00:00:00
looking forward to our thing in a few weeks yeah i don't know if I'll end up being there but I'm hoping to i'm hoping
00:00:05
to it's been What do you guys You guys have like a liberal cuddle party or what are you doing yeah yeah larry Larry
00:00:10
takes a bunch of MDMA and we all sort of go into the the corner and hang out together god that sounds incredible
00:00:16
liberalism is wonderful man you should come try it that's not liberalism it's called something else sorry Nikki is our
00:00:22
cryptozar joining us or no he's uh I'm talking to now it looks like he is oh zing this is going to be great this will
00:00:30
be like ratings bonanza all right we do have David Saxs here david make sure you
00:00:34
have a quick time on look at Sax looking so presidential he looks thin doesn't he
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oh he looks fabulous all right here we go three two one let your winners [Music]
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we open source it to the fans and they've just gone crazy with it all right everybody welcome back to the
00:00:59
number one podcast in the world i'm your host Jason Calcanis with my besties Chim
00:01:05
Polyha Patia our chairman dictator and live from well the administration Mr david Saxs our ZAR for AI and crypto and
00:01:16
amazingly two fantastic guests this week we have uh New York Times writer and host of the Ezra Klein podcast he's got
00:01:25
a new book with Derek Thompson Abundance and he co-founded Vox in 2014 and he's our guest here today before Trump ships
00:01:32
him to El Salvador please welcome Ezra Klein how are you sir glad to be here in my final hours of freedom okay great
00:01:39
good to be here sorry Saxs uh and uh with us of course Larry Summers economist former Treasury Secretary
00:01:45
under Clinton former director of the National Economic Council under Obama and the president of Harvard from 2001
00:01:52
to 2006 thanks for coming Larry good to be with you okay we have a lot to get to
00:01:57
here so we uh might as well talk about the big news of tariffs it's day 80 of the Trump presidency and a second
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presidency his second term and Trump tweeted that he paused tariffs for everyone but China on Wednesday
00:02:14
basically let me just ceue up the details Larry and then we'll get your take on all of this just one week after
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Liberation Day Trump announced on Truth Social that in effect he was raising tariffs against China
00:02:29
125% based on their lack of respect quote unquote instead of negotiating and that he was pausing reciprocal tariffs
00:02:36
on all other countries for 90 days and markets ripped 10% after he posted this and today Thursday when we
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tape there's been a massive selloff on Wall Street so the roller coaster ride continues what it will be on Friday when
00:02:51
you consume this podcast is anyone's guess s&p is down 5% today for context the S&P was at 5700 pre-liberation day
00:03:02
so about a 9% drop after these wild swings and uh in fact this has been historic
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volatility here are the top selloffs in history as you can see three of them came during Black Monday in
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1987 three of them came during the financial crisis three of them came during COVID and uh coming in 11th is
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Trump's tariffs also in the gainers uh you have these big rebounds wednesday's 9.5% recovery was
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number three the administration says this was all part of a master plan we'll hear more about that later and that they
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laid a trap for China they lit a trap bessent has been the spokesperson during this retreat or
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whatever we're going to call the uh pause and quote "This was driven by the president's strategy." He and I had a
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long talk on Sunday and this was his strategy all along i don't think we need to play the clip uh that's the gist of
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it the White House account then tweeted in all caps "My favorite way to tweet do
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not retaliate and you will be rewarded." Wall Street Journal on the other side posted a story about why Trump blinked
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they chronicled the decision as uh being affected by Jaime Diamond who went on Fox to express fears of recession while
00:04:25
saying the tariffs were valid and that he knew that Trump and cabinet would be watching him on Fox other banking
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executives who felt they didn't have a lot of influence in this administration according to the Wall Street Journal
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started lobbying Republican lawmakers that the Trump tariff plan would tank the economy the White House
00:04:42
chief of staff Susie Wild started receiving calls from executives and lobbyists expressing concerns and uh the
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Wall Street Journal reports that Trump was influenced heavily by Bessant they were flooded with worried calls from
00:04:54
Wall Street and that the president was uh lobbyed to find an off-ramp trump ultimately relied on his instincts
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according to the administration larry is this 4D chess or is this something else what are
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your thoughts this is uh dangerous work with a sledgehammer on a pretty sensitive
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machine which is the global economy that's having really serious uh consequences first it's important to
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understand that there's more tariffs that are around than you described even after the big backoff there's a 10%
00:05:37
across the board tariff a range of structural tariffs like on steel and automobiles and a range of new tariff
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threats like on uh pharmaceuticals here's a kind of market-based estimate of what the damage
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that the market thinks this is all doing to the US economy is market's down let's
00:06:01
take today's number 9% if that's right that would be about $4 trillion of course the at $4 trillion
00:06:12
since Liberation Day of course markets were down coming into Liberation Day because of some anticipation of these
00:06:20
policies so let's be conservative and say these policies have taken $6 trillion off the stock market now the
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stock market only measures the adverse impact on corporate profits not the adverse impact on workers not the
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adverse impact on consumers so you need to add to that uh stock market number uh
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one way of thinking about adding to it would be to say that corporate profits were 10% of the economy so you could
00:06:52
argue for multiplying by a factor of 10 but maybe that's being too exaggerating or too bold so let's multiply by a
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factor of uh five and what you get is a loss in the $30 trillion range as the present value as estimated by markets of
00:07:13
what's being done now I know the Trump administration sometimes likes to say it's working for Main Street not Wall
00:07:20
Street i noticed that they were pretty excited about the stock market rally yesterday in a way that wouldn't really
00:07:27
go with uh not caring about uh markets so I think what markets are seeing what's is what's true which is three
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things this is an inflation shock cuz you're adding to prices ceo of Amazon got it right the Secretary of the
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Treasury got it wrong increases in tariffs of this magnitude the overwhelming part of them will be passed
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on to consumers so you've got an inflation shock when you raise the prices of people and their income at
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least in the short run is the same they're poorer and that means they can afford less stuff and that pushes the
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economy down and so you've got higher inflation and you've got um more uh less demand and therefore more
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unemployment all of that's bad for the economy and companies and the last thing which I think is profoundly important is
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we are trading like an emerging market country right now for serious countries for the United
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States the pattern is that when the world gets riskier the bonds go down in yield and
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the currency goes up in value because people come for the safe haven when you're a country like
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Argentina then the assets all move together falling stock prices go with higher bond yields go with a weakening
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currency and so because of our erratic behavior we have changed the zeitgeist surrounding America from the
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traditional zeitgeist surrounding America to the kind of zeitgeist that surrounded Juan Peron's
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Argentina and that goes with all the other things that are happening the more protectionism denying the independence
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of the central bank fiscal irresponsibility breakdown of traditional boundaries between
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government and business substantial uh cronyism as a strategy authoritarian tendencies towards uh the opposition
00:10:07
lack of total respect for uh the judiciary larry keep going Larry what we're seeing is a is a pattern of
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America being governed on the kind of Juan Peron Argentina model and that sometimes produces some benefits for
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some people in the short run that sometimes generates popularity uh for it peron kept coming back in
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Argentina but ultimately it's extremely costly for our society uh you've you've heard uh Larry's uh take on all of this
00:10:46
larry's giving it about a a B+ on the Harvard great scale which might be inflated i'm not sure
00:10:53
sachs obviously in the administration you cover two things AI and of course crypto and you're a member of the pod so
00:11:03
let's get your take on what happened this week with these tariffs even the most ardent supporters of Trump have
00:11:11
felt this is chaotic not well executed not communicated well what's your take Saxs on how this was executed and could
00:11:21
this have been done better well I think what happened if you go back to Liberation Day was only 8 days ago it
00:11:27
was April 2nd if I had told you on April 1st that Donald Trump would find a way to get the entire world to eagerly
00:11:37
embrace a 10% tariff on the American market and not only would they not complain but they'd actually be relieved
00:11:44
that it was only 10% you would have said that would be an April Fool's joke if I
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had told you eight days ago or nine days ago that Trump would find a way to accelerate the United States is
00:11:54
decoupling from China which is something he's long wanted to do and that Wall Street would basically breathe a sigh of
00:12:01
relief over that you would have said that there's no way that could happen if I had told you eight or nine days ago
00:12:07
that President Trump figured out a way to assert a presidential power in a way that gives America extraordinary
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leverage over virtually every country in the world you would have said "Well I don't believe it i don't you know what
00:12:18
what is that power and he proceeded to do that and now basically every country in the world except for for China is
00:12:24
coming to Washington seeking to negotiate a new trade deal for the United States on better terms for the US
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if you told me any of that few days ago I would have believed you and I would have thought the consequences would be a
00:12:39
substantially deteriorated American economy and a substantially less secure i don't think
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we know that United States i don't think we know that it's not any surprise there's nothing surprising about the
00:12:51
fact that the United States has the power to extort Loto it's just and that's that's the country that was
00:12:58
singled out in the Trump formula for the highest level of protection there is no
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surprise in uh that there is no surprise that capacity to isolate itself to Washington will be very very Japan's
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coming to Washington south Korea is coming to Washington everybody's going to try to cut everyone's going to come
00:13:19
to Washington it never would have occurred to anyone with experience in government that the United States would
00:13:26
have any difficulty getting any major country to come send a representative to the United States to have a discussion
00:13:34
and a negotiation with a United States on a matter that was of concern to the United States they never could possibly
00:13:42
have commish any Let me let Sax reply to that and then Ezra I'm going to bring you in saxs go ahead you reply then why
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didn't they Larry do you think that all these countries were going to renegotiate their trade deals with the
00:13:54
US if President Trump asked nicely if he said pretty please renegotiate our trade
00:13:58
deals so you take down your trade barriers they would have done it if he had said pretty please with a cherry on
00:14:03
top that's not the way these things work he had to establish the leverage in the
00:14:07
negotiation first and the fact of the matter is he's the first president in decades who's been willing to do that
00:14:13
you don't get anywhere by just asking nicely and I think that what President Trump did over the last eight days is a
00:14:19
establish the leverage and b get all these countries to now want to negotiate a new trade deal with the United States
00:14:26
if this is such a terrific thing why do markets think it's so terrible for the American economy maybe
00:14:33
there maybe the market's just completely wrong but at least another possibility is the question that the market's
00:14:41
judging this that the market I mean job of markets is to look forward it's to look past the immediate it's to see what
00:14:50
the long run consequence are going to be and markets are making a pretty devastatingly negative judgment not true
00:14:57
not true not true that feels emotional and nice but it's just not accurate so let's just establish a couple facts
00:15:05
about quote unquote the markets number one there are two markets and they behave totally differently and sometimes
00:15:12
inversely to each other there's the stock market and there's the bond market with respect to the stock market what
00:15:19
they are debating and you're right Larry is what is the effective long-term rate
00:15:25
of return a dollar needs to generate in order to pay me back that dollar that is
00:15:30
what the fundamental stock market does and what we've seen for many years with trade imbalances trade deficits and
00:15:39
close to zero interest rates of which more of that happened under Democrats and Republicans we have allowed the
00:15:46
stock market to inflate past historical averages what we've actually seen happen
00:15:52
in the last week is what most people would call mean reversion the stock market is still way above where it was
00:16:00
last year two years ago three years ago what has happened is that the forward multiples have compressed so that's
00:16:07
number one that's a fact you can debate whether that's bad or good and I'm willing to debate that with you okay now
00:16:13
let's go to bonds and then with respect to bonds what we are seeing now is there
00:16:17
are two very complicated issues and we don't know what the unknown known is and let me be very specific in the last two
00:16:26
days we saw one part of the bond market totally get out of whack and what we know is that the
00:16:34
yields changed materially in a very acute way which is atypical of how the bond market typically digests a
00:16:43
philosophical change in approach to policy normally when you see an acute reaction in the bond market the
00:16:50
underlying reason tends to be some financial calamity in a participant what we heard in the last 24 hours is a lot
00:16:59
of this move may have been attributed to an enormous levered bet on US treasuries
00:17:07
by a Japanese hedge fund it will take three and four and five and 6 weeks for us to really know separately what we do
00:17:15
know though where the structural complexity of the market and this is where Larry I agree with you is acute
00:17:22
and important to observe is in the credit markets for private companies and that is where you have to pay a lot of
00:17:28
attention okay Larry let me let you respond to Chimath's response to you and then Ezra I promise you're going to come
00:17:35
in next larry go ahead martha as you well know the vast majority of financial thinking
00:17:44
emphasizes changes in the earnings prospects of companies associated with the strength of the economy as a major
00:17:52
source of stock market fluctuations and if you look at dividend strips if you look at what's happening to analyst
00:18:00
revisions that's got a lot to do negative prospects for the economy has a lot to do with why the economy why the
00:18:08
stock market has turned downwards the foreign exchange market's very big and it's a big referendum on whether people
00:18:17
have confidence in uh the United States and somehow tariffs reduce imports are supposed to reduce dollar selling and
00:18:28
make the currency go up and not only is the currency not going up it's going down substantially so we're seeing a
00:18:37
pattern maybe it's all just due to one Japanese hedge fund but maybe we're seeing a pattern that really looks that
00:18:45
looks pretty much like uh the Argentine pattern ezra you uh are hearing this debate i think there's no debate that
00:18:53
this was done in a very extreme fashion at a minimum do you wonder if this could
00:18:59
have been done in a more gradual or thoughtful way what's your take on the execution here by the administration of
00:19:06
these tariffs and their response to the markets i I can't say I wonder if it could have been done in a more gradual
00:19:12
thoughtful way it could have uh I I defer to Larry on the markets i'm more of a a connoisseur of arguments and
00:19:17
something I've been thinking about over the past very long 8 days is covering the 2024 election and covering Donald
00:19:25
Trump's tariff promises and it was a thing that liberals like me were doing where we would do these shows and say
00:19:31
Donald Trump is promising a 10% to 20% global tariff and then 65% tariff on China and if he does that it'll have
00:19:39
this set of effects higher prices it'll create financial uncertainty etc and what I would be told like the the
00:19:46
counterargument was oh you libs you always take him literally when you should be taking him seriously had
00:19:53
became Swami on my show he said he's not going to do that that's just a negotiating ploy and this was the the
00:19:59
common line from Trump allies on Wall Street and then I watched as he began doing not just that but layering uh a
00:20:09
series of then bilateral tariffs on top of that plan the markets began freaking out while they were freaking out a bunch
00:20:15
of his defenders said "No no no actually these tariffs which we told you were never going to happen are actually a
00:20:20
great idea we need to reset the entire global financial system and you can't uh shift those tectonic plates without
00:20:27
creating a few earthquakes then the moment the tariffs paused with the 90-day pause on the uh tariffs on top of
00:20:34
the 10% and the China tariff then I heard "Nope that pause is genius haven't you read the art of the deal?"
00:20:41
And what I would observe from this is it usually when an idea is good you don't need people jumping back and forth on it
00:20:49
so often going between these tariffs are a bad idea but they're a smart negotiating ploy to these tariffs plus
00:20:55
are an actually great idea and you should all calm down as Trump said you should all be cool back to know these
00:21:00
tariffs are a great idea i I think something I'd love to hear from David uh it's very hard to break the the pattern
00:21:06
being a podcast host i would like to hear what the measure of success in two years is right we can sit here and
00:21:14
speculate about the effect of these and I'm much more on on Larry's side than what I'm hearing from from Chimath and
00:21:18
David but if what are your measures what in 2 years good question if manufacturing you know employment or
00:21:27
whatever is below X will you be unhappy if GDP is what what is a a sort of uh objective yard stick where we could come
00:21:35
back in 700 days and say did this work out or was this a bad idea go ahead i would say probably the biggest thing
00:21:43
would be whether the US can re-industrialize to some extent so that we're not completely dependent for our
00:21:49
supply chains on on a potentially hostile adversary and what is the measure of that is it the the quantity
00:21:54
of manufacturing we're making is it the share of manufacturing i think that's a hard thing to understand you know during
00:22:00
co we learned point I am saying it concisely during co we discovered that we were
00:22:07
horribly dependent on a supply chain from China for some of our most essential products for pharmaceuticals
00:22:13
for other medical gear that we needed during co Sure so what would be if you were to put a metric on just as one
00:22:19
example but we've also learned that our entire supply chain for all sorts of industrial products now is dependent on
00:22:25
China and other countries so let's be more precise we have 4% unemployment at the record low of our
00:22:32
lifetimes and do you think Americans want to work in these factories and if so which factories obviously
00:22:38
pharmaceuticals that's a dependency obviously building ships and weapons that's a dependency i think we can all
00:22:43
agree on that and that might be hundreds low hundreds of thousands of jobs do you
00:22:47
believe we should be making Nike sneakers here do you believe we should be making jeans here again what what
00:22:52
would be the objective measure of success like a certain number of jobs certain number of factories certain
00:22:58
types of factories because the other piece that I don't understand and maybe you can inform me here Saxs is number
00:23:04
one who's going to do this work if we're uh going to be deporting millions of people and we have the lowest
00:23:10
unemployment of our lifetimes and we have automation coming to these factories and Americans don't want to
00:23:15
take these jobs historically how is this all going to work it seems a bit farcable to me that we're going to bring
00:23:22
these things back i don't think the the millions of Americans who lost their jobs in the heartland because we let
00:23:27
China into the WTO which is something that Larry I think supported and championed talking about decades though
00:23:32
right that's what started this whole thing yeah okay okay I don't think those millions of people want to lose their
00:23:36
jobs you're talking nonsense what are you talking about respectfully David you are Treasury secretary when we walk when
00:23:44
we walk China into the WTO and you're just still defending it I was just watching an interview hold David Larry
00:23:50
you just did an interview with Neil Ferguson answer why am I the only one who gets to
00:23:55
talk for two seconds before I get interrupted you guys give 5 to 10 minutes finish your thoughts finish your
00:24:00
thoughts i got to speak for two seconds then you interrupt me you speak for five
00:24:04
or 10 minutes go right ahead larry I just saw you do an interview with Neil Ferguson where he asked you was it a
00:24:11
good idea to bring China into the WTO was it a good idea to give them permanent normal trade relations status
00:24:17
basically MFN which is something that Bill Clinton did in 2000 and I admit it was bipartisan george W bush continued
00:24:24
it was and you were defending this as a good idea for the country what was the result of that over the past 25 years
00:24:31
millions of industrial jobs were lost or export to China millions of factories shut down the United States has a
00:24:38
diminished and hollowed out industrial base we certainly can't make the products of the future like drones or
00:24:44
semiconductors jason just to answer your question yeah obviously some industries
00:24:48
are more strategic than others do I personally care about sneakers or textiles no I personally don't do I care
00:24:54
about semiconductors absolutely do I care about circuit boards do I care about drones do I care about robots do I
00:24:59
care about EVs and cars absolutely okay those industries we are no longer in a position we are no longer in a position
00:25:08
as a country to make those products because we exported our entire supply chain and manufacturing base to China i
00:25:15
have three so how is that a good idea Larry okay I have three questions and then Ezra I'll go back to you and Shim
00:25:19
go ahead i have three questions for you one can you name a single trade barrier that was reduced by the United States
00:25:30
associated with China accession a single restriction that existed uh in the United States that had not been in place
00:25:38
for 5 years before that we removed during China's WTO accession can you name one i don't think we should have
00:25:46
done any of it Larry we threw open our markets to Chinese goods what restriction your your thesis is that we
00:25:54
threw open the market and therefore we exposed ourselves to all of this China thing and question I'm asking you is can
00:26:02
you name any restriction on Chinese exports to the United States that was in effect in
00:26:13
1999 and was removed by our WTO accession in 2000 can you name any such restriction just name this was a policy
00:26:23
that built up over time and was basically made permanent hold on it was made permanent when we walked China to
00:26:28
the WTO and gave them MFN status sorry i'm sorry David i'll ask the question one more time we had given them MFN
00:26:37
status 15 years before no one they had MFN status they had it for 15 years there was not a
00:26:48
single reduction in a barrier to Chinese trade so the way in which you're describing it is just bears no
00:26:57
resemblance to what it was bring him into the WTO what was the point of bringing him into the WTO bringing them
00:27:04
into the WTO was to use the leverage that we had to win a whole variety of concessions that enabled us to um Larry
00:27:15
more to China reciprocity this is an extraordinary history here let's move forward history you're denying totally
00:27:25
denying history all right listen this is a bad deal hold on a second i want to Let's go back to this just a minute i
00:27:30
just want to know the the whole argument you are making is about increased exports to the United States that had
00:27:40
bad consequences and so I'm just going to keep asking you what barrier that previously existed okay I'll name them
00:27:49
i'll I'll name them i'll name them go ahead let me get you number one prior to the WTO China imposed a bunch of export
00:27:57
duties and taxes on a whole bunch of goods to control outflow okay that prioritized domestic supply as part of
00:28:03
coming into the WTO China said "Hey hold on we'll limit these export duties to only a specific set of
00:28:10
products and then they cap those duties at agreed rates." Number two they eliminated export quotas they you
00:28:17
historically had export quotas to manage the volume of goods under that WTO commitment they agreed to phase out all
00:28:23
those quantitative restrictions on exports except were explicitly justified under WTO number three they removed the
00:28:29
export licensing restrictions number four they ended state trading monopolies for exports number five they liberalized
00:28:35
foreign trade rights the point is people thought that China was going to be a honeypot of economic activity and it
00:28:42
turned out to be a sucking sound a grand sucking sound of opportunity where the globalist corporations saw a massive
00:28:49
labor arbitrage so it's fair to say that it was done with the best of intentions
00:28:54
but it was a bad deal and they got one over on us want to say that rather than having 30 minutes of debate over
00:29:01
something that happened in the '90s I would I would like to go back to this question i keep not hearing I will
00:29:05
answer your question because that was a great hear from David um but I'm I'm I'd
00:29:09
love your student i never got a chance to tendency to just begin talking in an anecdotal
00:29:16
way about aneot announces you are going to look for where if it's if in four two years it is
00:29:29
under X I can come back and we can have a conversation here's the metrics ezra I'm so sorry here's the metrics for you
00:29:34
okay let's go back to Bill Clinton's speech that was given at John's Hopkins on March 9th 20 he was asking about
00:29:40
forward David forward-looking metrics what would you think would be successful two years from now not the history
00:29:44
lesson wait hold on we haven't finished the debate about China and PNTR okay but
00:29:49
my question predated that debate yeah we're trying to get Listen you're trying to change the subject let's just finish
00:29:53
up on this no no we're trying to move forward that's all I'm just trying to finish up on this topic okay we'll let
00:29:58
you get the last word about this okay you can have the last word march 9 2000 Bill Clinton announces PNTR at John's
00:30:05
Hopkins it's a very famous speech liam maybe you can tell us about how it got written anyway Bill Clinton promises
00:30:11
several things he makes a number of arguments for PNTR he does not think that this does nothing larry your
00:30:18
argument is that Bill Clinton didn't do anything you're saying that somehow it happened under Reagan or something like
00:30:22
that that's not what Bill Clinton was arguing he said number one there'd be huge economic benefits to the US he says
00:30:28
quote by this agreement we will increase exports of American products he means to
00:30:34
China that will create American jobs okay did that happen the way we intended i don't think so number two is he
00:30:40
believed that when you looked at the data on export flows from the United States to China it actually did happen
00:30:45
at a quite substantial rate but with huge trade deficits for the United States you're arguing that they they did
00:30:52
not act in a discriminatory way towards our products this idea that Americans could just do business in China the way
00:30:58
that they could do business here is ridiculous anyone who tried to do business over their nose you had to
00:31:02
create a JV you had to get a local partner give them 51% it was extraordinarily difficult we were
00:31:07
discriminated against Larry it's ridiculous to try and claim that somehow this was an equal relationship okay and
00:31:14
we imported far more from them than we ever exported to them so Bill Clinton was wrong about that number two he said
00:31:20
that signing PNTR and and bringing China to the WTO would promote democracy in China that we would export one of
00:31:28
democracy's most cherished values economic freedom did that happen i don't think so he said this would strengthen
00:31:34
global trade by ensuring China adhere to international trade rules reducing trade
00:31:39
barriers and resolving disputes through WTO did that happen i don't think so and
00:31:43
then he said on national security he said it would improve our national security to bring China to WTO and help
00:31:50
make them rich he said quote "If we don't deal with China in this way we will increase the prospect that they
00:31:54
will turn inward." That's not what happened we helped make China rich we've exported millions of jobs to them they
00:31:59
built up their economy and their supply chain to the point where now they are a global competitor to the United States
00:32:04
they're a pure competitor we turned that baby dragon into a Drogonsized monster that can now challenge us in Asia and
00:32:12
across the world for primacy why in the world we have done that just for national security reasons that was a
00:32:18
very foolish thing to do okay so Larry I I guess I have to let you maybe self-grade how did you guys do is there
00:32:26
any regrets as Sax is pointing out there obviously China has not magically become
00:32:30
a democracy but I guess you could argue they do have a middle class now we haven't gone to war with them so I guess
00:32:35
you could argue that this has been good for relations but to Sax's point they are incredibly powerful and they are our
00:32:41
top adversary how would you grade the history of this so we can move forward iowa was a surging growing reforming
00:32:52
economy growing at double-digit rates that it was before there was any WTO agreement the WTO agreement did not
00:33:03
change a single rule that represented a US restriction on imports from China it did
00:33:13
change a variety of rules not as far as I would have liked that let the United States export more to China and that
00:33:23
protected United States intellectual property in China and that brought China more closely into the international
00:33:36
system you need a counterfactual for what would have happened if China had been excluded from
00:33:43
the World Trade Organization that counterfactual is not that they would not have sold goods to
00:33:50
the United States that principle had already been crossed 15 years before not a single restriction was uh reduced so
00:34:03
look anything you would have done differently i just don't get I I don't get the whole uh mindset uh here i
00:34:11
understand that we should have done more as a country for the rust belt and invested in it much more heavily if I
00:34:20
was worried about dependence and strategic and all that the last policy I would have wanted to abolish was the
00:34:28
CHIPS act that's the largest boldest thing the United States has ever done to avoid dependence in a national security
00:34:38
area great let me bring the Trump administration has killed all of that jimoth you heard Ezra's original
00:34:44
question and the history here from Larry and David looking at there are some industries that we need strategically
00:34:52
pharma military cars these are fairly obvious rare earth minerals uh are obvious but we also have the lowest
00:35:00
unemployment of our lifetimes and Americans probably don't want to work in factories on mass what is your take on
00:35:09
going forward some metrics that this administration should not Sax is saying this you're saying it what what would
00:35:17
you measure this success as in terms of onshoring and reducing dependencies if to Ezra's point two years from now we
00:35:26
were degraded give us some specifics here Chama there is a major issue that the United States has that's much bigger
00:35:33
than China which can be framed in the lens of resiliency and the ability to fend for
00:35:41
ourselves there are supply chains that have many single points of failure and independent of whichever country that
00:35:50
single point of failure exists it could be an ally or it could be a foe or it could be a friendmy that creates risk
00:35:59
and I think what we are learning and David's right it was really highlighted during COVID we are not in a position to
00:36:05
take care of what we need so if I had to very precisely answer Ezra's question I
00:36:11
would say that we need to measure and protect four critical areas everything else I think we can deal with some
00:36:20
inefficiency some single points of failure but the following four areas Ezra I would say are sacrosanked number
00:36:27
one is all of the technology both the chips as well as the enabling technology around artificial intelligence it must
00:36:37
be a robust largely American supply chain it must you cannot have single points of failure outside the United
00:36:44
States because what you see is even in allied countries their posture towards things
00:36:50
like free speech and other things can eb and flow their posture on trade their posture on defense okay so that's number
00:36:56
one can change chips got it number two is energy we have a critical deficit of electrons in America we do not have the
00:37:05
capability we need to make the energy we need quickly in many ways we have supply
00:37:11
chain issues on nat gas we have critical supply chains that can be shut off by China around photovoltaics so whether
00:37:18
you believe in coal whether you believe in that gas whether you believe in clean
00:37:22
energy we are in a very we got to shore that up okay I think we're in agreement keep going number three are there are
00:37:28
critical material inputs that drive the material science of the future rare earths are an example going back to
00:37:36
chips things like gallium things like phosphorus even so we have a critical minerals and rare earths and m and
00:37:46
material science input problem and then the fourth Ezra are pharma APIs so that when American citizens get sick we have
00:37:54
the ability to not just make it but also design it and manufacture it because some of these APIs the active principal
00:38:01
ingredients for many of the drugs require very convoluted and complicated processes cold chains and the like and
00:38:08
again there we depend on folks whose view of the United States can change in real time so if I had to say to Ezra
00:38:17
what I would expect is if the United States government whoever was in charge would put those four things on a board
00:38:23
then detail out all of the key inputs measure how much we can make ourselves versus import and then basically try to
00:38:30
level that playing field we would be in a very good place a couple things because I think I probably agree with
00:38:36
all of that and what it sounds like is an excellent argument for Joe Biden's policies which were functionally maybe
00:38:42
not the pharma side just literally that let's pull out semiconductors and the semiconductor supply chain let's pull
00:38:48
out energy let's p a couple of things like that you know what was it a high fence around a small garden was what
00:38:54
Jake Sullivan called it let's particularly try to restrict the supply chain export of AI critical materials to
00:39:02
China um they had a whole set of policies about this now the Trump administration the thing we are in
00:39:08
theory here discussing is an extraordinarily broad-based set of policies um it is tariffs on not just
00:39:15
China it's on Brazil it's not just on critical industries like Chimath is talking about but it's on you know
00:39:20
mangoes and avocados and you know lumber from Canada and and basically everything
00:39:25
else i I guess there's an argument I could sort of extract out of this that the Biden administration believed what
00:39:31
they called French shoring which is that you want to create an integrated supply
00:39:35
chain of of allied countries that we can work with and that we can rely on and the Trump administration I think
00:39:43
believes something depending on who's talking more like that the entire supply chain needs to be on to America
00:39:50
specifically but one of the problems and the reason I I I'm keep trying to push people to be very clear about their
00:39:55
arguments and very clear about their metrics is that I feel like there's this king's cup of what we're trying to
00:40:00
achieve here where one day it's that we're trying to achieve the re-industrialization of the American
00:40:05
heartland and the next we're trying to replace the income tax with tariff income and then the next we're just
00:40:10
using it as all-purpose surplus leverage against any country that does anything we don't like and the next day we're you
00:40:17
know using it for uh an entirely third purpose and maybe we're just going to use it to to isolate China but to bring
00:40:22
in our our friends but none of these you can't do all of these things at once and
00:40:28
it needs to be very stable if you're going to get companies to do these long-term capex investment decisions
00:40:36
that take decades to play out nobody I know in the market is you guys didn't want to change anything you guys didn't
00:40:42
want to change anything about anything i wasn't in the I wasn't in the Biden administration number one I'm treating
00:40:46
Ezra and Larry as a team i would love to change i just want to make sure to change all here you mean the Democrats
00:40:53
didn't want to see if we can cause Let's see if we can Larry won't even admit that PNTR did anything can we not keep
00:40:59
doing PNTR for a minute let's look forward not backward look at the look at the chips act look at the IRA act they
00:41:04
did the exact things we're talking about larry go ahead let's see if we can find
00:41:08
a little bit of agreement please here i agree with Chamath's agenda i I may not agree in every detail but I broadly
00:41:16
agree with Chamath's agenda and I'll go a little further than that Ezra i think Joe Biden's attachment to energy
00:41:24
security was kind of selective and heavily oriented to green technologies not others i thought cancelling the
00:41:33
Keystone pipeline was a clear mistake i thought the stopping a variety of things
00:41:40
involving liquid natural gas were a clear mistake so I think the Biden administration's approach to regulation
00:41:51
that empowered every NGO with respect to stopping transmission lines with respect
00:41:57
to constructing power plants because of the importance of democratic constituencies was a mistake so I think
00:42:05
energy security is a central objective of policy and that there's a lot of room to move beyond what the Biden
00:42:13
administration did i actually believe that very strongly and agree with Chimath and David what I don't
00:42:20
understand is chips absolutely right the chips act was all about making there be an
00:42:29
American semiconductor industry with production in the United States as a central priority the Trump
00:42:39
administration has declared war on that rare earths you want to have a strategic
00:42:45
petroleum reserve for any rare earth you want to do more mining in the areas that
00:42:51
Chamath says we should in the United States or in friendly countries i am all for that here's what I cannot understand
00:43:00
chamath they don't see how your resilience agenda drives anywhere near liberation day and the emphasis on uh
00:43:13
tariffs it drives towards a set of specific industrial policies perhaps including tariffs in some particular
00:43:22
product areas but steel from Canada anything from loto any natural resource uh product
00:43:37
across the board tariffs on everything i think you are absolutely right about resilience and that traditional
00:43:44
conventional economics has given it too little thought and that co pointed that up as a central issue what I can't
00:43:55
understand is why Donald Trump's echoing of Liia Koko from the 80s about tariffs is responsive
00:44:07
to any of that but but this is the point I'm trying to draw around Biden i'm not
00:44:12
saying I agree with every way the Biden administration defined its objectives i just wrote an entire book about the
00:44:17
failures of Democratic policym in this specific era what I am saying is the bid administration's view of trade was that
00:44:24
there are targeted industries we should be putting a lot of both uh domestic policy and international policy into
00:44:31
play in order to protect and reshore or French shore and the Trump administration's view is that you have a
00:44:38
generalized problem running all across the world that requires highly general policies that then when I ask people to
00:44:45
defend it they sort of move to this targeted argument donald Trump's view we can I I feel like we end up making
00:44:51
something that is not that complicated um into something much more complex than it is since the 80s you know Larry's
00:44:58
point about Liika Donald Trump has seem has appeared to hold the view that anytime the US is operating at a trade
00:45:06
deficit with someone else that is uh evidence we are being ripped off and that is how you get at least the initial
00:45:13
set of tariffs here that work off of bilateral trade deficits and try to correct every single one with every
00:45:20
single country be it Loto or a collection of islands inhabited by penguins i I just I think it's really
00:45:27
important to be connected to the policy that was actually announced and not sort
00:45:32
of projecting all of our own onto it like yes Larry's right that you could have a different set of critical
00:45:37
industries than Biden did the Biden team was very focused on clean energy over other kinds of energy i also did not
00:45:42
agree with like the liquid gas pause i thought there were some you know there and we did not do nearly enough on
00:45:48
things like permitting reform right there's a lot you could have done that they didn't do but if what you have in
00:45:53
your head is a targeted idea of reshoring specific industries or nearshoring or frenching or whatever
00:46:00
which is kind of what I'm hearing from um from a number of people on this call then it seems like you would want
00:46:05
targeted policies and what we have is not targeted policies it's broad-based policies a 90-day pause on larger
00:46:11
broad-based policies and a huge trade war with China i would like to hear a defense from somebody
00:46:19
ezra and I agree specific policies i'd like somebody to explain to me why it's a remotely sensible theory to say that
00:46:28
the United States is being exploited by any country where the overall pattern of
00:46:36
trade is uh such that we are running a trade deficit and maybe in the process you could explain to me why my grocery
00:46:45
store is exploiting me because I'm running a massive trade deficit with that okay trade deficit shimath or Sax
00:46:52
who wants to take it i can start the then maybe Sax can Saxon so let let me actually start by giving some credit to
00:46:59
where Biden did do a few things right just in the spirit of finding some common ground inside the IRA i think
00:47:07
that there were two things and I've said this pretty repeatedly but I just want to put it on the record again the ITC
00:47:13
credits and the ITC transfer markets for those credits the tax equity markets are
00:47:20
critical industries in America to support private investment in all kinds of very complicated markets energy
00:47:28
markets being the most important and what the Biden administration did to their credit was remove the uncertainty
00:47:36
because those things had to be renewed over and over again and they gave us a very long window where we could
00:47:42
underwrite investments to your point Ezra that was smart but it's important to also remember that in order to get
00:47:49
Biden's budget done what they did was they had Mansion roll over on permitting reform and Ezra you know this probably
00:47:55
better than all of us when you look inside of the chips act as smart as that initial policy was if you ask why has
00:48:03
nothing actually happened why have no fabs actually been built other than grandio statements the answer is that
00:48:11
which you speak to in your book it's just this complete malaise and inability to actually get these things permitted
00:48:17
and turned on even when it's right so I just want to acknowledge that that's there so Larry to very very importantly
00:48:23
to your question the thing that we have to acknowledge is that in certain countries what you have is a very blurry
00:48:30
line between private and public industry and they have this very tight coupling and again I hate to go back to China but
00:48:36
it is the best example of this where what do they have choose one other country just for the sake of it we can
00:48:43
use Korea we can use Japan we can use Germany okay there are instances where the government balance sheets support
00:48:52
private industry they can support them in three different ways number one is the tax credits that they can use the
00:48:59
subsidies that they can use to build the things that they need number two is how
00:49:05
then they can support that in the active selling and engagement in public spot markets to shape the demand curve of the
00:49:12
things that are made and then number three is the taxation on the back end the terms of repayment and the capital
00:49:19
cycle those are things that in the United States we overwhelmingly turn the responsibility over to the private
00:49:28
markets to do we are the cleanest the purest form of capitalism in that sense but many other countries are shades of
00:49:37
this and again let's not talk about China which is the So so Larry hold on a second so Larry so what you have is how
00:49:43
do you defend dumping how do you defend that how do you defend spot market manipulation that drives American
00:49:50
companies out of business how do you fight that and I think here's the problem if President Trump had announced
00:49:59
a big broadening of anti-dumping law to confront a variety of instances of what he what the administration after careful
00:50:11
economic analysis saw as inappropriate subsidy i might or might not have thought that they were doing that in the
00:50:20
right way but we wouldn't be having this argument the front pages would not be about tariff policy day after day and
00:50:29
the stock market would not be down by $5 trillion the central thing we are discussing is
00:50:38
not whether there are sensible modifications to trade policy to respond to bad practices in other countries or
00:50:45
to promote resilience those are technical debates that frankly aren't that interesting to a large number of
00:50:52
people the question is whether declaring that we need a whole new era of US economic policy
00:51:01
around universal tariffs against everything is so I think is a rational step forward or
00:51:12
using bilateral trade surpluses now we're talking about the Monte Carlo simulation of how to achieve
00:51:18
the outcome and what I am saying is there is just as much as you and I want to guess the fundamental and honest
00:51:26
answer is none of us know the people in the White House what they know they will
00:51:31
share a little bit at a time because the reality is if you what you wanted was a
00:51:36
white paper or if what you wanted was paint by numbers I think back to David's point all that would do is just take any
00:51:43
leverage that they had and give people the opportunity to shape their response and I think in traditional game theory
00:51:52
and and again in traditional game theory I think the right thing to do is when you're playing poker you play street by
00:51:57
street what's the flop make a set of actions what's the turn make a set of actions what's the river make a set of
00:52:03
actions and I think if you're going to play to win this is what they should do keep their cards very very close to the
00:52:10
vest realize that you can't necessarily surgically go and attack the lithium market first then the rare earth market
00:52:18
second because it all goes back to the same balance sheet it's the same actor over and over i think there's a useful
00:52:24
analogy to draw here i think a lot about an article Mark Danner wrote in the New
00:52:31
York Review of Books many years ago about the Iraq War and it's an article that has stuck in my mind forever
00:52:36
because what he says about it is that one of the the difficulties of the politics of the Iraq war is there was no
00:52:44
one war there was everybody's private war that they were projecting on to the Bush administration you have the liberal
00:52:50
humanitarian vision of why we were going to war and what that war would look like
00:52:53
you had a realist vision for it you had a vision that was more about uh weapons of mass destruction and keeping the
00:52:59
homeland safe from terrorism you had people believe there was an Iraq al-Qaeda connection there were really
00:53:05
dozens of these which is how you got as broad a coalition behind as bad a policy
00:53:09
as that together because everybody said you know they're being a little bit vague about what's really going on here
00:53:15
and why we're really doing this but I bet you if you go into their heart of hearts what they want is the thing I
00:53:22
want even though the policy doesn't quite match what policy you would get from starting from my premises and
00:53:29
that's really what I hear here i hear it on this show but I hear it in general in
00:53:34
the discussion around this that there are a lot of different objectives being projected onto Donald Trump and his
00:53:40
trade war the objectives do not fit the policies we're seeing the objectives are
00:53:45
not uh stably articulated by Donald Trump or the people around him nor is any specific objective being articulated
00:53:51
in a stable way without contradicting objectives also being articulated at the same time and look maybe in the end and
00:53:58
this is why I want to push you all on metrics you get something you like out of this but you're giving away a lot of
00:54:05
clarity just on the trust that what is happening is people are keeping a good hand of cards with a good strategy of
00:54:12
poker hidden from you as opposed to what's happening is what we seem to be seeing in public which is Donald Trump
00:54:18
is a chaotic and erratic person they are making policy in a chaotic and erratic way that policy is having chaotic and
00:54:24
erratic consequences and then they are operating and moving on the fly in a chaotic and erratic fashion sax you
00:54:31
heard Ezra say that they he feels this administration is being a bit chaotic in the approach here what's the counter to
00:54:37
that you heard Shamant say "Hey this is a really thoughtful they're holding their cards close to the chest." Maybe
00:54:42
you could clarify what your position is is this too chaotic or is this crazy what I'm hearing is a bunch of process
00:54:48
objections to Trump's policy and I'm hearing a bunch of nitpicking what about Lutu or whatever okay look this is a
00:54:56
very unrealistic view of politics when we've had a bipartisan consensus in Washington for decades that unfettered
00:55:03
free trade is a good thing no matter how big our trade deficits got no matter how
00:55:07
rich and powerful China got no matter how unfair the trade practices got no matter how many millions of our jobs and
00:55:13
factories got exported overseas this has been the bipartisan consensus in Washington and Larry you're right that
00:55:20
it started before the Clinton administration and the George W bush administration definitely accelerated it
00:55:25
but there has absolutely been a bipartisan consensus in Washington that this sort of unfettered free trade
00:55:30
policy was good for the country now how do you change that now look you can nitpick this and you can make all the
00:55:38
process objections you want but Donald Trump has changed the conversation i just want to let you keep saying I I've
00:55:45
offered a process suggestion when I'm objecting to the absence can I finish you were pointing to Donald Trump's
00:55:52
views when he was a public figure in the 1980s and 1990s on trade as somehow he was wrong he was not wrong he was one of
00:55:59
the few people and the few public figures in America who was right about this i think most people today would say
00:56:05
he was right about this that throwing open our markets to these to these foreign products without thinking about
00:56:12
the consequences was a mistake you guys have me completely confused really you do no I'm confused about the incurrence
00:56:19
of your position larry Larry David you still believe that the Clinton administration let's call it a
00:56:25
bipartisan consensus of that era was correct while at the same time you're arguing that PNTR didn't do anything i
00:56:31
think it is really telling that you are so much more loathed to defend what we are seeing than to attack what has been
00:56:37
if you want to it's fine like I guess you could have It would be interesting to have you and to go if you'd be
00:56:42
interested to have you and Larry go 12 rounds on the Clinton era you know when I say to you listen there is not a
00:56:48
stable set of objectives that fit the policy here you say that's a process i just would like somebody to defend the
00:56:56
thing they keep actually doing i would like somebody to explain to me here i understood Chimath Chimath resilience
00:57:05
central four sectors are we more resilient in the four sectors what's the answer in two years from now i got that
00:57:15
i agree all that i cannot make any linkage between a 10% across the board tariff a tariff on steel a tariff on
00:57:29
auto on automobiles and much of what the rest of the president says and your very valid
00:57:38
objectives i hear David this free trade has destroyed America and we're gonna undo that and
00:57:48
viscerated the heart and all this and I just want to understand how we'll know okay whether we have fixed okay look
00:57:54
well I I can answer this too go ahead go ahead David all right look Larry and Ezra welcome to a political coalition
00:58:01
different people have different objectives just like different people had different objectives for the policy
00:58:05
that we had in place 25 years ago okay there are some people who think that we should have an across the board 10%
00:58:11
tariff to raise revenue because the country needs revenue and that that would be a better way to raise revenue
00:58:17
than to say have income taxes or capital gains taxes stan Ducken Miller who's not
00:58:21
a fan of tariffs nonetheless said that he would support a 10% tariff no more than 10 but up to 10 as a way to raise
00:58:29
revenue okay that's his point of view there are other people and I would say I'm more someone who thinks about the
00:58:35
geopolitical consequence of this who think it was a huge mistake to throw open our markets to Chinese products
00:58:42
basically feeding their economy to the point where they could become a pure competitor of the United States and
00:58:48
threaten the US to threaten the US world order there are different people hold on
00:58:52
there's different people with different objectives one more time because you're you are just not speaking truth
00:59:00
want to know one restriction that the United States had on Chinese products that was changed in the year 2000 you've
00:59:12
said seven times throw open our market to Chinese products i want to know one example in which the United States
00:59:22
opened its market in 1999 the point just one the point of Well the name one product where
00:59:32
restrictions were reduced okay David Namon listen you're mischaracterizing what PNTR did we can play this like uh
00:59:38
Grock game if you want people can go ahead and grock this question and they'll get this answer look the answer
00:59:43
is that before PNTR China was granted MFN on a year-by-year basis by Congress correct pntr made it permanent what does
00:59:52
that do it created a permanent new framework for trade relations between the United States and China so it it
00:59:58
created permanence and it created a certain expectation what did that enable massive investment by US companies in
01:00:06
China so all the bean counters from McKenzie started talking about outsourcing and just in time
01:00:13
manufacturing they started moving the factories over there in a much greater way you know the Mitt Romney and private
01:00:19
equity hold on for a second we finished the Mitt Romney and private equity said this is a great idea let's move all of
01:00:24
our manufacturing could we agree that whether or not it was the WTR the bankers on Wall Street got to
01:00:29
financialize and securitize all sorts of new products okay that was the result of
01:00:35
PNTR the thing we have to decide really right now as a country is if the thing that you all are trying to replace us
01:00:41
with is better right if it will work and so I want to go back to what you said a
01:00:45
minute ago David when you're like "Welcome to political coalitions." Uh Larry has been in politics a long time
01:00:50
he was Treasury Secretary i've covered politics for a long time i'm familiar with political coalitions in fact a lot
01:00:55
of my book is currently about the problems in the way the democratic coalition with too many objectives all
01:01:01
at once can end up destroying the ability of the policy to actually achieve a clear goal so this is this is
01:01:09
precisely the nonprocedural objection I am bringing here this is why I think it is dangerous to be treating an upheaval
01:01:17
of the entire global financial system without a clearly defined objective that is connected to a policy and so the the
01:01:24
question is if the idea is that there are all these different players here who have all these different policy
01:01:30
objectives that would connect to all these different policies and everybody's getting a little bit of them and Trump
01:01:35
is kind of flipping back and forth through different versions of them you could end up despite yes whatever
01:01:41
mistakes are made in the free trade consensus which I do agree that we had you could end up with a bad next not
01:01:47
even consensus just a bad next policy a unclear coalition that is fighting with itself and is making policy without a
01:01:54
strong process can create not like nitpicky procedural problems but actual damage and disasters shimoth let's look
01:02:02
let's try to look forward here this obviously has been a cataclysmic chaotic intense whatever descriptor you want to
01:02:11
use of the past week productive is okay sure and it certainly created massive swings in the market is this all going
01:02:19
to cause a recession is this too violent of an approach to markets that is I think a valid uh criticism that people
01:02:29
have including you know the majority of business leaders are saying "Hey I think
01:02:33
I have to start layoffs." You had United Airlines say "We're not going to give any guidance." This feels to business
01:02:39
leaders Republican business leaders primarily and market participants as just far too chaotic and they can't plan
01:02:48
and if they can't plan then they stop planning which then is going to cause layoffs it's going to cause bankruptcies
01:02:54
and uh who knows what the second and third order consequences are going to be so what's going to happen here over the
01:03:00
next couple of weeks and months so just on the recession question and then I'd like to give an answer to Ezra and Larry
01:03:06
i think that and I've said this for about a year it was clear to me that we were sneakily in a recession before and
01:03:14
the reason was the vast amounts of money and deficits that were being pumped into
01:03:21
government services that perverted the actual GDP picture in America so as Doge sort of slows down that money flow and
01:03:32
as the consensus in Congress gets to a better budget I think that you're going to see that the government was probably
01:03:41
responsible for 100 to 150 basis points of just waste and if you take that out you will technically be in a recession
01:03:49
that was independent of these tariffs and I think that that's where the true economy Jason was and I think that we're
01:03:56
going to just find that out so that's that on where we go from here i can give you an anecdote and I'll give you a
01:04:03
projection the anecdote is this weekend my wife and I were in bed and a person called me very successful businessman
01:04:10
who was representing the president of a country saying "Hey I need some advice what do we do here?" And we walked
01:04:16
through the three things that he and his government that they government were trying to figure out because they wanted
01:04:22
an off-ramp they were like "I'm ready to cry uncle we're ready to tap out." And again he was calling me as a private
01:04:30
citizen but I think this conversation was very instructive number one he's like "Look we have these really high
01:04:35
tariffs on inbound American products we're happy to cut these things to zero." And I said "Well you should do
01:04:40
that." Second while we were exploring he's like "Yeah you know we have a enormous capital purchase with Airbus."
01:04:46
I said "Cancel it swap it to Boeing." He's like "Done." And then the third which was interesting is he's like "We
01:04:53
need to import an enormous amount of energy." And I said "Well who do you give that concession to right now?" And
01:05:01
it was a non-American company and I said "Well why wouldn't you just RFP that to
01:05:05
an American business and let them compete?" And he's like "We'd be open to that as
01:05:11
well." So he said "You know we're getting prepared we want to find a way to talk to the Trump administration."
01:05:16
And I'm like "Great however I can be helpful I'm help I'll be helpful to you." I got off the phone and I looked
01:05:20
at my wife and I said "If even 30 of these 75 countries do a deal anywhere remotely close to this this was an
01:05:28
enormous win." So let me give you my projection Jason of what the art of the deal could be here what you do is you
01:05:35
can rewrite Bretonwoods 2.0 what was Bretton Woods 1.0 it was fixing exchange rates it was setting up the IMF it was
01:05:42
setting up the World Bank those were the conditions on the ground post World War
01:05:45
II it made a lot of sense what would we do if we had to write the Mara Lago accords right now i think what we would
01:05:51
do is work backwards from the question that Ezra asked and the answer that I gave how do we create resiliency in
01:05:59
these critical markets number one a framework for that number two is how do we create limits for government
01:06:06
sponsored intervention against capital for-profit companies many of whom are American so that we can actually compete
01:06:14
on a level playing field and then number three very simply if you can do business
01:06:19
in my country why can I not do business in yours and I'll just give you that story for one second i was responsible i
01:06:25
was the head of every single entity of Facebook outside of the United States i opened every market my team and I
01:06:33
created a framework for dominating i figured we figured out how to crack Brazil India Russia you know the one
01:06:40
market that we never could ever make a single iota of progress say it Jason with me well China China China Russia no
01:06:50
Iran we won in Russia so my point is in every single market except one is it that we were just lucky in 174 markets
01:06:58
and one we were stupid no so I think that the moral accords this sort of Brettonwoods 2.0 is the outcome Ezra it
01:07:05
will basically use tariffs as a way to get these governments to a table and allow us to negotiate a much fairer
01:07:14
economic quid proquo here's my concern with with this theory and I want to leave out but I'll leave the the sort of
01:07:19
question of what the real economy looked like to Larry this world in which what is happening is a business leader who
01:07:25
represents a country is calling you and saying okay what do we need to do to deal right they're coming to Donald
01:07:29
Trump and they are going to come to Donald Trump as Larry said earlier there's no doubt that the US economic
01:07:35
leverage is enormous and virtually every country faced with our might is going to
01:07:41
try to cut a deal with us but then there's a call they're not making to you that they're making to someone else
01:07:47
which is we have allowed or we have approached the US as a functionally benign partner for a very
01:07:57
long time and now they're becoming a dangerous partner they are very very strong and they will use that strength
01:08:05
to crush countries smaller than them when it suits the whims of a personalist regime run by a person who his feelings
01:08:15
even about people that the US or countries the US traditionally considered allies like Canada or much of
01:08:20
Europe uh change and so yes on the one hand for the next year or two we want to avoid getting a big tariff slapped on us
01:08:28
and so we got to figure out what is it that if we offer it to Donald Trump he will say to himself that was enough uh
01:08:36
of a give that you know I can move on to someone else i can make them the the focus of my eye and on the other hand
01:08:43
they're going to begin to build fortresses and deals and partnerships and approaches that make sure they are
01:08:49
less exposed to our ability to wield this power against them in the future but before I came on the show I had gone
01:08:56
on X and I saw a clip of you going around where you were saying that one of the problems with the Biden
01:09:01
administration was that you couldn't get anybody on the phone and in the Trump administration you make the call the
01:09:06
deputy chief of staff picks up you say "Hey I need you to talk to to this company they I work with them they're
01:09:11
freaking out about the tariffs the deputy chief of staff tells the company they they work something out." No no not
01:09:16
that they work something out they listen they listen this this world in which we
01:09:22
are doing the dealm by individual relationships by who can get their calls answered not by rules that feel clear
01:09:29
and stable that's how the Hold on a sec but that's how the Biden administration worked that's not what said that's not
01:09:36
what I said well no Ezra you're trying to make it sound like corruption hold on it was George Clooney that was making
01:09:43
the call who cares what George Clooney thinks didn't you just say on uh well I was very very critical of Biden
01:09:49
I saw that clip Ezra and what Jamas said what Jamas said is simply that the White
01:09:54
House listens when he calls whereas he couldn't get his calls returned by the Obama administration great i think we're
01:10:02
actually not saying something all that you made it sound like corruption well I actually think what Trump is working
01:10:08
through is deal patronage based on how he sees the company i'm sorry the other country what happened ezra can I just
01:10:17
make sure that this is clear to you this is a 150year-old American business i have no interest in that company except
01:10:24
a friendship these are Americans hiring Americans trying to compete with China who were very negatively affected and
01:10:32
all I said was why don't you have a chance to explain what's happening on the ground my point that I was trying to
01:10:37
make and maybe I didn't make it clear enough so let me set the record straight the Trump administration what I have
01:10:42
seen as a businessman is willing to hear the conditions on the ground as a businessman when I was building Ezra
01:10:49
just to be clear critical rare earth supplies for America under the Biden administration battery can materials to
01:10:56
compete with China under the Biden administration AI chips to be the best inference solution under the Biden
01:11:02
administration i couldn't get a call back that's just the facts not because I wanted anything just to tell them what
01:11:10
was going on so fair enough insane okay fair enough i I am not telling you that the B
01:11:17
administration shouldn't have returned your calls what I am saying is that the degree to which Trump first and then
01:11:24
everybody around him as an example of him because culture comes from the top is working off this kind of individual
01:11:30
call and deal making worries me because I believe that you had every one of these calls you're saying and they went
01:11:36
exactly the way you say they went and then the calls that you are not getting and they are two minutes ago Ezra you
01:11:43
were saying that a 10% across the board tariff was too broad and we need to go industry by industry and now you're
01:11:49
saying that it's going to be too particular and he shouldn't do country by country negotiations the word
01:11:54
dealing people listening to people is not deal making Ezra it's just listening to people are you really going to be
01:12:01
tell me that the way Trump himself works is not individual deal making people with
01:12:10
Is this really is this really the argument here i will tell you what I've seen and David's seen much more what I
01:12:16
have seen from the president is he takes in hundreds of opinions and starts to figure out what the ground truth is and
01:12:24
the reason is when you only listen to one or two every president probably deals with this you have this
01:12:30
information asymmetry problem because you are the president of the United States and so how do you cut through it
01:12:35
you talk to hundreds and hundreds of people and you triangulate what the truth is so it's not like he's giving
01:12:41
any favor he's collecting information that is a good process you want the most powerful person in the world to get to
01:12:47
the ground truth go ahead Larry i am all for information gathering i agree that the Biden administration did
01:12:58
not do a as good a job as it could have of maintaining relations with the business community i agree that it's a
01:13:05
good idea for there to be quite extensive connection i am also appalled by the halfozen phone
01:13:14
calls I have gotten from prominent people in business who have said "I'm used to being shaken down when I try to
01:13:24
do business in some parts of the world." It's a new experience to be shaken down
01:13:30
by representatives of the president of the United States what's the shake down when you have close connections you help
01:13:38
us you contribute this way you no sense at all makes no sense what the president
01:13:43
has been trying to do is encourage domestic maybe it is an erroneous perception to which I have been exposed
01:13:53
repeatedly but it is total nonsense but it is a pervasive total nonsense you guys are very confident that your true
01:14:01
and everybody else's aren't it is a perception that is shared by almost everyone who has experience in the
01:14:09
conflict of interest area who has looked at the situation of Trump administration
01:14:17
officials and those working as special government employees in the Trump administration what are you saying so I
01:14:24
just went through that whole process Larry it will be false but I can speak to this cuz I just went through this
01:14:30
process it took forever it took like months okay i went through the same process everyone else goes through the
01:14:36
OGE career staff have to go through all of your disclosures and they figure out what the conflicts are and then you have
01:14:42
to devest them okay it's the same process everyone goes through so you're all over the place making all sorts of
01:14:48
accusations here so if you have some proof or you want to accuse someone then why don't you just do it but otherwise
01:14:54
what you're saying is just not true it's not backed up by anything great they shut down Eric Adams that's my That's a
01:14:59
direct accusation that happened in public they shook down Eric they shook down Eric Adams because they put him in
01:15:04
his pocket that's a big deal y'all like that is the way they are doing business here you guys are all over the map
01:15:11
making wild accusations first it was a second resations because of their discomfort with being overruled by your
01:15:23
colleagues in the Trump administration so the suggestion over the map you have been held to the same ethical standards
01:15:30
that I was held and that other members of previous administrations including the Bush administration were held
01:15:38
unfortunately is not right no that's that's false all right well there's two issues you may not be familiar but I had
01:15:47
to devest hold on i had to devest a lot as I talked about on this show in any event you guys are all over the map
01:15:52
making wild accusations two seconds ago the shakeddown was at the level of companies then all of a sudden it was OG
01:15:58
and ethics then it was something about Eric Adams integrated business it's nobody's making I like that you're like
01:16:04
"Who's Eric Adams?" We're not making I know who Eric Adams is i supported him on this show forward way that Trump does
01:16:11
business at every level at which he operates and so it is happening at every level of his administration you know I
01:16:17
got to say I don't It's not that I It's not that I don't want to hear you i don't want to hear it you know how this
01:16:23
started is because Hold on a second Ezra you misqued something Chamas said on another podcast where all he said was
01:16:30
that I can get my phone calls returned by this White House where I couldn't with Obama or Biden even though I was a
01:16:36
big donor hold on and you guys have somehow morphed that into some sort of like broad ranging accusations of
01:16:43
corruption or something like that no evidence clear about what the accusation of the way Donald Trump works is ezra
01:16:51
your accusation of me tried to infer some form of corruption or some form of dealmaking none of that happened what I
01:16:56
what I again I'll tell you I connected the White House so they could hear on the ground what's happening from a
01:17:02
company who was very negatively impacted by the tariff so that they had the complexion of that feedback as well okay
01:17:08
do you deny the possibility that your experience with the Trump administration might be different than people who they
01:17:13
feel are less allied to them than you are ezra I'm will I'm willing a straightforward question what are you
01:17:18
sure that you're a good sample i don't even know what we're talking about anymore also I think what we're talking
01:17:24
about right now is that people who donate to politicians have unique access to politicians i think we can all agree
01:17:30
that's not true just to be very clear I give I have given way more to the Democrats than I've given to Donald
01:17:36
Trump and you were disappointed about that i didn't say anything about your donations said about where your ally now
01:17:42
and by the way like what what's crazy is I was the same intellectual person I was
01:17:46
under Biden that I am under Trump it's just that it seems like the Trump administration is like "Well this is a
01:17:51
smart guy with some opinions let me listen." Biden I And by the way and Larry you and you know this these were
01:17:56
some very close friends of ours that we share mutually that would not even return my calls so it is a little
01:18:02
personal for me as well Ezra just to be honest with you i'm not going to go there but the point is that's fair i
01:18:06
have never I have never seen a single iod of any form of anything other than just gathering information from the
01:18:15
Trump they've never asked me for anything they've never tried to direct me to do anything they just want to know
01:18:20
what's going on when you ask them hey can you talk to such and such a person i can assure you that your experience is
01:18:26
not the experience of quite a number of the nation's major law firms it is not the experience of quite a number of the
01:18:35
nation's business leaders it is not the experience of quite a number of um the nation's uh
01:18:44
universities that I am neither the first nor the hundth person referencing efforts at
01:18:53
extortion to use the movie The Godfather as a metaphor for the for aspects of the
01:19:00
way in which our country is uh being uh governed what a surprise democratic universities and Democratic law firms
01:19:08
are making accusations all right let's move on we think we've the tariff issue and I think we can all
01:19:15
agree that if you donate money you might have better access to politicians i want
01:19:19
to talk about the future especially Jason if you give 10% to the big guy then you really get access listen we can
01:19:24
we can do these allegations if you you know yeah there's a long list of people who've made donations and there's a long
01:19:31
list of favorable things that have happened to them after across all administrations and we can debate cause
01:19:38
and correlation all day long here but I wanted to talk about the future of the Democratic party while we're here Ezra
01:19:44
you have been on a tour talking about exactly how incompetent how terrible of a campaign they ran what is the future
01:19:55
and I'll let Larry get you know his uh his two cents in here as well is there any saving this party and if so what
01:20:02
would it look like well well there's a the problem of the party and the campaign let me bracket that cuz so my
01:20:06
book Abundance is more about how Democrats govern at both the state and and local and federal level and some of
01:20:12
the pathologies of governance there they make it hard for for liberals to achieve
01:20:16
their goals there are versions of this on the right but I'm not really writing about that in in this so my book
01:20:21
Abundance Derek Thompson is about the tendency Democrats have to subsidize things where they are choking off the
01:20:27
supply of the thing they want people to have more of so think about housing in California to get rental vouchers from
01:20:33
the federal government but we make it incredibly hard to build homes clean energy which a lot of the B
01:20:38
administration's policies were about putting huge subsidies behind the building of more clean energy but they
01:20:44
didn't really do anything to make the permitting the sighting the state capacity to do all of that uh capable of
01:20:50
building that amount of of clean energy at the pace they foresaw us building it right that they wanted us to build it
01:20:58
and behind this and and I can sort of go into a lot of detail here but is a a diminishment of state capacity that
01:21:04
comes from wrapping the state itself in red tape and regulation i think we think
01:21:09
and have an intuitive way of thinking about the idea of deregulation on the private sector right when the government
01:21:15
is imposing regulations on private companies and it's making it hard for those companies to act to do business
01:21:21
etc but this happens first and foremost on the government itself one of my favorite examples I've been using lately
01:21:27
there's a new Rand report that looks at how much it costs to construct a square foot of housing in California in Texas
01:21:34
and Colorado and it does it on two kinds of housing market rate and it does it on
01:21:39
affordable housing subsidized by the public sector and the cost of creating housing in California market rate is 2x
01:21:46
in California what it is in Texas but when you get into that publicly subsidized housing where you have all
01:21:53
these new standards and rules and regulations being triggered by the addition of public money it goes up to
01:21:58
about 4.4x and so you have this real problem I think in a way of governing that evolved in the 70s the '8s there's
01:22:07
a kind of small government version of the Democratic party the new left more individualistic that was worried about
01:22:13
too much exercise of government power and now that we are in a different world with different problems we're thinking
01:22:20
about re-industrializing we have a housing shortage and you have things like the Biden administration which
01:22:25
really are thinking about how to build a lot more in America but you don't have either a policy architecture or I would
01:22:31
say a governing culture that makes that possible yeah and and so a lot of this came from Francis Fukayyama I think uh
01:22:39
and vto votocracy vtocracy how do you pronounce fukyama is a great sort of related concept of vetocracy which is
01:22:45
that he also got another great concept since we're bringing up fukyama which is that neoliberalism which we've sort of
01:22:51
been talking about here with the WT and other things he says people think about it as the veneration of the market but
01:22:56
what it is first and foremost is the degradation of the state and I think that explains a lot more about the world
01:23:02
we're in than people recognize ezra you can agree with this francis Fukuyama is probably one of the most polarizing
01:23:07
modern academics in America as you read him people end up in they're very pro- Fukuyama or they think Fukyama because
01:23:14
Yeah i mean look cuz cuz what happened is I mean just to uplevel this for a second is that you you had Fukuyama
01:23:19
write the end of history which basically said that democratic capitalism is the end- all beall and we're basically down
01:23:25
to one system and the whole world's going to run on that system and that philosophy then animated I would say a
01:23:33
neoliberal and neoonservative consensus in Washington for 25 years and there were three key pillars of that let's
01:23:40
call it globalist consensus number one we'd have open borders free flow of labor in fact the Wall Street Journal
01:23:47
editorial page which you know is considered to be conservative actually supported a constitutional amendment
01:23:52
saying that we'd have open borders number two we'd have open flows of trade and capital so basically the unfettered
01:23:59
free trade agenda and then number three the third leg of it was Pax Americana we
01:24:03
had deploy American troops all over the world to defend this consensus because they'd be greeted as liberators not
01:24:09
occupiers i think all three pillars have been refuted and the the person who has
01:24:17
represented the shift in this consensus to I'd say a new agenda of economic nationalism and geopolitical nationalism
01:24:26
is Donald Trump okay wow i was going to guess that when you have listen when you
01:24:33
have violence end of history and the last man is a much more complicated question at a very high level let me
01:24:38
finish the point here cuz I'm kind of on a roll here yeah keep wrap bring it home
01:24:43
when you have a bipartisan consensus that included both Bush Republicans and Clinton Democrats around
01:24:50
these three pillars of globalism and then I'd say that country turns against that that's not going to
01:24:57
be a smooth process that is going to be potentially a violent process it's going
01:25:01
to be a disruptive process and you guys want to raise like all these nit objections and pro or whatever
01:25:08
donald Trump is bringing that realignment but the real question the real question is was that consensus
01:25:14
correct or was it a failure i would argue as a failure larry let me ask you a question then when you see something
01:25:20
like Doge happening and people start taking a bit of a a more unilateral a quicker a less veto based approach is
01:25:29
that encouraging to you Larry do you think that's the right way to do it because we haven't been able to get the
01:25:34
government smaller since Clinton so are you pro Doge not Doge and do you think this sort of objection to hey we're
01:25:41
going too fast too violently maybe that's what we need to do at times and then I'll go back to you Ezra to answer
01:25:46
the same question i think that Ezra is broadly right about the pro promiscuous distribution of the veto power he's
01:25:55
broadly right that we need to be able to do more things more quickly in the state
01:26:03
if we're to be an effective government i think we need much more reform i think Democrats have allowed
01:26:12
themselves excessively to become hostage to particular groups particular traditional uh concerns and have lost
01:26:24
touch in important ways with an American mainstream and I think that in so far as
01:26:31
the election outcomes in recent years have not been what they wanted that is an important contribution to how that
01:26:38
has happened and I agree with David that Donald Trump represents a transformative and profoundly different
01:26:49
ideology than has been present in governing America before i do believe that it is
01:26:59
fundamentally not new under the sun just new in America that it is the Juan Peron
01:27:08
approach which is very familiar to students of Latin American uh history in particular and that the general
01:27:19
experience of that approach is that its leaders particularly when they have galvanizing
01:27:27
personalities can be very popular for a substantial period of time but that they
01:27:34
are very rarely remembered well by historians of their countries and so my best judgment is
01:27:44
that this project is going to end in disastrous failure despite having put its finger on
01:27:56
some important concerns and issues of course there should be much more aggressive reform of
01:28:05
the government than there is but that does not excuse or mean that it is likely to work
01:28:14
out well for some of the mindless savagery that the Doge is bringing to traditional American institutions uh is
01:28:28
going to work out Well and to take just one example my belief is that the revenue
01:28:37
loss from the Doge's destruction of significant part of the functioning of our nation's tax collection system is
01:28:49
likely to exceed in terms of contributing more to the deficit than any savings realized what do you mean by
01:28:59
what do you mean by that what is this they've identified the right thing but they're executing on it too much go
01:29:04
ahead Shim no no I have two questions Larry just tactically what do you mean by the destruction of the revenue
01:29:09
collecting mechanism that's question number one which was just I just want to understand what you meant a second
01:29:14
question which is more broadly if Larry if you were president for a day just give us the Larry Summers plan like what
01:29:22
is the counterfactual to what's happening now you can include tariffs you can include Doge i just want to
01:29:28
understand how you would frame the solution to what hils us so maybe tactically just talk about the the
01:29:36
collections part because you referenced it and then just more strategically what
01:29:40
the Larry Summers 2.0 plan is we are firing on mass people whose job it is to audit
01:29:50
people like you and the result of that is that we are losing revenue directly we are losing revenue further
01:30:00
because people once audited go straight in subsequent years and we are losing revenue because more and more people are
01:30:08
playing the audit lottery engaging in problematic practices in the expectation can I burst your bubble on this that
01:30:17
they will not that they will not be caught let me tell you my experience i get audited every year automatically and
01:30:24
the reason you get audited every single year is typically the way that you acquire your wealth creates complexity
01:30:31
700 800 900page tax filings now you don't do that yourself what happens is you typically pay a large big four
01:30:40
accounting firm millions of dollars to do it deote PWC Anderson etc every year that I've been audited
01:30:48
the biggest delta has been about a thousand bucks in this case I actually was owed a,000 by the US government last
01:30:56
year which was what you spend it on incredible i'll spend it everywhere so Larry just so you know I'm well aware of
01:31:02
everything you just said and I have no doubt about your personal integrity fact you think it is less than a quarter of
01:31:10
people with incomes over $10 million are audited so it's just it's just not true
01:31:17
let me ask you that everybody not true that everybody is uh that everybody is audited i get the sense Larry you're you
01:31:25
like Doge but you don't like the execution got it ezra you talk about your book we got to move faster we got
01:31:30
to do things faster we got to take more risk so are you pro doge or not and if you look at the Democratic if you look
01:31:37
at this administration I'm going to call it Trump 2.0 for clarity these are I would say two out of three people around
01:31:44
Trump whether it's Chamont Joe Rogan Bessant Howard even uh Trump himself are Clinton Democrats so it's
01:31:54
basically the Clinton you were going to say yourself what i don't matter ezra are you happy about Doge your book seems
01:32:02
to be a plan to do like things i think building state capacity is two dimensions one is what the state can do
01:32:11
and the second is the rules under which it doesn't doge seems to me to be fundamentally destructive of state
01:32:17
capacity first and this goes again to my endless frustration that I feel like goals are not clearly laid out in the
01:32:23
Trump administration what are the measures we are looking at and how will they achieve them is it just trying to
01:32:28
cution they've been very But that's not efficiency right i could save a trillion
01:32:32
dollars no I could save a trillion dollars in ways that will make the it let's put it this way what Larry was
01:32:38
just saying right if you cut everybody at the IRS right just cut every single one of them on the Doge measure of how
01:32:46
much did you save in headcount that will look like it counted up towards your save a trillion dollars goal but in
01:32:52
terms of what Larry is saying which is the long-term efficiency of US tax collections you'd have just made the IRS
01:32:57
much much much less efficient no no we get that but they've also cut all these software and consulting
01:33:04
nonsense stuff i am not going to tell you that there are zero Doge cuts that made sense but I am going to say that
01:33:11
what I see them doing overall is highly destructive state capacity or similarly a lot of things happening around USAD
01:33:16
and say PEPAR funding um is PEPAR efficient i mean yes you save money by not giving HIV retrovirals to children
01:33:25
in Africa but I think it is good that you do that right so that's not the kind of efficiency I'm looking for i am
01:33:30
interested in state capacity that is connected to achieving specific goals i've talked to a bunch of the people
01:33:37
around Doge and again here you get a lot of different ideas of what the goals are
01:33:41
some people say well what we're trying to do is save money but if what you wanted to do is save money you could say
01:33:46
go to Congress and do a very big bill there was a lot of interest in Congress people like Roana who wanted to work
01:33:52
with Doge to identify big spending cuts that both sides could agree on defense being a big being a big piece of this
01:33:59
and then they decided not to do it so Doge to me uh is a it would be great if somebody tried it but I see this as much
01:34:06
more of a destruction of state capacity and a hacken slash operation larry Summers we're going to thank you for
01:34:12
coming i know you've got to uh drop off right now thank you wait what about Larry Summers 2.0
01:34:18
would you like to do your Larry Summers you're Yeah before you leave I want to know what the counterfactual is yeah
01:34:24
what's your plan Larry counterfactual is focus on necessary strategic investments in
01:34:34
infrastructure in making America the leading country unambiguously in the world in technology particularly
01:34:42
disseminating in large scale artificial intelligence for collective uh benefit building a larger network of alliances
01:34:56
so that we are in a position to counter China both with hard power in the form of increased military expenditures and
01:35:06
with moral strength and the world as a whole uh as a whole behind us as a central organizing theme of uh foreign
01:35:20
policy and reinvent our education system at uh every level to pick up on Ezra's notion
01:35:32
of being about results and doing all of that while you're doing the abundance agenda as uh well of freeing stuff up so
01:35:44
that we're in a position uh for governments to get things done i believe the country is best
01:35:53
governed from the center not best governed from a radical fringe and I believe moving to a
01:36:07
transactional model of leadership is the approach of Latin American strong men and history does not
01:36:19
find it to be a successful model and so I would venerate rather than denigrate the rule of law as
01:36:30
part of governing the country all right there you have it folks larry Summers appreciate you coming on the pod thank
01:36:36
you Larry spicy spicy episode here sax you wanted a chance to respond on the Doge issue as as we wrap wow pretty
01:36:46
productive episode yeah let me um let me partially agree with Ezra here i mean I
01:36:51
think that uh he's trying to introduce this idea of an abundance agenda to the Democrat party i think that's a good
01:36:56
thing you know I I know you've talked about permitting reform and not tying up projects and so many hoops and so much
01:37:04
environmental regulation and you know even DEI and all this kind of stuff so I think that is all well and good i mean
01:37:11
we should we should do those things the thing that I take issue with is that you're on the one hand saying that
01:37:20
there's way too much process around just getting things done right when you're talking about public works but the
01:37:27
objection you're making to Elon is that he's not following enough process you know it's not enough
01:37:33
nicities larry called it mindless savagery this is the problem is how do you expect anything to ever get done the
01:37:41
reason why your public works projects don't happen is because there's too many special interests who get organized and
01:37:46
they stop it okay what Elon is trying to do we have a $2 trillion annual deficit
01:37:52
he's trying to figure out how to cut it every single program that gets cut the interests who receive that money and we
01:37:59
found out that it's hopelessly corrupt you know Stacy Abrams gets uh $2 billion for her nonprofit and you have all these
01:38:06
NOS's who are basically cashing in they're all going to do everything in their power to stop those cuts from
01:38:12
happening and they're the ones who are jinning up this hysteria you know burning down car dealerships and so
01:38:18
forth and so on so this is the problem that I see is that you don't really have a kind word to say for the people who
01:38:26
are actually getting things done who actually are reforming things elon is one who's actually making difference can
01:38:33
you can you find any good in this i mean you you sound like you're cherrypicking
01:38:38
you when when I brought it up and I questioned you like "Do you support Doge?" Your first thing is to say like
01:38:42
"Well here's my favorite pet projects i want to keep those." But yes right like this is I think really important and
01:38:48
weirdly it's the through line of almost everything I've said on the show today knowing what you are trying to achieve
01:38:55
is the first part of achieving it so if Doge is cutting things that I think do good in the world I'm not going to say
01:39:01
"Hey look they're making the government more efficient we no longer have a you know a strong uh foreign aid program or
01:39:07
whatever it might be they've destroyed the Department of Education without knowing what they're cutting there." I
01:39:11
don't think Doge is doing a good job because I don't think they have in a in a thoughtful way connected means and
01:39:17
ends and weirdly my critique often of Democrats is also that they have not been outcomes focused they've been
01:39:24
process focused so David's point here is actually not been the critique I've made
01:39:28
here i would make procedural criticisms of Doge but there's a world in which my take on Doge is look I agree with what
01:39:36
they are trying to do but I wish they would follow the law but that's not my take on Doge you have to pick Kla Harris
01:39:42
continuing the spending that was going on or Elon and Doge cutting which would you choose i would absolutely I would
01:39:48
absolutely prefer the Kla Harris administration to the Trump administration would I like to see
01:39:52
Democrats be significantly more reformist yes I've written a book about it i'm trying to persuade them of of
01:39:57
this argument but your book is about getting rid of this red tape and you just said you want to keep the people
01:40:03
who put us hold on you just you you say you want change this is radical change i agree
01:40:11
but you just said you would rather have had the person and the administration that put 9 trillion on top of this this
01:40:18
is why you'll never get that change ezra you guys all invited me here you'll never get the abundance agenda that you
01:40:23
want because it's people like Elon or Trump who get things done this is the way that politics work you have to have
01:40:31
a paradigm shift to get what you want i think getting dumb things done is not good change right i I I I actually don't
01:40:37
understand how this point is so hard to gro if you get a lot of change and the change is bad I'm going to think that is
01:40:44
bad not good i would hope that is true for all of you that if Kla Harris or some other Democrat came in and began
01:40:52
wrecking things that you wouldn't say well we needed a bunch of change like let's break everything in sight i want
01:40:58
to see things done well there should be good permitting reform so let me give you let me give you an example of the
01:41:03
kind of thing that I am looking for we talked about chips a bunch on this show i like the chips act i did a big piece
01:41:09
that coined the term everything bagel liberalism about the way in which the ideas inside that act when they began
01:41:14
building out the grant program layered on too many standards and and programs and so on but one thing they then did
01:41:21
was they passed a bill or Biden signed a bill by Ted Cruz and Mark Kelly uh taking chips out of the normal uh
01:41:29
environmental review because they said look if this is a matter of national security and we're trying to build these
01:41:34
semiconductor fab so quickly we cannot have this layered in years of environmental review which now take on
01:41:41
average 3 and 1 half to four and a half years so because I care a lot about clean energy one of my arguments is that
01:41:47
we should have a speedrun for clean energy it should not go through the normal levels of review what is
01:41:52
happening in California highspeed rail where it had 12 years of environmental review was not in my view a good idea at
01:41:57
the same time that doesn't force me to say well I think we should build a bunch of coal plants without environmental
01:42:01
review because I can make distinctions between things I want to see happen in the world and things I don't i think
01:42:07
you're totally right with that let me give you the more practical day-to-day example because those are these
01:42:12
albatross projects that are largely a byproduct of ineptitude and corruption but let me tell you a more tactical
01:42:20
example so that you can understand why what Elon and Trump are doing is so necessary so as I told you in 2020 on
01:42:30
the back end of COVID I started a business to build battery cathode active material in the United States okay so
01:42:37
that's a business we need so that when you want to electrify everything you want to electrify there are batteries
01:42:43
that we can make that's not reliant on the Chinese supply chain it made sense the guy that I started it with worked
01:42:50
for Elon the other guy I started it with was a professor at Stanford and the third guy I started it with was the head
01:42:55
of battery engineering at Toyota a more complete group of people I think you couldn't put together so we start to
01:43:02
build we get a deal with General Motors so far so good but eventually you hit a point where in order to really
01:43:09
commercialize you need some form of government acknowledgement that you're good and the way that you do that is you
01:43:14
apply to the DOE and the DOE has a very legitimate grant program that tries to accelerate these key things especially
01:43:21
things that are critical we went through that program Ezra we paid a couple million dollars in consulting fees to
01:43:27
the people that we were told to pay it to and we were rejected okay fine kept going i kept funding the business and
01:43:35
then next year last year we applied again 125 companies applied 25 were shortlisted we all went through
01:43:44
incredible diligence we won incredible validation at the end of that entire process so really two years from when I
01:43:52
started and millions of dollars we got a hund00 million federal grant from the DOE and $50 million from Michigan to
01:43:59
build a plant in Michigan to help redmesticate battery cam in the United States it turned out that in that same
01:44:10
period while we were going through that rigomearroll Stacy Abrams got $2 billion
01:44:15
after 30 days and I just asked the question what is broken inside of the government that that's possible that us
01:44:24
it's hopelessly corrupt that's exactly right a company of 50 people 50 people where none of this money goes into our
01:44:32
pockets we take that money and we then have to raise more money i have to put in more money we try to hire people we
01:44:38
try to build a battery factory that can basically give us resilience against the
01:44:43
Chinese which I think is great they're an incredibly forward you know strong and viable
01:44:49
competitor in 30 days she got 20 times more than we did how do you explain it so here's what I'll say on here's what
01:44:56
I'll say on the two things and how do you fix it i have not myself looked deeply into the Stacy Abrams story but
01:45:01
I'm very skeptical of the accounts I keep hearing about it i suspect that if she had made $2 billion in 30 days she
01:45:06
wouldn't be now hosting a podcast on crooked media she'd be on an island somewhere so I can't comment on that
01:45:11
piece of crooked media yeah what I Yeah the America thing it's a joke from Donald Trump actually i don't know the
01:45:20
broader thing here though right which is you're getting at you're frankly what I
01:45:24
worry about is that what you had in that DOE process was fairly quick for the government one of the things that I am
01:45:30
targeting in the book is a way that even when members of the administration when
01:45:36
governors want things to happen they are not willing to upend the process to pass
01:45:42
the new bills to reconstruct the architecture of the federal or the state government to get it to happen jerry
01:45:48
Brown and Gavin Newsome wanted highspeed rail can't you acknowledge Can't you acknowledge it's insane that somebody
01:45:53
can get $2 billion after 30 days i I I am not going to acknowledge a story I have not looked into myself because I'm
01:46:00
not sure I trust the account of it i don't think it's I don't think it's crazy i don't think it's crazy to get
01:46:05
the money after 30 days but it depends on whether or not the process was good hold on i want I want to stop before you
01:46:10
guys move around to a bunch of like random people the thing that I want to stay on with abundance for a minute here
01:46:16
is that the thing that I think would be useful to do is actually build legislation to make these processes work
01:46:22
more quickly with more discretion from decision makers and then oversight after the fact rather than heavy process
01:46:29
before the fact i was talking to somebody highly involved in the royal broadband programs under O Biden and one
01:46:33
of the things they were saying to me was that there is this entire uh edifice as
01:46:38
he put it of policy that is here to make sure I do nothing wrong what would be better and I think this is right is to
01:46:46
allow me to act more and then look afterwards to see if I did something wrong and then hold me accountable for
01:46:50
it i think too much of our regulation is precautionary as opposed to being able to to let people move quickly and make
01:46:57
decisions in the real world and then go back and see how they worked out all right i I think that's a a great point
01:47:02
and I agree with you on that and I think there are a lot of people out there who
01:47:07
would say that government's too too bureaucratic there's too much red tape in terms of getting things done any kind
01:47:11
of project like the rural broadband takes 15 steps three of them were DEI that's crazy the environmental reviews
01:47:18
and the lawsuits that bog these projects down for years make them unfinancable there are people who agree
01:47:25
with you on that you know what they're called republicans republicans agree with this but you know who doesn't agree
01:47:32
with you aoc and Elizabeth Warren and Bernie Sanders so maybe you're in the wrong party because I don't think you're
01:47:39
going to convince Democrats of this well we'll see well I wish you well in that i
01:47:44
hope you do i appreciate that yeah no I do i I think if you can convince Democrats of this I think it'd be a
01:47:48
great thing but look this is my issue with some of what you and and Larry are saying is that you want Elon and Trump
01:47:56
to abide by all of these procedural nicities you want them to play by saying Marath of Queenberry rules you
01:48:05
keep saying this is my view but it's not my view you know who get things done and
01:48:09
this is what we say in Silicon Valley you know who get things done disruptive people founders founder mentalities
01:48:14
they're the ones who get things done your response Ezra as we wrap here i know you have to go getting dumb things
01:48:21
done quickly is not a good idea and that is why Starlink is a much better idea than rural broadband neither are
01:48:28
batteries batteries are not dumb things you're asking me about what Trump and and Musk are doing right now we started
01:48:33
here on the tariffs what what you're watching with Trump is using expanded tariff authorities to do things that
01:48:40
have a bad process behind them and will have a bad set of outcomes so look I've asked you many many times here i don't
01:48:46
really feel like I got the set of metrics I was looking for but we will maybe talk again in 2 or 3 years and we
01:48:51
can decide together was this genius work by the disruptors or was this a really really dumb approach to economic policy
01:48:59
what was the issue with the metrics that I gave you Ezra you don't think they're
01:49:03
I I I don't think I don't think they're You want the unit of measurement kilogram i don't think they're remotely
01:49:08
complete i think you're processing us you're doing to us exactly what the government bureaucrats did to rural
01:49:14
broadband what's your metric how long is it going to take you to deploy this we have to go through a checklist yeah
01:49:20
exactly come on these are debate tactics here's all you need to know Ezra it's a
01:49:24
hundred bucks to get Starlink it's 15,000 to do fiber we're trying to debate principles and you're trying to
01:49:30
bog it down in procedural arguments hold on this is amazing to me do you really think saying to you in 2 years what are
01:49:39
three or four metrics that would give you what you gave me doesn't fit the pol I mean look we don't need to do this
01:49:45
whole thing again but what you gave me doesn't fit the policy it's just re-industrialization hold on we said
01:49:51
that we want to re-industrialize America in critical industries especially and reduce our dependence on foreign supply
01:49:57
chains that are based in potential adversary countries that's concrete enough as well those are basic a
01:50:03
sufficient objective Because the other thing that I the part of you the part of it that I did not
01:50:07
hear things seems to be measured was okay where is the economy right there's got to be some cost you don't want to
01:50:13
pay so what metric would you want I'd like to see like okay GDP growth has been X I would like positive GDP growth
01:50:20
and we want resiliency for those four critical industries amongst others okay and and it be nice for the trade
01:50:25
deficits to come down and you know especially with certain countries get back to work then we're all going to get
01:50:31
back to work we got the four critical industries we got the GDP increase and uh yeah trade deficits yeah it's it's an
01:50:37
open debate all right Ezra Klein's new book Abundance is out in fine bookstores and Amazon and all kinds of other places
01:50:45
you can get it and you can hear him on podcasts incessantly when are you going to stop this podcast for Ezra oh my god
01:50:52
I know man it's growth industry one of the last absolutely all right we'll talk to you soon Ezra bye y'all thanks for
01:50:58
having me thanks Ezra all right thanks Ezra how do you think the debate went i think is a good debate to have and we
01:51:03
made progress here the paradox of all of this is what they're describing in some
01:51:10
ways is what Trump and Elon are doing yes but it's a it's a bit too hot so if I were to give a criticism or room for
01:51:18
improvement to the current administration to maybe pull some of these people over it's basically slowing
01:51:25
down and explaining what's going on a bit better i give the administration like I give Doge an A++ it's obvious
01:51:32
like they're doing the right thing i give the communication like a B like just increase the communication and you
01:51:37
can see they're doing that antonio went out and talked a bit about Doge they did
01:51:41
a a round table and they're updating the website faster the more you do that the
01:51:45
less the opposition's mind is going to wander the same thing with the tariffs if the terrorists if if Bent was out
01:51:52
there front and center every day talking about methodically what their plan was instead of the shock and awe I think
01:51:59
people would be able to process it quickly let me just add one person's opinion okay I like that obviously you
01:52:04
can always say that communication should be better but but here's the reality of
01:52:07
it take Doge for example you have crazy leftists firebombing Tesla dealerships painting swastikas on Tesla cars
01:52:18
accosting Tesla drivers okay creating violence and chaos and trying to depress Tesla's sales okay and who's to blame
01:52:29
for that and then what people say is well somehow Elon's the disruptive figure here you have a crazy leftwing
01:52:35
that's reacting in crazy ways to sensible things that Doge is doing and then what people do is they
01:52:42
reinterpolate this chaos that's being created by the left they somehow put the blame for that on Elon i think your uh
01:52:48
explanation there is even more reason to be proactively communicating decisions so and that doesn't forgive anybody
01:52:55
drawing SWAT stickers on Teslas obviously they should go to jail and if anybody's coordinating it that should be
01:53:01
like a RICO case and we should find out who it is just if we're going to bring these two parties together which I think
01:53:06
we came close to here of like finding some common ground I think Chimath you outlining your four bullets and then at
01:53:11
the end Ezra saying well what what's the impact on GDP and then you adding to that sax well what's the you know input
01:53:16
on the trade difference for the first time you know these two sides I think we outlined what should happen what should
01:53:22
the measure be in two years are have we on shored those important industries is GDP P robust and is the trade deficit
01:53:30
deficit more balanced this is the same debate we always had over immigration let's pick a number and work towards a
01:53:36
number right and and that's where the debate in our country breaks down in my mind is that we don't pick numbers we
01:53:42
can agree that we need a ton of innovation segue Jason go hey uh Chimath I saw that you were at the breakthrough
01:53:51
prize ceremony over the weekend sorry I couldn't make it Yuri i uh I had family stuff but Freeberg was there as well and
01:53:57
uh as everybody knows this is the breakthrough prize is like kind of the Oscars for science they had hundreds of
01:54:03
guests there and uh about a third of them were scientists a third were tech founders and you had a bunch of
01:54:09
Hollywood folks there hosted by James Cordon and you had Jeff Bezos Yuri Milner as I mentioned Zuck Vin Diesel
01:54:17
Sergey and Gwennneth uh and Mr beast lots of excitement there and I know David you were at a secret conference
01:54:24
that uh also I was almost invited to that um you met Gwennneth Paltro friend of the pop jason my Nick you can show
01:54:33
some photos here oh we do have photos okay I know why don't you show them my wife sent me a letter to read on the air
01:54:41
so let me just open this up here is this an open letter what's the letter to oh my okay dear Gwennneth Paltro oh jeez
01:54:50
just a open a love letter to Gwennneth okay I'm just going to read this here last night when I met you I learned in
01:54:58
that moment that pherommones are not a myth they are real and apparently trademarked by you you have the kind of
01:55:05
femininity that could destabilize the stock market i left the encounter slightly dazed unsure if it was your
01:55:12
presence or an as of yet unlisted goop candle okay wait let's just stop here let me just mansplain what she's trying
01:55:18
to say here guys wait are you saying she's got a girl gwenneithro crashed the stock market gwennneth Paltro is hot as
01:55:25
balls okay that's the Troy are you saying she crashed the mark she has so much aura and rez david you have to I
01:55:32
mean I don't know if we have the picture where David met her at the JPM conference but she is so kind she's got
01:55:39
high EQ but I I I got to say so cool i have to say like I've met a lot of stars that's like a star star
01:55:46
that's a star star where you're just like "Holy shit." You're just kind of like a little bit in awe
01:55:51
she's Oh she's a star she's a star look at that there she is fifth bestie Gwennneth Paltro GO nat was stunned nat
01:55:59
was stunned i was stunned we were all stunned so wait are you saying that Nat has a girl crush i think so a girl crush
01:56:07
has been declared here for the first time on Allin we have an official girl crush what I think is just remarkable
01:56:13
Jason though is that another conference lost your invitation in the mail i mean it just keeps happening you got to talk
01:56:19
to the post office about all these invites i my White House invite this uh your mailman he must hate you or something i
01:56:30
don't know i got to get invited to something i think you're the party i guess I'll see everybody in F1 you're a
01:56:34
great You're a great family man so at least you're But you're always busy with your family so I think people Well I try
01:56:39
to prioritize the fam i got young girls just what am I supposed to do you know oh my gosh big shout out big shout out
01:56:44
to Yuri and Julia Milner I think uh yes incredible and what they're doing to inspire people to get into science is
01:56:50
just so you know you know they the awards are enormous it's like $3 million awards which I think is just kind of
01:56:57
like it's an amazing reflection of how important this stuff is and every so for the last two years also had a little
01:57:03
tear had to shed a little tear because they do these things where like you know you you bring some of these folks that
01:57:09
have been impacted positively there was a girl who had her jeans edited she was literally on on her deathbed and this
01:57:17
guy David Lou who won the Breakthrough Prize did a very targeted gene edit she's alive and thriving and she gets to
01:57:24
present the award to him and you're just like "Oh my god it's you know Sax when he said he was shedding a tear or almost
01:57:30
shed a tear." I thought he was going to say he saw his reflection in his tuxedo and just got a little choked up about it
01:57:36
because of how good he looked roth does look good in that photo put it back up put it back up let's see what are you
01:57:42
wearing the silhouette the silhouette on your tuxedo is just uh outstanding that
01:57:46
so Nat So Nat's wearing Armani P and I'm wearing Laura Piana which is like a double breasted they make a double
01:57:53
breasted wow i didn't know they made that cashmere cashmere tuxedo i I cannot comment on the material choice because
01:58:00
it was just that is absolutely wow that's a gorgeous garment well actually you know Freedberg was going to be on
01:58:06
the program today but then he found out how many endangered species were murdered did you Did you see that nick
01:58:13
do you have the picture of us with Zoe Sana oh there's Austin Friedberg oh Freeberg looks good oh there's Zoe Sana
01:58:19
the Mr beast and her husband who's the guy with the man bun marco Paraggo great guy this is Zoe Sana's husband a cooler
01:58:27
funnier fun dude you're not going to That guy should be at every party really bun huh he definitely looks like he's
01:58:34
carrying look at Look at Zoe Sana's uh tattoo in her on her chest i don't know if that's I want to see if that clo You
01:58:39
know that closed guy on X who's always critiquing Republicans oh he's awesome i love I wonder yeah Derrick or whatever I
01:58:46
want to I want to know if he how he responds well that's terrible Mr beast fails but I want to know how he responds
01:58:52
to your tuxedo Jamath and finally gives you credit because I think he he only compliments Democrats is sort of the
01:58:59
problem oh is he really not uh yeah he's always picking on Republicans jimmy looking Did you guys see the picture of
01:59:06
Julia's dress i just want to say one thing about Julius did you see Julia's dress i I haven't let's take a look here
01:59:10
this is an insane story so this is Julia Milner so the cool thing about this guys
01:59:14
is this is this is a very incredible and famous painting by Raphael called the school of Athens yes this is like a a
01:59:23
visual manifesto of human knowledge and so there's all these very important people Aristotle Plato Socrates
01:59:30
Pythagoreia Pythagoras etc anyways she got the license I think from like the Vatican and then she worked with Dolce
01:59:37
and Gabbana to make it into a dress for the occasion just to celebrate learning but there she is with with our boy Jimmy
01:59:43
Donaldson so anyways it was a great event thank you Yuri and Julia for including us all right guys i gota wrap
01:59:49
all right David i miss you thanks for the invite all right bye i will handel Jason's
01:59:56
invitation for 20 seconds i'm pretty sure i mean I I have a phone number you could
02:00:04
text me the invite i could You could send me a calendar i have a Gcal i've got a Google calendar you could invite
02:00:10
have a good so funny that that event that Sax was at one of our mutuals was like "Hey
02:00:17
guys this incredible event's going on this famous person's hosting it these celebrities are coming jay Cal Freeberg
02:00:23
everybody you're all invited." And then like two weeks before they went I was like "Um are we going to this thing?"
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Cuz I'm just like my calendar and everything they're like "Ah yeah yeah the event's happening." And
02:00:34
I'm like "Fo you Jason did you send the event?" And they're like they're like I'm not sure you're my ride or die
02:00:41
you're my ride or die texting me the invite but you didn't email it okay sure i will never go to an event that rejects
02:00:47
you ever like a ride or die baby for our chairman dictator another exceptional episode of the all-in podcast we'll see
02:00:55
you all next week byebye we'll let your winners ride rainman David and it said we open sourced it to the
02:01:08
fans and they've just gone crazy with it love you [Music] besties [Music] are my dog taking notice your driveways
02:01:27
oh man my appetiter will meet the ugly we should all just get a room and just have one big huge orgy cuz they're all
02:01:33
just useless it's like this like sexual tension that we just need to release somehow
02:01:41
your feet we need to get merch i'm going all [Music] in i'm going all in