# Live with Ryan Lizza

An episode of [Paul Krugman Podcast](https://invisiblenetwork.ai/podcast/1877144831), 16 May 2025, 27 min.

Audio: https://api.substack.com/feed/podcast/163735198/6c7cd6b74f418089e87927e351ee865d.mp3

Thank you Trevor Aaronson, Indran Amirthanayagam, Critical Minerals Journal, PamC, Lawrence Toole, and many others for tuning into my live video with Ryan Lizza! Join me for my next live video in the app. Ryan’s internet went down during Part I, so here’s Part II. Get full access to Paul Krugman at paulkrugman.substack.com/subscribe

## Transcript

[0:01] SPEAKER_00: The inflation risk,
[0:03] SPEAKER_00: the stagflation risk,
[0:05] SPEAKER_00: the other thing that you have really been hitting on recently,
[0:08] SPEAKER_00: and I'm wondering how much you have revised this assessment,
[0:13] SPEAKER_00: if at all,
[0:14] SPEAKER_00: this week with some of the reduction in the tariffs,
[0:17] SPEAKER_00: is the risk of a financial crisis.
[0:22] SPEAKER_00: And one,
[0:23] if you could just explain why that's something we should be
[0:27] worried about at all
[0:29] and what the warning signs are and what's your current thinking
[0:33] on that right now.
[0:35] SPEAKER_00: Okay.
[0:37] For the moment,
[0:39] there were early indicators that looked like financial crisis.
[0:44] SPEAKER_01: And the style of financial crisis, if we're going to have one,
[0:54] The most sort of familiar thing is that you get a situation
[0:59] where there are key
[1:00] players in the plumbing of the financial markets that are not
[1:07] set up to audio
[1:11] SPEAKER_01: skipping.
[1:11] SPEAKER_01: Some people are saying, sorry, I don't know, we'll do what we can.
[1:15] SPEAKER_01: But there are people.
[1:17] SPEAKER_01: Um,
[1:17] SPEAKER_01: one thing I've learned,
[1:18] SPEAKER_01: I've done,
[1:18] SPEAKER_01: I've done a couple of videos with,
[1:21] SPEAKER_01: with Nathan Tankus,
[1:22] SPEAKER_01: who's one of those,
[1:23] SPEAKER_01: you know,
[1:23] SPEAKER_01: um,
[1:24] SPEAKER_01: sort of self-talk stuff that,
[1:27] SPEAKER_01: that,
[1:28] SPEAKER_01: Hey,
[1:28] SPEAKER_01: we don't,
[1:29] SPEAKER_01: we didn't study in grad school.
[1:30] SPEAKER_01: Um,
[1:31] SPEAKER_01: and,
[1:32] SPEAKER_01: um,
[1:32] SPEAKER_01: the,
[1:33] SPEAKER_01: just the,
[1:34] SPEAKER_01: the financials,
[1:35] SPEAKER_01: there's one thing we've learned actually,
[1:36] SPEAKER_01: just in general,
[1:37] SPEAKER_01: in the last,
[1:39] SPEAKER_01: last five years is how much of the economy depends on,
[1:44] SPEAKER_01: um,
[1:46] SPEAKER_01: on,
[1:47] really kind of pesky like i said plumbing um the that um that
[1:53] we just think oh
[1:54] there's gdp and we spend it and it goes to imports and actually
[1:58] it has to go
[1:58] through uh uh container ports and railroads and trucks and
[2:02] stuff all of that um is
[2:05] SPEAKER_01: much more vulnerable and um uh hang on a moment yeah uh
[2:14] SPEAKER_01: My wife, who's listening, is wondering what happened.
[2:17] SPEAKER_01: I could tell her that... Tell her we appreciate her concern.
[2:23] SPEAKER_00: That's very sweet of her.
[2:39] SPEAKER_01: Yeah, we're...
[2:43] SPEAKER_01: work.
[2:44] SPEAKER_01: Sorry, you're getting a good view of my light fixture or something.
[2:49] SPEAKER_01: But the hope that this is functional.
[2:54] SPEAKER_01: There we go.
[2:56] SPEAKER_01: The and financial markets are like that, too.
[3:02] SPEAKER_01: If you sell that, you know, the
[3:07] SPEAKER_01: The government sells some bonds or companies make a financial exchange.
[3:13] SPEAKER_01: Well, actually, there's a lot of intermediaries and so on.
[3:16] SPEAKER_01: And it turns out that these intermediaries, they need to be solvent.
[3:23] SPEAKER_01: They need capital to operate.
[3:25] A lot of the current financial system actually depends a lot on
[3:29] hedge funds.
[3:31] SPEAKER_01: And they're the primary brokers, dealers for a lot of stuff.
[3:35] SPEAKER_01: And a lot of hedge funds
[3:38] are caught by these wild changes in valuations when policy is
[3:43] this unstable.
[3:44] SPEAKER_01: So you have a bunch of hedge funds that can't really do their job.
[3:48] And there were some clear signs that some of the things that
[3:55] are not traded in
[3:57] SPEAKER_01: really large volumes,
[3:59] SPEAKER_01: so they really depend upon the brokers to keep the market working,
[4:02] SPEAKER_01: were suddenly starting to
[4:04] SPEAKER_01: not be traded or sell at big discounts.
[4:07] SPEAKER_01: So that was a real,
[4:08] SPEAKER_01: that was a kind of a,
[4:10] SPEAKER_01: at least a cousin of the financial crisis we had back in 2008.
[4:15] SPEAKER_01: Now that seems to have abated some,
[4:18] SPEAKER_01: still things are still looking a little elevated,
[4:21] SPEAKER_01: but that's one thing.
[4:23] SPEAKER_01: The other thing is that,
[4:25] SPEAKER_01: you know,
[4:26] SPEAKER_01: the stock market's been doing occasionally seeming optimistic,
[4:31] SPEAKER_01: but if you look at the value of the dollar,
[4:33] SPEAKER_01: against other currencies,
[4:35] SPEAKER_01: that's been consistently pessimistic,
[4:38] which is weird because normally tariffs cause the dollar to get
[4:41] stronger because
[4:43] SPEAKER_01: you're spending less on imports,
[4:44] SPEAKER_01: less demand for foreign currencies.
[4:47] SPEAKER_01: And what that looks like is,
[4:49] as we were talking earlier about how America runs a trade
[4:52] deficit essentially
[4:53] SPEAKER_01: because people think we're a good place to invest,
[4:56] SPEAKER_01: well,
[4:57] SPEAKER_01: maybe they don't anymore.
[4:58] And there's at least I cut my teeth as a policy economist
[5:05] largely on crises in
[5:07] SPEAKER_01: emerging markets.
[5:09] SPEAKER_01: And I actually just spoke to some in New York,
[5:12] SPEAKER_01: but I spoke to a Brazilian audience just the other day.
[5:15] SPEAKER_01: And I said, you know, I love your country.
[5:18] SPEAKER_01: I love you.
[5:18] SPEAKER_01: But I'm also grateful that these days to see crisis, I don't have to
[5:24] SPEAKER_01: I don't have to fly to Sao Paulo.
[5:25] SPEAKER_01: I can just take the one train.
[5:31] SPEAKER_01: The U.S.
[5:31] SPEAKER_01: is showing, now we're a long, long way.
[5:34] My sort of base case for what does a real capital flight from a
[5:39] country that is no
[5:40] SPEAKER_01: longer regarded as credible look like,
[5:43] SPEAKER_01: and that's Indonesia in 1998 with the rupiah losing 80% of its value.
[5:46] SPEAKER_01: We're talking about a
[5:52] a few percent on the dollar,
[5:54] but still not the kind of thing America is supposed to be.
[5:59] SPEAKER_01: We are the reliable country.
[6:01] SPEAKER_01: U.S.
[6:02] Treasury bills are the ultimate safe asset,
[6:05] safer than safer than anything or were now.
[6:10] SPEAKER_01: So you see you see signs that all of this takes a toll on U.S.
[6:16] SPEAKER_01: credibility.
[6:16] SPEAKER_01: And in general,
[6:19] SPEAKER_01: Credibility is,
[6:20] SPEAKER_01: you know,
[6:20] SPEAKER_01: it's always invoked to defend bad or orthodox policies,
[6:27] SPEAKER_01: but that never matters.
[6:29] And if a world in which nobody is sure what the hell the United
[6:34] States is going to
[6:35] SPEAKER_01: do next is not a good world for anybody.
[6:38] SPEAKER_00: What's your,
[6:39] SPEAKER_00: you alluded to this a second ago,
[6:41] SPEAKER_00: the stock market recovery,
[6:44] SPEAKER_00: what's your analysis of that?
[6:47] SPEAKER_00: That has been cited by,
[6:48] SPEAKER_00: you know,
[6:48] SPEAKER_00: lots of people as,
[6:49] SPEAKER_00: oh,
[6:49] SPEAKER_00: you know,
[6:50] SPEAKER_00: these tariffs haven't had any negative impact.
[6:54] SPEAKER_00: The stock market freakout is over, so everything's just fine and dandy.
[6:59] SPEAKER_01: Yeah, the stock market is not the economy.
[7:02] SPEAKER_01: That's one that we're always told.
[7:03] SPEAKER_01: The stock market, even if the stock market is rational, it's still...
[7:08] SPEAKER_01: It's reflecting corporate profits and,
[7:10] SPEAKER_01: you know,
[7:11] SPEAKER_01: corporate profits are not just a piece of the economy,
[7:14] SPEAKER_01: necessarily the one most of us care about.
[7:16] SPEAKER_01: But also it's not rational.
[7:18] SPEAKER_01: We know that.
[7:20] SPEAKER_01: And it's certainly a poor predictor.
[7:22] SPEAKER_01: Paul Samuelson,
[7:24] SPEAKER_01: great economist,
[7:25] SPEAKER_01: my teacher and former colleague,
[7:27] famously said that the stock market had predicted nine of the
[7:30] last five recessions.
[7:32] SPEAKER_01: The stock market is tied to what's going to happen.
[7:36] And particularly the stock market,
[7:40] sort of small retail investors who are very vibes based.
[7:46] SPEAKER_01: And it's hard to know,
[7:48] SPEAKER_01: but it does look as if the smart money is being a lot less,
[7:52] SPEAKER_01: there's a lot less sanguine than that.
[7:54] SPEAKER_01: But I like to look at other markets.
[7:57] SPEAKER_01: And if you look at bonds,
[8:01] SPEAKER_01: it's a little bit complicated,
[8:03] but the bond market is definitely not looking like it thinks
[8:05] that the crisis is
[8:06] SPEAKER_01: over.
[8:07] SPEAKER_01: The bond market is really looking nervous.
[8:10] SPEAKER_01: I've been looking lately at oil futures.
[8:13] SPEAKER_01: Why is that?
[8:14] SPEAKER_01: One thing that's good about oil futures is that's professional investors.
[8:19] People,
[8:19] sports bars with CNN in the background are not speculating in
[8:25] oil futures.
[8:26] SPEAKER_01: And oil futures are way down,
[8:31] which is a signal that people in that market think that the
[8:34] world economy is still
[8:36] SPEAKER_01: in trouble.
[8:37] SPEAKER_01: So I think the stock market is not a good indicator.
[8:42] SPEAKER_01: And I actually think it may turn out to be a self-defeating prophecy,
[8:46] is that Trump will feel vindicated by the fact that the stock
[8:50] market is up,
[8:51] SPEAKER_01: and so he'll continue to do crazy stuff.
[8:54] SPEAKER_00: Right.
[8:54] SPEAKER_00: Right.
[8:55] SPEAKER_00: But, oh, it's not so bad.
[8:56] SPEAKER_00: Right.
[8:56] SPEAKER_00: Because that is an indicator he cares about.
[8:58] SPEAKER_00: Yeah.
[8:59] SPEAKER_00: Go ahead.
[9:03] I actually drive me a little bit crazy that people over focus
[9:06] on the stock market,
[9:07] SPEAKER_01: which is a really poor indicator of what's
[9:13] SPEAKER_00: Paul,
[9:13] SPEAKER_00: there's there's been this effort to this gets a little weedy,
[9:18] so I hope you can break this down for us in a way that is easy
[9:21] to understand.
[9:21] But there's been this effort to put a sort of higher level
[9:26] intellectual sheen on
[9:28] SPEAKER_00: Trump's tariff policies.
[9:31] SPEAKER_00: And if I've got this right,
[9:32] the argument is that he's deliberately trying to weaken the
[9:35] dollar in a way that
[9:37] SPEAKER_00: would somehow benefit the United States.
[9:40] SPEAKER_00: So I wonder if you could just explain that actual philosophy behind that,
[9:47] SPEAKER_00: whether there's any indication that that's really what they care about,
[9:52] SPEAKER_00: and if it is,
[9:54] SPEAKER_00: whether it would make sense anyway.
[9:56] SPEAKER_01: Okay.
[9:57] SPEAKER_01: So first of all,
[9:59] SPEAKER_01: I actually just did,
[10:00] and it'll it'd be popping up on everybody's popping up on my
[10:04] Substack tomorrow.
[10:05] SPEAKER_01: I did a long conversation with with Joey Politanos is very, very good.
[10:10] Alarmingly young,
[10:12] but very good person who's really following the ins and outs.
[10:16] And one of the things that Joey likes to say is that there has
[10:20] been you know,
[10:21] SPEAKER_01: where are the white papers?
[10:23] Where where where are the strategy documents explaining from
[10:27] the administration
[10:28] SPEAKER_01: explaining their policy?
[10:31] SPEAKER_01: Not one.
[10:31] SPEAKER_01: There hasn't been a statement of what they're trying to accomplish.
[10:35] SPEAKER_01: And there's no reason to think that there is a strategy behind there.
[10:44] SPEAKER_01: Trump selected as chairman of the Council of Economic Advisors.
[10:49] SPEAKER_01: Steve Miran,
[10:50] SPEAKER_01: who had written,
[10:53] he had a white paper that kind of laid out a strategy for
[10:57] weakening the dollar and
[10:59] SPEAKER_01: stuff.
[11:00] SPEAKER_01: But
[11:01] SPEAKER_01: There is absolutely,
[11:03] SPEAKER_01: and people poured over it saying,
[11:04] SPEAKER_01: oh,
[11:05] SPEAKER_01: is this the administration's strategy?
[11:06] SPEAKER_01: But it isn't.
[11:07] SPEAKER_01: It was something he wrote sort of on his own and then got hired.
[11:11] And it was clear that he was hired because they thought that in
[11:18] some ways what he
[11:19] SPEAKER_01: said could be construed as support of what they're doing,
[11:24] SPEAKER_01: although it really isn't.
[11:26] SPEAKER_01: And it's not a, there's,
[11:30] SPEAKER_01: That position, the chair of the council is – I worked there once.
[11:35] SPEAKER_01: Even in the best of times, it's not an important policymaking position.
[11:39] SPEAKER_01: At best, it has the president's ear, which almost certainly he doesn't.
[11:45] SPEAKER_01: And he was not hired to devise policy.
[11:49] SPEAKER_01: He was hired to provide.
[11:52] SPEAKER_01: a plausible front of some intellectual gloss on the policy.
[11:57] SPEAKER_01: A drunk uses a lamppost for support, not for illumination.
[12:04] SPEAKER_01: And there is no strategy there.
[12:09] SPEAKER_01: Now, do you want a weaker dollar?
[12:11] SPEAKER_01: There have been times when we did.
[12:14] SPEAKER_01: Once upon a time, there was a
[12:17] SPEAKER_01: You talk about 1985 and the Plaza Accord,
[12:21] or actually Nixon wanted the dollar a week and actually 10%
[12:27] tariff on everybody to
[12:30] SPEAKER_01: force them to strengthen their currencies against the dollar.
[12:34] SPEAKER_01: But
[12:36] SPEAKER_01: The idea that that's a desirable thing right now,
[12:40] SPEAKER_01: again,
[12:41] SPEAKER_01: what problem are we supposed to be solving?
[12:44] We have an economy that,
[12:46] at least until the next jobs report,
[12:49] is still at full employment.
[12:52] SPEAKER_01: We're...
[12:53] SPEAKER_01: worried about inflation.
[12:54] SPEAKER_01: A weaker dollar would add to inflation.
[12:57] SPEAKER_01: There's really no kind of strategy there to the extent that,
[13:02] SPEAKER_01: I mean,
[13:02] SPEAKER_01: Trump is making the dollar weaker,
[13:04] but kind of making the dollar weaker by making America look
[13:08] irresponsible and
[13:09] SPEAKER_01: untrustworthy,
[13:11] SPEAKER_01: which is not exactly everybody's idea of a great economic strategy.
[13:16] SPEAKER_01: So it's really hard to know.
[13:19] SPEAKER_01: I don't, I don't know if there's anything
[13:24] SPEAKER_01: I hate to personalize this,
[13:25] SPEAKER_01: but if you think that there's a clever strategy,
[13:27] SPEAKER_01: who is responsible for that?
[13:32] SPEAKER_00: Trump himself has said he doesn't want to weaken the dollar.
[13:34] SPEAKER_00: It's just this constant search for it.
[13:37] It's like everyone's always searching for a foreign policy
[13:41] doctrine that ties
[13:42] SPEAKER_00: everything together.
[13:43] A lot of the times,
[13:44] this is just journalists trying to find new clever reasoning.
[13:51] you know,
[13:51] retrofitting this stuff on like a lot of nonsense and insanity.
[13:57] SPEAKER_01: I mean, I actually did, as I said, spend a year in the U.S.
[14:01] SPEAKER_01: government during the Reagan administration,
[14:03] SPEAKER_01: of all things,
[14:04] SPEAKER_01: subpolitical level,
[14:05] SPEAKER_01: but I wasn't in there.
[14:06] SPEAKER_01: I was in
[14:07] SPEAKER_01: in the room for cabinet level meetings and so on.
[14:10] And the Reagan administration was a maragon of intellectual
[14:12] clarity and legal and
[14:15] SPEAKER_01: responsible behavior compared with these people.
[14:18] SPEAKER_01: But the main lesson I took out of that was that in general,
[14:22] SPEAKER_01: people in government,
[14:24] SPEAKER_01: certainly FTA,
[14:25] SPEAKER_01: I'm sorry,
[14:26] but in Republican administrations have much less idea what
[14:30] they're doing than you
[14:30] SPEAKER_01: can possibly see.
[14:32] SPEAKER_01: Exactly.
[14:34] SPEAKER_00: I believe that.
[14:35] You're not the first person to come out of government and make
[14:38] that point.
[14:41] SPEAKER_00: Finally, Paul, let's talk a little bit about the politics of this.
[14:45] There's often a sense among Democrats that because Trump won or
[14:50] Trump is somehow
[14:52] SPEAKER_00: succeeding,
[14:54] SPEAKER_00: that there's
[14:57] SPEAKER_00: Democrats look for ways to co-opt some of these issues,
[15:00] and some of that seems politically sensible when it comes to
[15:03] certain issues.
[15:03] I think there are a lot of Democratic strategists who have
[15:07] helped the party rethink
[15:08] SPEAKER_00: their views on immigration.
[15:12] SPEAKER_00: It's starting to happen on tariffs a little bit.
[15:16] SPEAKER_00: And you wrote about that recently.
[15:20] SPEAKER_00: And I wonder what you think of some of those efforts,
[15:24] SPEAKER_00: but also,
[15:24] SPEAKER_00: you know,
[15:26] SPEAKER_00: what advice you have for Democrats in thinking about this issue?
[15:32] SPEAKER_00: Is there anything to borrow from Trump when it comes to this issue?
[15:37] SPEAKER_00: And how do you think about that?
[15:39] First,
[15:40] I don't think that the tariffs are in any sense a winning
[15:44] political issue for Trump.
[15:45] SPEAKER_01: In fact, people hate them, as far as we can tell, from the polling.
[15:49] SPEAKER_01: And by the way,
[15:50] SPEAKER_01: the idea that Trump has a mandate,
[15:51] SPEAKER_01: I mean,
[15:54] SPEAKER_01: there's a new poll from G.
[15:56] SPEAKER_01: Elliot Morris,
[15:57] SPEAKER_01: who's formerly of the F38,
[16:02] SPEAKER_01: where he actually tried to do a rerun.
[16:06] SPEAKER_01: If the election were held today, Trump would lose by five points.
[16:09] SPEAKER_01: People are really, really pissed at what he's done so far.
[16:12] SPEAKER_00: And
[16:14] SPEAKER_00: And the people who are the most pissed,
[16:15] SPEAKER_00: I correct,
[16:16] SPEAKER_00: I don't know if,
[16:16] SPEAKER_00: I haven't looked at that poll,
[16:17] SPEAKER_00: but from other polling,
[16:18] it seems the people he's losing are those tenuous voters who
[16:22] are not diehard Trump
[16:23] SPEAKER_00: people,
[16:24] SPEAKER_00: didn't like Biden's economy,
[16:25] SPEAKER_00: and thought,
[16:26] SPEAKER_00: oh yeah,
[16:26] SPEAKER_00: I remember the Trump economy being okay,
[16:29] SPEAKER_00: you know,
[16:29] SPEAKER_00: maybe give him a shot because egg prices are high.
[16:31] SPEAKER_01: Yeah, that's right.
[16:32] A third of the public is Trump if he,
[16:36] you know,
[16:36] if he shot somebody on Fifth Avenue or,
[16:38] you
[16:41] SPEAKER_01: or accept a $400 million bribe from Qatar.
[16:43] SPEAKER_01: But
[16:46] SPEAKER_01: that's not enough to win an election.
[16:47] SPEAKER_01: It was those people,
[16:50] SPEAKER_01: low engagement voters,
[16:51] SPEAKER_01: people who don't follow the news a lot,
[16:52] SPEAKER_01: who thought,
[16:53] SPEAKER_01: I want prices down.
[16:56] SPEAKER_01: And the tariffs, there is no strong constituency for tariffs.
[17:02] SPEAKER_01: It really is just not there.
[17:03] There are some unions who favor them,
[17:08] although I think they haven't really thought it through.
[17:10] SPEAKER_01: And
[17:12] SPEAKER_01: trying to respond to that.
[17:14] SPEAKER_01: But if you say, I am from U.S.
[17:16] manufacturing and I want a strategy that will an industrial
[17:21] policy that promotes
[17:23] SPEAKER_01: important manufacturing,
[17:24] SPEAKER_01: that leads to increased investment in manufacturing.
[17:27] SPEAKER_01: Well, we had that.
[17:30] SPEAKER_01: We had a doubling of manufacturing construction under Biden.
[17:34] SPEAKER_01: And I don't think you need to get anything there.
[17:39] SPEAKER_01: In general,
[17:39] SPEAKER_01: so this is now just completely taking off my economics hat,
[17:43] SPEAKER_01: but what I've seen on politics,
[17:45] SPEAKER_01: the idea that when somebody is pursuing unpopular policies,
[17:51] SPEAKER_01: that you must have your own grand business.
[17:55] SPEAKER_01: Yeah.
[17:59] SPEAKER_01: I've been around for a while here.
[18:02] SPEAKER_01: I know I look extremely youthful here,
[18:03] SPEAKER_01: but I remember the Bush attempt to privatize Social Security.
[18:10] SPEAKER_00: Yeah, major turning point.
[18:12] SPEAKER_01: Democrats have to have their own alternative for Social Security,
[18:16] SPEAKER_01: and Nancy Pelosi just said,
[18:18] SPEAKER_01: no,
[18:19] SPEAKER_01: we are just against this.
[18:21] SPEAKER_01: It was enough.
[18:23] SPEAKER_01: Yeah, and I think the thing to say is, look, we were doing pretty well.
[18:28] SPEAKER_01: I know people were concerned.
[18:30] SPEAKER_01: We want to address the issues with the economy,
[18:33] but this guy has come in here with this policy to raise your
[18:37] cost of living,
[18:38] SPEAKER_01: that is going to cost you jobs,
[18:40] SPEAKER_01: and we are not going to give him any cover.
[18:43] SPEAKER_01: We're not going to give him any support.
[18:45] SPEAKER_01: I think that's the strategy.
[18:48] SPEAKER_01: Yeah, just go with that.
[18:49] Were you disappointed in what Gretchen Whitmer said about the
[18:54] tariffs recently?
[18:55] SPEAKER_01: Yeah, failure to read the – I just – I understand.
[19:00] SPEAKER_01: I was disappointed that Sean Fain from the UAW endorsed the tariffs,
[19:06] SPEAKER_01: and he really shouldn't because –
[19:09] SPEAKER_01: The U.S.
[19:10] SPEAKER_01: auto industry is, you know, it really isn't the U.S.
[19:13] SPEAKER_01: auto industry.
[19:13] SPEAKER_01: It's the North American auto industry.
[19:15] SPEAKER_01: It's extremely integrated with Canada and Mexico.
[19:18] SPEAKER_01: His members' jobs depend upon the continuing flow of trade.
[19:22] SPEAKER_01: And I think this was a little bit of being stuck in the past.
[19:28] SPEAKER_01: Or maybe it's hard to explain to his members,
[19:30] SPEAKER_01: but he really should be trying to say,
[19:32] SPEAKER_01: look,
[19:34] SPEAKER_01: I want pro-manufacturing policies,
[19:37] SPEAKER_01: but not this.
[19:40] SPEAKER_00: So on that,
[19:41] SPEAKER_00: isn't – I mean,
[19:42] isn't there always going to be a special pleading case where
[19:45] any domestic interest
[19:47] SPEAKER_00: group would want their industry protected and would be,
[19:51] SPEAKER_00: yeah,
[19:51] SPEAKER_00: put tariffs on foreign imports that protect me?
[19:55] You're saying that's not actually the case with the auto
[19:59] tariffs and that the UAW
[20:00] SPEAKER_00: should not think of it that way?
[20:03] SPEAKER_01: Well, because the auto tariffs are being levied on – not just –
[20:07] SPEAKER_01: completed autos, but also on auto parts.
[20:12] SPEAKER_01: Actually,
[20:13] SPEAKER_01: when you buy a car,
[20:15] SPEAKER_01: even if it's made in the United States,
[20:18] a very large part of the value of that car is stuff that was
[20:21] made in Canada or
[20:23] SPEAKER_01: America.
[20:25] SPEAKER_01: And the steel is coming from...
[20:31] SPEAKER_01: Every estimate I've seen of what the Trump tariffs in his first term did,
[20:35] was that they reduced employment and manufacturing because the
[20:38] increased costs
[20:39] SPEAKER_01: outweighed whatever protective effect they supplied.
[20:44] SPEAKER_01: And so now every industry is going to want a tariff to protect them.
[20:51] SPEAKER_01: Tariffs for me, but not me.
[20:55] SPEAKER_01: Which is why FDR passed the Reciprocal Trade Agreements Act.
[21:00] SPEAKER_01: It's why we have a system of negotiations.
[21:03] SPEAKER_01: The real purpose of negotiations
[21:06] SPEAKER_01: is mostly not to protect us from things that other countries will do.
[21:11] SPEAKER_01: It's to protect ourselves.
[21:14] It's actually a way of getting clean government that is dressed
[21:21] up wearing a
[21:21] costume that makes it look like it's a way of getting access to
[21:24] foreign markets,
[21:25] SPEAKER_01: which it does,
[21:25] but it's actually so that the clothespin in the middle of
[21:30] nowhere doesn't get a
[21:31] SPEAKER_01: special tax.
[21:34] SPEAKER_00: Finally,
[21:34] SPEAKER_00: Paul,
[21:35] SPEAKER_00: I want to sort of end where we started,
[21:37] SPEAKER_00: which is with the system that was built up,
[21:39] both with the legislation from 1937 and GATT and these decades
[21:45] of reducing tariffs.
[21:48] SPEAKER_00: I mean,
[21:48] SPEAKER_00: we talk about this in so many arenas,
[21:52] SPEAKER_00: the post-Depression,
[21:53] SPEAKER_00: post-World War II,
[21:54] SPEAKER_00: international agreements that have been built up.
[22:00] and trump just sort of you know disassembling them on multiple
[22:04] fronts um you know
[22:07] on liberation day you know you wrote that he he burned all of
[22:11] that down at least
[22:12] SPEAKER_00: with respect to to this issue um do you
[22:17] SPEAKER_00: Do you think there's any going back?
[22:21] SPEAKER_00: I mean, how bad?
[22:21] SPEAKER_00: I know it's very early days.
[22:23] SPEAKER_00: A lot could happen.
[22:24] These tariffs could be declared,
[22:26] you know,
[22:27] illegal by the courts and just evaporate.
[22:30] SPEAKER_00: Do you think there's any going back to the international economic crisis?
[22:36] SPEAKER_00: world that came before Trump?
[22:39] Or do you think this is now embedded in the Republican Party
[22:42] and the trust in
[22:43] SPEAKER_00: America is at such a low and it's just not fixable going forward?
[22:50] SPEAKER_00: It's really going to be hard.
[22:52] SPEAKER_01: I mean, everybody, foreign governments, U.S.
[22:58] SPEAKER_01: businesses,
[22:59] SPEAKER_01: everybody knows,
[23:00] SPEAKER_01: even if all of this stuff is reversed,
[23:03] SPEAKER_01: they will know that it can happen.
[23:05] SPEAKER_01: They now know that the United States is a country that treats a solemn
[23:10] SPEAKER_01: international agreement as a suggestion.
[23:15] SPEAKER_01: Like the way New Yorkers treat don't walk signs.
[23:26] SPEAKER_01: NAFTA has its detractors.
[23:28] SPEAKER_01: I think it was on the whole a positive thing.
[23:30] SPEAKER_01: But when we did sign an agreement with Canada and Mexico back in 1994,
[23:36] The really important thing was not reducing the tariffs,
[23:40] which were already pretty low.
[23:42] SPEAKER_01: It was certainty.
[23:44] It was giving everybody the assurance that the three countries
[23:48] would have access to
[23:49] SPEAKER_01: each other's market in perpetuity,
[23:51] SPEAKER_01: or so we thought,
[23:52] SPEAKER_01: and businesses making plans on that basis.
[23:55] SPEAKER_01: We can't make that kind of promise now.
[23:57] SPEAKER_01: That's true about a lot of other things, too.
[24:00] SPEAKER_01: It's obviously not just trade policy.
[24:02] SPEAKER_01: And when people ask you...
[24:04] back to where we were,
[24:05] to the country and the international system we had four months
[24:10] ago.
[24:11] It's going to take more than just a change in management at the
[24:14] White House.
[24:15] SPEAKER_01: It's going to take a lot.
[24:16] I mean,
[24:17] the only way I can see to ever get back to the good things
[24:20] about that world
[24:22] would be to have something like not just a change of political
[24:25] leadership,
[24:26] SPEAKER_01: but something like a Truth and Reconciliation Commission,
[24:30] where we go through and sort of have accountability for all the
[24:33] bad things that
[24:33] SPEAKER_01: happen.
[24:33] SPEAKER_01: And trade policy will be way down the list of things.
[24:38] SPEAKER_01: But it's part of it.
[24:40] SPEAKER_01: We really need to not just change policy, but we need to convince...
[24:46] SPEAKER_01: the world,
[24:47] SPEAKER_01: including our people here,
[24:48] SPEAKER_01: but also abroad,
[24:50] SPEAKER_01: that no,
[24:51] actually the America that you thought you knew last year is
[24:54] still who we are
[24:55] SPEAKER_01: because at the moment it doesn't look like it is.
[24:59] SPEAKER_00: Well,
[24:59] SPEAKER_00: I hate to end on such a gloomy note,
[25:01] SPEAKER_00: but my own view of this is that things are going to need to get much,
[25:05] SPEAKER_00: much,
[25:06] SPEAKER_00: much worse before anything like what you just described happens.
[25:11] Because I think some of these conversations and some of the
[25:13] people that are closely
[25:15] SPEAKER_00: following this stuff are...
[25:18] uh are a lot of people are way behind uh are not paying
[25:22] attention don't think
[25:23] things are uh are as bad as they are and it's it's going to
[25:27] take um it's going to
[25:28] take some of the things that you've been warning about with the
[25:30] financial crisis
[25:31] and stagflation for us to to get in that place i don't know if
[25:35] you uh agree with
[25:37] that or not and nobody obviously would wish for for anything
[25:40] like that but um i
[25:43] SPEAKER_01: really think things need to get
[25:45] uh much worse and the good news i guess sort of is there's a
[25:49] pretty good chance
[25:49] that things will get much much worse perfect way to perfect way
[25:56] to end thanks for
[25:57] SPEAKER_00: cheering us up um thank you for for doing this sorry about the technical
[26:01] difficulties that were all my fault you dealt with it like a
[26:04] pro and uh i hope we
[26:06] can do it again sometime paul really appreciate it okay good to
[26:09] talk to you and hi
[26:10] SPEAKER_00: everybody talk to you sorry about hi everyone
[26:14] SPEAKER_00: Please check out TELUS News if you aren't a subscriber already.
[26:17] Thanks for all of Paul's excellent viewers coming on here and
[26:22] all the great comments.
[26:23] SPEAKER_00: And we'll see you all soon.
[26:24] SPEAKER_00: Take care.
[26:28] SPEAKER_00: Oh, Paul, you have to end it because you, I think, oh, no, I got it.
[26:32] SPEAKER_00: All right, bye.

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