WEBVTT 1 00:00:02.480 --> 00:00:10.000 A lot of the foals of woe. 2 00:00:09.800 --> 00:00:11.560 And an individual loss. 3 00:00:14.160 --> 00:00:21.399 This is the show, all right, everybody, welcome to your 4 00:00:21.440 --> 00:00:27.839 one book show on this Monday, July fourteenth. Have an 5 00:00:27.839 --> 00:00:30.839 exciting interview for you today. I'm really looking forward to this. 6 00:00:32.200 --> 00:00:36.280 We're be talking to Nobot Michelle, who is at the 7 00:00:36.759 --> 00:00:40.560 is the vice president and director of the Cato Institute 8 00:00:40.640 --> 00:00:45.439 Center for Monitoring Financial Alternatives. I think I first met you, 9 00:00:46.439 --> 00:00:49.920 I don't know, on a bus at montpello In, you 10 00:00:50.079 --> 00:00:52.960 at the Cato institutent you at Heritage in those days. 11 00:00:54.119 --> 00:00:56.520 I think it was a plane, but it could be 12 00:00:56.560 --> 00:00:58.200 a plane. It could have been of us. 13 00:00:58.280 --> 00:01:03.079 But yeah, something like that. I think Mont Parlamin was related, 14 00:01:03.200 --> 00:01:06.239 something like that. But but this is great, I mean, 15 00:01:06.319 --> 00:01:12.519 following following your work for years. You know, I'm interested 16 00:01:12.560 --> 00:01:15.760 in finance and and you've you've written a lot of 17 00:01:16.280 --> 00:01:20.239 really really important stuff on financial regulations over the last 18 00:01:21.799 --> 00:01:26.159 long time. Yeah. 19 00:01:26.920 --> 00:01:29.200 I don't know about how important it's been, but it's 20 00:01:29.239 --> 00:01:29.920 been a lot of years. 21 00:01:30.000 --> 00:01:32.519 No, it's important. I don't know how, let's let's put 22 00:01:32.560 --> 00:01:35.599 it this way, how much impact it's had, sadly, but 23 00:01:35.599 --> 00:01:38.400 but yes, it's it's important. Uh, And it should have 24 00:01:38.439 --> 00:01:42.000 a lot more impact. So you've got a new book 25 00:01:42.000 --> 00:01:50.719 out and it's uh, Marching capitalism. Yeah, why do I 26 00:01:50.760 --> 00:01:51.519 have the wrong book? 27 00:01:51.560 --> 00:01:53.120 Up? Can you buy you? 28 00:01:53.239 --> 00:01:54.959 It's got financing Opportunity. 29 00:01:55.519 --> 00:01:56.280 That's the other one. 30 00:01:56.400 --> 00:01:58.319 Okay, I didn't I didn't realize you had that one 31 00:01:58.359 --> 00:02:01.359 as well. All right, So to books financing opportunities. The 32 00:02:01.359 --> 00:02:05.120 financial markets have fueled American prosperity for more than two centuries. Okay, 33 00:02:05.400 --> 00:02:07.319 that one I have to get. I've got the other 34 00:02:07.359 --> 00:02:09.599 one already. I need to get this because I love 35 00:02:09.639 --> 00:02:14.599 this topic. That'd be great. I'll just download it on 36 00:02:14.680 --> 00:02:18.199 Kindle because you know, the fewer books I have, the 37 00:02:18.240 --> 00:02:22.479 better in terms of bookshelf space. But the other one 38 00:02:22.520 --> 00:02:25.960 is rushing capitalism, how populist policies are threatening the American dream, 39 00:02:26.000 --> 00:02:31.800 which is very very relevant right now, and we're constantly 40 00:02:31.800 --> 00:02:34.080 discussing it on our show. I had Scott Lindsey him 41 00:02:34.719 --> 00:02:40.560 on the show last week. So this is this is 42 00:02:41.560 --> 00:02:46.240 the whole Trump administration, MAGA populism left and right really 43 00:02:47.520 --> 00:02:52.159 is a big issue. So tell us what motivated you 44 00:02:52.240 --> 00:02:54.000 to write this book? Because you have been doing mostly 45 00:02:54.039 --> 00:02:57.039 financed stuff, So so why why this? 46 00:02:58.000 --> 00:03:00.319 Yeah, it's a little bit of a change for me. Yeah. Uh. 47 00:03:01.879 --> 00:03:05.360 I Actually the motivation for this actually started when I 48 00:03:05.400 --> 00:03:09.599 was still at Heritage, you know. I at some point 49 00:03:09.919 --> 00:03:13.159 I went from being just research fellow to being put 50 00:03:13.199 --> 00:03:16.479 in charge of our center for Data analysis over there, Okay, 51 00:03:16.680 --> 00:03:19.159 data for data. So I was sort of in charge 52 00:03:19.159 --> 00:03:24.120 of the empirical economics piece, and we started getting asked 53 00:03:24.280 --> 00:03:27.919 to defend or to discuss this idea about income stagnation. 54 00:03:28.120 --> 00:03:32.560 And that was the first time. This is way before Trump. Yeah, 55 00:03:32.599 --> 00:03:35.800 and I started thinking, well, what stagnation? 56 00:03:35.960 --> 00:03:39.599 What well this and this was a story that came 57 00:03:39.639 --> 00:03:43.000 out of the left, because I remember debating this during 58 00:03:43.000 --> 00:03:46.840 the financial crisis. People would say, economy, you know, people 59 00:03:46.840 --> 00:03:49.599 are stagnation in the seventies, and it was all leftist 60 00:03:49.599 --> 00:03:51.599 economists would talk about that. 61 00:03:51.599 --> 00:03:54.199 That's right, that's right. And then the rights started picking 62 00:03:54.199 --> 00:03:57.919 it up as the sort of premise for yeah, we 63 00:03:58.000 --> 00:04:01.919 need to do more to colm that free trade and 64 00:04:02.639 --> 00:04:05.960 whatever China and and you know, all these things. So 65 00:04:06.240 --> 00:04:09.080 it was sort of in the background though, and and 66 00:04:09.120 --> 00:04:12.400 then as Trump won, really after Trump won, it became 67 00:04:12.479 --> 00:04:17.839 much more prominent and I I sort of started putting 68 00:04:17.920 --> 00:04:20.759 all this stuff together and I really didn't have a book. 69 00:04:20.839 --> 00:04:24.240 I had just this giant pile of stuff, you know, 70 00:04:25.639 --> 00:04:30.360 and then long story short, that just kept going in 71 00:04:30.439 --> 00:04:33.800 terms of that that that thing, that theme on the left. 72 00:04:34.199 --> 00:04:36.399 You started seeing it more and more and more and more, 73 00:04:36.800 --> 00:04:40.079 and you know, I just I got really tired of it. 74 00:04:40.120 --> 00:04:44.279 And the motivation for me was that's that's not true, 75 00:04:44.639 --> 00:04:49.000 that that stagnation story is just wrong, and that free 76 00:04:49.040 --> 00:04:53.720 market paradise story is also wrong. And I don't really 77 00:04:53.800 --> 00:04:57.160 like people using data to lie about things. So you know, 78 00:04:57.279 --> 00:05:00.000 that was kind of that. That was my motivation for it. 79 00:05:00.040 --> 00:05:02.720 And I was lucky enough that a Cato, you know, 80 00:05:03.079 --> 00:05:05.360 it was sort of like, yeah, okay, we could do it, 81 00:05:05.720 --> 00:05:08.160 and so I was able to do it along with 82 00:05:08.199 --> 00:05:11.480 my other stuff, but still got that one out that 83 00:05:11.639 --> 00:05:12.079 just went out. 84 00:05:12.319 --> 00:05:15.240 So it's part of the motivation for leaving heritage, the 85 00:05:15.279 --> 00:05:17.920 fact that they went the populist route and away from 86 00:05:18.000 --> 00:05:19.160 kind of a defensive markets. 87 00:05:20.720 --> 00:05:23.800 I mean, I had a great, great opportunity to come 88 00:05:23.839 --> 00:05:27.639 to Cato, and I wouldn't change my decision for a 89 00:05:27.639 --> 00:05:32.360 million years, but but yeah, that certainly was on my mind. 90 00:05:33.240 --> 00:05:37.680 I'm glad that I'm here now because I really that 91 00:05:37.680 --> 00:05:40.480 that would have just clashed. You know that that whole 92 00:05:40.519 --> 00:05:43.720 thing clashes with my worldview, my philosophy what I like 93 00:05:43.800 --> 00:05:46.920 to think of as what I've studied for a very 94 00:05:46.959 --> 00:05:50.600 long time, you know, And and it gets to the 95 00:05:50.639 --> 00:05:54.120 core of what is capitalism, what is free enterprise, what 96 00:05:54.240 --> 00:05:58.199 is socialism? How much government involvement should we have? And 97 00:05:59.199 --> 00:06:02.720 that whole thing is just not lined up with my 98 00:06:02.839 --> 00:06:07.240 way of thinking at all. So I'm very lucky to 99 00:06:07.279 --> 00:06:10.480 be here and stick to my principles. 100 00:06:10.560 --> 00:06:15.959 Yeah, maybe talk a little bit about this mythology and 101 00:06:16.360 --> 00:06:18.360 what the truth is. You know, how do they come 102 00:06:18.439 --> 00:06:21.560 up with it? And then you know, how do they 103 00:06:21.560 --> 00:06:22.920 make such a big mistake if you will? 104 00:06:23.639 --> 00:06:31.759 Sure, well, it's sort of dependent on you know, who's 105 00:06:31.759 --> 00:06:35.279 saying it and when. So Orn Cass is a great example. 106 00:06:36.360 --> 00:06:39.120 He came out with that book, The Once in Future Worker, 107 00:06:39.639 --> 00:06:42.839 and that's when it really picked up at Heritage, and 108 00:06:43.040 --> 00:06:46.800 you know, if you go in there, you'll find a 109 00:06:46.920 --> 00:06:51.680 very very specific claim of income stagnation and it's from 110 00:06:51.839 --> 00:06:55.839 nineteen seventy five to twenty fifteen, and it's the wages 111 00:06:55.920 --> 00:06:59.480 of non supervisory workers and has adjusted with the consumer 112 00:06:59.560 --> 00:07:05.639 price end. And basically, if you take that exact same 113 00:07:05.720 --> 00:07:08.680 data series, and even if you just adjust it the 114 00:07:08.680 --> 00:07:12.319 way he adjusted it for inflation, it turns out that 115 00:07:13.199 --> 00:07:17.199 nineteen seventy five is the problem. In other words, if 116 00:07:17.199 --> 00:07:21.680 you pick nineteen seventy five's that gives you the lowest 117 00:07:21.720 --> 00:07:26.480 possible growth rate that you could have picked between nineteen 118 00:07:26.519 --> 00:07:29.720 sixty four and I think the year two thousand. So 119 00:07:30.360 --> 00:07:33.439 it whether they did it on purpose or whether it's 120 00:07:33.480 --> 00:07:37.439 a coincidence, you know, I'll let people decide, But that 121 00:07:37.639 --> 00:07:40.959 is my definition of some sort of cherry picking, even 122 00:07:41.000 --> 00:07:43.800 if it's by accident. In other words, what you have 123 00:07:43.879 --> 00:07:47.800 to do to get a stagnant line is you have 124 00:07:47.920 --> 00:07:53.519 to either have biased the dates, the inflation adjustment, or 125 00:07:53.560 --> 00:07:58.519 the income measure itself in some way. Because if you 126 00:07:58.560 --> 00:08:01.199 don't do that, if you just pick, you know, basically, 127 00:08:01.279 --> 00:08:04.839 ninety nine out of one hundred ways show a lot 128 00:08:04.879 --> 00:08:09.639 of income growth between nineteen seventy and now, and even 129 00:08:09.680 --> 00:08:11.319 before COVID, you know, just if you could want to 130 00:08:11.319 --> 00:08:13.879 cut it off before COVID. Yeah, and there's like one 131 00:08:13.959 --> 00:08:17.560 way that you can find, you know, that shows stagnant income, 132 00:08:17.639 --> 00:08:21.360 and that's the one that they pick, you know, But 133 00:08:21.399 --> 00:08:23.680 I mean, you can look at household income. You can 134 00:08:23.720 --> 00:08:27.079 look at median personal income, you can look at total 135 00:08:27.079 --> 00:08:31.600 compensation indexes, you can look at consumption measures. You can 136 00:08:31.639 --> 00:08:35.000 do this twenty different ways of the Sunday, and you 137 00:08:35.039 --> 00:08:37.200 know you're only going to find one way that shows 138 00:08:37.200 --> 00:08:39.080 that it's stagnant. And what that means is that the 139 00:08:39.120 --> 00:08:44.320 bulk of the evidence does support an enormous amount of growth, 140 00:08:44.919 --> 00:08:47.360 not just a little, you know, a lot. 141 00:08:47.519 --> 00:08:49.200 So we're a lot richer than we used to be. 142 00:08:50.000 --> 00:08:54.960 Incredibly so if you look at households and say, like 143 00:08:55.000 --> 00:08:58.919 households that earn more than one hundred thousand dollars, that 144 00:08:59.039 --> 00:09:04.639 number more than more than tripled from nineteen seventy on 145 00:09:04.840 --> 00:09:07.840 up to twenty nineteen. And if you look at the 146 00:09:07.879 --> 00:09:11.720 share of households earning less than thirty five thousand dollars, 147 00:09:12.440 --> 00:09:18.039 that share went down. So it's not that people drop down, 148 00:09:18.320 --> 00:09:21.519 it's that everybody, a lot of people dropped up. You know. 149 00:09:22.360 --> 00:09:24.559 So the middle class is shrinking, but the shrinking because 150 00:09:24.600 --> 00:09:25.960 they're getting rich rich. 151 00:09:26.080 --> 00:09:29.120 That's right, We're going to have to readjust the definition 152 00:09:29.159 --> 00:09:32.559 of middle class if we're not careful. Yea, because because 153 00:09:32.600 --> 00:09:34.159 so many people have done so much. 154 00:09:34.000 --> 00:09:37.840 Better, and of course a lot of the story, particularly 155 00:09:37.879 --> 00:09:43.960 coming out of Piquette and the whole inequality literature, is that, yeah, 156 00:09:44.080 --> 00:09:47.399 the top of the distribution has done phenomenally well, but 157 00:09:47.879 --> 00:09:50.200 put people that you know, put people, they're the ones 158 00:09:50.240 --> 00:09:53.960 who have really taken a hit since the nineteen seventies, right. 159 00:09:54.480 --> 00:09:57.159 And that's not true either. You know, we we do 160 00:09:57.200 --> 00:09:59.200 see a lot of that with the picketty stuff, and 161 00:09:59.240 --> 00:10:00.960 then you we would see that coming out of the 162 00:10:01.039 --> 00:10:03.480 left for a while there, and then the rights started 163 00:10:03.480 --> 00:10:06.480 picking that up as well. But if you look at 164 00:10:06.519 --> 00:10:10.440 the data sets that follow the same individuals over time, again, 165 00:10:10.639 --> 00:10:12.799 you see a lot of growth. You see a lot 166 00:10:12.840 --> 00:10:18.240 of phenomenal things. For example, about three fourths a little 167 00:10:18.240 --> 00:10:20.720 more than three fourths over the last five decades, a 168 00:10:20.720 --> 00:10:24.840 little more than three fourths of all the households spent 169 00:10:24.960 --> 00:10:29.159 at least one year in the top twenty percent at 170 00:10:29.240 --> 00:10:33.440 least one and less than ten percent spent more than 171 00:10:33.480 --> 00:10:36.519 one year in the bottom ten percent. This is a 172 00:10:36.559 --> 00:10:39.840 really small share. So it's just not true that we 173 00:10:39.960 --> 00:10:43.679 have these polar classes. You know, there's an enormous amount 174 00:10:43.679 --> 00:10:48.120 of income ability across those groups, a lot of people 175 00:10:48.120 --> 00:10:51.759 moving up, and if you stay away from that and 176 00:10:51.799 --> 00:10:54.120 you just look at the census data, so you're not 177 00:10:54.159 --> 00:10:58.159 following the same people. Again, outside of the two thousand 178 00:10:58.159 --> 00:11:02.120 and eight recession, you see most of the income growth 179 00:11:02.360 --> 00:11:04.360 for the groups that were in the lower end of 180 00:11:04.399 --> 00:11:07.960 the income distribution. You saw a lot of growth in 181 00:11:08.000 --> 00:11:11.679 the bottom ten, twenty, and thirty and forty percent, in 182 00:11:11.720 --> 00:11:13.720 many cases more than you saw at the top bend. 183 00:11:14.840 --> 00:11:19.240 So what do you think motivates? Because because the data 184 00:11:19.240 --> 00:11:20.879 is I mean, I agree with you. The data is 185 00:11:20.919 --> 00:11:23.600 pretty clear, and you can spice it and dice it 186 00:11:23.639 --> 00:11:27.200 in lots of different ways. And the left had a 187 00:11:27.200 --> 00:11:30.080 particular agenda that they were pushing, and this was consistent 188 00:11:30.120 --> 00:11:32.720 with that agenda. So I get it they bused everything 189 00:11:32.759 --> 00:11:35.399 towards that agenda. But what happened on the right that 190 00:11:35.519 --> 00:11:40.000 made this It made them kind of kind of switched. 191 00:11:40.320 --> 00:11:43.440 They used to defend, No, things are going pretty well. 192 00:11:44.759 --> 00:11:49.200 I don't know, Okay, I don't know. 193 00:11:49.320 --> 00:11:54.000 So like so there's there's a there's a wide swath 194 00:11:54.360 --> 00:11:58.000 of people on the right. Right in my experience, especially 195 00:11:58.039 --> 00:12:00.879 at Heritage, you know, or in CA was somebody that 196 00:12:00.919 --> 00:12:03.600 nobody ever talked about, and then he was there. So 197 00:12:03.960 --> 00:12:05.440 I don't know what motivates him. 198 00:12:05.759 --> 00:12:05.919 You know. 199 00:12:06.559 --> 00:12:09.879 Uh, there were certain people and I won't name names, 200 00:12:10.639 --> 00:12:13.279 but there were certain people who liked that story because 201 00:12:13.279 --> 00:12:15.919 they were able to say, well, the problem is immigration. 202 00:12:16.919 --> 00:12:19.360 We've we've let in so many immigrants and we have 203 00:12:19.399 --> 00:12:23.559 to clamp down on immigration. There were other people who, 204 00:12:25.159 --> 00:12:28.360 you know, saw it as an opportunity to win in 205 00:12:28.399 --> 00:12:31.360 the sense of we who I never thought I was 206 00:12:31.399 --> 00:12:34.399 a part of. You know, we need to win. And 207 00:12:34.559 --> 00:12:38.240 Trump is anti trade and look lokid free trade did 208 00:12:38.279 --> 00:12:41.039 to the rust belt, you know, so we need to 209 00:12:41.120 --> 00:12:43.440 we need to have we need to pound that and 210 00:12:43.440 --> 00:12:47.000 and and talk about how Yeah, maybe maybe free trade 211 00:12:47.039 --> 00:12:49.120 is not so great anymore, you know, maybe we need 212 00:12:49.120 --> 00:12:53.360 to be careful. Maybe it's needs to be sensible. And 213 00:12:53.399 --> 00:12:54.759 there were a lot of people who I think were 214 00:12:54.759 --> 00:13:00.000 anti China, you know, just broadly speaking. Uh, this there 215 00:13:00.159 --> 00:13:06.600 this geopolitical foe, and they're doing industrial policy and if 216 00:13:06.639 --> 00:13:09.120 we don't do industrial policy, we're not going to be 217 00:13:09.159 --> 00:13:11.679 able to keep up whatever the hell that means. 218 00:13:12.000 --> 00:13:14.159 Yeah, let's mimic them. We don't like them, so let's 219 00:13:14.240 --> 00:13:16.559 let's let's mimic them, right. 220 00:13:16.039 --> 00:13:19.039 Right, Yeah, But they would use the they would use 221 00:13:19.080 --> 00:13:23.360 the stagnation stuff, you know, as a way of justifying that. 222 00:13:24.120 --> 00:13:27.919 So there's different groups. Yeah, I think there's a lot 223 00:13:27.960 --> 00:13:29.960 of a lot of different things going on there. 224 00:13:29.960 --> 00:13:32.960 I think, I mean, they all seem to share a 225 00:13:33.000 --> 00:13:36.120 common feature of they somehow want to increase the power 226 00:13:36.120 --> 00:13:39.240 of US central government. Yeah, and this is a excuse 227 00:13:39.320 --> 00:13:39.679 to do that. 228 00:13:40.000 --> 00:13:43.200 Yeah. Yeah, you know, And and I'm sure some of 229 00:13:43.200 --> 00:13:45.919 it is the sort of just you know, basic power 230 00:13:46.240 --> 00:13:50.159 DC power hungry sort of mindset. 231 00:13:50.759 --> 00:13:52.879 So so one of the arguments they make, of course, 232 00:13:53.200 --> 00:13:56.279 is and Trump makes and and uh I think has 233 00:13:56.360 --> 00:14:00.840 resonated is about industrial jobs and and uh, you know, 234 00:14:00.919 --> 00:14:03.360 we've lost and you you talk about this in the book. 235 00:14:03.399 --> 00:14:07.480 We've lost industrial jobs with de industrializing. We need to 236 00:14:07.519 --> 00:14:10.639 re industrialize. And again this is for years a talking 237 00:14:10.639 --> 00:14:13.399 point from the left, and they kept talking about this 238 00:14:13.639 --> 00:14:16.679 and and promising one day the jobs will come back. 239 00:14:17.559 --> 00:14:20.039 And I think the political gimmick is that Trump figured 240 00:14:20.039 --> 00:14:24.000 out that he could get votes by stealing that and 241 00:14:24.000 --> 00:14:28.440 and claiming to be more serious about it. So well, 242 00:14:28.879 --> 00:14:30.799 what is the truth about the industrialization? 243 00:14:31.399 --> 00:14:34.840 And and and and you know, I think it's I mean, 244 00:14:34.840 --> 00:14:37.320 you're right, the left did do that for a very 245 00:14:37.360 --> 00:14:41.399 long time. I think it's also uh important for people 246 00:14:41.440 --> 00:14:45.080 to remember that there was a faction. There has always 247 00:14:45.080 --> 00:14:48.039 been a faction on the right who was sort of 248 00:14:48.080 --> 00:14:56.360 doing the same thing like yeah, Ross Bureau. So there's 249 00:14:56.480 --> 00:14:59.679 so that that that was certainly always kind of there, 250 00:15:01.519 --> 00:15:05.159 you know. And but but the truth then and the 251 00:15:05.240 --> 00:15:11.320 truth now you know, is that it wasn't because of 252 00:15:11.639 --> 00:15:16.399 free trade or globalization necessarily, right, it was it was 253 00:15:16.639 --> 00:15:20.440 really a productivity story. You can see it, you know, 254 00:15:20.639 --> 00:15:25.559 basically depending on exactly where which which data set you 255 00:15:25.600 --> 00:15:27.399 want to use, you can go back to like pre 256 00:15:27.480 --> 00:15:30.080 nineteen hundreds, you can go back to nineteen twenty. You 257 00:15:30.120 --> 00:15:33.080 can basically look at the most consistent data set you 258 00:15:33.080 --> 00:15:38.200 can get at nineteen forty three, and you can see 259 00:15:38.320 --> 00:15:43.039 service sector jobs becoming a bigger share of employment while 260 00:15:43.279 --> 00:15:46.720 manufacturing is dropping. And to say, and it was even 261 00:15:46.720 --> 00:15:50.720 steeper with agriculture, you know, and that going on for 262 00:15:50.759 --> 00:15:55.559 even longer. Yeah, and then so you know that again 263 00:15:55.639 --> 00:15:58.320 in the forties, so that has absolutely nothing to do 264 00:15:58.639 --> 00:16:02.799 with China or to or anything like that. And you 265 00:16:02.840 --> 00:16:07.320 could even take the data, say like the employment data 266 00:16:07.679 --> 00:16:10.840 and cut it off at nineteen eighty, so all those 267 00:16:10.879 --> 00:16:14.919 trends that took place between nineteen forty and nineteen eighty, 268 00:16:15.320 --> 00:16:18.559 and you can just do a simple linear projection and 269 00:16:18.600 --> 00:16:23.399 you basically nailed manufacturing employment. Yeah. So if the China 270 00:16:23.440 --> 00:16:26.399 stuff was so important and the NAFTA stuff was so 271 00:16:26.440 --> 00:16:30.279 important for jobs, just for jobs, you wouldn't be able 272 00:16:30.279 --> 00:16:34.159 to do that, you know, but you can. You can 273 00:16:34.159 --> 00:16:36.720 do it for labor force participation as well. 274 00:16:36.960 --> 00:16:41.120 So conquitise kind of make you what it means productivity gains. 275 00:16:41.120 --> 00:16:45.960 What does that mean we can make a lot more 276 00:16:46.000 --> 00:16:49.200 stuff with a lot fewer people. I mean, it's really 277 00:16:49.399 --> 00:16:51.559 just that simple. You know, if you look at something 278 00:16:51.600 --> 00:16:57.240 like steel, you know, basically nineteen seventy one worker would 279 00:16:57.279 --> 00:17:01.600 take hours and hours and hours to produce a ton 280 00:17:01.639 --> 00:17:06.119 of steel, and now it's close to a half an 281 00:17:06.160 --> 00:17:10.400 hour to produce a ton of steel. If we tried 282 00:17:10.480 --> 00:17:14.000 to have as many people working in the steel industry 283 00:17:14.160 --> 00:17:17.359 as we did, you know, say like in nineteen seventy, 284 00:17:17.960 --> 00:17:21.480 we would be producing enough to supply the world with steel, 285 00:17:22.119 --> 00:17:26.240 you know, even more or roughly on par rith or 286 00:17:26.279 --> 00:17:30.160 about the same roughly as what we were doing at 287 00:17:30.200 --> 00:17:33.319 the end of World War Two, when the industrial world 288 00:17:33.319 --> 00:17:36.680 had been destroyed. So I mean it's so like so 289 00:17:36.920 --> 00:17:40.279 that you know, just everybody like that's that doesn't that 290 00:17:40.319 --> 00:17:43.799 wouldn't make sense, right, Like, that's not it's just not 291 00:17:43.839 --> 00:17:47.759 where we are anymore. Stanley Tools, you know, you can 292 00:17:47.920 --> 00:17:50.319 like there's there's stories in the Wall Street Journal. They 293 00:17:50.440 --> 00:17:53.759 have a new facility in North Carolina. They drop down 294 00:17:53.799 --> 00:17:56.799 from having over thirty to forty people on an assembly 295 00:17:56.880 --> 00:17:59.559 line to maybe like ten, and they're talking about it 296 00:17:59.559 --> 00:18:02.599 in the next generation will have maybe two. Yep. Now, 297 00:18:03.000 --> 00:18:06.680 every single thing that we manufacture across the entire world, 298 00:18:06.799 --> 00:18:10.119 mind you, not just in the United States is like that. 299 00:18:10.799 --> 00:18:14.000 And that's a good thing. It's a very good thing. 300 00:18:14.119 --> 00:18:17.920 That's how that is the definition of becoming richer. But 301 00:18:18.920 --> 00:18:21.319 it does mean that you will have fewer jobs to 302 00:18:21.440 --> 00:18:24.759 produce certain things. I mean, that's just that is the 303 00:18:24.799 --> 00:18:28.759 way that works. And unfortunately that's like a historically that's 304 00:18:29.039 --> 00:18:32.640 always been a thing, right you think of like Paul Bunyon, 305 00:18:33.160 --> 00:18:36.240 the lore of Paul Bunyon and Patrick Henry in the 306 00:18:36.319 --> 00:18:41.440 United States, you know, with the hammer trail, yep. I yeah, 307 00:18:41.480 --> 00:18:44.160 you're going to have fewer people that have to chip rocks, 308 00:18:44.519 --> 00:18:46.680 you know. I mean, if you don't want to chip rocks, 309 00:18:46.799 --> 00:18:47.519 then that's good. 310 00:18:49.680 --> 00:18:53.079 Yeah, so there's something super attractive about chipping box for 311 00:18:53.160 --> 00:18:53.640 some reason. 312 00:18:54.440 --> 00:18:57.200 I don't know. Yeah, yeah, it's done it before, even 313 00:18:57.240 --> 00:18:59.000 with the machine. I don't really want to do it 314 00:18:59.000 --> 00:18:59.400 that much. 315 00:18:59.559 --> 00:19:01.119 Not fun at all. 316 00:19:02.799 --> 00:19:06.000 I mean, there's this nostalgia to a world where we 317 00:19:06.079 --> 00:19:10.000 all worked in machines and worked with muscle, whereas progress 318 00:19:10.000 --> 00:19:12.960 has basically led us to work one with our minds, 319 00:19:13.039 --> 00:19:16.920 which is you would think, is progress. 320 00:19:16.880 --> 00:19:20.200 Yes it is, you know that's I mean, if if 321 00:19:20.240 --> 00:19:22.519 we wanted to go and say well no, no, no, no, 322 00:19:22.559 --> 00:19:25.079 the thing that's important is that everybody has jobs, well 323 00:19:25.079 --> 00:19:27.640 we could we could do that right away, right We 324 00:19:27.680 --> 00:19:31.559 could outlaw machines, could outlaws shovels. I think I was 325 00:19:31.599 --> 00:19:34.640 a Midlton Friedman example. You know, why are you digging 326 00:19:34.720 --> 00:19:37.920 with the machines or shovels. You should just dig with spoons. 327 00:19:37.960 --> 00:19:41.359 We'll have a lot more jobs. You know, nobody wants 328 00:19:41.400 --> 00:19:45.440 to be in the fields all day. That was back breaking. 329 00:19:45.799 --> 00:19:50.599 That was a very difficult way of life. And we 330 00:19:50.599 --> 00:19:54.799 were poor. We were literally impoverished. And you know the 331 00:19:54.799 --> 00:19:58.599 flip side of that is that you have everybody has 332 00:19:58.640 --> 00:20:01.720 to do something to set themselves up to take advantage 333 00:20:01.720 --> 00:20:06.039 of the new opportunities. You know. But that's okay, because 334 00:20:06.039 --> 00:20:08.720 that's that and that has been happening. That doesn't mean 335 00:20:08.759 --> 00:20:12.119 that everybody is a millionaire, yep, But that's never going 336 00:20:12.200 --> 00:20:17.400 to happen that way. The numbers simply bear out that 337 00:20:17.480 --> 00:20:22.359 everybody is on hold much better off. Our standard of 338 00:20:22.400 --> 00:20:25.000 living is so high across the board, even for the 339 00:20:25.039 --> 00:20:28.279 people among us who are on the lower sides, lower 340 00:20:28.319 --> 00:20:32.519 rung of the income distribution, have a lot more opportunity, 341 00:20:32.839 --> 00:20:37.000 have a lot more amenities, have a much easier life, 342 00:20:37.160 --> 00:20:39.279 you know, than we did in say, like nineteen hundred 343 00:20:39.319 --> 00:20:42.359 and nineteen forty, even so even nineteen seventy. 344 00:20:42.680 --> 00:20:45.759 And it's not like we've had these massive unemployment rates. 345 00:20:45.799 --> 00:20:47.519 I mean, it's not like people last stage jobs and 346 00:20:47.559 --> 00:20:50.160 didn't find anything to do, and they found some stuff 347 00:20:50.200 --> 00:20:52.359 to do that pays more, that's right. 348 00:20:53.319 --> 00:20:57.359 The numbers of people who who lose it, who are 349 00:20:57.400 --> 00:21:00.960 displaced by a trade shock or some other shock, right 350 00:21:01.000 --> 00:21:03.440 and have to get a new job. The share that 351 00:21:03.799 --> 00:21:07.319 are not able to get a job earning at least 352 00:21:07.079 --> 00:21:09.000 is at least is what as much as they earned 353 00:21:09.000 --> 00:21:12.720 before or more has also been declining steadily, so we've 354 00:21:12.720 --> 00:21:17.680 been trading more and that share has also been declining. 355 00:21:17.799 --> 00:21:21.000 So it went from being I think it was about 356 00:21:21.119 --> 00:21:24.599 in the nineteen seventies only about a third of the 357 00:21:24.640 --> 00:21:26.720 people who lost their job could get an equal or 358 00:21:26.759 --> 00:21:30.319 higher pain, and now it's more than half. Yeah, I mean, 359 00:21:30.359 --> 00:21:32.640 that's why we're trading more, importing more. 360 00:21:32.759 --> 00:21:36.480 Yeah, I mean because we have the ability to trade, 361 00:21:36.720 --> 00:21:38.839 because we have the money to trade, and they want 362 00:21:38.960 --> 00:21:40.920 they want the money to invest in the United States. 363 00:21:41.240 --> 00:21:41.759 That's right. 364 00:21:42.519 --> 00:21:44.920 Yeah, I mean people think of trade, people think of 365 00:21:44.920 --> 00:21:50.119 service jobs. The sovice economy as McDonald's and McDonald's is fine, 366 00:21:50.319 --> 00:21:54.119 but the reality is, like Apple is service jobs, right, 367 00:21:54.160 --> 00:21:56.440 I mean, Google's service jobs is. 368 00:21:56.400 --> 00:21:59.920 So much more. Yeah, it's so much more. And it's 369 00:22:00.680 --> 00:22:04.759 service jobs broadly have been an incredibly important part of 370 00:22:04.799 --> 00:22:08.279 the US economy really from the beginning, you know, if 371 00:22:08.279 --> 00:22:09.880 you go back all the way to just after the 372 00:22:09.920 --> 00:22:14.559 Civil War, as we started to industrialize, uh, service jobs 373 00:22:14.920 --> 00:22:17.839 were taking off, and we're a big share, and it 374 00:22:18.000 --> 00:22:22.799 just kept growing and they've always been growing. It's it's 375 00:22:22.839 --> 00:22:26.359 it's it's definitely not just one type. It's an incredible 376 00:22:26.440 --> 00:22:32.039 array of diverse activities that do not require you to 377 00:22:32.079 --> 00:22:33.440 stand on an assembly line. 378 00:22:34.680 --> 00:22:36.440 So what happens with all these toasts? Do you have 379 00:22:36.519 --> 00:22:40.759 any sense of, you know, what happens to the US economy? 380 00:22:40.799 --> 00:22:43.519 Where do we go from here? Because it looks like 381 00:22:43.599 --> 00:22:47.079 Trump is not backing down. It looks like he's excuse me, 382 00:22:47.480 --> 00:22:50.319 he's serious about this, and it's. 383 00:22:50.200 --> 00:22:54.599 Been uneven sort of the application, right, so some on 384 00:22:54.680 --> 00:22:57.880 some off and exemptions, and so I don't, I don't, 385 00:22:57.920 --> 00:23:00.559 but but in general, it doesn't look like he's backing down, 386 00:23:01.640 --> 00:23:06.319 and that's incredibly unfortunate because you know, this is however 387 00:23:06.359 --> 00:23:08.960 you want to cut this and sell this if you're 388 00:23:08.960 --> 00:23:11.839 the Trump administration, Okay, fine, But the truth is, this 389 00:23:11.880 --> 00:23:15.319 is just a tax, and the higher you make it, 390 00:23:15.480 --> 00:23:17.920 the more of an impact you're going to have. And 391 00:23:18.200 --> 00:23:21.799 it's not just a tax on Americans, it's a tax 392 00:23:21.880 --> 00:23:24.920 on everybody. So it's a tax on economic activity. You 393 00:23:24.960 --> 00:23:28.920 know that this is designed for people to produce less, 394 00:23:29.640 --> 00:23:32.960 and that's what it will do. And the bigger we 395 00:23:33.039 --> 00:23:35.799 make the tariffs and the more people retaliate with their 396 00:23:35.839 --> 00:23:39.319 own tariffs, the less economic activity we're going to have, 397 00:23:39.519 --> 00:23:41.920 the less options we're going to have the less things 398 00:23:41.960 --> 00:23:44.160 we're going to have to buy, and the less income 399 00:23:44.200 --> 00:23:47.480 people are going to have, both in the United States 400 00:23:47.680 --> 00:23:49.759 and outside of the United States, so they're going to 401 00:23:49.799 --> 00:23:52.920