Are we up to 10 wars yet or how many wars that have been
prevented? I mean, we know this. I have a question for both of you, though.
Th. This is the guy sitting next to. To you guys in the
(27:54):
pickup where you're going to make that argument. And
obviously you're right. It isn't hard to see once you explain it.
But, you know, Donald Trump's going to look me in the eye and he's going
to say, if I'm doing so bad, then why is the market doing so well?
And so I'm going to throw that at you, Justin. Why is the market
doing so well? So let me turn it around and ask you a question. Is
(28:16):
the market doing so well? I don't believe so, but I get to play
devil's advocate, too. Okay, so you would think that one
way of thinking about this question would be to compare how the
US Market is doing to other countries. And it's funny that
the media has almost not played this game at all. But if you look at
this in a comparative perspective, stocks have risen
(28:38):
much, much more rapidly in other countries. So since inauguration date, it turns out I've
got the data in front of me because I'm that kind of ner.
Since Inauguration Day, the U.S. stock market is up 13%. That sounds
terrific. Must be people say to me, well, how's this possible if you keep saying
these are terrible policies? Well, let me tell you, since Inauguration Day, Spain's
stock market is up 61%, Austria, 58%,
(29:00):
Finland, 45, Ireland, 42, Hong Kong,
41. Italy, 39, Portugal, 35.
Belgium, 33. Singapore, 29. Japan, 27.
The Netherlands, 27. Canada, 24. Poor Canada, who were beaten
up at every point. Canada's market is doing nearly twice
as well as the United States among industrialized
(29:22):
countries, the stock market in the US has risen the least. In the United
States, we're only ahead of three countries. So first,
one of them is my country, Australia. But it's pretty close. The US market's up
14, Australia's up 11. Let's call it a draw.
New Zealand has been flat. Well, I'm an Australian, I can tell you. New Zealand
is a pack of losers. Who cares? We get to say
(29:45):
that about. Oh, whoa. Yeah. Well, you.
I bet you have your enemies, too, right, Heidi? We do. It's sort of like
New York v. Boston. Boston. Is there a North/South Dakota thing like that?
Yeah. Yeah, I was close to saying it.
I was stupid. This is a national podcast. I'm a North Dakota
podcast. So go ahead and say. Because I just say this. Where do you think
(30:07):
Kristi Noem's from? So there. There's your answer.
It's the gift that keeps on giving. South Dakota's gift that keeps on giving.
So there's one other country that the US and it's
Denmark. And 60% of the Danish economy of the 40% of the
Danish stock market is Novo Nordisk. So Denmark's economy is
basically one company, which is basically one drug. So actually, the US
(30:31):
market is well behind that in the rest of the world. So let me ask
this. And this isn't X's and O's and numbers
on a sheet. I get that. But twice
America elected this guy. Twice.
What does the world think of us? What do world
economists think of us? What is. I mean, are they
(30:53):
just going to look at us and say, you know what?
They're not serious. They're not intelligent enough to do business
with. So I don't know if you can tell. This is actually.
My accent is not actually a South Dakota accent,
so I do spend some time. But I bet you it's not a New Zealand
accent either. And be careful of Rom Christy Noem, because, you know,
(31:15):
for all I know, you're hanging. Is she in New Zealand? She could be. No,
I'm kidding. And sorry for swearing.
Just New Zealand has got me riled up
yet. No, the rest of the world is just looking on in utter amazement, bafflement.
So when you think about kinds of falls of great
(31:36):
economies, great countries, and you think about kind of the beginning of
the end, you know, we start out with this idea that
hubris, which is we are being taken advantage of, you
know, which is kind of this grievance thing that he's been able to tap
into in middle America that look what we've done for the rest
of the world. And you look at, you know, people say, oh, China,
(31:58):
China's got to come to the table. I said, you know, U.S. exports are
less than 3% of the Chinese GDP. So I
mean, don't over exaggerate, don't overplay
your position. But I think the
point is that there's gotta be a pivot point here
where we reunite kind of the idea of
(32:21):
democracy with capitalism, with
promoting opportunity. Because one of the great things, I
mean you said already our rule of law and the reliability
of the ability to do a contract and have it enforced. But,
but I also would include in that the,
the, the opportunity that you have to own
(32:43):
property. The opportunity in our country you have to basically,
you know, kind of jumpstart. And, and one of the things that you said is
that most disturbing is that we have now
played the game. You know, the President has played
the game that I now want to be revered by all the big
guys. And in the meantime, the little guys aren't getting the
(33:06):
opportunity. How, how, if, if you were going to fashion
a policy, kind of looking at that
fact for, let's say, you know, a Democrat running for the Senate,
what, what, what would you say? How would you, what policies would
you bring to the forefront? Such a good
question, Heidi, and it's such a great
(33:29):
question. It's one of the reasons I admire you.
And because it's another reason why you're stalling for time and answering
and. You didn't, you didn't grow up. I want to
enjoy the emotional moment because actually you just hit on something that
I think is deeply broken in left leaning media.
I get invited all day, every day to say what's wrong. And
(33:53):
there's a lot, and it's really easy. I got a million trillion talking
points. And I can tell you I do think the President has been very bad
for the economy. I think the facts are on my side. I think economic theory
is on my side, I think history's on my side. And I know how to
marshal all of that and give the this isn't working
speech. And you said, hey Jaz, I'm going to put you in a room
with a Democratic Senate candidate. What should they do?
(34:16):
And I think it's really hard because I assume you want me to think about
the politics at the same time as the economics. So
one of the most important tasks for the next administration is going to be
to make more of our institutions bomb proof that
it turns out we're fortunate we still have an independent Fed.
But boy, it could be one Supreme Court case away from
(34:40):
not being that way. We're fortunate that we
have a functioning democracy, but that's mostly because
elections are run at the state level. And that's actually intrinsically bomb
proof. And I want to make sure that we think about
making more of those institutions
absolutely populist bomb proof because those institutions are the
(35:01):
things that make us rich rather than poor.
It turns out it was an accident of history that Congress accidentally
gave the White House more power over
tariffs than it really ought to have. And most presidents have been pretty
responsible with that power. Now the Supreme Court might be about to come back and
say, hey, you guys, you don't actually have that power. But
(35:23):
thinking very carefully about delegated powers I think is really important.
And of course this, we always run the risk that we fight the last war,
so we're going to spend the next. Just like after the financial crisis, we spent
five years trying to make sure that the financial system was bomb proof. So
I sort of gave you a list there. Let's try and make it so that
America functions even if we have a subpar
(35:47):
president. But it may be that it's other institutions
that break next. For instance, I happen to think Mike Johnson's
a terrible leader of the House. And it could be that
we fix all the problems with the executive and then it just makes it even
more glaring what the problems are with the legislature. That's the point at which,
Heidi, I'm going to defer to you. You know a little more about that than
I do. Well, you know, we've run out of time,
(36:10):
Justin, but we didn't even get to two of my favorite
topics, which is the uncertainty that AI is.
I love that question sending out, especially among the job
market. When you look at, like you said, people can find jobs, but people see
the layoffs, they see this automation
coming and they know that eventually it's not just going to be,
(36:33):
you know, the radiologists that are going to get hit, it's going to be the
truck drivers, it's going to be all the people. And the question is, you know,
when you have a president that is so transactional and not forward
thinking, I don't think that people are getting prepared for this transition.
What's going to happen? The other thing I want to say. Can I just take
10 seconds on that? That's the argument we should be having.
(36:54):
That's the debate we should be having. All the nonsense that we read and we
wade through day in, day out and the insults and all of that means that
we've taken our eye off what is perhaps the most interesting economic
challenge of a generation. So I love the fact you're looking at it and thinking
about it. Well, and the other thing that I'm deeply concerned about,
which is, you know, politically,
(37:15):
cryptocurrency has gotten to be kind of everybody's
darling because they're pouring tons of money into campaigns,
and there really isn't a lot of discussion about what that looks like 10,
15 years from now. Well, Justin, I
will tell you, the thing that you said that bothered me the most, and I
realize we're closing out, is the fact that you said it's not going to show
(37:35):
itself up until about 10 years. And that's the image I had
of the early 2000s. I saw a big kegger by
George W. Bush, and I saw my party have to get out the vacuum
cleaner and the mop and clean up that kegger. And here we sit
again. It's easy to say, man, it was a great party if
somebody else is picking up after it. And it scares the hell out of me.
(37:57):
But Justin, thanks for joining us today on the Hot dish.
Great pleasure. I hope you come back because we'd love to
kind of delve into these issues a little bit more. And I know it gets
a little wonky, but I think it's really important. And one of the
things, Justin, that you said is, you know, it really for
for any level of economists, it's really important to be
(38:19):
honest. And I don't think that the economists that are heading up
or working in this administration are very honest. And, you know,
now they have to be when they reduce tariffs to lower coffee prices. But
that's a small step. Reality does that. And Joel, I'm going to take that with
me. And my job is to bring my mop. So I'll bring my
mop next time. Tell you what, Justin, I've been there, done that. I'm going to
(38:42):
enjoy the kegger first, but I'll help you clear. I was going to say he
didn't it wasn't like he didn't make the mess.
Thanks, Justin. Thanks for coming out. Thanks, Justin, so much.
Thank you for joining us today on the Hot Dish brought to you by One
Country Project, making sure the voices of the rest of us are heard in
(39:03):
Washington. You know, learn more about One country at
One country project.org that's One
Countryproject.org we'll be back next week with more Hot dish
comfort food for rural America.
(39:27):
Topica.
Welcome to the Hot Dish, comfort food for rural America. I'm Heidi
Heitkamp. And I'm Joel Heitkamp. Today we get a chance to and we're
delighted to visit with Justin Wolfers. Now, Justin is a
professor of economics and public policy at the
Ford School of Public Policy at the University of
Michigan. He's a senior fellow at the Brookings Institute and a
(00:26):
contributor to the New York Times, the Wall Street Journal, and he's a
regular on CNN. Justin, welcome to the Hot Dish,
mate. This is exciting. Well, it's exciting as all get out for Heidi.
Heidi's only got, what, a hundred questions for you, Justin.
Yeah, I think, you know, Justin, I'm kind of an econ geek.
I think that one of the big mistakes that our political party, the
(00:49):
Democratic Party, has made is not paying attention to what's been
going on. I think Biden completely missed what was going on with
inflation, with people's real life inability to make
ends meet. I think Trump's doing a little bit of that. But before we get
there, when I was in the Senate, Trump was elected, and
you know, that was always every day. It was the best economy
(01:11):
in the history of the world. Look what we've done. Look what we've done. And
this was even before COVID and I went to my
leadership and I said, that is absolutely not true. It's not
the worst, but it's anemic. But yet he gets by with it
day after day by basically saying it over and over again.
And that's why it's so important to have people like you on podcasts like this.
(01:33):
But also speaking kind of publicly about what is the
state of the American economy and what can we expect in
the next three years in terms of the direction that this administration's
taken us. So if you could just kind of comment on, you know, kind
of where Trump's economy is right now and what you think some
of the pitfalls are going to be kind of going forward. Yeah,
(01:56):
I want to tell a sort of optimistic story. I agree with you,
Heidi, that we on the center left should be
not only economically literate, but truthful. And sometimes the glass is half
full. I'll tell a more sympathetic story for
you, which is that President Trump inherited a pretty strong economy
that we had largely recovered from COVID and there was
(02:19):
a lot of bad stuff in the system from COVID The
unemployment rate was quite low when he came to power, and the
economy has not dramatically shifted. Inflation had
fallen and had fallen to around about 3%, which is almost acceptable.
And what's happened since is actually just a really hard story.
It's hard because there's been so much that's happened
(02:42):
in trying to keep track of it all. And
some of those things actually distort the way that economic data ends up getting reported
and so on. So I'd say let me start at the top line and say
it's a B+. It's a B with a lot of risk and,
and a lot more downside risk than upside risk. So most people
who want jobs can find them at the moment. Big part of that
(03:03):
at most means not everyone. The cost of living is
rising, but it's not rising at tragically high rates, but it's
rising at concerningly high rates.
But the president has thrown a lot of mud at the wall, mud of the
form that you think might hurt an economy. And so even as the hard
data continue to look, okay, that's the B.
(03:24):
If you ask people how they're doing, and here it could be
regular folks listening to the podcast or it could be CEOs.
Actually, their answers are unbelievably
miserable. They're sort of recession level miserable.
And so if your sense of how the economy's going comes from asking people,
you would say it's going absolutely terrible.
(03:47):
And then if you talk to my tribe, the economists, we'd say
he's put in train a whole lot of things that are really going to hurt
the economy. So it might be a B plus today, but gee, look out
because the future might be not even in the B range.
Well, it's like that old story, how did you go bankrupt?
A little bit at first, but then really fast. And
(04:09):
so a lot of what you're seeing right now in those
numbers is again, this growing gap between
affordability for people in the lower half of our
income category and the, you know, kind of this K
shaped. And if you could just comment on, because as a lot of people are
hearing about the K shaped economy, if you could just comment on
(04:31):
what exactly is that and how does that drive
something like the University of Michigan Index of Consumer
Sentiment? Yeah. So let's start by explaining what a K shaped economy is.
First of all, there's a whole lot of economists on Wall street and you get
quoted the most if you come up with the catchiest name. And one of them
came up with this idea K shaped. And the reason it's catchy is because
(04:52):
it's so confusing. What does a letter K look like? Well, the leg
stands up tall. That's where we were and then you've got these two other things
coming out at different angles. One's going up and one's going down. And that's the
story that the one that started at the top, which is in our case, the
wealthy are doing pretty well, that stocks have been rising, their
portfolios are worth a lot. They've gotten all these tax cuts from their one big
(05:13):
beautiful bill. Life's pretty good if you've got a lot. The other
part of the K, the lower part, kicks down, which is, is
this a recession for working and middle class Americans?
I'm pretty sure Joel's going to talk about, is it a recession for rural folks?
And so if what we see is some doing well and some doing poorly, we
(05:33):
call it a K shaped economy. I'm somewhat
concerned about that and I understand the political salience of it, but actually
I'm not as convinced that the differences are that large.
I would simplify things. I'd say when you pass a budget
that gives huge tax cuts to the rich and nothing to the
poor, when you pass a budget that cuts Medicaid, that only
(05:56):
hurts the poor by cutting Medicaid, and when you impose a new
tax policy, that's tariffs, and tariffs are regressive and they hurt the poor
rather than the rich, then you help the rich and you hurt the poor.
The problem with the rhetoric of a K shaped economy is it sounds like the
economy's doing the work. The economy's not doing the work. The President's doing the work.
And the President's party, they're the Anti Robin Hood. And that's what
(06:18):
we're seeing around us right now. You know, Justin, I don't want to play poker
against you because clearly you know what I do or what I'm about to do,
and that's to talk about the rural economy. You know,
we can talk about 3%, we can talk about all of that. But I think
to understand it and to get back to the rural economy, maybe in just a
step, you gotta, you gotta let me
(06:39):
know, what did he do? Which is gonna, you know, make us
sit there and wonder why we're not even at a B. Let's look
forward because it's forward where my fears lie.
Look, we're only a few months into the Trump administration. Economic
data lags. We don't know what the President's agenda is going to wreak
upon the economy, but we have a lot of fears. So I want to
(07:02):
take the question in two parts. One is the short to medium run.
So tariffs are immensely destructive.
Statement Number one, particularly, it
can at times, if we're tariffing the inputs that farmers use,
could be a big effect on the rural economy. We also know
that this immigration crackdown is a huge shock
(07:25):
at a moment when we might not be ready for it. If there's something
we learned from COVID it's that you can't just unplug an economy and plug
it back in and hope that it's going to work really well the second time
that we want to be a little more gentle in what you're doing.
And so it's creating, I think, incredible tumult there. And
so you've then got. So all of that, I
(07:46):
think, sort of has led people to be somewhat worried about the medium run.
We use words like recession. Are we concerned that there may be one around the
corner? I actually want to focus you even further
down the road than that. And this is unusual, and I think it's a politically
difficult conversation to have. But I want you to take a step back
and think, what is it that makes America rich? There's a deep
(08:08):
question. Why is America rich in the country that I was born in, Papua New
Guinea poor? The answer, according to most economic
research, is the quality of our economic and political institutions, that we
respect the rule of law, that we have contracts that are
respected, that we have a functional government, that we have useful infrastructure.
And on and on the list goes. The United States has that poor countries
(08:30):
don't have that. That's the foundation of our prosperity.
The President is undoing many of those important
institutions. The President has fired the head of
the Bureau of Labor Statistics, potentially leading, sending the signal.
Don't tell the truth when you're in government. The President has had a go
at Jay Powell and the Federal Reserve over and over again. This has been a
(08:53):
fed that, love it or hate it, has done better than most other Federal Reserves
around the country, around the world. When the CEO of
Intel walked into the White House, he walked out having accidentally left 10%
of his company behind. And that's not a sign of a healthy
democracy. When you talk to business executives around the country,
(09:13):
they talk about Trump a lot. Do you remember in the old days
when business people would get together, they would not talk about the president because
the president was some boring guy in Washington. They're
worried, do we have the right bathroom policy to please the president? Do we buy
our imports from the right country to please the president? Does the president think that
Coca Cola should use the right sweetener? Which sweetener does the president think
(09:35):
Coca Cola should use? The President's intervention in every aspect of
corporate life has come to dominate the operational
roles of executives. They're focused now on pleasing
Washington rather than their customers. Well, it's not
really pleasing Washington, it's pleasing one man in Washington. And
maybe it's one of the things. If you give them a nice Rolex watch, I
(09:57):
guess with some gold bar, you get a really good trade deal. That's what I
heard. It's absolutely the case. And it's worse than that. Cause you could say,
well, if that's the price of doing business, then just everyone turn up with a
watch and you'll be fine. The problem is
that the President is mates. He calls in,
let me go back a step. What was his previous job? He used to run
(10:17):
the Trump Organization. He's a bloke in an office in New York. And
you know, some guy would come in and say, hey, Trump Vodka's doing well. Let's
do more Trump Vodka and go, oh, yes, let's do that. And then have another
CEO come and say, oh, well, our downtown golf property's working well. Let's do more
of that. And he thought his job was to manage each of these
executives, and it was. When he ran the Trump Organization, he now
(10:37):
governs as if his job is to manage
the country's CEOs. He calls in Tim Cook whenever he feels like it.
He calls in the head of OpenAI. He calls in the head of Coca Cola
and tells them that they should be using real sugar. The problem
is, the good thing is each of those guys, they bring in a Rolex or
a bar of gold and the bloke's happy and he lets them go on. The
(10:59):
problem is, think about who doesn't have access to that. It's
the young companies, it's the entrepreneurial companies, it's the small companies.
And to borrow a phrase from my Republican friends, it's the
unborn, which is tomorrow's superstar company
hasn't been born yet. And it can't thrive if its existing
rivals is getting protection from a White House that's giving out favors like that.
(11:22):
And so the reason this is a difficult economic story to tell is it says
that the damage being done by the White House is not something that's going to
show up in next quarter's GDP or next year's federal budget. It's
going to show up as lost opportunities in 10 or 20 years time. It's going
to show up as the company your kids don't have an opportunity to go and
work for, because the company never grew because it got
(11:44):
bullied by the existing, you know, by Apple or by
Coke or the existing companies that have an in with the White House.
There's a deep sickness at the heart of crony capitalism. It
means that you're not focused on building a better mousetrap, you're
focused on bringing a better Rolex. And that
is what I worry most about. Well, I was
(12:06):
talking right after
the whole thing with intel and with Nvidia and these
interventions that we've never seen before. And I said, okay, let's flip the
switch. Let's assume it's a Democratic president. And he goes
to the head of Starbucks and says, hey, you know, you can't grow
coffee in our country. We're going to tariff coffee
(12:28):
1000% if you don't allow unionization in every one of your
shops. And those same people who have tolerated this
and the lack of resistance because everybody has
become transactional without thinking about what does the future look
like. The real question becomes just how do you put it back?
How do you go back to the norms that were established for
(12:50):
capitalism and that everybody kind of played by
the rules with fudging a little bit on the guardrails? But not like this.
Not like this. So I worry deeply about this, Heidi, and
I'm going to show you how upside down the world is. Where's Ronald
Reagan? And that's kind of crazy. I'm a center left economist.
(13:11):
We know where your politics lie. But Reagan would have been against
every word of this. Reagan believed in
markets. Reagan believed in competition. Reagan believed in trade.
Reagan believed in immigration. And so what's happening is the voice of
Reagan is gone. And guess who the faint echoes of Reagan are today? It's
you and I, quite literally the people standing up for
(13:32):
Reagan's ideas. Center left economists.
Well, think about this. Think about the fact that for years we said
that the era of big government is over and Trump, with one
magic wand, has brought big government back
to the front. And you can't say it any other way, that this is
government intervention in almost every aspect of civil
(13:55):
society that we have never seen before. And then the question
becomes, does it establish a new norm? Absolutely. So
you're absolutely right to say this is the most interventionist government of my lifetime.
It's not only taking 10% of
intel, it's calling the University of Michigan and telling it who
to hire and what should be on our syllabus. We have some brilliant
(14:17):
academics here. We don't need Washington telling us how to teach.
And we're doing that throughout the economy. We're telling Apple where to put their factories.
We're messing with American soybean farmers in all sorts of ways.
We're changing the cost of the inputs. We are forcing companies
to build where they don't want to build. And on and on it goes. And
Heidi, you're happens next is I think, the
(14:39):
deepest and most important question, and I don't know the answer because
my Republican friends haven't thought through the next stage of this game, which is
there'll be a Democratic administration in the future. What I hope they
do is put in place great institutions and great policies and build wealth and
prosperity for all of us. But if they don't
feel the guardrails of the past is binding them anymore,
(15:02):
that could create all sorts of other problems, different problems, right.
Maybe we'll end up nationalizing industries that are treating
Democrats the wrong way. Who the hell knows? So
I don't know how I can persuade Democrats to fix this problem, because
politics can't be that asymmetric. You guys get to do whatever you want when you're
in, and we'll play by the rules when we're in. I think
(15:25):
I don't have an this is why I don't sleep at night.
Heidi. In my
fantasies, the Republican Party that
I grew up understanding, the party of Reagan
comes back to life and we go back to it wasn't a perfect
politics, but I will take the Clinton, Bush, Obama years
(15:48):
over the current madness any day of the week. And I say there's an economist
thinking about our economic future. So you're right. I'm
going to bring in rural economy. You talked about 3%. It
isn't 3% here. If you look at fertilizer, if you look at the
of equipment, if you look at everything else that goes with it, it's
far exceeding 3%. If you look at immigration, I don't think people
(16:10):
understand how much immigrants play a role
in the rural economy and in the labor force. And so,
you know, between tariffs, which have been devastating
to the rural economy, and just this philosophy
that you can pay them off, because really, you know, that
happened in the first Trump administration when it came to soybeans.
(16:32):
Wilbur Ross said, hey, just pay them off. And he gave a buck. I think
it was a buck 62 to every farmer per bushel of
soybeans. And what did that do to our soybean market? We lost a
bigger share to Brazil. Here we sit again. Here
we sit again. The amount of trade that we're going to do with
Argentina with the worthless bonds that they have or the worthless
(16:53):
money that they have. You know, granted, 40 billion,
you know, is it that big a deal, the amount of cattle, you know, those
type of issues. But it doesn't change what
farmers think in regards to how they can
farm. So the rural economy. And I would also add this,
Justin, that a lot of the people that I talk to every day on
(17:15):
my radio show buy their insurance off the exchange.
They do. You know, they've got five employees, they've got
themselves. They don't have a wife that goes to town. Not to sound
like a complete sexist, but that does happen where her only
goal is to find a job that provides them health insurance and maybe make a
buck or two. But if you look at the rural economy, there aren't a lot
(17:37):
of pickups getting sold, There aren't a lot of tractors getting sold, and there
aren't as many soybeans is getting sold as what there should be. And so
I'm curious what your thoughts are on that. I want to
introduce another word that is uncomfortable for an economist to talk about,
but I think is a key part of all this is actually just the word
competence. We've had Democratic and Republican
(17:59):
leaders for hundreds of years, and they've mostly been competent,
and that's fine. Some of them I agree with, some of them I disagree with.
Who cares? The problem of competence really comes to the
fore for a lot of the issues you just described. So let's start with
soybeans and then go to health insurance. So with soybeans,
last time around, Trump started a trade war with China. China retaliated
(18:20):
by not buying soybeans. Trump backed down, went to China and said, how
can we get you to do this? And got commitments from China to buy
brickloads of soybeans. Over the ensuing
two years of that agreement, China actually bought fewer
soybeans than it had before. The agreement
delivered zero to the American people. It
(18:43):
delivered a lot of headlines to the president, who got to say he solved a
problem he caused. But the guy's just not very good
when he's in a room. He got totally played by the Chinese.
This isn't the first time. Well, luckily, we all learn from history. So
we come forward. He starts a new trade war. China decides that the
easiest thing to do is go after the soybean farmers. Trump realizes
(19:04):
this is politically unsustainable. He goes to China, and you know what? He's come back
with a set of promises that are completely
unenforceable. And China will buy whatever the Hell, they want going forward. He got his
positive headlines, he's fine. And soybean farmers,
the new set of commitments, by the way, is a commitment to buy fewer soybeans
next year than they were buying in 2019. So it's actually not
(19:27):
even to get back to where we were. And they've shown they don't necessarily need
to live up to these commitments. And so that sector
just got flattened for literally no reason and no
upside. And that's not about left
or right. It's not about rural versus cities.
That's just about incompetence. That's just being bad at your job.
(19:49):
And then you went to health insurance next, right? So health insurance.
We have been told that Obamacare is a problem and that
I have a plan that's coming out in two weeks for
literally 10 years in a row. And we finally
got the Trump healthcare plan last week. Do you know what
it is? Assume we have a well functioning health
(20:12):
insurance market and go buy your own goddamn health insurance.
I teach Economics 101. You will
not pass my class. You can't just say,
in a world in which our health insurance markets are wildly
dysfunctional, let it rip. Capitalism
(20:33):
will fix it. There are thousands of health
economists around the world who've studied this. It's one of the most complicated,
messed up, difficult markets to make work. And his
answer is, we're walking away. You guys figure it out.
Yeah. Let me throw one else, one other thing at you,
(20:53):
Justin, and that is going along with your whole
kind of pattern there. We're scared about
infrastructure. That's what we're scared about. Number one,
we've got the Biden Bill, which, you know, Kamala Harris never had the
foresight to actually talk about in terms of infrastructure and how that affects
rural. But this area is the one that really
(21:15):
scares the hell out of me and a number of my buddies at Farm.
And that's the fact that every time he pokes
China, China goes to Brazil and now Argentina.
And the next thing you know, China is actually making an investment
into those countries. They're actually building ports that they own,
they're actually building rail that their part ownership up.
(21:38):
Once that infrastructure is in place, what will
that do to the ag market as a whole? And you
mentioned the troubles coming 10 years down the road. This is an example
to me of, of what you were getting at. Yeah. So
you framed that as being a question about infrastructure. And I have to say back
to you, of course we had infrastructure week and we had it every week for
(22:00):
it literally became a joke. Right. A meme. Things going
wrong. Next week's infrastructure Week,
and he failed to deliver. But I understand your question actually as
being one about isolationism. So Trump has a
notion that America is big, we're the 800 pound gorilla, and all we need to
do is beat our chest and then people will pay us tribute. That's sort of
(22:22):
the underlying idea behind these trade wars.
We can get more out of these other characters. The thing
is, actually, America's a much smaller part of world trade
than I think the President understands. Let me try and
explain why. First of all, we are, what, $340 million people in
a world of $8 billion, you might say, well, we're really important because we're
(22:44):
rich. We are, but so are lots of other countries and increasingly so is China,
which is a cool billion right there. And the
other thing is the US Economy is actually a remarkably closed economy compared to
other countries, which means we're actually a relatively small part of global
trade. And so his idea was, I'm going
to beat my chest and if you can't do business with me, that's such a
(23:06):
big threat that you're definitely going to come and pay me tribute instead.
We've discovered that when we show ourselves to be an uncooperative,
unwilling, uncertain, unclear trading partner,
folks go looking somewhere else. It's the middle school lunchroom all
over again. If you act like a jerk at the middle school lunchroom,
people go sit at another table and the rest of the world is sitting at
(23:28):
these other tables. And Joel, you're describing infrastructure
investments to help the rest of the world get on without the United States.
And those are really smart investments for those other countries to be making because we've
shown ourselves to be an unreliable partner. And so I
absolutely agree that this is going. Once you
show yourself as an isolationist once, everyone's always going to be worried
(23:50):
that you're going to revert to that again in the future. The American people, we,
the voters, have shown ourselves to be unreliable because we
elected an unreliable leader who wanted to isolate us from the rest of the
world. We cannot easily unring that bell. And
that's leading the rest of the world to make a lot of investments that exclude
the United States. Supply chains are getting rewritten right now.
(24:11):
Remember after COVID, we all talked about friend shoring and onshoring and moving business to
more reliable places. Right now, the number one conversation happening in
businesses elsewhere is how they can non usshore. We've got to come up
with a catchy word for that. And so, yeah, That's a real
risk. To play devil's advocate and just have
you explain a little bit. It seems like every other week he announces
(24:33):
some big investment that a foreign company is going to make in the
United States. You know, billions here and billions there. And no one's brought this
amount of investment. Saudi Arabia is in town. They're clearly there
trying to. In town trying to
amp up their munitions and
continue that, which is an odd relationship that they have
(24:56):
with the President of the United States. So if I'm devil's
advocate, I say, hey, he's doing deals. People are coming to the United
States to build factories, to do the kinds of things that we want them to
do. Yeah. So this the answer. The truth here is
strange. It's bizarre. And I've never been in a situation like this.
The numbers that he's describing are literally made up.
(25:19):
No, no, that'll drop. No,
no, that wouldn't happen. Come on.
But, Heidi, I'm not used to saying that because there were norms
in American politics where you might cherry pick your truth, but you
always told the truth. But so Trump has this
running tally of how much money he's made from other countries. So first
(25:42):
of all, you don't make money from other countries, but that's a whole different question.
So, for instance, let me tell you, I think. I can't remember the exact number.
It might be $600 billion. It might be a trillion. Where he said, the European
Union, as part of their trade agreement, have committed to invest $600 billion in
the United States. I think that's the number. You read the trade
agreement and it just says European
(26:03):
companies. First of all, the European Union can't do that.
The European Union is a government. A government doesn't send money
around the world. So what the trade agreement actually says is European
companies will think about locating in the United States.
They'll think about it. They'll think about it. It's like
China. They'll think about buying soybeans. They'll think about. The European Union literally
(26:26):
cannot even force companies to do that because it's not a.
The German government would have to do that. The French government would have to do
that. And so that $600 billion is part of his number,
which, last I checked, the White house website was 17 trillion, but actually I heard
overnight it raised to $21 trillion. It's actually really interesting.
It always moves with his feelings. But I cannot tell
(26:48):
you enough. I cannot enforce this enough to your audience.
This is not a partisan talking point. This is a fact. The fact is he
made the number up, you can go and
look for it, and you can go and find it. And the other thing is,
not only is the number made up, it's implausible. Let me
explain. Every year in the United states, we produce $30 trillion
(27:10):
worth of stuff. The president says we have 21 trillion
being invested. Now, the total amount of stuff we produce
is the total amount we spend on investment, plus the total amount we spend on
consumption. So if the pie is 30
and 21 of it is building factories, that means that
Americans are getting by on a very small amount of money. Like you and I
(27:31):
can't afford dinner tonight. There's so little being spent on consumption. The number
doesn't make sense on its face. Yeah, well,
you know, none of this actually makes sense, whether it's stopping.
Are we up to 10 wars yet or how many wars that have been
prevented? I mean, we know this. I have a question for both of you, though.
Th. This is the guy sitting next to. To you guys in the
(27:54):
pickup where you're going to make that argument. And
obviously you're right. It isn't hard to see once you explain it.
But, you know, Donald Trump's going to look me in the eye and he's going
to say, if I'm doing so bad, then why is the market doing so well?
And so I'm going to throw that at you, Justin. Why is the market
doing so well? So let me turn it around and ask you a question. Is
(28:16):
the market doing so well? I don't believe so, but I get to play
devil's advocate, too. Okay, so you would think that one
way of thinking about this question would be to compare how the
US Market is doing to other countries. And it's funny that
the media has almost not played this game at all. But if you look at
this in a comparative perspective, stocks have risen
(28:38):
much, much more rapidly in other countries. So since inauguration date, it turns out I've
got the data in front of me because I'm that kind of ner.
Since Inauguration Day, the U.S. stock market is up 13%. That sounds
terrific. Must be people say to me, well, how's this possible if you keep saying
these are terrible policies? Well, let me tell you, since Inauguration Day, Spain's
stock market is up 61%, Austria, 58%,
(29:00):
Finland, 45, Ireland, 42, Hong Kong,
41. Italy, 39, Portugal, 35.
Belgium, 33. Singapore, 29. Japan, 27.
The Netherlands, 27. Canada, 24. Poor Canada, who were beaten
up at every point. Canada's market is doing nearly twice
as well as the United States among industrialized
(29:22):
countries, the stock market in the US has risen the least. In the United
States, we're only ahead of three countries. So first,
one of them is my country, Australia. But it's pretty close. The US market's up
14, Australia's up 11. Let's call it a draw.
New Zealand has been flat. Well, I'm an Australian, I can tell you. New Zealand
is a pack of losers. Who cares? We get to say
(29:45):
that about. Oh, whoa. Yeah. Well, you.
I bet you have your enemies, too, right, Heidi? We do. It's sort of like
New York v. Boston. Boston. Is there a North/South Dakota thing like that?
Yeah. Yeah, I was close to saying it.
I was stupid. This is a national podcast. I'm a North Dakota
podcast. So go ahead and say. Because I just say this. Where do you think
(30:07):
Kristi Noem's from? So there. There's your answer.
It's the gift that keeps on giving. South Dakota's gift that keeps on giving.
So there's one other country that the US and it's
Denmark. And 60% of the Danish economy of the 40% of the
Danish stock market is Novo Nordisk. So Denmark's economy is
basically one company, which is basically one drug. So actually, the US
(30:31):
market is well behind that in the rest of the world. So let me ask
this. And this isn't X's and O's and numbers
on a sheet. I get that. But twice
America elected this guy. Twice.
What does the world think of us? What do world
economists think of us? What is. I mean, are they
(30:53):
just going to look at us and say, you know what?
They're not serious. They're not intelligent enough to do business
with. So I don't know if you can tell. This is actually.
My accent is not actually a South Dakota accent,
so I do spend some time. But I bet you it's not a New Zealand
accent either. And be careful of Rom Christy Noem, because, you know,
(31:15):
for all I know, you're hanging. Is she in New Zealand? She could be. No,
I'm kidding. And sorry for swearing.
Just New Zealand has got me riled up
yet. No, the rest of the world is just looking on in utter amazement, bafflement.
So when you think about kinds of falls of great
(31:36):
economies, great countries, and you think about kind of the beginning of
the end, you know, we start out with this idea that
hubris, which is we are being taken advantage of, you
know, which is kind of this grievance thing that he's been able to tap
into in middle America that look what we've done for the rest
of the world. And you look at, you know, people say, oh, China,
(31:58):
China's got to come to the table. I said, you know, U.S. exports are
less than 3% of the Chinese GDP. So I
mean, don't over exaggerate, don't overplay
your position. But I think the
point is that there's gotta be a pivot point here
where we reunite kind of the idea of
(32:21):
democracy with capitalism, with
promoting opportunity. Because one of the great things, I
mean you said already our rule of law and the reliability
of the ability to do a contract and have it enforced. But,
but I also would include in that the,
the, the opportunity that you have to own
(32:43):
property. The opportunity in our country you have to basically,
you know, kind of jumpstart. And, and one of the things that you said is
that most disturbing is that we have now
played the game. You know, the President has played
the game that I now want to be revered by all the big
guys. And in the meantime, the little guys aren't getting the
(33:06):
opportunity. How, how, if, if you were going to fashion
a policy, kind of looking at that
fact for, let's say, you know, a Democrat running for the Senate,
what, what, what would you say? How would you, what policies would
you bring to the forefront? Such a good
question, Heidi, and it's such a great
(33:29):
question. It's one of the reasons I admire you.
And because it's another reason why you're stalling for time and answering
and. You didn't, you didn't grow up. I want to
enjoy the emotional moment because actually you just hit on something that
I think is deeply broken in left leaning media.
I get invited all day, every day to say what's wrong. And
(33:53):
there's a lot, and it's really easy. I got a million trillion talking
points. And I can tell you I do think the President has been very bad
for the economy. I think the facts are on my side. I think economic theory
is on my side, I think history's on my side. And I know how to
marshal all of that and give the this isn't working
speech. And you said, hey Jaz, I'm going to put you in a room
with a Democratic Senate candidate. What should they do?
(34:16):
And I think it's really hard because I assume you want me to think about
the politics at the same time as the economics. So
one of the most important tasks for the next administration is going to be
to make more of our institutions bomb proof that
it turns out we're fortunate we still have an independent Fed.
But boy, it could be one Supreme Court case away from
(34:40):
not being that way. We're fortunate that we
have a functioning democracy, but that's mostly because
elections are run at the state level. And that's actually intrinsically bomb
proof. And I want to make sure that we think about
making more of those institutions
absolutely populist bomb proof because those institutions are the
(35:01):
things that make us rich rather than poor.
It turns out it was an accident of history that Congress accidentally
gave the White House more power over
tariffs than it really ought to have. And most presidents have been pretty
responsible with that power. Now the Supreme Court might be about to come back and
say, hey, you guys, you don't actually have that power. But
(35:23):
thinking very carefully about delegated powers I think is really important.
And of course this, we always run the risk that we fight the last war,
so we're going to spend the next. Just like after the financial crisis, we spent
five years trying to make sure that the financial system was bomb proof. So
I sort of gave you a list there. Let's try and make it so that
America functions even if we have a subpar
(35:47):
president. But it may be that it's other institutions
that break next. For instance, I happen to think Mike Johnson's
a terrible leader of the House. And it could be that
we fix all the problems with the executive and then it just makes it even
more glaring what the problems are with the legislature. That's the point at which,
Heidi, I'm going to defer to you. You know a little more about that than
I do. Well, you know, we've run out of time,
(36:10):
Justin, but we didn't even get to two of my favorite
topics, which is the uncertainty that AI is.
I love that question sending out, especially among the job
market. When you look at, like you said, people can find jobs, but people see
the layoffs, they see this automation
coming and they know that eventually it's not just going to be,
(36:33):
you know, the radiologists that are going to get hit, it's going to be the
truck drivers, it's going to be all the people. And the question is, you know,
when you have a president that is so transactional and not forward
thinking, I don't think that people are getting prepared for this transition.
What's going to happen? The other thing I want to say. Can I just take
10 seconds on that? That's the argument we should be having.
(36:54):
That's the debate we should be having. All the nonsense that we read and we
wade through day in, day out and the insults and all of that means that
we've taken our eye off what is perhaps the most interesting economic
challenge of a generation. So I love the fact you're looking at it and thinking
about it. Well, and the other thing that I'm deeply concerned about,
which is, you know, politically,
(37:15):
cryptocurrency has gotten to be kind of everybody's
darling because they're pouring tons of money into campaigns,
and there really isn't a lot of discussion about what that looks like 10,
15 years from now. Well, Justin, I
will tell you, the thing that you said that bothered me the most, and I
realize we're closing out, is the fact that you said it's not going to show
(37:35):
itself up until about 10 years. And that's the image I had
of the early 2000s. I saw a big kegger by
George W. Bush, and I saw my party have to get out the vacuum
cleaner and the mop and clean up that kegger. And here we sit
again. It's easy to say, man, it was a great party if
somebody else is picking up after it. And it scares the hell out of me.
(37:57):
But Justin, thanks for joining us today on the Hot dish.
Great pleasure. I hope you come back because we'd love to
kind of delve into these issues a little bit more. And I know it gets
a little wonky, but I think it's really important. And one of the
things, Justin, that you said is, you know, it really for
for any level of economists, it's really important to be
(38:19):
honest. And I don't think that the economists that are heading up
or working in this administration are very honest. And, you know,
now they have to be when they reduce tariffs to lower coffee prices. But
that's a small step. Reality does that. And Joel, I'm going to take that with
me. And my job is to bring my mop. So I'll bring my
mop next time. Tell you what, Justin, I've been there, done that. I'm going to
(38:42):
enjoy the kegger first, but I'll help you clear. I was going to say he
didn't it wasn't like he didn't make the mess.
Thanks, Justin. Thanks for coming out. Thanks, Justin, so much.
Thank you for joining us today on the Hot Dish brought to you by One
Country Project, making sure the voices of the rest of us are heard in
(39:03):
Washington. You know, learn more about One country at
One country project.org that's One
Countryproject.org we'll be back next week with more Hot dish
comfort food for rural America.
(39:27):
Topica.
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