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unidentified
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C-SPAN 2, 39 years of bringing the U.S. Senate live into homes across the country. | |
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| Together, we bring you democracy unfiltered. | ||
| This is Orrin Cass joining us. | ||
| He is the founder and chief economist of an organization known as the American Compass, also the editor of a book called The New Conservatives. | ||
| Welcome back to Washington Journal. | ||
| Thanks for joining us. | ||
| Great to see you again. | ||
| To remind people about American Compass, what is it? | ||
| It's a think tank we founded in 2020, so actually our fifth anniversary this week. | ||
| And it's focused on economic policy and really trying to move all of American politics and especially conservatives forward toward facing the challenges we have now. | ||
| I think we were sort of stuck in Ronald Reagan mode for a very long time. | ||
| And I think a lot of what you're starting to see now with New Trump administration on trade or immigration or labor or Wall Street or antitrust and breaking up big companies, all of these themes are coming together in a very different way of thinking about our economy and what people need. | ||
| When you say Ronald Reagan mode, a lot of people look Ronald Reagan as like the chief economist or at least economic policy and other things. | ||
| What has to change or why do you think changes are needed from that mode? | ||
| Well look, I think Ronald Reagan was an incredibly important leader and incredibly successful for the problems the United States had in the 1980s. | ||
| But the 2020s are very different. | ||
| I mean if you even think about just the presence of the role of China and what it means to be competing with China, or you think about the kinds of problems we've had with immigration, you think about the challenges we've seen for the working class, for workers who have less education and what's been a very long period of stagnating wages for them. | ||
| You see the struggles that folks have if they don't have college degrees in a lot of cases. | ||
| The idea that we had coming out of the 1980s pretty much, well, whatever is good for corporations, whatever boosts corporate profits, whatever makes the stock market go up, somehow that sort of magically will take care of everybody else too. | ||
| And we've seen that that's just not true. | ||
| And so I think especially people on the right-of-center who used to be very committed to that idea are doing the right thing, which is taking account of facts and trying to understand what has to change. | ||
| Is that driving the book that you have out called The New Conservatives? | ||
| Yeah, so The New Conservatives is intended to sort of explain that story, I think, to a lot of folks who are still very confused by it, right? | ||
| Like why is there a labor union president speaking at the Republican National Convention? | ||
| Why is there a Republican senator out protesting outside of a factory that a private equity firm is trying to close? | ||
| And so what we've done, and this is what American Compass has been working on for the last five years, and we've been very fortunate to get to play a very prominent role in these debates, is we've tried to take all the kind of key pieces, whether it's something that we wrote ourselves, whether it's something we published from somebody else, and organize them in a way that helps explain what's going on in American politics. | ||
| So starting with principles, how are people actually thinking about the market and the role of government and policy? | ||
| and then thinking about the economy and then ultimately thinking about what it means for people. | ||
| And I think it helps a lot of people to understand, wait a minute, obviously politics does need to change. | ||
| It's not going to be 1980 forever, but why is it changing? | ||
| Why are we hearing these different things and where are we going to go from here? | ||
| You write in the book, What Began as an Entirely Justified Advocacy for the Benefits of Markets has mutated into a fundamentalism that throws bad policy after good, unable to distinguish between what markets can and cannot do, and unwilling to acknowledge the harm that they can cause. | ||
| Fortunately, it comes with an expiration date. | ||
| Can you elaborate from there? | ||
| Yeah, I think the way that people think about markets has obviously changed a lot over time. | ||
| We were in this period until recently, and some people still think about this way, that has what I would call a kind of blind faith in markets, that markets, there was actually a very interesting piece in the Wall Street Journal just last week where the columnist was saying the market just is, right? | ||
| It's sort of, it is this thing, you know, any two people who run into each other and trade something, that's a market, and that's kind of all you have to know about it. | ||
| And look, one thing I emphasize, I love markets. | ||
| I think markets are exactly the way we should be organizing our economy. | ||
| But what we've found when we just trust them and don't think we should even ask any questions, we don't think there's a role for public policy, is that they can also do a lot of things that are not productive. | ||
| You know, if the way to make money, if the most profitable opportunity is shutting down your business and moving it to China, that's what the market will tell you to do. | ||
| If the most, you know, the highest paying opportunity isn't inventing something great, it's going to a hedge fund and trading Bitcoin, that's what the market will tell you to do. | ||
| And for a long time, conservatives thought, well, we can't say anything about that because we're supposed to support the market. | ||
| And what we're arguing is, and what I think you're seeing increasingly a lot of people say is, no, that's exactly wrong. | ||
| If you just don't say anything, that's a very bad situation for markets. | ||
| If we want to have strong, healthy markets in this country, we have to be willing to recognize their limits. | ||
| We have to recognize the ways they cause challenges for families. | ||
| And we have to be willing to say, you know, ultimately the market is a tool. | ||
| The market is there in service to human flourishing, in service to a strong nation. | ||
| And it takes a government. | ||
| It takes a role for policy in making sure that it delivers on that. | ||
| You talked about the ultimate impact on people and challenges. | ||
| What are the challenges? | ||
| What are some examples that you can see as far as how markets currently work and how that could be impacting people in a negative way? | ||
| Well, I think the biggest problem that we've seen broadly is that markets, and particularly in the United States, the market has not been spreading prosperity broadly enough. | ||
| That in its pursuit of efficiency and its pursuit of profit, a lot of things that are most efficient and most profitable concentrate activity in certain places. | ||
| So economists call this agglomeration. | ||
| Let's get all the most productive people in the same cities working together. | ||
| Let's specialize in the particular industries where the biggest opportunities are. | ||
| Let's focus on the productivity of maybe the people who are already the most productive. | ||
| And what we've seen as a result is for some people, this has worked out great, right? | ||
| They're obviously people who are thriving and are doing better than ever. | ||
| If all you care about is total GDP, that looks okay too. | ||
| It's been growing. | ||
| Everybody has more stuff than they've ever had before. | ||
| But if you look at what's happened to the wage of the typical worker, it hasn't grown nearly as quickly. | ||
| If you look at productivity in something like our manufacturing sector, productivity is actually declining. | ||
| We're literally getting worse at making things, which should be impossible in a well-functioning economy. | ||
| And so I think what we have to look at is, obviously, we want growth. | ||
| I like stuff. | ||
| I'm not saying we should go live in log cabins. | ||
| But we have to realize that for growth to be good for people, it has to do certain things. | ||
| It has to provide for the typical person, and it has to actually create an opportunity for that typical person to be a productive contributor, to support their family, not just deliver for somebody else and then ask that person to send the other person a check. | ||
| And so I think what we're seeing is a lot more focused on the question of, okay, what does it take for the economy to actually deliver good jobs? | ||
| Because again, that's something that markets can do. | ||
| Certainly markets can do it better than government, but markets don't do it automatically. | ||
| Art and Cass is our guest, and if you want to ask him questions about his book and the themes there, it's 202-748-8001 for Republicans, 202-748-8000 for Democrats, and 202-748-8002 for independents. | ||
| You can also text us your questions or comments at 202-748-8003. | ||
| When did this become an aha moment for you? | ||
| When did you see the themes in this book in your own personal life? | ||
| It's a good question. | ||
| For me, it goes all the way back to 2012. | ||
| I worked for Mitt Romney on his presidential campaign, and one of the issues I was working on was trade policy. | ||
| And this was back in the days whenever just free trade was good, more free trade was better. | ||
| We should embrace China. | ||
| And I remember we gave him the standard presentation on here's why free trade is good. | ||
| And he said, you know, most of this is fine, but what are we going to do about China? | ||
| And all of the senior economists were kind of puzzled. | ||
| They'd like, what kind of question is that? | ||
| We know that free trade is good, so obviously we don't have to do anything. | ||
| And he, coming from more of a business background, said, no, that's not right. | ||
| That's not what's actually going on in the economy at all. | ||
| And I was the staffer who was kind of sent off to try and learn more about that for him. | ||
| And partly it was just incredible to have the opportunity to study it and learn about it. | ||
| But the other thing I discovered in trying to find the experts who could speak to it was that there just wasn't anybody thinking about it. | ||
| I mean, there were a couple of very interesting people who were thinking very seriously about it. | ||
| One of them was Bob Lighthizer, who at the time was a lawyer, then went on to become the U.S. trade representative for Donald Trump. | ||
| But by and large, people just, they sort of had their prayer book of the things they were supposed to say, and that was as much as they thought about it. | ||
| And so for me, the aha moment was partly, wow, free trade isn't working very well, but it was also more broadly, wow, especially those of us on the right of center, conservatives have not done the work we need to do to understand what's going on and to address the real problems that people have. | ||
| And I think we really saw that break out into the open with Donald Trump's rise within the party. | ||
| And now we're, you know, we're a decade into Donald Trump's leadership in the Republican Party. | ||
| And I think we're finally at the point where I would say most people in the Republican Party on the right of center are changing how they think about this stuff. | ||
| And that gives me a lot of hope because that, I think, sends us in a much better direction. | ||
| I'm simplifying, but the Trump administration is currently making the cases that their current effort on trade and tariffs ultimately will help people overall. | ||
| I'm simplifying greatly, but what do you think of the argument that's being posed? | ||
| I think that's exactly right. | ||
| And I think the way that they have focused on what has gone wrong with globalization, the way that they have focused on it's not just about the cheap stuff. | ||
| You know, I think Secretary of the Treasury Scott Beston has made this point. | ||
| He said, the American dream isn't cheap stuff. | ||
| And again, that's not to say we don't like stuff, but that when that's all we've focused on, we've lost a lot of things we frankly care about a lot more. | ||
| And so I think one thing you've heard them say is very true is that this isn't a free lunch, right? | ||
| There are absolutely costs associated with correcting these problems. | ||
| But I think it's important to see those costs as investments that will have a return, that will have a payoff, and that in the long run, it's the better choice to make. | ||
| We made one choice when we embraced China and said, let's just do free trade. | ||
| And I think most people look at what we got and what we lost and they say that was not a good deal for most Americans, for the nation as a whole. | ||
| And so we're ready to make a different deal. | ||
| When you hear the argument by some, the Commerce Secretary and others saying short-term gain, long-term or short-term pain, long-term gain. | ||
| Ultimately, what does that do for the people that you ultimately are concerned about in this book? | ||
| Well, I think it helps them tremendously. | ||
| I think one of the, you know, one of the things that's very funny, we've heard for a long time, oh, American politics is broken. | ||
| Leaders won't take the difficult decisions. | ||
| They won't level with people about the things, you know, and we finally actually have someone doing that, right? | ||
| We're actually being quite honest and upfront about the fact that, look, there is short-term pain here, but it's worth it for the long-term gain. | ||
| And I think, frankly, that most people understand that. | ||
| I think most people look at the direction the country has been headed until recently and say, this isn't good. | ||
| And we're already paying the costs. | ||
| I mean, there was a time when it did just seem like the fun of the cheap stuff. | ||
| But over the last 10 or 15 years, you know, outcomes for a lot of people, a lot of communities, young people trying to get their start in life, they have been on the decline. | ||
| And so I guess you could just say, well, let's just sort of stick with the managed decline. | ||
| Or you can say, no, let's do what we need to do to turn the ship around. | ||
| And I think it's very important to have leaders that are willing to try to make that turn. | ||
| 2027 488,000 want for Republicans, Democrats 202-7488,000, and Independents 202-748-8,0002. | ||
| How well are they doing in communicating the message as far as the good ultimately it does for people? | ||
| I think some of the communication has been very good. | ||
| I think when they've talked about, you know, look, here is the sort of cost that we expect. | ||
| Here is the vision of a country that actually does make things again, that has better jobs and opportunities, that is stronger and more resilient. | ||
| I think that's exactly the right case. | ||
| I think with the sort of rollout of the tariffs in particular, we've obviously seen, in some cases, a certain amount of chaos and a lot of changing back and forth. | ||
| And some of that's expected when you're pursuing an entirely new policy course. | ||
| But I also think it's a very fair criticism, and it's one we've made, that the administration can and should do a better job of making clear, here's where we're going. | ||
| Here's what we want the actual stable new situation to look like. | ||
| Because at the end of the day, what you're trying to do is you're trying to get people to invest, whether you're talking about businesses investing in building things here, whether you're talking about people investing in developing skills, going down certain career paths. | ||
| And for that to work, for people to do that, there has to be certainty and clarity about not just what's it going to be next week, but what's it going to be in three years, five years? | ||
| And that's where I think we can certainly, well, we certainly need more clarity for people to hold on to. | ||
| Let's hear from Tony. | ||
| Tony joins us from Pennsylvania, Independent Line. | ||
| You're on with our guest, Oren Cass. | ||
| He's the head of American Compass, also the editor of a book called The New Conservatives. | ||
| Tony, go ahead. | ||
|
unidentified
|
Yes. | |
| I am really glad that we have an economist on and that we're talking about these tariffs and ways to bring jobs back to the U.S. | ||
| I think it's important to recall Ross Perot back in the 1990s said that NAFTA would be a giant sucking sound and U.S. jobs would go oversea. | ||
| I think time has proven that Ross Perot was correct. | ||
| The other thing that I think is really important is to this idea somehow that U.S. companies are going to come back. | ||
| I have some concerns about that, especially the way Trump is going about these tariffs, where he slaps them on, then he takes them off, then he slaps them on, and there's no predictability. | ||
| I would like the economist's thoughts on that. | ||
| And then I also had another thought, which is that it's really strange that the billionaires in this country sold us out. | ||
| They basically gave our jobs to China. | ||
| They built our new enemy in a way. | ||
| And so are billionaires that backed Trump, like Elon Musk or other billionaires, are they our friends today? | ||
| Do they care about the American worker? | ||
| I find it laughable that we are suggesting that they do. | ||
| Yes, I think that there might be a way to bring back U.S. manufacturing, but with AI robotics, I don't think we bring back U.S. jobs. | ||
| And so I'm very worried about the future of the country, and I think we need to be honest. | ||
| Billionaires don't care about U.S. workers. | ||
| They never have. | ||
| Tony, there in Pennsylvania. | ||
| Well, I think that's a very good critique that he made. | ||
| And I think it connects in my mind exactly to the central theme that we're trying to talk about in the book, which is that billionaires don't care about American workers. | ||
| It's not that they dislike American workers, right? | ||
| It's not that they're trying to hurt them. | ||
| It's that the way that we've set up our market system, what we ask businesses to do, what we ask investors and entrepreneurs to do, is make as much money as they can. | ||
| And if the way to make as much money as you can is to move all of your production to China, then that's what they're going to do. | ||
| And we can be disappointed by that. | ||
| We can celebrate the occasional person who makes a different choice. | ||
| But we also sort of have to blame ourselves and say, well, but wait a minute, that's the system we set up. | ||
| That's the set of rules we had. | ||
| And the reason we did it, and this goes to that point about the giant sucking sound, we had this theory that it was okay. | ||
| If you go back and look at what the economists and what the policymakers were saying when we embraced China, it was, no, no, this is going to create new and better jobs for Americans, right? | ||
| We're going to embrace China, and we're going to have all sorts of new opportunities to sell stuff to them. | ||
| That was the theory. | ||
| It just didn't happen. | ||
| It was wrong. | ||
| And so I think what you're seeing, and this is a, I think for so many conservatives, especially China, is the lesson. | ||
| It's the key sort of jumping off point for a lot of this, is you say, no, no, wait a minute. | ||
| If we want Elon Musk to behave in a way that's good for American workers, then just saying hooray free markets doesn't do that. | ||
| It might maximize Tesla's profit, but it's not supposed to. | ||
| This isn't something markets do. | ||
| If we want Elon Musk's pursuit of profit to also be good for American workers, we have to have rules in place that say if you want to make a profit, you have to do it with American workers. | ||
| And that's exactly what something like the trade policy that the Trump administration is pursuing starts to do. | ||
| It says, no, no, there's actually an advantage. | ||
| There's going to be an advantage in our market for using American workers. | ||
| And, you know, that's the sort of policy that China had, and that was very good for Chinese workers. | ||
| And we're going to have to start thinking a lot harder about how to make sure that markets work for us. | ||
| In San Francisco, this is Frank, Democrat's line. | ||
|
unidentified
|
Yes, hey, good morning. | |
| Capitalism inexorably concentrates wealth, and wealth is power. | ||
| And power, corrupts, it goes to people's heads. | ||
| People who have a lot of wealth, they naturally think they earned it, even though Their wealth is either inherited or supported by a capitalist system and government, which seems intended to concentrate wealth. | ||
| So while I appreciate the author's critique of capitalism, well, when I mention the Marxist theory that I've somewhat alluded to here, when I mention it to conservative friends who are religiously oriented towards justice, they tell me, oh, well, Marxism is wrong. | ||
| What we need to do is have like distributionism or something. | ||
| And I'm afraid this author's rhetoric, it just sounds like another soporific. | ||
| Like, this is not really the real answer. | ||
| We need to have the control of production out of private hands. | ||
| Okay, that's Frank in San Francisco. | ||
| Well, I would certainly disagree with Marxism as the way to go here. | ||
| I think the point that's correct, though, or worth focusing on, is this question of does capitalism concentrate wealth and therefore power? | ||
| Because again, this is a perfect example. | ||
| If you don't care about how the market behaves, if you just say, well, the market just works, then yes, capitalism can concentrate wealth and power in those ways. | ||
| We've also seen periods of time where it did the opposite. | ||
| If you look at the post-war, you know, World War II period in the United States, we went through 30 or 40 years where that's not what capitalism did. | ||
| Capitalism actually did build an incredible middle class. | ||
| It did spread prosperity, wealth, power quite broadly. | ||
| And so the question is, well, what was different? | ||
| Why does it behave one way in one era and a different way in another era? | ||
| And I think there are lots of reasons. | ||
| One of them is the question of, well, how much power do workers have? | ||
| And this is something I think that you're starting to see conservatives focus on a lot because I think a very good point that Frank makes is by default, you just get the sort of distributionism. | ||
| Just like, well, if it's unfair, we're just going to have to tax the winners and provide a benefit to the losers. | ||
| But that's not what conservatives want. | ||
| It's not what most people want. | ||
| What most people want is the opportunity to have a good job themselves. | ||
| And so you're starting to see conservatives really think much more seriously about organized labor, you know, labor unions, ways of actually giving workers more power in what's called essentially countervailing power. | ||
| So if you have one group that has a lot of power, the laws you have are going to determine in a lot of ways, okay, well, how much power does the other group have? | ||
| And if you have a situation where workers have a lot of power too, and unions help with that, this is a place where I think immigration policy is actually really important, right? | ||
| For a long time, the policy was, well, if employers say they need more labor, bring in more labor. | ||
| Of course, this was mostly the progressive left that argued for this somewhat accidentally in kind of cahoots with the Chamber of Commerce. | ||
| But this was this idea that, you know, well, cheap labor, I guess, is a good thing because it makes cheap stuff. | ||
| And you say, no, no, that's wrong. | ||
| If you want our markets to work well, if you want capitalism to work well, you don't want cheap labor. | ||
| You actually want labor to be really expensive in a lot of ways. | ||
| You want to be very productive, but you need to create rules and you need to have systems and institutions that actually support workers in those ways. | ||
| And so whereas in the past, conservatives would have just said, well, just you leave that to the market, now I think increasingly they're saying, oh, wow, no, if we want this to work, if we want markets to work, we actually have to get more involved here. | ||
| Are labor unions an avenue to help people get a seat at the table? | ||
| Are there other means that conservatives can use to do that? | ||
| Yeah, I think labor unions are a sort of specific example of a way to create worker power. | ||
| And it's important to recognize that even labor union can mean a lot of different things, right? | ||
| The U.S. has one sort of very specific labor system that is a lot different from systems elsewhere in the world. | ||
| And even within the U.S. system, you have different kinds of labor organizing. | ||
| So, you know, I think when people say labor union, they picture like, you know, Norma Ray, right? | ||
| Sally Field up on the table with the sign. | ||
| And there are situations where that's worked very well. | ||
| I think it's important to acknowledge there are a lot of situations, and we see it broadly today, where that system doesn't work all that well. | ||
| Actually, a lot of workers don't like that structure. | ||
| Obviously, a lot of employers don't like it. | ||
| And you've seen it steadily decline as a force, especially in the private sector. | ||
| Now, historically, the response of conservatives to that was to say, hooray, right? | ||
| Like, if we get rid of unions entirely, imagine how great things would be. | ||
| And instead, now what you're seeing conservatives do is say, okay, well, wait a minute, we're glad a system that's not working is fading, but we should want to have a system that does work. | ||
| So what are the other ways, in some cases, it can be union organizing like that. | ||
| You can also have, you know, one example is what a lot of people call works councils, which is a much more collaborative relationship between groups of workers and employers. | ||
| Should workers have representation on corporate boards? | ||
| And then also, how do you just make sure you have what's called a tight labor market? | ||
| How do you make sure, in a sense, you always have a labor shortage so that employers are always having to think about how to attract workers, how to treat workers well, how to pay them more, how to make them more productive. | ||
| If those are the ways you run a successful business, those are the things businesses will do. | ||
| But that's not going to happen automatically. | ||
| The full title of the book is The New Conservatives, Restoring America's Commitment to Family, Community, and Industry. | ||
| Secretary of State Marco Rubio has a chapter in the book. | ||
| What did he contribute? | ||
| Yeah, he had given a really great speech for American Compass actually a few years ago, focused particularly on this China issue and reflecting back, I think it was on the 20th anniversary of when China had been welcomed to the WTO, reflecting on sort of what we had gotten wrong and why. | ||
| And I think he's someone who's been a real leader. | ||
| It would be hard to have a book on the new conservatives without featuring his perspective because going all the way back to 2018, 2019, in the Senate, he had started to work on a lot of these issues. | ||
| His team had put out a very important report looking at financial markets and showing how investors pursuing profit had really stopped doing that by actually investing and building things, which is obviously a huge problem. | ||
| He'd done a lot of leading work on China's industrial policy and the way China was very strategically stealing key industries and technologies for us. | ||
| He'd given a wonderful speech on what he described as common good capitalism, which was on this very broad theme that we'd sort of made the mistake of thinking that people in the nation are here to serve the market when in fact it's the other way around, that the market is here to serve the nation and its people. | ||
| And so I think he's someone who has been and will continue to be a very important leader in shaping this thinking. | ||
| This is Tom. | ||
| Tom's in South Carolina. | ||
| Independent line for our guests. | ||
| Go ahead. | ||
|
unidentified
|
Good morning. | |
| One of the things your guest mentioned was about markets and businesses. | ||
| The first rule of business is to make a profit. | ||
| Because if you don't make a profit, all your other goals are gone and you don't have a business. | ||
| So first and foremost, it's to make money for the business and the shareholder. | ||
| Secondly, I'd like to have your guest address the issue that for the past 50 plus years, members of both parties have crafted legislation that actually made outsourcing beneficial to a lot of companies, where you have the apples that used to be made in the United States now being made offshore. | ||
| A lot of other things, including some of the current president's merchandise. | ||
| How do you address the fact that the government has actually encouraged businesses to offshore and created tax laws that made it beneficial for them to do that? | ||
| And you don't turn that around in 10 minutes by a group of tariffs. | ||
| Tom, thanks. | ||
| Yeah, I think this is exactly right, that this is, in a sense, something we did to ourselves. | ||
| And that it's not like there was this sort of irresistible force, right? | ||
| Like an asteroid didn't hit the earth, right? | ||
| You know, aliens didn't show up and tell us we had to do this. | ||
| Policymakers, and it was absolutely bipartisan from both parties, thought it was a good idea to essentially release all of these constraints on the market, whether it was on trade, whether it was on immigration, whether it was on financial regulation, on tech and the kind of power we allowed the big tech companies to accumulate. | ||
| All of these were policy choices that we made. | ||
| And we made them on a theory that that was the direction that was going to work out well. | ||
| You know, I really do think people thought it was going to work out well. | ||
| I don't think it was a conspiracy to oppress everybody. | ||
| But it also turned out to be wrong. | ||
| And on one hand, that's incredibly frustrating and disappointing. | ||
| It actually, I think, is good news, though. | ||
| I would much rather have a problem that we created and can make other choices than have a problem that was out of our control and we can't do anything about. | ||
| And so I think the caller's point is exactly right that you're not going to turn it around in 10 minutes. | ||
| I think this is a 5, 10, 20-year project to reverse what took us 20, 40, 50 years to do. | ||
| But you do have to start somewhere. | ||
| And I think, you know, what you're seeing certainly with the Trump administration is a focus on trade as one example. | ||
| I think something actually that the Biden administration had a lot of leadership on that was very good was what was called industrial policy. | ||
| The idea that if there are certain industries that we think are really important, like semiconductor manufacturing, you can't just trust, well, the market knows semiconductor manufacturing is important, so it's going to invest in semiconductor manufacturing. | ||
| It's only going to do that if that's where the profit is. | ||
| And so what we saw was the U.S. obviously pioneered all of that technology. | ||
| And then other countries said, well, we want to make that stuff here. | ||
| And the U.S. said, we don't care. | ||
| There's a very famous quote from a chief economic advisor to George H.W. Bush. | ||
| He said, computer chips, potato chips, what's the difference? | ||
| Because again, if the market is just going to solve everything, then what is the difference? | ||
| Who cares what gets made where? | ||
| And now you're seeing, and again, this was a very bipartisan effort, what's called the CHIPS Act, which is, no, no, we're actually going to spend money to build chip factories here again. | ||
| And that's already having incredible results, I think. | ||
| It's still very early, but it looks very encouraging. | ||
| And so that's another example of a place where, look, if you actually think making things matters, if you actually care what we can make and do in this country, then you realize that markets are the right way to do it, right? | ||
| We don't want U.S. federal chip company that run by the government. | ||
| But you realize that the rules and incentives are going to shape what kinds of investments happen. | ||
| And you have to pay attention to that. | ||
| Let's hear from Stacey. | ||
| Stacey joins us from Virginia, Independent Line for Orin Cass. | ||
|
unidentified
|
Hello. | |
| Hi. | ||
| Thanks, Pedro. | ||
| Really appreciate it. | ||
| I have two questions, if you'd humor me. | ||
| The first is, I'm a little bit, I just, I have a little bit of an internal inconsistency challenge. | ||
| So the collar just said that, for you, the example, we don't want a U.S. chimp company. | ||
| But at the same time, we're using tariffs to onshore companies that presumably were less efficient, which is the whole reason why they got offshored. | ||
| So if the whole theory is that we're going to use government intervention in order to bring back industry that were deemed to be inefficient in our current market environment, at what point do you start to roll back the government intervention? | ||
| Because what I'm hearing is that there's always going to need to be government intervention to distort the market, which to me sounds like we're bridging onto sort of a communistic sort of theory of market dynamics. | ||
| And that just strikes me as being very internally inconsistent. | ||
| And then the second thing that the caller said is that we want a market here that serves the people and we don't want cheap labor. | ||
| But I'm from a really small town. | ||
| My dad's a veteran. | ||
| He ran a small business his entire life. | ||
| Like my entire community is run by small businesses. | ||
| And rule number one of running a small business is that you've got a really small margin of error in terms of your costs and your revenue, of which one of your largest is labor. | ||
| So if the whole idea is to increase the cost of labor, how is that supporting small businesses? | ||
| So those are my two questions. | ||
| Thank you very much. | ||
| Thank you very much. | ||
| Yeah, those are great questions. | ||
| Let me take a minute on each of them. | ||
| On the first point about inefficiency, I think it's really important to say that the reason that companies left the United States is not because they were inefficient here. | ||
| It's because there were particular advantages typically created by governments elsewhere that attracted them, right? | ||
| So the reason that computer chips, like the most advanced chips, are now made in Taiwan, it's not because there's something special about Taiwan, right? | ||
| They don't have chips on the beaches. | ||
| It's not like growing avocados in the place where it's the right climate. | ||
| It's because the Taiwanese government thought chipmaking was important and invested massive sums in helping to build those factories and training the workers and so forth. | ||
| And what we're seeing as we now actually say, no, we care about it, is the U.S. can absolutely do it just as well. | ||
| In fact, Taiwan Semiconductor, which is now building an enormous set of plants in Arizona, has the first one in its test runs. | ||
| And they're saying actually the yields, the quality in the American planet is already higher than in their Taiwanese plant. | ||
| So we can do these things. | ||
| What we have to recognize is that when you just say, well, whatever happens in the market is what's most efficient, you're trusting that everybody else is taking the same approach. | ||
| If other countries aren't doing it that way, you can't just step back and say, we don't care either. | ||
| And I think that's something to think about for the long term. | ||
| You know, I think there's a long way to go between having interventions in the market and communism, right? | ||
| And in fact, it was always the American tradition to have interventions in the market, and particularly to protect the domestic market. | ||
| I mean, literally the first law passed and signed by George Washington was a tariff. | ||
| Alexander Hamilton, the first Secretary of the Treasury, was a huge fan of protecting the American market, giving subsidies to companies to invest in the American market. | ||
| And the Republican Party was always the party of tariff. | ||
| Abraham Lincoln, William McKinley, Teddy Roosevelt, all the way through up to and including Ronald Reagan. | ||
| When Ronald Reagan left office in 1989, the Cato Institute, which is a large libertarian think tank, called him the worst protectionist since Herbert Hoover, because he loved the free market, but he also recognized that having a strong free market in the United States meant addressing what was going on in the global economy. | ||
| So I think actually this is much more the traditional American way to approach economic policy. | ||
| It's this period after the end of the Cold War when everybody lost their minds a little bit and just said, this is all going to take care of itself. | ||
| We don't have to worry about it. | ||
| On the point about cheap labor, it's a very important point that whether you're a small business or a large business for that matter, labor is a big cost, and you obviously can't just start paying people a lot more for the same thing. | ||
| And so when I say we don't want cheap labor, what I mean is that we want labor that earns a higher wage, but that's also worth the higher wage, that is much more productive, that can do more. | ||
| And so if you have a worker who can do twice as much and you pay him twice as much, that's not a problem for your business. | ||
| What we've done in this country instead is for a long time say, look, you don't have to worry about that question of how do you get more out of the workers? | ||
| How do you use more technology? | ||
| How do you improve your processes? | ||
| When you complain that things are getting more expensive, when you complain that you can't find enough workers, we say, oh, here, quick, let us bring you a bunch more workers. | ||
| And so, as I think a number of callers have pointed out very well, what businesses care about is making a profit. | ||
| And it's in fact the biggest proponents of business are the ones who celebrate the incredible power of business and the profit motive to solve virtually any problem, right? | ||
| When you put a challenge in front of businesses and say solving this is the way you're going to make a lot of money, the power to innovate and solve the problem is incredible. | ||
| And so what we need to do, what any good market needs to do, is say, okay, your challenge is create good jobs for people and make them productive. | ||
| If that's the way you're going to make a lot of money, I have no doubt businesses can do that. | ||
| We just haven't asked them to. | ||
| Well, we've got about five minutes left. | ||
| Anna in Massachusetts, Democrats line. | ||
| Hi there. | ||
|
unidentified
|
Hi. | |
| I'm going to follow up a bit on the whole small business sector in that it employs 40 to 50 percent of the workforce in the country. | ||
| And that's small businesses, seven to eight employees, and yet pays minimum wage, as perhaps has been addressed a bit by the prior comments. | ||
| And so that has created a working poor class. | ||
| And that's 40 to 50 percent of the workforce. | ||
| And so my question is, is that a conundrum or how do we move that system? | ||
| Thank you, Anna. | ||
| Yeah, it's definitely a challenge. | ||
| And, you know, again, it's not something that you're going to fix overnight. | ||
| We went through a long period in this country. | ||
| It's entirely possible in a capitalist system to have those jobs for those kinds of workers improving over time, to have those workers be more productive, to have them seeing rising wages, and also to see, at the same time, those small businesses be very successful. | ||
| What has changed in the more recent past is those wages stopped going up. | ||
| Those jobs stopped improving. | ||
| And there are a lot of reasons for that. | ||
| But step one, in a sense, right, step one is acknowledging you have a problem. | ||
| And one thing, there's still a fight, certainly within the right of center, a little bit across the board, about whether there even is a problem. | ||
| If I were writing a book called The Old Conservatives, it would spend a lot of time on various arguments about, oh, how actually, well, if you measure it differently, you know, workers are actually doing okay and they have more stuff than they used to, and so actually the economy is doing very well. | ||
| And if you start from that point, then it's hard to argue you need to do anything. | ||
| You end up thinking, actually, the market's doing great. | ||
| I think the reality, and we're seeing this in people's attitudes and their experience and how they vote, is that that's not how people feel. | ||
| That is not the actual experience of trying to make ends meet in this economy. | ||
| And so I guess there are two things you could do at that point. | ||
| One would be to throw up your hands and say, well, that's just the best we can do. | ||
| But I think the much better approach would be to say, okay, how do we change how our markets are operating? | ||
| How do we actually think about a role for public policy in ways that support people and prepare them better for successful jobs? | ||
| And in ways that shape the way that businesses behave and the incentives that they have to try to get that market actually delivering the outcomes we want. | ||
| What's a new conservative viewpoint of what's going on with the One Big Beautiful Bill? | ||
| Well, it's a great example of where there's a huge amount of debate, where there didn't used to be, right? | ||
| Even in, you know, if you go back to George W. Bush, right, he comes into office. | ||
| What's he going to do? | ||
| Big tax cut. | ||
| Everybody agrees. | ||
| Nobody cares how much it costs. | ||
| Deficits don't matter. | ||
| It's going to be great for businesses. | ||
| And off it goes. | ||
| If you look at when Donald Trump came into office the first time, actually quite similar, right? | ||
| Who was Speaker of the House? | ||
| It was Paul Ryan. | ||
| Got a big tax cut, going to be great for businesses, work out well for everyone, off we go. |