Latest / UK Column Radio / America Fights the Wrong Enemy — Warwick Powell Explains | Silk and Steel

Transcript

America Fights the Wrong Enemy — Warwick Powell Explains | Silk and Steel · UK Column Radio

0:01
Speaker 1: Hello, and welcome to another episode of the Silk and
0:05
Speaker 1: Steel Podcast. I'm your host Carl to today I walk
0:08
Speaker 1: on back the crowd's favorite doctor Warwick Powell from Australia.
0:13
Speaker 1: How are you, doctor Paul.
0:16
Speaker 2: I'm very well. What about yourself?
0:19
Speaker 1: Good? Good, And we do have a lot of talk
0:21
Speaker 1: about Like as always in the age of Donald Trump,
0:27
Speaker 1: he's a constant content generator. I was listening to Professor
0:33
Speaker 1: John Mehersheimer before Trump signed the surrender Document at Versailles
0:40
Speaker 1: aka the Memorandum of Misunderstanding. At that time, Meerscheimer said
0:46
Speaker 1: the reason Trump was compelled to sign the surrender document
0:52
Speaker 1: is because he was being told by his advisors that
0:55
Speaker 1: the world is facing an economic precipitae and if the
1:01
Speaker 1: war were to continue, especially if the war were continued
1:04
Speaker 1: to the end of July, then we are economic world
1:11
Speaker 1: depression is baked in. And that's why Trump had said
1:14
Speaker 1: publicly he does not want to be a Herbert Hoover.
1:17
Speaker 1: He does not want to be the US president that
1:19
Speaker 1: brings the world to an economic depression. And yeah, here
1:25
Speaker 1: we are. We are now at the end of July,
1:28
Speaker 1: and the straighter home Moose is still closed. So what
1:33
Speaker 1: are one, are the prospects right now for the world economy?
1:41
Speaker 3: Oh well, I think what's interesting to observe firstly is
1:48
Speaker 3: how the global economic structure has adapted over the course
1:54
Speaker 3: of the last five months, or not adapted, as the
1:58
Speaker 3: case may be. I think one of the things that
2:00
Speaker 3: we know is that there has been overall a reduction
2:05
Speaker 3: in the use of crude oil and crude oil derivatives.
2:10
Speaker 3: Some of that, of course, has resulted in some problems
2:14
Speaker 3: downstream shortages and materials, et cetera, et cetera, but a
2:18
Speaker 3: lot of that for the time being, I think has
2:20
Speaker 3: been largely papered over by being able to draw down
2:23
Speaker 3: on available inventories. The risk is is that as those
2:28
Speaker 3: inventories are not being topped up, and the shortage of
2:33
Speaker 3: inflow continues to play itself out, that the real supply
2:38
Speaker 3: side crunch is going to come later this year. So
2:42
Speaker 3: that's the first thing. The second thing that I think
2:45
Speaker 3: is worth noting is China's own response. China is one
2:49
Speaker 3: of the biggest users of crude oil globally, and China
2:53
Speaker 3: itself reduced its pull on the global oil market over
2:58
Speaker 3: the course of the last five months, which significantly alleviated
3:02
Speaker 3: pressure on the world market itself to a point where
3:06
Speaker 3: I think it's fair to say that one of the
3:09
Speaker 3: things we've learned from this conflict is that firstly, China
3:13
Speaker 3: is not as dependent upon global oil as many people
3:18
Speaker 3: once believed it to be. And secondly, in fact, China,
3:22
Speaker 3: as a big buyer and as a big accumulator reserves,
3:25
Speaker 3: nonetheless holds a dominant position because it can use that
3:30
Speaker 3: buying power to shape the dynamics of global oil pricing.
3:35
Speaker 3: Now that's a very fascinating outcome that we've now learned,
3:39
Speaker 3: because prior to the war, people would often talk about
3:44
Speaker 3: swing suppliers as being the price setters, whether it was
3:47
Speaker 3: Saudi Arabia or the United States. But in fact, what
3:50
Speaker 3: we've got is a swing customer that is dictating terms.
3:55
Speaker 3: The fact that China has been able to do this
3:58
Speaker 3: and sustain it's brought economic restructuring and ongoing economic growth
4:03
Speaker 3: tells us a lot about the Chinese economy as well,
4:06
Speaker 3: and we might touch on that later on. But globally,
4:08
Speaker 3: I think we've seen some obviously some restructuring by way
4:13
Speaker 3: of demand destruction. We have already seen depletion of reserves,
4:20
Speaker 3: and the real issue is not so much what has
4:27
Speaker 3: already happened, but it's whether or not what's been going
4:31
Speaker 3: on in terms of preparations for a potential longer term
4:35
Speaker 3: supply side crunch is going to be able to deal
4:39
Speaker 3: with a tightening supply side and what that's ultimately going
4:44
Speaker 3: to mean, I think on you know, things that I
4:47
Speaker 3: think are actually really worth watching out for at the
4:49
Speaker 3: moment is the impact of fertilizers on next season's cropping,
4:57
Speaker 3: especially if it intersects with the El Nino effect that
5:03
Speaker 3: is anticipated, which could have a very significant adverse effect
5:06
Speaker 3: on global food production. What's going to happen from that
5:12
Speaker 3: in terms of the cost of food and ultimately the
5:14
Speaker 3: availability of food, particularly to poorer countries. I think that
5:18
Speaker 3: that is something that people should be rightly concerned about,
5:22
Speaker 3: because it's not just a case of, well, you know,
5:26
Speaker 3: those poor people over there are going to starve, and
5:28
Speaker 3: there's a moral and humanitarian issue, which is true. But
5:32
Speaker 3: on top of that, when you have these kinds of
5:35
Speaker 3: humanitarian crises, it actually then catalyzes a whole bunch of
5:39
Speaker 3: other things. And the first world countries, of course, actually
5:44
Speaker 3: don't like a whole bunch of these other things happening
5:46
Speaker 3: to them, namely large migration, etc.
5:48
Speaker 2: Etc.
5:49
Speaker 3: Right, So these effects, of course can just reverberate through
5:53
Speaker 3: the global economic and social systems for quite some time
5:57
Speaker 3: to come. My own gut feeling for what it's worse
6:01
Speaker 3: is that national economies by and large, and particularly those
6:07
Speaker 3: underpinned by deepening connections to the Chinese economy, will reasonably.
6:14
Speaker 2: Adapt to.
6:17
Speaker 3: A future tightening and a further tightening of global oil.
6:22
Speaker 3: I might be wrong on all of this, by the way,
6:23
Speaker 3: car and you know, we might actually end up with
6:26
Speaker 3: a chronic depression. That wouldn't surprise me either, But I
6:31
Speaker 3: think that the adjustments that many countries can make will
6:35
Speaker 3: be made, and there will be some difficulties in certain sectors.
6:39
Speaker 3: No doubt, some countries will find it harder than others.
6:42
Speaker 3: Place like Australia, for example, where I'm at, is likely
6:46
Speaker 3: to face greater challenges because of its outsize dependency on
6:52
Speaker 3: imported fuels, for example, and imported fertilizers. Asia, more generally speaking, Japan, Korea,
7:00
Speaker 3: Singapore in particular are likely to face significant challenges as
7:06
Speaker 3: a result, whereas other places China, Russia countries that have
7:12
Speaker 3: much less dependency on oil today in some respects of
7:17
Speaker 3: going to be able to carry on the opportunity out
7:21
Speaker 3: of this is actually what the long term structural adjustment's
7:25
Speaker 3: going to be, as opposed to simply some demand destruction
7:30
Speaker 3: to get through. We're looking at, really, I think, a
7:37
Speaker 3: need and a growing body of evidence that suggests that
7:44
Speaker 3: organizations and countries around the world realize they need to
7:51
Speaker 3: change the structure of their energy systems, and that means electrification,
7:56
Speaker 3: and that's going to be the medium term consequence of
8:00
Speaker 3: this conflict. So short term wise, there will be patchy effects.
8:07
Speaker 3: I'm never quite sure what this idea of the global
8:09
Speaker 3: economy necessarily means, because the world's actually quite a patchwork quill, right,
8:14
Speaker 3: particularly when it comes to energy structures. Some places will
8:17
Speaker 3: be better off than others. The question is going to
8:21
Speaker 3: be what happens coming out of all of this, and
8:24
Speaker 3: what countries will take advantage of the opportunity to accelerate
8:30
Speaker 3: electrification to deepen their collaborations with the great electrifier. You
8:35
Speaker 3: know that the world has, which is China, and transition
8:40
Speaker 3: themselves to a position where over the medium term they
8:45
Speaker 3: are less dependent upon sources of energy that they themselves
8:49
Speaker 3: don't control. You know, I think that that's where we're
8:53
Speaker 3: They're the things that I think are particularly worth paying
8:57
Speaker 3: attention to.
9:03
Speaker 1: You know, you mentioned about demand destruction, but the demand
9:07
Speaker 1: destruction can only go so far, right, I mean, China
9:10
Speaker 1: already voluntarily cut back it's oil import, which is about
9:15
Speaker 1: five point five million barrels of oil. But as you
9:19
Speaker 1: also mentioned, the world's oil inventory has been drawn down
9:23
Speaker 1: in the past few months of war. You know, United States,
9:27
Speaker 1: for example, is only has less than a month of
9:30
Speaker 1: crude inventory left, and so there's a lot less of
9:34
Speaker 1: a buffer now than the time when Trump signed a
9:38
Speaker 1: surrender document. And in addition, because Trump's renew hostility against Iran,
9:45
Speaker 1: that led to YEA many joining the war. And now
9:49
Speaker 1: they're closing down the Babel Alman Depth. It's a straight
9:54
Speaker 1: at the mouth of the Red Sea, you know, whereas
9:57
Speaker 1: while the straight or Homos has been closed, there had
10:01
Speaker 1: been some oil that's coming out of Persian Gulf, and
10:03
Speaker 1: it's mostly through the Saldi pipeline that goes to the
10:08
Speaker 1: port of Gamboo where it gets loaded on ships and
10:11
Speaker 1: sailed down the Red Sea to the world market. And
10:14
Speaker 1: it's estimated there's about four point five million barrels of
10:18
Speaker 1: oil coming out of the Straight of Yamboo, and there
10:22
Speaker 1: might be another one to two million barrels of oil
10:25
Speaker 1: that was shipped through the UAE pipeline to the port
10:29
Speaker 1: of Fujara on the Gulf of Oman. But now the
10:33
Speaker 1: Iranian jones and missile attacks have effectively shut down Fujara,
10:38
Speaker 1: the UAE pipeline, and with many joining the war, they're
10:42
Speaker 1: shutting down the Red Sea. So there goes that. There's
10:46
Speaker 1: goes about five point five to six million barrels of oil,
10:51
Speaker 1: which is the equivalent of what China has already voluntarily
10:55
Speaker 1: cut back. So the slack that the slack and the
11:00
Speaker 1: buffer that the world had before is lots thinner, you know,
11:05
Speaker 1: Like like, so this is what kind of warries me?
11:10
Speaker 2: How you know?
11:12
Speaker 1: I mean like right now the world oil mark is
11:15
Speaker 1: still acting as if everything is still okay. Because I
11:19
Speaker 1: took a peek at the oil price today it sets
11:22
Speaker 1: a round between eighty to ninety dollars a barrel. So
11:31
Speaker 1: do you think do you think okay, let me let
11:36
Speaker 1: me phrase the other way. Do you think Trump will
11:38
Speaker 1: be able to bring back to his senses to end
11:44
Speaker 1: this war before everything just goes caput?
11:49
Speaker 3: Ending the war I think is probably beyond him for
11:53
Speaker 3: the duration of this year. It doesn't mean that he
11:58
Speaker 3: went from time to time agree to temporary cessations of
12:03
Speaker 3: hostilities both well, for a number of different reasons. One
12:07
Speaker 3: because I think for the first time, we've seen in
12:10
Speaker 3: the last couple of weeks a very significant number of
12:13
Speaker 3: American soldiers killed in the Persian Gulf, more so than
12:19
Speaker 3: in the previous four months, right when the numbers are
12:22
Speaker 3: very very low. So I think that there is a
12:25
Speaker 3: general sensibility amongst the American political elite to the prospects
12:32
Speaker 3: of a lot of dead Americans returning back to the
12:38
Speaker 3: United States in flag drape boxes. That's not the kind
12:43
Speaker 3: of optics that a president is looking for heading into
12:48
Speaker 3: a midterm elections where his party is already really facing
12:53
Speaker 3: a very significant uphill battle. The second one, of course,
12:56
Speaker 3: are some of those economic factors that could lead to
13:01
Speaker 3: attempts to try to moderate the consequences of the war.
13:06
Speaker 3: And I think the third issue goes to the state
13:10
Speaker 3: of the American arsenal itself. Right, So you bundle all
13:14
Speaker 3: of those things together and you've got a lot of
13:16
Speaker 3: reasons for an American president to periodically agree to cease hostilities.
13:24
Speaker 3: The reason why I think that there's no ending of
13:26
Speaker 3: the war in the short term is because an end
13:29
Speaker 3: of the war in the short term would require President
13:32
Speaker 3: Trump to accept terms that would be tantamount to an
13:37
Speaker 3: American defeat, and accepting those terms in the lead up
13:43
Speaker 3: to a midterm elections would be a very difficult political
13:47
Speaker 3: thing to do. So there'll be a bunch of time
13:51
Speaker 3: buying along the way, attempts to strong armed Iran to
13:56
Speaker 3: shift the terms of a potential settlement if in fact
14:02
Speaker 3: there is a long term intent for there to be
14:04
Speaker 3: a settlement with Iran with the present government intact, and
14:09
Speaker 3: I think that there's still a big question mark about
14:11
Speaker 3: that in terms of whether the American political elite, together
14:17
Speaker 3: with their wider ecosystem of supporters, is committed to that
14:23
Speaker 3: idea itself, or whether they're still committed to the idea
14:26
Speaker 3: of greater Israel without Iran. Let's not forget that Israel's
14:32
Speaker 3: having an election as well, and both the candidates in
14:36
Speaker 3: Israel have made it clear that part of their mission
14:41
Speaker 3: is to get rid of the Islamic Republic of Iran. Okay,
14:47
Speaker 3: so it's actually hard to see how in all of
14:50
Speaker 3: those circumstances, An American president is going to sign off
14:54
Speaker 3: on a lasting piece deal. The question around the demand destruction,
14:59
Speaker 3: I think is interesting one because I think that there
15:01
Speaker 3: are things that we know, which I touched on earlier,
15:03
Speaker 3: and things that we simply don't know. Things that we know,
15:06
Speaker 3: of course, is the ability for some let's call it
15:09
Speaker 3: demand destruction and belt tightening. Some of that would have
15:12
Speaker 3: been temporary, you know, let's just reduce the amount of
15:15
Speaker 3: activity that we do hold our reserves at a commercial
15:19
Speaker 3: level and see if we can get through the next month,
15:22
Speaker 3: two months, three months, or what have you. But at
15:24
Speaker 3: some point in time that becomes problematic and temporary demand
15:28
Speaker 3: destruction becomes permanent demand destruction or semi permanent demand destruction.
15:34
Speaker 3: Once you hit semi permanent demand destruction, the next set
15:37
Speaker 3: of considerations kick in, which is, well, I've got a
15:40
Speaker 3: bunch of equipment here that is now no longer being utilized.
15:44
Speaker 3: I'll maintain that for a while, obviously, because there's a
15:48
Speaker 3: whole bunch of finance capital tied up in that, with
15:51
Speaker 3: the view that maybe at some point in the future
15:54
Speaker 3: when things come down again, I'll be able to revitalize
15:57
Speaker 3: the equipment to kick it off and get myself up
15:59
Speaker 3: and running it again. The problem is is that once
16:02
Speaker 3: you start doing that, at some point there is a
16:06
Speaker 3: big financial pressure as cash flows squeeze, and as the
16:11
Speaker 3: overall domestic economy in particular begins to feel the pain
16:15
Speaker 3: of rising prices as well. You know, I'm just going
16:19
Speaker 3: to have to defer maintenance and eventually things start to
16:23
Speaker 3: fall apart. So that's a distinct possibility in certain areas.
16:28
Speaker 3: The other thing, of course, is what kinds of substitutions
16:32
Speaker 3: can be made. So if we're not using diesel, for example,
16:35
Speaker 3: how quickly can a particular activity switch to something else.
16:39
Speaker 3: Is there a substitute form of energy or technology or
16:43
Speaker 3: method of doing something that enables us to continue our
16:47
Speaker 3: activity but without using diesel in this case and in
16:53
Speaker 3: some areas you probably say there is. You know, you
16:56
Speaker 3: can move into things like electric drowne deliveries for last
17:01
Speaker 3: mile logistics. You might even contemplate moving to electric buck
17:07
Speaker 3: haulage right for you know, freight transportation. So there are
17:16
Speaker 3: these sorts of substitutions that I think can begin to
17:20
Speaker 3: take place. Some places will do it quicker than others,
17:24
Speaker 3: and I don't know which ones are going to be
17:25
Speaker 3: quicker and which ones are going.
17:26
Speaker 2: To be slower.
17:28
Speaker 3: When we look across Asia, for example, we do see
17:31
Speaker 3: reports of an acceleration of not only electrification for passenger
17:36
Speaker 3: motor vehicles, but also the electrification of freak transport. So
17:42
Speaker 3: that's going to continue and that will accelerate you to
17:47
Speaker 3: twenty thirty twenty thirty five. Is the United States going
17:50
Speaker 3: to move down that pathway as quickly.
17:52
Speaker 2: As you know?
17:54
Speaker 3: Korea, Japan, the Philippines, Indonesia, Malaysia, Well, actually I suspect not.
18:01
Speaker 3: The infrastructure is not there. Well, the electric trucks aren't there,
18:08
Speaker 3: and the United States is actually making it more difficult
18:12
Speaker 3: or American enterprises to get access to this kind of
18:16
Speaker 3: capability than ever before. So the speed at which this
18:21
Speaker 3: substitution can take place, I think is going to be
18:23
Speaker 3: severely hampered in the United States. So again, the reactions
18:27
Speaker 3: globally are going to be quite patchworking and hard to predict.
18:31
Speaker 3: They'll have ripple effects that will also transform things in
18:35
Speaker 3: ways that are difficult to for sea as well. All
18:40
Speaker 3: I can, in a sense get a handle on is
18:44
Speaker 3: this first order reaction of substitution, which is the places
18:49
Speaker 3: that are beginning to get their act together on electrifying
18:53
Speaker 3: not just passenger motor vehicles, but ultimately electrifying and moving
18:59
Speaker 3: away from hydrocarbon based transportation for freight. And that's the
19:06
Speaker 3: big move right And even in Australia, a little old
19:09
Speaker 3: Australia is starting to see some pilot projects emerge for
19:13
Speaker 3: electric long haul trucking. China itself has of course ramped
19:18
Speaker 3: up the sale and deployment of electric trucks. It is
19:22
Speaker 3: scaling up green hydrogen as a dense store of energy
19:28
Speaker 3: for the purposes of freight transportation, whether it's maritime or terrestrial.
19:33
Speaker 3: And I think we're going to see developments in these
19:39
Speaker 3: particular application technologies at rates far faster than any of
19:44
Speaker 3: us anticipated six months ago, because the need is so pressing.
19:49
Speaker 1: Now, what do you say to people who say that
19:54
Speaker 1: there's a deliberate strategy in the United States waging this
19:59
Speaker 1: war and closing down the street or ho moves. They say, well,
20:02
Speaker 1: because United States itself is a wash in oil, particularly
20:07
Speaker 1: shell oil, So you can't afford to shut down the
20:12
Speaker 1: pipeline of hydrocarbons from Persian Gulf because the people most
20:16
Speaker 1: affected will be countries in Asia and to some extent
20:20
Speaker 1: in Europe. You know, while United States is okay because
20:23
Speaker 1: US still have access to all the oil that's both
20:26
Speaker 1: produced in the continental United States but also in Venezuela,
20:31
Speaker 1: which US now controls. So this is a deliberate US
20:37
Speaker 1: strategy to destabilize the world energy supply while its self
20:42
Speaker 1: benefit reaps the benefit of the energy shortage. What do
20:47
Speaker 1: you what's your take on that?
20:49
Speaker 3: Well, I think it's quite clear in fact that the
20:51
Speaker 3: United States doesn't break the benefits. We already say rising
20:56
Speaker 3: costs at the pump. So that's how the benefit to
21:01
Speaker 3: the United States broadly speaking, even if it may be
21:03
Speaker 3: beneficial in the short term too. Refineries. We also need
21:08
Speaker 3: to understand that oils ain't oils, right. The chemical properties
21:13
Speaker 3: of oils from the Middle East is very different from
21:15
Speaker 3: the chemical properties and the composition of the oils from
21:19
Speaker 3: the shale fields at the United States, of course depends
21:23
Speaker 3: upon and that means that the final products that we
21:26
Speaker 3: get at the end of the refining process is different
21:29
Speaker 3: as well. People forget that the United States imports a
21:33
Speaker 3: significant amount of crude oil so that it can manufacture diesel,
21:39
Speaker 3: amongst other things. And in fact, if it wasn't for
21:43
Speaker 3: the importation of crude oils, it wouldn't be exporting some
21:46
Speaker 3: of the products that it exports as well. What tends
21:51
Speaker 3: to happen in these discussions is a level of abstraction
21:55
Speaker 3: about energy that is incredibly misleading. Talk about the United
22:00
Speaker 3: States being a net exporter of energy right, well, only
22:04
Speaker 3: at a certain level of abstraction, But particular kinds of
22:09
Speaker 3: machinery and particular kinds of processes actually use very particular
22:14
Speaker 3: kinds of or forms of energy which are not substitutes
22:19
Speaker 3: for one another. So the idea that you are, at
22:23
Speaker 3: an abstract level a net exporter doesn't help those that
22:29
Speaker 3: depend upon things that can only be made with important crude. Okay,
22:33
Speaker 3: so if it is a deliberate strategy, the beneficiaries are refiners,
22:41
Speaker 3: but the losers are everyone else who uses downstream products.
22:48
Speaker 3: The other thing that I think it's worth bearing in mind,
22:50
Speaker 3: and I wrote about this some months ago, is that
22:55
Speaker 3: the financial signals that arising mark rising prices sends would,
23:04
Speaker 3: if they sustain, catalyze further exploration and development of the
23:09
Speaker 3: American shale basins. The problem with that is that whilst
23:13
Speaker 3: that does deliver a financial or potentially delivers a financial windfam.
23:18
Speaker 2: It actually accelerates the.
23:23
Speaker 3: Degradation of the systemic energy efficiency of the United States itself.
23:29
Speaker 3: What do I mean by that, Well, every barrel of
23:33
Speaker 3: shale oil that we get out tomorrow takes more energy
23:39
Speaker 3: to get out than it did yesterday, and so all
23:44
Speaker 3: of the easy to extract shale oil has been extracted.
23:48
Speaker 3: The longevity of many of the new bores that have
23:57
Speaker 3: been put in is getting throught shorter, so it's more
24:02
Speaker 3: expensive financially, it's more expensive energetically to get that next
24:06
Speaker 3: barrel out, which means that from a system point of view,
24:09
Speaker 3: you're expending more and more energy to get that energy out.
24:15
Speaker 2: This is not.
24:15
Speaker 3: Actually a desirable outcome from the long term viability of
24:20
Speaker 3: an economic system. So short term financial signals undermines long
24:25
Speaker 3: term economic and energetic viability. So that's your downside risk
24:30
Speaker 3: for the United States. So again, fantastic for those who
24:34
Speaker 3: are in the business of drilling and refining today, but
24:38
Speaker 3: actually not particularly good systemically or for those who are
24:43
Speaker 3: users of downstream refined products. So I don't really buy
24:47
Speaker 3: this idea that this is a deliberate strategy unless I
24:51
Speaker 3: assume that those who have concocted this particular strategy are
24:57
Speaker 3: not aware of these particular issues, and that's inconceivable. If
25:03
Speaker 3: I'm aware of these issues based on publicly available information,
25:09
Speaker 3: then those people sitting in the Department of Energy, Department
25:12
Speaker 3: of Fray, in the White House surrounding the White House,
25:14
Speaker 3: I surely also understand these issues as well. So it's
25:19
Speaker 3: either a very poorly conceived strategy or the strategy executed
25:25
Speaker 3: in ignorance, one.
25:26
Speaker 1: Or the other, speaking of which, you know, during at
25:32
Speaker 1: this time of crisis, when Trump himself explicitly said he
25:38
Speaker 1: does not want to be Herbert Hoover, the president that
25:41
Speaker 1: brought the world to world economic depression, why is then
25:47
Speaker 1: he decided to add this juncture to restart the terraff war.
25:52
Speaker 1: Now he's going to reimpose the tariff across the globe,
25:56
Speaker 1: you know, like including so called US ally European countries.
26:01
Speaker 1: Why is he doing that? Why is he even bring
26:03
Speaker 1: that back?
26:06
Speaker 3: I think it's a political calculus, right, So, I think
26:09
Speaker 3: President Trump is actually in a very invidious political position
26:13
Speaker 3: because the policy ambitions and the policy means that have
26:21
Speaker 3: been part and parcel of his kit bag are not
26:26
Speaker 3: achieving the artcomes that he seems to want to achieve,
26:30
Speaker 3: and in fact, often undermine the chances of realizing the
26:36
Speaker 3: artcomes that he seeks to achieve as well. But having
26:41
Speaker 3: made his political name on the back of tariffs as
26:46
Speaker 3: the centerpiece of Trumpian economics and the revitalization of the
26:52
Speaker 3: American economy and as the key to the next Golden Age,
26:59
Speaker 3: he has no choice again in the lead up to
27:01
Speaker 3: midterm elections but to not let go of his signature instruments.
27:10
Speaker 3: He can blame the courts for why the previous tariff
27:15
Speaker 3: rounds got knocked out. It's actually very convenient for President
27:19
Speaker 3: Trump to be able to do that. But by reviving
27:23
Speaker 3: them now, and they're actually relatively modest in truth, you know,
27:26
Speaker 3: ten twelve percent here and there. Nonetheless, from an optic's
27:32
Speaker 3: point of view, I think it enables him to show
27:36
Speaker 3: good faith to what is actually the centerpiece of the
27:39
Speaker 3: Trump economic program. That's about it. It's unlikely to deliver
27:48
Speaker 3: on the outcomes that himself seeks to achieve. We've seen
27:54
Speaker 3: this already, right, you know, We've seen in the twelve
27:58
Speaker 3: months after Liberation Day tariffs twenty twenty five were implemented
28:03
Speaker 3: that American manufacturing has not revived. That was the purpose,
28:10
Speaker 3: that was the purpose, and it didn't happen. Many people
28:14
Speaker 3: were concerned about inflation. Now it is arguable that inflation
28:21
Speaker 3: itself hasn't manifested in large part because companies absorbed some
28:27
Speaker 3: of that price impact. And we know that from surveys
28:31
Speaker 3: in fact, that about seventy percent of the price impact
28:35
Speaker 3: was absorbed by importers. But more recent research suggests that
28:41
Speaker 3: it's playing out in a different way. So the adjustment
28:44
Speaker 3: that's being made in the American economy is that buyers,
28:48
Speaker 3: whether they're companies or household consumers, are buying cheaper, lower
28:54
Speaker 3: quality alternatives where they're available. So rather than prices rising
29:00
Speaker 3: per se, the actual effect on the American economy is
29:05
Speaker 3: a shift to lower quality and that will effect, of
29:09
Speaker 3: course the standard of living of Americans and also the
29:14
Speaker 3: productivity conditions of enterprises as they begin to import cheaper
29:20
Speaker 3: but lower quality alternatives. So these are the consequences, but
29:24
Speaker 3: much of that won't be visible for some time to come.
29:30
Speaker 1: Yeah, you would think, you know, with Trump's stated aim
29:34
Speaker 1: of bringing manufacturing back to the United States, he would welcome,
29:39
Speaker 1: for example, Chinese investment in US to build factories. You know,
29:44
Speaker 1: there are US American manufacturings manufacturers and talking more Forward
29:50
Speaker 1: and Pokmon Tessa that are now trying to manufacturing batteries
29:55
Speaker 1: in the United States, but they cannot do it long
29:58
Speaker 1: because China now dominates the car battery technology. So what
30:03
Speaker 1: Ford and Tesla is trying to do is they're trying
30:06
Speaker 1: to cooperate with the Chinese company, particularly Cattle uh C
30:10
Speaker 1: at L, to bring battery manufacturing in the United States.
30:15
Speaker 1: And for some reason, that's that's raising a lot of
30:19
Speaker 1: oppositions in Congress. You know, I just saw on Twitter
30:24
Speaker 1: a congressional hearing where uh you know, they brought in
30:28
Speaker 1: this think tanker guy who said, well, it's not difficult
30:31
Speaker 1: to envish imagining a scenario in which thousands or even
30:35
Speaker 1: millions of cars will be halted in our streets, and
30:40
Speaker 1: that could be an obvious tool for foreign adversary, and
30:43
Speaker 1: China is certainly considering this capability. Now, what he's actually
30:47
Speaker 1: talking about, he's talking about these Chinese joint adventures with
30:52
Speaker 1: American companies, with you know, likes of Ford and Tesla
30:56
Speaker 1: to manufacture battery in US. And he questioning, oh, what
31:01
Speaker 1: about what software do they use to to to interface
31:04
Speaker 1: with this bad way? You know, maybe they could be
31:06
Speaker 1: hacked to to to shut off the power supply. What
31:11
Speaker 1: I don't understand is like, why is there even such
31:15
Speaker 1: an opposition who found these things?
31:17
Speaker 2: Tanks to to.
31:21
Speaker 1: Check out these kind of propaganda because this is not
31:24
Speaker 1: positive for United States, you know, to actually bring manufacturing
31:28
Speaker 1: back to the US. And I would think, you know,
31:32
Speaker 1: with the heavy weights like the for CEO, like Ela Musk,
31:37
Speaker 1: they would have a lot of pull inside the Washington Beltway.
31:42
Speaker 1: But who would be opposed to this? That that's that's
31:44
Speaker 1: that's I'm baffled. I'm completely baffled. Why would anybody kind
31:50
Speaker 1: of object to this?
31:53
Speaker 3: Well, I mean the thing, thanks are funded by Congress
31:58
Speaker 3: bye large, and they get.
32:04
Speaker 2: The reports that they paid for the.
32:08
Speaker 3: Trump himself I think has again it's a classic case
32:12
Speaker 3: of contradictory objectives. He made it clear when he was
32:17
Speaker 3: campaigning prior to the last election, and I think from memory,
32:23
Speaker 3: who was campaigning in Detroit where he talked about the
32:27
Speaker 3: impending blood bath on the American auto sector should Biden
32:34
Speaker 3: or Kamala Harris be elected and Trump not be elected.
32:39
Speaker 3: And in that speech that he delivered, he also talked
32:43
Speaker 3: about being open to Chinese EV manufacturers setting up a
32:49
Speaker 3: shop in the United States. So there's a part of
32:53
Speaker 3: Trump that actually understands that there is certainly industrial and
33:00
Speaker 3: employment benefits of being open to Chinese capital and know
33:06
Speaker 3: how coming into the United States and establishing operations. The
33:11
Speaker 3: contradiction arises because you also have pulling the other way.
33:16
Speaker 3: All of these well, let's call them national security concerns.
33:21
Speaker 2: Whether they are real.
33:22
Speaker 3: National security concerns or not, I think is a debatable question.
33:28
Speaker 3: And if they're not genuine national security concerns, and I
33:32
Speaker 3: would suggest that in many cases they're not, or that
33:35
Speaker 3: they're at least not unmanageable national security concerns. And the
33:40
Speaker 3: real question is is, well, why do these issues get
33:43
Speaker 3: the traction that they get. The comments that you reference
33:50
Speaker 3: evinced to me a level of unreflective paranoia that has
33:57
Speaker 3: reached new heights. Clearly ignorant of how these technologies actually work,
34:06
Speaker 3: but nonetheless fearful of anything that is related to the
34:12
Speaker 3: People's Republic of China. So why is this happening again?
34:17
Speaker 3: And still I think that there's an incredible investment politically,
34:21
Speaker 3: emotionally and of course financially in the anti China story.
34:27
Speaker 3: We're heading into midterm elections where running the anti China
34:32
Speaker 3: reads under the bed. The Communists are coming, They're everywhere.
34:36
Speaker 3: Flag up the pole might help galvanize the base. And
34:42
Speaker 3: when you're facing a difficult electoral situation, as many Republicans
34:48
Speaker 3: in particular are, then this is a go to issue
34:53
Speaker 3: with very little short term downside. You'll remember about a
34:58
Speaker 3: year ago there was also all that hyped up fear
35:03
Speaker 3: about Chinese nationals directly or indirectly buying American farmland, and
35:10
Speaker 3: how a number of states passed legislation prohibiting Chinese nationals
35:14
Speaker 3: or entities associated with them from buying American farmland, and
35:18
Speaker 3: in fact, I think in Texas even buying other kinds
35:20
Speaker 3: of property. When you actually look at the real numbers,
35:25
Speaker 3: you'll see that, in fact, Chinese ownership of American farmland
35:30
Speaker 3: is minuscule in the scheme of things. The most significant
35:35
Speaker 3: foreign investor in American farmland is actually Canadian, followed by
35:41
Speaker 3: assorted entities registered in Europe. The Chinese rank well behind,
35:48
Speaker 3: and yet the entire campaign of fear and loathing revolved
35:53
Speaker 3: around Chinese ownership of farms. So there's something clearly in
35:59
Speaker 3: the world water in.
36:00
Speaker 2: Washington that.
36:03
Speaker 3: Leads otherwise people that you would think are at least
36:09
Speaker 3: marginally intelligent. You know, they're not totally silly people. These
36:12
Speaker 3: are people who get elected to things. They're good at
36:15
Speaker 3: certain things, quite obviously, but it leads them to running
36:19
Speaker 3: this sort of staff these lines and taking these political
36:23
Speaker 3: positions when the evidence actually suggests that it's overrated. The
36:29
Speaker 3: paranoids are in misplace. I mean, these are the same
36:32
Speaker 3: people who argue that imported garlic was a national security threat, right,
36:37
Speaker 3: I mean, you know, let's just keep that in mind.
36:42
Speaker 3: So it's kind of hard to rationalize why it is
36:46
Speaker 3: that these sorts of concerns get articulated, which leads me
36:51
Speaker 3: to ultimately conclude that these aren't rational concerns. They're mobilized
36:57
Speaker 3: for other reasons, you know, whether they're electoral reasons, whether
37:01
Speaker 3: they're deep seated racial reasons, right, you know that it's
37:06
Speaker 3: Chinese therefore bad, Whether it's ideological reasons you know, the communists,
37:13
Speaker 3: whatever those reasons are, none of them actually relate to whether,
37:18
Speaker 3: in fact, the imagined downstream possible consequences are even remotely possible.
37:30
Speaker 3: And when we're talking about factories and things like that,
37:32
Speaker 3: they're not remotely possible at all. But you get this
37:36
Speaker 3: space where this crazy stuff gets run. Now will it
37:40
Speaker 3: sustain into twenty twenty seven after the midterm elections. Well,
37:47
Speaker 3: if President Trump actually does have a serious interest, and
37:53
Speaker 3: he might not, but if he does have a serious
37:56
Speaker 3: interest in revitalizing aspects of American industry, ensuring that American
38:02
Speaker 3: industry is able to benefit from the latest of the
38:05
Speaker 3: technology frontiers, then you'll want to revisit this whole issue.
38:10
Speaker 3: I don't know whether he will though, because as we
38:12
Speaker 3: also know, he's recently made some decisions concerning prohibitions on
38:16
Speaker 3: Chinese robotics. Right, So again there's a level. So these
38:20
Speaker 3: are the contradictions. You've got Trump on the stump saying
38:25
Speaker 3: we need Chinese investors to build factories in America. Then
38:31
Speaker 3: you've got the other Trump, which is banning Chinese technologies.
38:36
Speaker 3: You've got people on the hill talking about the risks
38:40
Speaker 3: of Chinese technologies under national security terms. No wonder, American
38:49
Speaker 3: economic policy making is paralyzed, totally paralyzed, because you've got
38:56
Speaker 3: these contradictory forces at work. Until this paralysis is broken
39:03
Speaker 3: by a leadership that actually has a clear and persuasive
39:07
Speaker 3: vision for American economic structural transformation and social transformation, then
39:15
Speaker 3: I think we're going to be in this stasis for
39:18
Speaker 3: quite some.
39:18
Speaker 2: Time to come.
39:23
Speaker 1: Yeah, you know, the US senator that mentioned Chinese carlig
39:29
Speaker 1: is a national security threat is the Senator from Florida,
39:33
Speaker 1: Rick Scott. And I just saw him before the show.
39:37
Speaker 1: I just saw him posting on Twitter again. He's this
39:40
Speaker 1: is a Senate Congressional hearing where he's talking about the
39:44
Speaker 1: danger of China contributing to significant supply of antibiotics to
39:54
Speaker 1: the United States. And you know, I just decide to
40:00
Speaker 1: put a reply under his post. I'm like, yeah, your senator,
40:04
Speaker 1: thank you for your attention to this matter. You should
40:07
Speaker 1: immediately cut off all antibiotics supply to the United States.
40:11
Speaker 1: You will do, you will bring you will bring great
40:14
Speaker 1: benefit to the humanity of the earth. I mean, this
40:17
Speaker 1: is just mind boggling stuff. He is arguing, you know,
40:21
Speaker 1: there's a danger that if China decide to weaponize their
40:25
Speaker 1: their cultural dominance of the supply chain and to cut
40:28
Speaker 1: off that antibiotics supply to the United States, this will
40:32
Speaker 1: be this will be terrible. But what's alternative. You know,
40:36
Speaker 1: you're just gonna ban antibiotics from China. I mean, like
40:39
Speaker 1: it's it's it's crazy stuff, But as you you mentioned
40:44
Speaker 1: the recent US ban on robotics, because you know, China
40:50
Speaker 1: has now had clear dominance in the field of robotics.
40:56
Speaker 1: And but when I look into the seeing or talking
41:00
Speaker 1: about the band, the band actually extends more than humanoid robots.
41:06
Speaker 1: It actually includes power. The band also includes power converter
41:11
Speaker 1: used to connect renewable energy infrastructure and batteries to the
41:15
Speaker 1: power grid. Now that is actually in desperate need by
41:21
Speaker 1: all these hyperscalers inside United States who are trying to
41:25
Speaker 1: build data centers because US power script but grid cannot
41:30
Speaker 1: support all these outgrowth of data centers. So now they're
41:35
Speaker 1: trying to build their own energy supply, their own own
41:39
Speaker 1: power supply, and they do that either by building the
41:42
Speaker 1: gas turbines, and some of them like Ela Musk is
41:46
Speaker 1: trying to bring you more.
41:49
Speaker 2: Renewable energy.
41:53
Speaker 1: Into the mix, and that needed importation of power converters, transformers,
41:59
Speaker 1: all these equipment tools they import from China. And now
42:05
Speaker 1: this ban apparently includes a power converger. So this will
42:09
Speaker 1: actually contradict the US aim for AI dominance by by
42:16
Speaker 1: building by continually build out these uh these data centers.
42:21
Speaker 1: So I again I don't understand. I don't understand you
42:25
Speaker 1: will think, like with all the money that piling to
42:28
Speaker 1: the AI bubble right now, and with the tele telecom,
42:32
Speaker 1: with the Silicon Valley tech bros, UH have a have
42:36
Speaker 1: a big say in Washington. How did things like this
42:42
Speaker 1: get passed? How did how did this kind of legislation
42:45
Speaker 1: get passed that that will actually hurt their chance of
42:50
Speaker 1: you know, increasing the us UH in US energy production.
42:56
Speaker 1: I mean like, like they need equipments from China. Why
43:00
Speaker 1: are you banning China? This is a great idea.
43:05
Speaker 3: Look, I think all of this tells us something, right,
43:08
Speaker 3: and that is that good economic policy and what actually
43:15
Speaker 3: happens are two.
43:16
Speaker 2: Very different things.
43:18
Speaker 3: It tells us that there are other considerations that dominate
43:24
Speaker 3: decision making priorities inside Washington in ways that define economic sense.
43:34
Speaker 3: And it really points to, I think, a political elite
43:39
Speaker 3: that is driven by a series of concerns and priorities
43:44
Speaker 3: that actually don't have a lot to do with the
43:48
Speaker 3: things that matter to ordinary people and communities across the
43:53
Speaker 3: United States. It's the only conclusion that I can reach
43:57
Speaker 3: that there is a level of political irrationality, right, And
44:03
Speaker 3: I don't mean that in a sort of a hard sense,
44:06
Speaker 3: but that there is a set of considerations or a
44:10
Speaker 3: certain kind of rationality that is more important than smoothing
44:17
Speaker 3: the way for economic development and those sorts of things.
44:23
Speaker 3: This energy stuff is a real classic case in point.
44:28
Speaker 2: This equipment. It's been baded.
44:30
Speaker 3: Because the scare campaign is that if they come from China,
44:33
Speaker 3: China will be able to somehow switch the energy off. Okay,
44:38
Speaker 3: that's the story, right, Whether it's the garlic, it's the
44:41
Speaker 3: batteries in cars, it's the connectors between solar farms and
44:46
Speaker 3: and data centers.
44:48
Speaker 2: What have you.
44:48
Speaker 3: Right, So that's the paranoia. The problem is is that
44:52
Speaker 3: without this equipment, a whole bunch of data centers won't
44:55
Speaker 3: get built. Okay, So that's actually a consequence. You can't
44:59
Speaker 3: just magic up this equipment. There's a whole bunch of
45:03
Speaker 3: other equipment and materials necessary for the electricity networks and
45:08
Speaker 3: for data centers that come from China, and there's already
45:11
Speaker 3: a waiting line for some of this stuff.
45:13
Speaker 2: Already.
45:13
Speaker 3: We know that some data centers have been delayed or canceled. Okay.
45:19
Speaker 3: On top of that, data centers are sucking skilled workers,
45:24
Speaker 3: electrical workers in particular, out of the economy at a
45:27
Speaker 3: greater rate of knots than you can imagine. It desperately
45:30
Speaker 3: needs these particular skills to do the things that it
45:33
Speaker 3: needs to do. And you think, well, you know, well,
45:36
Speaker 3: you know, that's what happened to them. Here's the flip side.
45:40
Speaker 3: The flip side is is that skilled electrical workers are
45:45
Speaker 3: now in scarce supply for the rest of the economy.
45:48
Speaker 3: The rest of the economy still needs these workers. So
45:51
Speaker 3: what happens, Well, one is that the price of these
45:53
Speaker 3: workers is going up. This is Dutch disease stuff, right,
45:56
Speaker 3: So I've been bit up by the data center system.
46:01
Speaker 3: The availability of these skilled workers is reducing, which means
46:05
Speaker 3: that the non data center demands will either have to
46:09
Speaker 3: pay more and or wait longer for these skills, which
46:14
Speaker 3: then has roll on effects in so far as industrial competitiveness, productivity,
46:18
Speaker 3: et cetera, et cetera. So you've got a data center
46:21
Speaker 3: system that itself is being delayed because of quote national
46:27
Speaker 3: security concerns unquote, but still affecting the viability of industrial
46:33
Speaker 3: competitiveness in other parts of the economy. None of this
46:38
Speaker 3: is coherent. This is why we sit here and say,
46:41
Speaker 3: you know, help me make sense of this. Well, the
46:44
Speaker 3: best way to make sense of this is to accept
46:46
Speaker 3: that it's incoherent. The thing to understand is, well, if
46:51
Speaker 3: that bits incoherent, what is the rationality that makes this
46:56
Speaker 3: incoherence something that the political class us is willing to
47:02
Speaker 3: live with? And it seems to me that the calculus
47:05
Speaker 3: is simple that fear campaigns about China is viewed as
47:11
Speaker 3: a vote winner in the lead up to the midterm elections.
47:16
Speaker 3: And that's about as far as these characters go.
47:20
Speaker 2: Right now.
47:22
Speaker 3: When you've spent a lifetime invested, and these guys have
47:25
Speaker 3: spent a lifetime, you know, last five to ten years
47:28
Speaker 3: invested in demonizing China, what else are they going to do?
47:35
Speaker 2: Right?
47:35
Speaker 3: They certainly can't look themselves in the mirror, and heaven
47:38
Speaker 3: forbid ask voters to take a good hard look at
47:41
Speaker 3: them and their own track records.
47:44
Speaker 2: The best thing to do is.
47:46
Speaker 3: To frame someone else as being responsible for your plight.
47:51
Speaker 3: There is nothing better for a politician, with his or
47:56
Speaker 3: her back against the wall to find someone plause quote
48:02
Speaker 3: unquote plausible to blame for the problems that these politicians
48:08
Speaker 3: themselves have caused and have no capacity to resolve. So
48:15
Speaker 3: that's what we're seeing unplaying in America at the moment.
48:19
Speaker 3: In a sense, it's not hard to make sense of
48:22
Speaker 3: once we stopped trying to make sense of the incoherence
48:25
Speaker 3: on its terms. Economic policy in the United States is
48:29
Speaker 3: entirely in coherent. What's interesting is actually why it's in coherent.
48:38
Speaker 1: Okay, I understand the argument that China makes an easy target,
48:43
Speaker 1: easy escape goat because for the longest type, for decades,
48:48
Speaker 1: escaping escapegoat in China almost have no consequences, you know,
48:54
Speaker 1: at least no political consequences for all these American politicians.
48:59
Speaker 1: And but now as China itself becomes ever even more
49:04
Speaker 1: important in the world economy, escaping escape goal China, hating
49:09
Speaker 1: on China, banning everything Chinese is having increasingly more real
49:17
Speaker 1: life consequences for the United States.
49:23
Speaker 3: This is like, but those consequences are not being internalized yet, right,
49:34
Speaker 3: There's a catch up that has to be done.
49:36
Speaker 2: Yet there's a reckoning.
49:37
Speaker 3: Reality marches on regardless, Right, But reality and the consequences
49:42
Speaker 3: of reality unfolding as it's unfolding, has not yet caught
49:46
Speaker 3: up with a political class that continues to milk a
49:52
Speaker 3: set of circumstances which is no longer supported by reality.
49:56
Speaker 3: And the thing is is that in the United States,
49:59
Speaker 3: we have two years like cycles. Two year electoral cycles.
50:03
Speaker 3: Makes it actually pretty easy to kick things. Kick the
50:05
Speaker 3: can down the road. You're not kicking the can down
50:08
Speaker 3: the road four years or six years, right, as far
50:13
Speaker 3: as the cycle is concerned. You've just got to kick
50:15
Speaker 3: it down the road for a couple of years.
50:17
Speaker 2: I get that.
50:18
Speaker 3: Senators, of course, are elected every six years, and the
50:20
Speaker 3: presidential cycles are four years, right, But congressional seats are
50:24
Speaker 3: every two years. And so when you've got such short
50:28
Speaker 3: time horizons, you don't need to think too far beyond that,
50:35
Speaker 3: and therefore they don't. Therefore they don't, and there will
50:40
Speaker 3: be a price to pay. And the price, of course
50:43
Speaker 3: is already manifest, the price that's being paid through American
50:47
Speaker 3: political a league proflicacy, and a refusal to take a
50:52
Speaker 3: good hard look in the mirror at the policy settings
50:54
Speaker 3: that they've adopted over the course of the last four.
50:57
Speaker 2: To five decades.
50:59
Speaker 3: A refusal to actually take a good hard look at
51:01
Speaker 3: all of that means that the root causes of American
51:06
Speaker 3: malaise are currently being ignored. American malaise is a consequence
51:16
Speaker 3: of an economic restructuring that has favored the emergence and
51:22
Speaker 3: accelerated growth of finance capital over the growth and consolidation
51:29
Speaker 3: of industrial capital domestically. And that has taken fifty years,
51:36
Speaker 3: and in fact even longer, but let's just say the
51:38
Speaker 3: last fifty years to take a grip and ultimately work
51:43
Speaker 3: its way through the American economic and social system one
51:48
Speaker 3: hundred years ago. Carl Transatlantic discussions about capitalism in the
51:57
Speaker 3: nineteen tens and nineteen twenties into the nineteen thirties talked
52:03
Speaker 3: about a certain persona called the rontier or at other
52:09
Speaker 3: times called the coupon.
52:10
Speaker 2: Clipper, as being a.
52:14
Speaker 3: Symptom of an economic restructure in the very nature of
52:21
Speaker 3: capitalism which had serious downside consequences. Whether you were a
52:28
Speaker 3: sort of a business management school educator Berlin Means, for example,
52:34
Speaker 3: they had a very classic book on this stuff, or
52:37
Speaker 3: whether you were a liberal collectivist like John Maynight Caines,
52:43
Speaker 3: socialist like Tawny, or in fact the Marxists going back
52:47
Speaker 3: to the nineteen tents, they all understood that the emergence
52:52
Speaker 3: of the rontier, the separation of finance capital and its
52:58
Speaker 3: interests from the dynamics and ownership of fixed capital, factories, equipment,
53:04
Speaker 3: and those sorts of things was a problem for capitalism,
53:10
Speaker 3: and that there needed to be an effort to bring
53:14
Speaker 3: that to heal. The Marxist, of course, saw that as
53:17
Speaker 3: part and parcel of a process by which capitalism eventually transitions.
53:23
Speaker 3: But the reformers who wanted to fix capitalism, they talked
53:28
Speaker 3: about a need to well Cain's talked about a need
53:30
Speaker 3: to euthanaser Ontier. Okay, Come nineteen eighty onwards, the coupon clipart,
53:39
Speaker 3: which was not a term of endearment, right, this was
53:41
Speaker 3: a term that was used to really besmirch a class
53:46
Speaker 3: of people. Come nineteen eighty onwards, the shareholder became the
53:52
Speaker 3: embodiment of.
53:54
Speaker 2: Liberalism, of freedom, of the.
53:58
Speaker 3: Democratization of finance. It became a symbol of all things
54:03
Speaker 3: good about capitalism. So, in the space of fifty years,
54:09
Speaker 3: we went from a situation where this particular phenomenon was
54:12
Speaker 3: seen in very critical terms to one in which it
54:14
Speaker 3: was embraced as the quintessential defining feature of modern capitalism. Now,
54:22
Speaker 3: until you confront that, until you're willing to reign in
54:25
Speaker 3: the Rontier or to bring Wall Street to heel, you're
54:31
Speaker 3: never going to heal Main Street. You're never going to
54:36
Speaker 3: revitalize industrial capital because the drivers and the imperatives are
54:43
Speaker 3: at odds with each other. Now do you see anybody
54:46
Speaker 3: in the American political classes willing to confront that problem?
54:49
Speaker 2: Right, No, of course not. They've bought into.
54:54
Speaker 3: The entire kool aid of American shareholder capitalism. For them,
55:01
Speaker 3: this is the defining characteristic of what makes America great.
55:06
Speaker 3: We hear all the talk about America's strengths in the
55:09
Speaker 3: depths of its capital markets. Well, one of the consequences
55:13
Speaker 3: of the strengths of America's the capital markets is a
55:17
Speaker 3: hollowing out of industry. So when you cry about the
55:21
Speaker 3: hollowing out of industry but not look at the root causes,
55:24
Speaker 3: it's important to find someone else to blame. And this
55:28
Speaker 3: is precisely what goes on, But it doesn't solve the
55:31
Speaker 3: real problem. Blaming China won't solve any of these problems
55:35
Speaker 3: that besets America today. Blaming China will not overcome the
55:40
Speaker 3: malaise that now envelops American industry, American communities, and society
55:46
Speaker 3: at larche. But until either the political class can confront
55:52
Speaker 3: these problems of its own making or is forced to
55:58
Speaker 3: reckon with the consequences of the decisions that they've made
56:01
Speaker 3: and supported over the course of the last four or
56:03
Speaker 3: five decades by those most affected by these decisions in
56:06
Speaker 3: an adverse way. Then nothing's going to change. We're going
56:11
Speaker 3: to continue experiencing this kind of paralysis at a political
56:15
Speaker 3: and policy level whilst the real economy continues to hollow
56:19
Speaker 3: out in Corode. This is America against America.
56:26
Speaker 1: Wow, Well said, do you is there any other topic
56:33
Speaker 1: you would like to cover today?
56:35
Speaker 3: Doctor pop Well, Now that I've climbed down from the
56:38
Speaker 3: high horse, look, the world at the moment is going
56:47
Speaker 3: through obviously some very turbulent times. There are going to
56:54
Speaker 3: be some real In my view, there's going to be
56:58
Speaker 3: some real pain.
57:01
Speaker 2: The question about pain.
57:04
Speaker 3: Is whether or not it's grasped as an opportunity for
57:08
Speaker 3: the kinds of changes that we need to make to
57:12
Speaker 3: make things better, or whether the pain just gets consolidated
57:17
Speaker 3: and concentrated amongst a small group of people in a
57:19
Speaker 3: small group of countries. The United States is a big
57:25
Speaker 3: and important country, but it needs to find a way
57:32
Speaker 3: of addressing the issues that I've talked about because it
57:36
Speaker 3: needs actually to make peace with itself. And until it
57:42
Speaker 3: can make peace with itself, it is always going to
57:44
Speaker 3: be at war with the rest of the world. The
57:47
Speaker 3: challenge for the rest of the world is to understand
57:50
Speaker 3: that and protect itself when America makes war with it
57:57
Speaker 3: to the extent that it can, and try to help
58:02
Speaker 3: the United States at a broad cultural level, political level,
58:05
Speaker 3: institutional level come to terms with the changes in the
58:11
Speaker 3: world and help America realize that it can actually be
58:17
Speaker 3: a member of the community of nations, but no longer
58:22
Speaker 3: as first amongst equals, but just as one of the
58:27
Speaker 3: normal nations that make up this world. That's the challenge
58:31
Speaker 3: we face today.
58:33
Speaker 1: While said, while said, if people wish to follow you,
58:37
Speaker 1: doctor Powell, where would they go?
58:40
Speaker 3: Substackworickpalell dot substack dot com. And they can check out
58:44
Speaker 3: my book as well on Amazon. The book is called
58:48
Speaker 3: Thermoeconomics in a Time of Monsters.
58:52
Speaker 1: Thank you very much, Doctor Power for making the time
58:55
Speaker 1: to speak to us, and thanks everyone in the audience
58:58
Speaker 1: for following a long and listening. Until next time.
59:02
Speaker 2: Bye bye MHM.