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April 1, 2025 - The David Knight Show
56:06
How Globalism Stole Our Jobs, Our Land, and Our Future – Can Tariffs Restore by Reshore
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Joining us now is Spencer Morrison, and his book is called Reshore, How Terrorists Will Bring Our Jobs Home and Revive the American Dream.
Just as a little bit of an introduction, Spencer Morrison is a lawyer, an entrepreneur, an independent intellectual with a focus on applied philosophy, imperial history, and practical economics.
He provides extensive pro bono legal services to the victims and the families of trafficked children.
Good for you, Spencer.
He also is editor-in-chief of the National Economics Editorial.
His work on tariffs and trade policy has been featured in major publications, including the BBC, Real Clear Politics, Daily Caller, American Greatness, Western Journal, The American Thinker, Foundation for Economic Freedom.
So you get the idea, and I'm very interested to talk to him, because tomorrow is going to be Liberation Day!
Tomorrow we're all going to be free.
And we're going to be free because of terrorists.
So I'm going to let him give you his case for terrorists and his critiques of free trade, what has been called free trade.
And we know how NAFTA has worked out for us.
We've said on this program many times, we've talked about that giant sucking sound, as Ross Perot called it.
And that sucking sound, I don't hear it so much anymore because I think everything's been sucked out of this country already.
But thank you for joining us, Spencer.
Good morning, thanks for having me on the show.
Well, tell us a little bit about, you know, your critique of how we got to this point, you know, globalism as we look at it.
It's also, to me, it's a technocracy when we look at it and we look at what is happening with China.
You make some very interesting observations in terms of gross domestic product and how we measure that and how we really are already lost so much ground to China.
Talk a little bit about that.
Yeah, certainly.
So I think where I'd like to start is understanding how foreign trade and the trade deficit actually works.
It doesn't work the way a lot of people think, okay?
So, if we take a look at last year, for example...
Now, let me just interject here.
You know, we talk all the time about the annual deficit with the budget of the government spending, and we talk about the cumulative debt of like $37 trillion.
It used to be talked a great deal about, the trade deficit, but most people are not talking about trade deficit anymore, and you talk a great deal about that.
So, yeah, talk a little bit about the importance of keeping an eye on the trade deficit.
Well, the trade deficit really matters because it's the reflection of the offshore production.
So I'm just going to walk you through this.
So when we have a trade deficit, what that means is that we're buying every more than we're selling.
So last year, for example, we purchased from foreign producers $1.2 trillion more worth of goods than we sold to them.
The question is, and this is the question that very few people actually ask, is how do we actually pay for that?
Part of it is paid for by selling services.
So America runs a trade surplus in services.
So apps like Spotify or Facebook, that brings in a decent amount of money into the country.
Last year in 2024, it was about $350 billion.
So that brings that trade deficit down.
But we're still left with about $920 billion that we need to pay for.
So how do we pay for that?
Well, we do it in two ways because the Chinese aren't giving us goods for free, right?
So what we're doing is we're selling assets and we're selling debts, right?
Assets are production that we made in the past.
So for example, a house.
If a house was built in 1973, the construction costs would have boosted the GDP in 1973, but not in any subsequent years.
But the house obviously retains value, right?
And land retains value.
So in order to pay for the trade deficit, we have to trade them something.
So one of the ways we're doing this is we're selling our assets like our real estate.
So every year, we're selling a ton of that.
For example, in 2024, we sold $42 billion worth of real estate, residential real estate, so houses.
We sold $8 billion worth of agricultural land, and we sold $12 billion worth of commercial real estate.
So, in order to get these goods, these allegedly cheap goods from places like China and Mexico, what we're actually doing is we're selling our inheritance.
Yes, I agree.
We're selling ownership of this country.
I agree, yes.
And let me ask you, because we've had both Scott Besant and Howard Luknick.
And also Doug Burgum, who is Interior Secretary.
They have all talked about the massive amount of assets that we have.
When Doug Burgum was in confirmation hearing, he said, we've got $200 trillion worth of federally owned land.
And later on, when he was doing an interview with Breitbart, he said $100 trillion.
So I don't know.
I guess it's a big difference in those two numbers, isn't it?
But whatever it is, they have indicated that They're looking at putting those assets to work, and my question and many people's question is, Is that going to be a liquidation?
As you point out, we've got $12 billion worth of commercial real estate.
We've got $8 billion worth of agricultural stuff that's being sold to foreigners.
Are they now going to sell all of the land that is owned by the federal government?
Is that what this is ultimately working up to?
A lot of people are suspicious about that.
I know it's not about the tariffs issue, but that is one of the big concerns.
What do you think about that?
Is all of this chaos that is happening with the tariffs?
And that's another layer.
Above and beyond how we collect taxes, whether it's with tariffs or income taxes and that type of thing, and I'm sympathetic to doing it through tariffs instead of income tax.
I just don't like both of them.
But I'm also concerned about the chaos that is there, and if this is to distract us from the fact that maybe there's just a great Americathon auction that is coming up in the future.
I know it's kind of a side issue.
What do you think about that?
Well, I think that's a really great point to make and I think it's very troubling as a matter of fact now that's not You know, I don't have any insider information.
I Typically, I refuse to make predictions because I don't believe that you can make predictions when we're dealing with a complex system like the economy Right, the best we can do is make forecasts.
So I'm not going to speculate on that point But what I will say is that there is an interesting historical parallel That is worth considering Well, think about what happened to the British Empire and British holdings towards the late 1800s and then culminating with the Lend-Lease Agreement in World War II.
The British Empire was running massive, chronic trade deficits for about 50 years, and that, in very real terms, resulted in all of the gold being shipped from the holdings in London to the United States.
It resulted in the lease, which ultimately it was, we'll say it was consideration for the products that were provided to the British Empire by America in World War II.
So I mean, what we saw is that the British Empire and Great Britain was completely sold out, in large part because they were purchasing We're good to
go. I mean, those are the only options.
We've got to pay for it somehow.
Yes. How are we doing it?
And that's a good example.
That's a great example of Great Britain.
You know, we've seen other things in terms of usage of energy and stuff, and you can see that when they were a manufacturing concern, they were using all this energy.
I used to hear people when I was in high school in the 70s decry the fact that America was using so much of the world's energy, and said, yeah, it's because we're manufacturing most of the stuff that the world has.
And yet you see that has transitioned from America to China.
And so as the manufacturing is transitioning, Transitioning and that's one of the key things that you're pointing out is that the wealth of a country is about actually making things when you talk about China and the US and GDP you make that case you say well, okay, they've got We've got a higher GDP but most of our stuff as you just said and as you point out in the book Most of our stuff is largely skewed towards services as opposed to actually manufacturing things Yeah,
that's that's entirely correct I mean, the big issue here is that America's economy has shifted from a productive economy into a consumptive economy.
It's a service-driven financial economy, but that doesn't actually generate any material wealth for our own people or for the world.
I'd like to give a couple of really telling examples as to the difference between what a productive economy in China looks like versus the sort of financial economy in the States, right?
In terms of steel production, in 2023, China produced 12.6 times as much steel as America.
I mean, steel is the backbone of a nation.
Steel is what you use to build skyscrapers, it's what you use to build automobiles.
Without steel, and I think President Trump has pointed this out correctly, no steel, no nation, right?
So right now we have a problem where we don't actually produce enough steel to replicate our own economy.
We consume about 20% more steel than we produce.
Concrete's even worse.
You can look at the development of a country along how many resources it's consuming.
Concrete is directly tied to how much people are building.
Are we building a country?
China produced 22.9 times more concrete in 2023.
The level of construction and creation that's going on in China is orders of magnitude larger than what's going on in this country.
Power consumption.
They're consuming more electricity.
And I think you made a very good point when you're talking about Britain's shift to these so-called green energies.
I mean, the amount of energy that people are able to use is directly proportional to the wealth of that population.
mean, the switch to electricity from animal power, or the switch even from animal power to steam power, I mean, these were tectonic leaps in the wealth of mankind, right?
And it's because of the sort of access that we had to power, right?
Right now, America's falling behind on our power consumption, and And as a result of prosperity is going to follow our power consumption.
I agree.
Ship tonnage.
America doesn't even make ships anymore.
All of the goods we consume are shipped on Chinese and Korean-made vessels.
America doesn't make any ships anymore for the merchant marine.
Automobiles, it's another one.
makes...
More automobiles than we do.
We're import dependent on foreign automobiles.
About a third of the automobiles we consume come from foreign producers.
Computing power, we're now on parity with China.
Computing power, AI, that's a sign of the future.
That's tied to power consumption.
And China is just shy of where we're at right now.
It's very dangerous, because they've got very good AI.
I mean, look at DeepSeek compared to ChatGPT, right?
I mean, China's got some very powerful AIs with some very energy-intensive GPUs, and they're going to make good use of that.
One more thing, or two more things, okay?
I know I'm rambling here, but I think these are really important statistics.
No, they are, yeah.
So, two more things.
Machine tools.
Machine tools are the tools that shape metal.
We need to shape our products, right?
We need machine tools to make more machines.
The market share for America, we used to produce over 50% of them, now we're producing 7%.
China produces 31%.
We actually produce fewer machine tools in Italy, which is crazy if you think about it.
And then silicone chips, we're dependent on silicone chips, right?
If we stopped trading with China and Taiwan, this economy would shut down.
Make enough computers.
The funny thing is that the machinery we use to make computers, the photolithography machines, we don't even make those in America.
Those are made by one company in the Netherlands.
They're shipped to Taiwan.
The chips are printed in Taiwan and then we buy them.
But that whole supply chain, you know, is offshore.
So America is completely dependent on foreign suppliers and designers for computers, which go in everything.
They go in our aircraft.
They go in our cars.
We use them at work.
We're on the computer right now.
This economy shuts down without computers and we can't even make them.
Things that has come out of NAFTA and free trade and globalist trade is these long and complicated supply chains that we have, as you're pointing out.
I mean, even when we look at the effects of an EMP, for example, the fact that it's going to blow out transformers that are made by one company in Germany, and they've got a long lead time for doing these things.
So if you had massive destruction of a lot of these things, it's going to be a long time before people can get a replacement for it.
So it is what the free trade regime has created is a very complicated global infrastructure that, yes, it can deliver a lot of goods efficiently, but at the same time, it has become really a house of cards, a very complicated, easily destroyed supply chain, and we've all been set up for.
It's not just going to affect us, it would also affect China.
Yes, they are more independent, and I think a lot of that goes back to energy, and that has been directly, and by fiat, and by treaty, which we didn't sign, the Paris Climate Accord, we never signed into that.
That was self-ratified by Obama and John Kerry.
So we're supposing, we're pretending that we're in this treaty, which allows them to build, I think, what is it?
Yes! They're steel plants and they can't afford to compete because their energy is so expensive.
It's like four times as much as it is even in Germany, and Germany can't compete with China.
I think that's one part of the China price that nobody's really talked about, energy, and that has by design been turned over to China.
But you had a couple of interesting things when you talked about, first you talked about GDP.
And then you pull that back and you said, well, GDP inflates America's position.
You said it's better to look at the purchasing power parity, and that changes it considerably.
Talk to the audience about what that is.
Yeah, exactly.
So typically the way GDP is marketed to the American public is it's based on the value of all the goods and services produced in the country.
It's measured in relation to the American dollar, because we're the yardstick by which other countries are measured.
The problem of doing it that way is that it really undercuts the actual production in the rest of the world, because the value of a dollar is different in different countries.
So, essentially, if you look at the value of production and you account for that sort of inflationary differences, what we find is that China's GDP is not simply equal to America's, which is what they'd have you believe.
It's about 50% larger.
It's even worse when you look at just the productive components of the economy, right?
So, America's economy is heavily based on services industry.
You know, in any given year, about three-quarters of the economy is services, right?
So things like accountants, lawyers, massages, restaurants, all of those things that are, you know, produced and consumed simultaneously, those are services.
But in terms of producing long-lasting value, like steel and concrete manufacturing, China's economy is not just double America's, it's – hang on, I have the number here.
You got it, that it was three times larger than America's, their productive economy.
Yeah. Yeah, three times larger.
Yeah, that sounds correct.
I just wanted to look to see if I had any numbers, any more specific numbers for you.
But yeah, it's about three times larger.
I've got the section here, and I thought this was really key.
You said, in 2022, service accounted for 80% of American GDP.
That means that America produced just $5.3 trillion worth of physical output.
Meanwhile, just 52.3% of China's GDP was services, so 33% of its economy was industrial output.
In total, China's productive economy was $15.7 trillion, or three times what America's was.
I thought that was very interesting, and especially because, you know, when you look at it, you talked about, you know, normalizing it in a sense for the American dollar.
That is one of the things that they have done in order to help them with the China price.
Part of that is currency manipulation, as well as slave labor and other things.
Now, of course, they have a tremendous energy advantage, and that was given them by fiat.
All the rest of the, you know, leaders of the West decided that they were going to hand China's trade policies To
begin with, they were explicitly designed to focus on predation, on the American market.
And China has used the American market to leapfrog the scale of their industries.
Back in the 1980s when China was opening up for business, and even in 2001 when China joined the World Trade Organization, they did not have the purchasing power to actually consume the goods they were producing.
There was simply no market for it.
The market that they were piggybacking off of was America's.
So, China's rise was impossible without the cooperation of America's politicians.
Now, the question is, why did America's politicians do this?
I mean, what was the benefit that they accrued by offshoring America's factories and jobs to China and making us dependent on Chinese imports?
I don't think it's a question that you can answer from an economics perspective.
There's no long-term justification for doing so.
I think you can somewhat justify it on a short-term.
I mean, obviously, offshoring factories is in the short-term interest of any given company because they reap cost benefits by moving factories abroad, and that sort of creates a cascade of offshoring.
I call it in the book, I call it the offshoring vicious cycle.
So I think there's a bit of that, but you've got to remember, this was a top-down policy choice.
I mean, since 1789, when the first Tariff Act was implemented under George Washington, America has run high tariff policies.
In fact, this nation had the highest average tariff rate throughout the 19th century.
It was only in the 1970s that the tariffs were abandoned, and that's when you start seeing this offshoring.
to China and other countries, right?
So this was a deliberate policy choice to integrate America's economy with the world at large.
It's hard to speculate on motives.
I mean, we can look to the EU, the European Union.
The European Union began as the European Coal and Steel Commission, and in the documents that were written by some of the founders and the debates they had, You know, one of the things they wanted to do is they wanted to prevent the outbreak of a third world war.
They wanted to make, and I quote, they wanted to make war materially impossible.
Right? And economic integration, the idea was, is that it will make war impossible because, you know, simply you won't be able to fight.
If France is getting all of their coal from Germany and Germany is getting all of their steel from France, how can either country go to war when they need the other country's resources?
So I think that may have been part of the impetus, but I mean this really brings us all back to globalism and one world government, right?
If America's economy is fully integrated with that of the globe, America is not economically independent and therefore political independence will fold in the future.
I think that's their endgame, ultimately.
I agree.
When we look at it in the European Union and Bilderberg, where they first talked about having a euro and things like that, I kind of look at it as not just that economic ties are going to make things more peaceful, actually.
You talk about it perhaps being exactly the opposite in your book.
And I think it was a recognition from them that it would be a shorter path to global dominance if they went through the economic issue rather than through the tanks and planes.
You know, they could achieve global government economically with a, I don't know, maybe a world economic forum.
They could maybe do that more quickly and more efficiently economically rather than with tanks and planes.
And so I think that was a big part of it.
Exactly. You talk about how, you know, this whole idea, well, if we trade with people, we're not going to go to war with them, but you say that's exactly the opposite.
Talk a little bit about that.
Well, I think it's very interesting if you look at the countries that are the most warlike throughout history.
Those countries are always the ones that are the most reliant on trade, or the most economically integrated.
And the reason for that is that disputes over resources, especially when one nation relies on a particular resource for its own economic well-being, basically necessitate conflict if the supplies are not available.
A really great example of that, well, we can go all the way back to the Peloponnesian Wars in the 4th century Ancient Greece.
You know, I'm a classics guy.
I love ancient history.
There's a lot to learn there.
A great example is the city of Athens.
The city of Athens had no access to timber, and it had very limited access to grain, which resulted in the city of Athens trading with all of these other cities across the Aegean Sea for timber and grain.
This ultimately culminated in the creation of the so-called Delian League.
whereby all of these states sort of under the umbrella of Athens entered into basically a big free trade agreement.
And this, over the course of about 20 years, transformed into the Athenian Empire.
And this pitted them directly against the other Greek states led by Sparta.
It was wars over resources, right?
And you see the belligerent It's
Because Britain itself, if it didn't have an empire, the country would starve, right?
So countries that trade together often end up in conflict.
And the converse of this is also true.
The United States of America, and I say traditionally as in sort of the 1800s, had an isolationist approach.
Now that we are engaged in foreign trade, we have taken the mantle from the British Empire as being the most belligerent of the countries.
And all the bloodshed that goes with it.
That's right.
We had Pax Britannia, and now we have Pax Americana, and it's not really peaceful.
It never is.
That's right.
One of the other things that you said, I thought it was a very interesting insight, and we'll get into some of the specifics about what's happening with Liberation Day here in a moment.
Darrell Bock of textiles, and how in Christendom, the Greco-Romans had used slavery, and it was the impulse of Christians to invent machines, so they didn't have slaves.
And you talked about that as being a fundamental aspect of production, and when you said that, I thought about the way NAFTA and free trade was being sold back in the 90s.
I remember this debate when it was happening.
A lot of people would say, well, You can get the Chinese to do this for practically nothing.
They work for practice.
Wouldn't you rather have cheap goods at Walmart that's produced by slave labor?
I used to always think that was a really corrupt calculation.
It's like, yeah, okay, let's do that.
I'm going to enslave those other people over there.
And yet it has redounded to our harm in doing that type of thing, deciding that because that's a big part of the Chinese price was the cheap labor, even slave labor that's there.
Because that's a key part of your argument in favor of tariffs was the way that the King of England protected himself from the textile industry that was being done by, what was it, the Flemish, I think it was?
Yeah, it was Flanders.
Yeah, so it's very interesting.
The rise of England as an industrial powerhouse begins long before the Industrial Revolution.
It actually begins around the year 1200 A.D. At that time, Christendom, I don't know if we're still Christendom, but at the time we certainly were, right?
A big thing in Christendom was investing in machinery, because obviously slavery was illegal.
There was no slavery as there was in the Roman world.
So in Christendom we invented all sorts of, we call this the first industrial revolution.
Right? This is in sort of the 1200s, 1100s, when windmills and water mills, treadmills, all of these things were being used in a new way to mechanize the production of, you know, grinding grain, moving cranes, pulling cloth, things like that.
And Flanders, which is an area in northern Europe, Belgium, Holland, that area became sort of the the mechanical hub for Northern Europe, where the textile industry really flourished and took off.
In Flanders, they were essentially purchasing cheap English wool, turning it into finished textiles, and then selling that cloth back to England, you know, at a higher price, right?
So England was sort of in a colonial trade paradigm, where they were making raw materials, shipping it to the Metropole, And then buying the expensive products back.
Does that sound familiar?
Oh, yeah.
Exactly what was happening to America in the colonial period.
We were doing the same thing to England, right?
That's right.
So what England did was very, very novel and very, very smart.
A succession of English kings banned exports of wool to Flanders.
They put on high tariffs.
They even paid textile mill owners and machinists from Holland to settle in England and teach English.
How to make cloth and set up these factories.
And as a result, England actually, because they already had the wool, they had the raw materials, they shut down the Flemish textile industry and England became the main center, the main hub of production.
So for example, the cloth production rose from 1350, just 5,000 balls of cloth in England.
By 1500, it was 80,000.
England became very, very rich during this period, relative to its rivals, because rather than focusing on low-tech, low-value agriculture, they were now the hub of manufacturing and textile design.
And that core industry is what gave birth to the Industrial Revolution.
England had all of the factories, it had the tinkerers, the inventors, it had a population You know, very knowledgeable about machinery, and that allowed the Industrial Revolution to really take hold in England in the latter half of the 1700s and early 1800s.
And it would have been impossible without having that industry there, right?
Because industrial development is path-dependent, right?
So if you're on sort of You know, one track, it's very difficult to switch tracks later.
That's why countries that were early adopters of industrial technologies are still the richest today.
There's a long latency effect.
You even look at the difference between the countries in, you know, Eastern and Southern Europe versus Western and Northern Europe in different regions of those countries, like Northern Italy versus Southern Italy.
You have, in many ways, very similar populations, but you have one One side of the country that industrialized and one side that did not.
And it's taken, you know, 300 years, 200 years to catch up and they still haven't caught up, right?
Because the cutting edge is where all the economic growth and wealth flows to, right?
So if you're at the cutting edge, it's easy to stay there.
It's hard to get there.
So that's the whole point of tariffs and the whole point of this book is a reminder that America is at the bleeding edge of technological development.
But if we hollow out our industries and if we reduce our human capital so that people don't know how to make things, we're not going to be able to stay there.
And once we lose that position, it's very, very difficult to get back.
It's taken China a century to get back, right, after the opium wars.
Yes. Over a century, actually.
Yes. Right?
And since 1980s, it's decades and decades to get back in the driver's seat.
And we're already there.
Why leave?
Yeah, I agree.
Well, there's a whole lot of things that come together with that.
Again, it's the availability of energy, and we've had our political leaders in the West have decided that they don't want us to have affordable energy.
And that's not just a We're good to go!
We've done these types of things for their own benefit, and also the aspect of central planning.
As I said earlier in the show, the concern that I have with the terrorists is that it requires a lot of central planning.
Who are the winners going to be, and who are the losers going to be?
And we've seen that that fits perfectly with the Chinese Communist Party, but it's a bit of a problem here in America.
Early on, we had, and you're right, you talk about this, the fact that Washington had put tariffs in.
You say that Jefferson was a bit reluctant about it.
He was more of a free trader.
I think he was maybe not on behalf of protectionism, but he bragged in his second inaugural address, I've talked about frequently on this show, that he had eliminated We're
But later on, as you pointed out, in 1812, he came around to Washington's thinking in terms of protecting of industry because it was on the cusp of the 1812 invasion by the British.
He realized that it made us vulnerable from a defense standpoint.
But when he was doing it, it was for revenue.
Later on in the 18th century, it was about...
I'm not really clear what's going on with Trump because he is more than anything focusing it on a blanket attack on individual He doesn't have enough there to fund the revenue.
We're going to wind up with an income tax plus a tariff, and he doesn't seem to be focused on any particular industries.
But even with that, I think that the tariff aspect is a bit troubling in terms of allowing the government to pick winners and losers.
What do you think, first of all, about that?
The protectionism, and it's linked to central planning.
Yeah, I think the first thing that I'll say is that one of the things that has made this country so great and economically productive is that it has historically been very decentralized in its economic production, and I think that is an integral and key ingredient in keeping America rich.
If we want to make America great again, America has to be free again, and part of that is economic freedom.
This sounds like a paradox.
On the one hand, Mr. Morrison, you're in favor of tariffs.
On the other hand, you're saying we need economic freedom.
I don't think it's a paradox.
And the reason for that is that tariffs...
It's not about picking winners and losers.
Every policy choice is going to have a winner and a loser, regardless of whether you do something or you don't do something.
We talked earlier in the show about the switch to economic globalization.
That was a deliberate policy choice.
So America used to have high tariffs.
The government decided we're going to get rid of those and instead we're going to globalize the economy.
That was a policy choice.
And the question is, did that policy benefit the American people?
And I would say no, it didn't benefit the American people.
I don't think that we have access to better quality goods today.
I don't think we necessarily have access to a better variety of goods today.
And the reason for that is because somebody is going to win and somebody is going to lose.
Ideally, the market picks who that is.
The problem is that if we don't have trade barriers like tariffs or, you know, other...
I mean, tariffs are the main one, but there are other ways of doing it as well.
If we don't have those, rather than the American people picking the winners, It's really foreign governments that are picking the winners.
A good example of this is China.
So China engages in all sorts of asymmetrical trade with America and American companies.
Chinese manufacturers are given preferential land treatment.
They are given massive loans and export subsidies.
They are given asymmetrical access to markets so they can sell and prove up their products in Chinese markets.
Wealth still having access to American markets, but American companies don't have that same access.
As a result, what often happens is Chinese companies, backed by the Chinese state, are able to out-compete American free enterprise.
And it has nothing to do with the quality of the product, and it has everything to do with the fact that the Chinese are simply able to dump their products at below market rates and prices For 20 years until they killed the American businesses off, and then they have a monopoly.
So the problem is that American businesses are operating on a private enterprise model.
That's not a problem and that's what we want, but what I'm saying is that in an international competition where you have private American enterprise and small business competing against the Chinese government, they're never going to win.
And as a result, who's picking the winners and losers?
In a free trade paradigm?
And, you know, free in air quotes, it's not really free, but in the sort of economic globalist paradigm, China's government, Germany's government, Canada's government, they're picking the winners and the losers.
In a tariff model, the American public, you know, has a better opportunity to actually pick the winners, because it's going to level the playing field between these foreign producers and American producers.
I guess what I see happening, for example, a Taiwan semiconductor manufacturer, TSMC, right, they've been given, I think, tens of billions of dollars because...
I guess They are so incredibly productive in Taiwan that, you know, that's the big prize that's there.
Why the U.S. and China are both fighting over that.
So the idea is let's get them to come here and open up in America.
Let's onshore these manufacturing processes that are over there.
And they have given them massive amounts of money.
It's not really working out yet for them.
And I guess when I look at that from a You know from that standpoint we're trying to emulate what the Chinese Communist Party is doing in terms of you as you point out tightly integrating subsidizing particular industries and I think there's an as I look at it I see a tendency by Americans to say okay we need to do what the Chinese are doing so let's subsidize TSMC and other companies of that ilk they're doing it with a lot of different things on a on a micro basis I guess
we could say we've seen this type of thing happening With just stadiums being built, because they love to have the pride of having a professional sports team there of some sort.
They're more than willing to give lots of money, billions of dollars, to these billionaires who own these different teams, and have it paid for by the small local businesses that are there, and say, well this is great for the economy.
And it's like, yeah, well, except that, you know, you're kind of directing this and maybe it's not being done very efficiently, maybe not as efficiently as a competitive market would do it.
And, you know, from the standpoint of somebody who is there with a small business having to subsidize this billionaire's stadium, I think when I look at this TSMC, it looks like just a more I
think that's always a risk.
I don't think it's the right way to do it.
What I would like to see is the President stick to the game plan.
Yeah. They're more efficient than German factories,
and they're more efficient than Canadian factories.
The issue, again, is that all of these other countries are engaged in this sort of asymmetrical industrial policies that are artificially lowering the costs to the detriment of America's industries.
And then, of course, when they conquer the industry, then they can jack up the price.
I agree.
What I'd like to see is reciprocal tariffs so American companies can compete.
We don't want to pick winners and losers because the reality is we're going to win if the playing field is level.
I agree, I agree.
I would agree with you on that.
What we see a lot of...
With Europe as well as with China especially.
It used to be called, when I was in high school, they called it Eurosclerosis.
You know, they would so highly regulate everything that was there that they really couldn't move quickly, they couldn't adapt, they couldn't change.
Whereas you had less regulation in the U.S. and so the companies were able to flex with demand and to change and to grow and to innovate.
And it really is regulation that is doing that.
So I look at it and On the one hand, you know, you have the protectionism that we've seen in Europe, now we see it in China.
But on the other hand, they hobble themselves with a highly centrally planned economy and a great deal of regulation.
And I guess my concern about this is when I look at it and look at the nimble free market Thank you These companies that we need here in America,
rather than just protecting them because we think that that industry is important.
What do you think about that?
Do you see much in terms of a focus on deregulation and that being a really key component?
Because I think that was a key component of what happened in the prosperity of America.
It wasn't just tariffs at the border, it was freedom on the inside, as Jefferson said.
People inside the country don't know a taxman, and they certainly didn't know somebody who's going to come around and micromanage their business in the name of saving the planet from CO2 or something, right?
Well, that's exactly correct.
It's not an either-or proposition.
It's a both-and proposition.
We need tariffs to balance out the market asymmetries so that American companies have an opportunity to compete, because right now they're getting killed.
They don't have an opportunity to compete.
So we need to preserve the ability for them to compete.
But part and parcel to that is we don't want to go the European model and just say, oh, we're protecting everything, let's overregulate.
We don't want to do that.
America was at its best and most vibrant economically in the 19th century.
And there was two critical components of that.
Number one, it was high tariffs, which promoted domestic manufacturing and domestic industry.
But number two, you're entirely correct.
This was the most free country in the world.
We had robust property rights, we had economic and political freedom, the freedom of speech.
At the time we had a very functional patent office.
It's not like that anymore, but at the time it was very functional.
And this allowed Americans to invent and to prosper off of their inventions and to build industries without being crushed by cheap foreign imports.
So, we need both.
On the one hand, we need tariffs, but that's not in and of itself going to be enough.
That's just going to get us to where Germany is today, which is not great.
We need to go back to our roots and to have decentralized economies.
We need to cut regulations and we have to cut taxes.
And what I'd love to see, what I'd love to see, is the tariff being, you know, reduced by domestic taxes.
So any money that we collect from the tariff, it's a one-to-one reduction in domestic taxes, whether that's import taxes or, you know, consumption taxes.
I mean, ideally, there's no income tax.
But what I'd love to see is the The money coming in from the tariffs reduce the internal tax burden on a one-to-one basis.
That would be, I think, great, because then we'd have a revenue-neutral policy that promotes American industry and labor, which doesn't actually have a cost associated with it.
And then tied to that, obviously, cutting Cutting welfare and making the government less bloated.
We need to do that regardless, right?
Well, it's kind of interesting because, you know, first they were talking about hundreds of billions and then Trump said, well, maybe about a trillion.
Then we had Peter Navarro say tariffs will be a $6 trillion tax increase.
But then he said, because he would use it as a reduction, he said, we'll use it to pay for making the 2017 tax cuts permanent.
So now we're talking about reducing taxes.
He's talking about maintaining the status quo, essentially, and saying that they're going to add $6 trillion in taxes.
So I guess, you know, when we talk about the actual policies, it's very interesting to talk about the tariffs as we're coming up to this big announcement tomorrow.
And everybody is still guessing as to what that's going to be.
We look at whether or not they're going to actually do any reduction of taxes.
Certainly, there's been a lot of people in the media that are favorable to Trump who have said, well, we're going to get rid of the income tax.
That, of course, is not going to happen at all.
They made it very clear that they're going to make these tax cuts permanent or they're going to take off taxes for this particular for waitresses, for example, or whatever.
They're going to take off taxes for tips.
So that means that they're going to keep the income tax.
They're going to keep it pretty much at the same level that it is.
This is going to be an additional tax, I'm assuming.
We still don't know because there's been so much back and forth and it's been so volatile.
And I guess that's one of the key things.
We talk about tariffs and taxes and regulations.
But, of course, chaos and volatility is a big, big issue in the economy as well.
I mean, what do you – I know you don't make predictions.
I think the branding is very, very bizarre and a little schizophrenic, and I think you pointed this out in a previous program.
You had mentioned that You know, on the one hand, we're saying tariffs are going to bring jobs back, and on the other hand, the tariffs are going to increase and we'll get more revenue from them in the future, which should be precisely the opposite.
If the tariffs are successful, the tariffs should actually go down, because we're going to be getting the money domestically, right?
And the whole point of the tariffs is to increase the size of the pie within the country, so that you can generate more money within America.
And you can lower the taxes but get the same amount of money because we're going to have more GDP in the country, right?
And that's sort of the point of tariffs is to create long-run economic growth, right?
So I don't really understand the branding.
I don't know if it's just about scoring political points or who knows, but it doesn't make a whole lot of sense to me.
But just speaking about the historical value of the policies and what we can expect, we can expect That if President Trump stays the course and institutes reciprocal tariffs, like he said he's going to do, that is going to create a large incentive for factories to reshore their factories in America.
It's going to create a lot of jobs.
It'll create, you know, predicate jobs.
And that ultimately will increase purchasing power in the long run.
Let me ask you from a practical standpoint, since you focus a lot on tariffs, what are the impacts of, you know, he replaced NAFTA with USMCA, what are the impacts of that going to be?
I mean, it seemed like when he first announced these things in January, they were kind of taken back and surprised that, oh, wait a minute, we have a treaty here on this.
Is he, to what extent are you aware that he is hamstrung in terms of what he can do with Canada and Mexico, for example, because of the USMCA?
I don't think he's hamstrung legally.
I mean, politically it may be a bit of a bind, but I think the President has shown that he's willing to burn political capital on this issue.
So I'd like to see him to push forward on the tariff agenda.
But I mean, if they've got something in the USMCA that is an agreement, they're part of One of the things that I don't like about NAFTA or USMCA was that they had a mechanism in there where they would, a corporation, if they felt that they were being unfairly tariffed according to the agreement, could take them, take the country to arbitration.
And so, I mean, they would get that back.
So, you know, I guess that was my question.
I don't really know how that plays out since there was so much done to distribute supply chains for automobile manufacturing over the three countries and all of a sudden you're going to Yeah, I mean...
The very fact that the so-called free trade agreement allocated production across Canada, America, and Mexico just goes to show that it's a centrally planned agreement.
It's not free trade.
That's right.
I mean, it's a...
I think that's what Ron Paul said, or somebody said that, you know, well, if it's a free trade agreement, you don't need a thousand pages to define that, right?
Yeah, exactly.
So, I mean, the whole thing's a bit of a...
I mean, it's a sham agreement, so I...
Yeah. Whether or not, you know, it has any teeth is a question.
I suppose for trade lawyers, I don't do a ton of that myself.
What I'd say is that the focus ultimately, I mean there's a big show about the asymmetrical trade with Canada.
Okay, whatever, Canada is the size of California.
It's not a big deal.
What we really need to be focusing on is China, right?
And there's no such agreements that are going to be binding with China.
If we dealt with China, I mean it's an 80-20 Pareto principle, right?
China's doing 80% of the damage.
Let's deal with China.
Yeah. And, you know, forget about Canada.
I mean, ultimately, if Canada, you know, engages in asymmetrical trade policies with the states, It's not really that big a deal.
Canada is a tiny country.
China is the one we've got to deal with.
And yet we see from Trump, you know, what is the long-term strategy?
Is it to deal with China?
Because he's already said, well, I'm going to increase your tariffs, but I'll pull them back off if you let us buy TikTok, you know?
So we get these mixed schizophrenic policies that are there.
It's like, OK, so are you really trying to protect us from China, or is this just some kind of a Things that you can sell this to your friend, get your friend to be able to buy TikTok.
I don't understand what's going on with it at all, but we're just gonna have to wait and see.
It's very interesting to talk to you, and I agree with you in terms of forms of taxation, and we've always had in the past a lot of different plans about how we could change the way taxes are done.
I don't like the income tax because of the intrusive nature of it because of all of the Time-consuming compliance with it and everything but you know, so there's a lot of different things have been proposed You know all kinds of sales tax things or flat taxes or whatever Everybody was always concerned that we're gonna wind up with both of them So my concern with all of this is that we're going to wind up with six trillion dollars worth of new tariffs as well as income taxes But as you point out if they on short those that
tariff revenue goes away So I guess that's one of the reasons why they're keeping the income tax there But it's great talking to you, and again, I'll remind people, the name of the book is Reshore and Restoring the American Dream, and basically going back and recovering some of the principles and the tax structures that we had at the foundation of this country, I think.
And it's a very interesting book.
Spencer Morrison is the author, and where is the best place to get it?
Yeah, thanks very much.
The book is currently available on Amazon.
It can also be purchased directly from Calamo Press.
And if you'd like to hear more on tariffs, I'm always available on X or Twitter or whatever it's called these days.
But it's real SP Morrison.
Okay, great.
And Calamo Press, is that calamopress.com?
Is that where people can find the book there?
Want to try to encourage him to get it outside of Amazon if at all possible?
Talking about decentralizing.
That's another way that we need to decentralize.
Very interesting talking to you, Spencer.
Thank you so much.
Again, the book is Reshore, How Terrorists Will Bring Our Jobs Home and Revive the American Dream.
But as he pointed out, we need a lot of different things to happen.
We need especially to have deregulation.
That's an important part of the formula that made America prosperous in the 1800s.
And that's the part that seems to be forgotten.
Thank you so much for joining us.
Hello, it's me, Volodymyr Zelensky.
I'm so tired of wearing these same t-shirts everywhere for years.
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And I could.
If only David Knight would send me one of his beautiful grey MacGuffin hoodies or a new black t-shirt with the MacGuffin logo in blue.
But he told me to get lost.
Maybe one of you American suckers can buy me some at the davidknightshow.com.
And David is giving a 10% discount to listeners from now until 2025.
At that price, you should be able to buy me several hundred.
Those amazing sand-colored microphone hoodies are so beautiful.
I'd wear something other than green military cosplay to my various galas and social events.
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