How Trump Can Unleash Production and Prosperity: Jeffrey Tucker

as we approached the election the financial press was assuring us that everybody's happy everybody's doing well our incomes are up the jobs are plentiful and then there was an intuition on the part of the public that none of this is true I mean there was like but I'm not so sure about this a lot of what we're faced right now is kind of this terrible Thicket of compliance uh that if we can revisit that thing and and really do something dramatic and big and and the Trump Administration is talking about we could see that all the problems that they're facing just pushed aside and overwhelmed by an exposure of wealth creation and Entrepreneurship and Innovation and optimism and joy that comes with that oldfashioned idea of freedom we're launching a special American thought leaders series during this post-election transition period where I will be interviewing former and possible future Trump Administration officials as well as subject matter experts to understand what the incoming American administration's policies in 2025 may look like for America Canada and the world to start off I'm sitting down today with Economist Jeffrey Tucker founder and president of the Brownstone Institute and a senior economics columnist at the epoch times to understand the tough economic reality the incoming Trump Administration faces and what might be done about it Jeffrey Tucker such a pleasure to have you back on American thought leaders be here thank you you know you had a piece maybe a week ago week and a half ago um about a recession that will be backdated meaning that we'll really see it in 2025 You're Expecting but you know but it really is just going to be a look back at the real numbers way back to 2022 I think that's going to happen and and the foreshadowing of that was actually the jobs numbers that came out um a week before the election if if not a few days before the election that showed C catastrophic numbers you know I think the numbers were so low that it's neg negligible and it's almost like we're coming to terms with reality but I think that as a data colle collection is getting more honest and recovering from the lockdown period and all the disruption that we're just getting we're getting better numbers and they look the numbers look terrible I'm fully expecting we're going to see some revised numbers uh going into next year and and and they they'll recognize that we've been in technical recession for uh the better part of two years um or three yeah let's lay out you know what this looks like your report is very interesting 40% over last four years basically is H yeah and a technical recession since 20 2022 um I should add something very interesting when I came out with that report I fully I fully expected people were going to tear it apart and when I talked to the two economists who wrote it I said you need to show all your work I need full citations and everything of everything you do so so that your results can be replicated you know we don't want to be like epidemiologists here we want to show our work that's that's little dig there sure yeah and so they did it and I have to tell you on that and that that report has gotten vast amounts of attention not one message not one uh hint of dispute of these numbers has has come along since we released that thing I think you're postula inflation is the big issue whoever it is that would have inherited this mandate is going to have to deal with that and it's and it and it's not an easy fix it's not an easy fix and and of course on the campaign Trail everybody says I'm going to bring your prices down there there isn't a mechanism that the president of the United States has to do that um and we can explore various various ideas that have been thrown thrown around out there and it's fine it's fine I understand the I'll just throw this out right I mean I think that one of the promises that of this uh new Administration with especially with the you know tech people with Elon Musk involved you know a lot of innovation a lot basically the idea of you know unleashing Prosperity unleashing Innovation unleashing production know this this is always supposed to somehow deal with economic problems isn't it well you kind of jumped to my conclusion a way which is fine um my own view is that that is the best hope for reducing it's just that's that's what one would think would be a well you wouldn't normally think that because I tell you there's if because you read the financial p and if you have any point in the last 30 40 50 years what you always hear is that inflation is caused by an overheated economy you've heard this right so I read I I I've heard that but I've always found it to be bizarre and keep in mind just for the just for the for the benefit of the viewers I'm just in the process of learning economics through these wonderful little books like the one you described and some giant ones like basic economics that's but that that never made sense to me I'm glad to hear that I'm glad to hear that uh uh and I was hoping we would get to this topic because under the old Keynesian scenario it like upside down economics really the idea is that the economy overheat these metaphors you get in economics why we talk about overheating overheating what what what we got was there a pan on the stove or something like a economy is a soup and you anyway overheating uh drives inflation that is simply not true and you just only need to look at the logic of supply and demand if you can increase the supply of goods and services and the same amount is being uh you know it and and the and demand Remains the Same then that's going to reduce the price I mean it just it just is you're going to get lower prices with more more production rather than higher prices that just remains true so a greater amount of productivity and growth is going to have overall a a an effect of of of downward price pressure and that's a good thing and I but what is this argument for the overheating then because I like as I said it's just not it doesn't come intuitively me to me to imagine that someone would you made that you said this people would argue this and you made an argument against it but well it has to do with you know what's called the old is LM framework of the Keynesian Keynesian Hydraulics you know where where there big big way over my head yeah it you and truly you can read the general theory of uh K's book from 1934 I think it was and and read all about it but basically he turned classical economics upside down and and shoved all sorts of new Aggregates together that don't belong together and posited you know a a new operation of a new machine uh that would that would require experts to to manage everything whether it be a inflation uh employment unemployment tradeoff with so-called Phillips curve so you could you know drive one down by driving the other up and you know just all these crazy things um aggregate demand aggregate supply and and it just enraptured a generation of of economists or two or three or four and we've yet to kind of unplug that from our uh from the public mind but the but the bottom line you you're you're telling me that there just isn't a good argument for this at all so so we don't need to consider it as that you're no I I think that's right and if there's one takeaway I would say that like economic growth mitigates against inflation again but to me that's the intuitive well that's obvious thing that one might expect right yeah you know which reminds me one of the Ws against the Trump Administration that I'm hearing right now whispered in my ear he doesn't have enough economists advising him now you'd think my response would be oh no that's terrible but maybe that's my first response my second response is hm maybe that's not so bad do you know what I mean well you got people that are enthusiastic about um building things right I mean this is this is well here here's a huge topic right you know the gutted uh manufacturing sector of America that you know everyone that I've talked to that I found credibles tells me and again it's kind of intuitive this must come back there's no there's no winning scenario without interesting yeah that's that's a problematic one you're you're good at at at at leaping all all over the place that oh I'm not sure I'm not sure that's good well I mean no it's fine but um the manufacturing problem is is a is a is a big problem because it it traces Back 40 years you know and and it's fascinating to me that we've gone 40 years and and and gutted the country of you know dozens of Industries for which we once had all the infrastructure all the institutional knowledge all the talent all the skills and all the markets and all Supply chains and now they're all gone uh that is an incredible thing to have happened to to a country and I look back at my own writings and with some degree of uh shock that I I would write about this and I used to believe the old line that this is just free Trader work you know hey this is great you know um um and I read it now and I can't believe that that was that was that I was I'm the writer of those things because it's it's not it's not correct I've I've spent some time revisiting The Works of David Ricardo and and um David Hume you know the early trade theorist and then also a man who I count as a mentor godfried hobbler who's you know largely the architect of the general agreement on tariffs and trade after um and the Wy years of World War II gave us the free trade world and they they they never anticipated anything like this would happen uh because there they expected there would be this sort of flow mechanism that would go back and forth the spey flow mechanism uh that imports and exports would would balance out based to the the flow of gold would would cause prices to to rise in one country and and discourage U uh exports and then and then they would fall in another country to to to encourage exports and so there would be this this kind of flow mechanism that that really did it broke at the same time that American manufacturing began to leave our Shores and that would have been you know after after 19771 Jeffrey we're going to take a quick break right now and we'll be right back and we're back with president and founder of The Brownstone Institute Jeffrey Tucker well when you're talking about these flows it reminds me of you know if you read uh Robert lighthiser the former and possibly the incoming I mean if I was guess I would guess he's going to play a very important role in trade policy um but his philosophy was is is simply this as I understood from his book and and confirmed from speaking to him is simply that if there's a sustained trade deficit between two trading partnersh over time of course there's going to e and flow over short short time periods But ultimately then someone is gaming someone is gaming the system so you really you're whatever you going to use the tools in Your Arsenal one of them is tariffs yeah people think I I saw a headline recently Arch protectionist lier or something like that I don't I I certainly these ter these terms these terms are thrown around a lot you know but as I understood it the Tariff or Whatever item is just simply a tool for it's a tool and I I would I would argue that it's probably a bandaid but it's also an inevitable uh result of of you're going to have tariffs under these conditions you you're you're just not going to continue to experience these kind of blood red increasing trade deficits forever and and and see our country you know go from a a nation of makers and doers into a country of of of debtors you see why I'm kind of dragging us into this area right which isn't which wasn't what thinking because you you you kind of need that yeah right for there to be economic prosperity in the first place or is that is it OB so I I think what what you really need is what the market asks for but what I'm suggesting is that it's an unnatural situation where you have a country with all the infrastructure all the skill all the markets all the supply chains and and all the Innovation and all the energy and uh just be uh depleted like that I mean this looks like the work of some sort of mercenary Army that came in and just gutted a major swats of the country um I have doubts that we can you know that there's any point in trying to restore it exactly as it was but nonetheless there are ways in which we can inspire you know the creation of an a new manufacturing sector and I think we're we're poed to do that um I don't think tariffs alone are going to achieve that and I tell you um just very quickly something uh that I think I wrote about in the article is that there are a number of motivations for for tariffs one is to get one is to raise revenue and and Trump's talked about that and and mercifully uh even rais the prospect of of going back to an 1880s 1890s kind of situation where there's no income tax and that all revenue funding the government comes from from tariffs and I have say that sounds sounds like a a decent trade-off to me um so but but that requires you know a revenue flow uh on the other hand the goal of protecting our industries from you know what people call unfair competition from from abroad uh requires less trade so so if you're if you're doing the tariffs for purposes of Revenue that is potentially at some point working at Cross purposes with your desire to use tariffs for protecting industry you see what I mean so the revenue requires a continued flow of trade uh the the the the objective of protecting your industry against against low wage competition from abroad requires throttling down trade so there's some magic point in there that um you get the maximum of both effects which I presume is what Trump is is going for I'm not sure that we know exactly where that is I certainly wouldn't the most memorable image to me right of the last I don't know however long is this 12 story rocket Landing in the you know in these calipers yeah yeah and the Innovation that it took to achieve that right and the reason that it could exist that there's this thriving space industry in America significant portion is well well it's it's because they protected them for the Chinese regime's predatory practices on everything else are we sure about that I mean uh okay but it's got to play some some role surely it does but there's also you know the The Innovation and the the the mind of um Elon mus well no so that's that's that's all absolutely the case right and but I think there's I think the way that the wolf Amendment worked was it just said you know this is a very sensitive area of Technology you just can't work with Chinese companies on it so in other words there wasn't that technology transfer deal that happened with every single time you made a partnership and worked together yeah yeah right so so that so it just kept that Innovation at home a little longer just a little longer which I understand be enough well something like that happened with with the steel industry in the United States in 1880s and 1890s but you know uh we also need to when we're speaking about about China we should not forget the basis on which China is expanding its industrial capacity with a direct purpose of of competing with the US on a with a low-wage uh high-tech model to to eat American Industries right I mean the the basis on which they're doing that is is in large part in substantial part funded by their stash gigantic stash of US Dollars sitting in their Central Bank US dollar Assets in the form of US debt okay those are serving as the basis of their industrial production model they copied the whole scheme from Japan in both cases they're serving as collateral for expanding their industrial base for their own form of industrial planning yeah right and and it's kind of it's kind it's a simple model and a Cheesy one what is America doing now was eat it I mean that's that's it and that's what's happening right now with all the green energy stuff right I mean the the under under Biden uh and and before um the US decided all right we've G we've given up toys and ship building and tools and and steel and and and and texes and and clothing and household appliances and semiconductors too bad but now we can have solar uh panels and other things associated with clean green energy right so uh wind turbines and the like well that has been fun I suppose why it lasted but that's not going to last very long I mean China's all over it and that it's it's it's crazy I mean that is not sustainable and I'm curious and we have to remember too that all those Industries in the US are entirely subsidized U by the federal federal government so so so I'm looking at the Trump Administration trying including the E Market I might add which is which has by the way seen a ton of innovation that's remarkable yeah yeah and I should have mentioned but not as much Innovation as we see in China apparently reportedly so I don't know um and also that's being dialed back because of the lack of consumer Market I mean elon's really the only you know profitable producer in this in the sector but um yeah I should have mention that but I'm I'm trying to figure out where the Trump Administration is going to go in this I mean I'm I think it's a decent guas and assumption they're going to unplug all that stuff because it's just only sustained by by federal subsidies we're going to and that's what he means by drill baby drill it's not just it's not just drilling oil which he says Liquid Gold it's under our feet and it's true I mean I'm from West Texas originally and when I go back home driving across you know all those miles for hours and hours and hours knowing for sure that there are oceans of oil under our feet over expansive and see seeing the landscape entirely um populated by these wind turbines everywhere was said what are we doing we got wind turbines all over the place killing the birds and everything else while there's oceans of energy under our feet and like on the face of it it's obviously crazy so Trump has talked about this openly I'm guessing that we're going to we're g to unplug the green energy stuff and but also the other thing is that like once you end the market for that that also unplugs China's market for that that nonsense too is it is it all nonsense really some people say it's not it's just over it's just overblown it's well sure I mean if it has to be sub the idea is you know sub subsidized for a good CA well I don't know you know I have I have my doubts about about Central planning that that Washington knows what what kind of energy we ought to use I mean doesn't really make sense to me and by the way I would say the same thing you know there's some people I think that exaggerate the Merit of of oil and gas you know so-called fossil fuels I mean you can get carried away with that I don't I mean I'm a Believer in markets let's let the markets decide let's let's subsidize things as little as possible and see uh what naturally emerges you know uh in the most efficient production but I I don't think I don't think for the us it's going to be wind turbines and and solar actually in the Biden Administration they have started making fossil fuels much more available beyond that was for one purpose only and that was to to doll back the public Fury about the price of gas that was it but they I mean there's there's I I don't know if it's quite gotten to the drilling stage but but it it seems like the the Trump Administration has Head Start in this area now well it's which raises another Point um that it's a point that about which I could I could could be critical of of a lot of the rhetoric on the campaign Trail by by Trump saying that the inflation was caused by uh the wreckage of the of the energy markets and and that those drove up prices and those drove up the cost of production and those prices bleeded out to all the other prices and so on and so on okay it's a campaign Trail but that is not a rigorous analysis of the cause of inflation and it follows that just by freeing up the oil markets and drilling drilling that's not going to drive down inflation that's not so I you know I would be critical of of of trump for that sort of analytics it's it's it's it's simply untrue on the other hand Trump's critics are wrong to think that his tariff policies are going to drive up inflation you hear this all the time oh Trump's going to unleash inflation with with his tariffs it's not going to increase inflation it's going to increase the price of relative goods and services by those goods that are most affected namely imported goods well Jeffrey Tucker such a pleasure to have you on again thank you Yan thank you all for joining Jeffrey Tucker and me on this episode of American thought leaders I'm your host Yan Kell [Music]