Feb. 26, 2025 - Freedomain Radio - Stefan Molyneux
08:36
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| Time | Text |
|---|---|
| This is why I mentioned the Doge thing. | |
| So Doge thing is interesting. | |
| The Doge thing is resulting in a massive change in the economy as a whole, because in the long run, tens or hundreds of billions of dollars are going to be withdrawn from certain areas, and that's going to cause economic losses. | |
| I mean, the fact that people's shows are getting cancelled after USAID was revealed to be funding a bunch of media outlets, probably not entirely unrelated. | |
| So there's going to be a massive reallocation of funds. | |
| So let's just take a silly example, which would be You invest in mosquito netting, but then the amount of foreign aid being poured into Africa, which has been trillions and trillions of dollars, it's just crazy, like 45 Marshall plans went into Africa. | |
| It's a hole with no bottom. | |
| But you invest in mosquito nets, and then USAID is put under spending review, and then foreign aid to Africa goes down. | |
| Some of that foreign aid was used to buy mosquito nets, so you don't want to invest in mosquito netting anymore. | |
| And the first one to realize that gets out before the price goes down. | |
| So what's happening is there's been a huge realignment in the economy. | |
| With Trump, Musk, and Doge, wherein there's a whole lot of economic uncertainty, right? | |
| So are some of these contracts going to be re-established because there's going to be lawsuits? | |
| Well, maybe. | |
| How much money is actually being saved? | |
| It's hard to tell, but there is a massive realignment. | |
| Money, tens or hundreds of billions of dollars that were flowing in one direction are now going to go where? | |
| Are they going to pay off the national debt? | |
| Are they going to get the $5,000 per head check that is under contention or proposed by Some members of the Trump administration, we don't know. | |
| But it certainly does not seem to be going to the place that it used to be going to. | |
| So there's an economic dislocation. | |
| And what happens is people dump the stocks that are supported by USAID or other kinds of spending. | |
| They dump those stocks and they don't know what to invest in. | |
| So there's a net drop in net economic activity because people are just holding on. | |
| You don't know, right? | |
| You don't know. | |
| It's sort of like you get lost in the woods and you stop and you look around. | |
| But you don't know where you're going to go yet, right? | |
| And so there's a whole bunch of economic reallocation. | |
| What's going to happen in Europe if there's a potential end to the Ukraine-Russia war? | |
| That's going to also change things economically. | |
| If America starts to withdraw its economic support of defense in Europe, then Europe is going to have to change its policies significantly. | |
| And, you know, one of the reasons that Europe is... | |
| Dealing with some of the migration issues is because America has taken over its military defense to a large degree, and therefore they have more money for the welfare state that tends to attract a lot of migrants, so that is also going to be a significant reallocation. | |
| If America is no longer driving this kind of stuff, will European states, and I'm thinking France in particular, but others as well, will European states have to deregulate to some degree? | |
| In other words, if America starts deregulating, which really is a big goal of Trump, it was in his first term, and it's even more so in his second term, then it's going to draw a lot of talent and capital and investment to America at the expense of Europe at the time when European bill's going up because America's pulling back from its defense commitments. | |
| And so Europe is going to have to deregulate if it wants to stay at all competitive. | |
| I don't know, Europe is hell-bent on suicide these days, so who knows? | |
| But if they do want to survive, they're going to have to deregulate. | |
| Now, if Europe deregulates, All of the companies that have adapted and, to some degree, quote, prospered on massive amounts of regulation are going to face more competition, and therefore, the larger, bulkier European companies are going to be less competitive, and they'll be, you know, it's dinosaurs versus the mammals, right? | |
| The mammals are way smaller, but way more nimble and end up flourishing in the long run. | |
| So, with deregulation, again, people will see these big, propped up, through regulation, large corporations in Europe, and they'll say, well, if the deregulation comes along, then Smaller companies will start nibbling away at the market share, so we'll sell the big companies, but we don't know which small companies to invest in yet. | |
| So again, there's just a pause, there's a holding, and that looks like lower economic activity. | |
| The other big question with Doge, which is very interesting, is if you just look at the cuts in government workers, right there, I mean to cut a lot of government workers. | |
| Now, the big question is, for investors, I think, is something like this. | |
| Are they going to get jobs? | |
| It's a big question. | |
| If the government workers are competent, efficient, and hardworking, they're probably going to stay. | |
| So the people who are shed the most are the people who are going to be least attractive for people to hire in the free market, in the private sector, right? | |
| So if there's some, you know, 50-year-old, pear-shaped, spotty-bottomed doofus who's been treading water and pushing paper for 30 years, Do you want to hire them in your startup? | |
| Well, probably not. | |
| Because they're going to be resentful, they're going to be resistant, they're going to be lazy and entitled and so on, right? | |
| So are they going to want to work for significantly less money and benefits, which generally happens in the free market? | |
| Are the people let go of the public from the public sector? | |
| Are they going to be hireable? | |
| Now, if they are going to be hireable, then what's happening is you're reducing the cost of government and you're increasing the efficiency and productivity output in the free market. | |
| That's going to be good for the economy. | |
| If, though, they're going to live off their savings or they can't get jobs or whatever, then they will not be contributing to the economy in that way. | |
| And I think that investors are probably waiting to see what happens with that. | |
| Now, the other thing, of course, the tariffs are an indication of a breakdown in negotiations. | |
| So that's really important, right? | |
| So if, let's just take, forget Europe for a sec, so we talked about that. | |
| So if we just look at North America, right? | |
| Canada, US, Mexico. | |
| The hope was that Trump would threaten tariffs and they would say, oh my gosh, that's bad. | |
| What do you need? | |
| And they'd work something out. | |
| Now, if the tariffs go forward, that's because these three trading partners can't negotiate. | |
| Their governments can't negotiate. | |
| If the governments can't negotiate, that means that there's a lot of hostility and politics involved in the relationship. | |
| Now, if There are a lot of politics, hostility, immaturity involved in the relationship between three of the world's biggest trading partners. | |
| That's going to really realign the economy because you're not going to get the kind of division of labor and cross-border efficiencies and so on. | |
| That's all going to start to fall apart with these tariffs, right? | |
| So, of course, a lot of US and Canadian companies and Mexican companies have aligned themselves along this America doesn't look out for its own interests and it's easy to take advantage of, which Trump has been complaining about since the 80s. | |
| Now, if America does start looking out for its own interests and say, we're no longer interested in trade deficits, we're no longer interested in partnering with people who keep sending their worst people over the border to sit on our welfare state, then you are setting yourself up for a situation of significant economic realignment. | |
| So the companies that are easily selling into the Canadian market are going to lose some access to that market. | |
| And they're going to have to realign who's going to make it, who's not going to make it, who has the experience. | |
| I mean, America has allowed itself in many ways to be economically exploited for decades after decade after post-second World War period, starting with the Marshall Plan. | |
| But America has allowed itself to be bent over and economically railed for decades. | |
| And that's how... | |
| The European economy, to some degree, of course, the Chinese economy, definitely the Mexican and Canadian economies have just gotten used to winning against the lax lack of American self-interest in America first policies. | |
| So with Trump coming in, the breakdown of negotiations, it's like they can't reason together, so it's going to escalate. | |
| And if it's going to escalate, that means that there's going to be A significant amount of anti-American nationalism and also anti-Canadian and anti-Mexican nationalism, and it means that the economic dislocations are going to be much faster, which creates more uncertainty, which means people are going to sell, I assume, trades or shares in the companies which are profiting from the current situation and they won't know who to invest in, right? | |
| If there's some race and the fastest runner, It drops out. | |
| You don't exactly know who's going to win, right? | |
| So I think that there's a certain amount of uncertainty with regards to that stuff as well. |
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