Latest / Trumponomics / Trump Heartland Depends on -- And Loathes -- Globalization

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Trump Heartland Depends on -- And Loathes -- Globalization · Trumponomics

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Speaker 1: So was there a point as the journey continued and
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Speaker 1: you noticed these things where you thought Trump may have
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Speaker 1: a shot, and if not Trump, someone like him is coming.
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Speaker 1: Or was it only afterwards you pieced it together and
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Speaker 1: thought I should have seen it. Welcome to Bloomberg Benchmark,
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Speaker 1: a podcast about the global economy. I'm Daniel Moss, executive
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Speaker 1: editor for Global Economics based in New York, and I'm
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Speaker 1: Scott Landman, an economy editor for Bloomberg in Washington. So
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Speaker 1: America's unemployment rate is four point seven percent, close to
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Speaker 1: what most economists define as full employment. Consumer confidence is
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Speaker 1: back to where it was before the financial crisis. Wages
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Speaker 1: are finally starting to pick up. So why the discontent,
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Speaker 1: why the division and all the handwringing about our and
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Speaker 1: it is our place in the world. Our guest, Robert D. Kaplan,
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Speaker 1: has some unique observations. He spent three weeks on a
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Speaker 1: coast to coast road trip last year and just published
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Speaker 1: Earning the Rockies, How geography shapes America's role in the world.
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Speaker 1: Bob's a senior fellow at the Center for a New
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Speaker 1: American Security, a senior advisor at Eurasia Group. He held
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Speaker 1: positions at the U. S. Naval Academy, the Defense Policy Board.
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Speaker 1: He's the author of Balkan Ghosts. The list goes on
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Speaker 1: and on. Bob, if I missed anything, No, but it
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Speaker 1: was five weeks actually that ipent driving, and it was
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Speaker 1: one of several road trips that I took across America. Well,
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Speaker 1: it's fabulous to have you here, unless we're missing something.
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Speaker 1: You came away something of an optimist. So what is
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Speaker 1: the dominant narrative with its obsessions about inequality, declinism, surging
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Speaker 1: sales of George orwell, what's that missing? I think what
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Speaker 1: I saw, And I took my trip in the spring
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Speaker 1: of teen, about nine months before the first presidential primaries,
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Speaker 1: when Donald Trump was just a failed celebrity New York
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Speaker 1: real estate developer who people who read The New York
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Speaker 1: Post knew about, but not not many other people. And
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Speaker 1: that wasn't the policy, right, It wasn't. What I came
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Speaker 1: away with were several things. First, probably the most important,
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Speaker 1: is that the very the middle class, the very thing
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Speaker 1: we pay lip service to celebrate assume exists, was disappearing
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Speaker 1: before my eyes. What I saw once I got away
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Speaker 1: from the coasts and away from the college towns and
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Speaker 1: away from a few successful big cities like Chicago and
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Speaker 1: Des Moines in Denver and Kansas City, was a country
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Speaker 1: where assert a small amount had drifted upwards into the
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Speaker 1: global cosmopolitan up or middle class elite sipping chardonnay at
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Speaker 1: fine restaurants, even in western Nebraska, even in eastern Wyoming.
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Speaker 1: Because the red blue divide is not as clear cut
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Speaker 1: in person as it is on the TV screens. But
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Speaker 1: the much larger percentage of people that I saw, which
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Speaker 1: used to be the middle class with drifting downward into
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Speaker 1: a precarious blue collar existence that was one or two
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Speaker 1: misfortunes away from poverty. And that's what you saw. You
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Speaker 1: saw this stark differentiation between people who were had benefited
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Speaker 1: from globalization and people who had been left behind by it.
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Speaker 1: It's almost as if the American continent, the interior continent,
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Speaker 1: has been swept into the world through globalization, cyber all
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Speaker 1: of that, and a part of the population has done
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Speaker 1: magnificently with it. But a much larger population simply can
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Speaker 1: not compete and find that their lives. They're employed, but
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Speaker 1: they hate their jobs. Their lives are full of worries.
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Speaker 1: When you overhear conversations and restaurant bars, et cetera. Everyone
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Speaker 1: is worrying about taking care of elderly relatives, UH, pensions, UH,
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Speaker 1: their medical problems, getting health insurance. Um. It's a country
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Speaker 1: united by people's worries, where in twenty fifteen I heard
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Speaker 1: very little discussion of politics, and I think what unite.
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Speaker 1: The explanation for that is that Donald Trump represented a
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Speaker 1: kind of anti politics. Well, I'm wondering now if I've
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Speaker 1: misread portions of the book, because there is a strain
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Speaker 1: of optimism that comes up, and you derive that directly
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Speaker 1: from the actual geography. Over it's a celebration and um
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Speaker 1: and and a mend meditation upon the American landscape. And
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Speaker 1: as I call it, it's the there is no geography
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Speaker 1: in the world in world history better perfectly apportioned for
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Speaker 1: projecting power around the globe as the American continent, the
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Speaker 1: temperate zone of the American continent. And that geography is
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Speaker 1: really the main character of the book. And on that geography,
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Speaker 1: I'm very optimistic. But things I see here and there
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Speaker 1: as I write, one place, I passed through towns where
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Speaker 1: pennies still mattered, where you didn't leave pennies as extras
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Speaker 1: in the Little Uh you know, in the Little jar Bob.
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Speaker 1: How does the how does this view on the geography
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Speaker 1: play into the mix of people you you met and
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Speaker 1: conversations you heard throughout your road trip. You talk about
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Speaker 1: the inequality you saw across the country, and yet at
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Speaker 1: the same time, there's this unique geography that this country
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Speaker 1: is in that makes it very different from the place
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Speaker 1: where Europe is in its proximity to the Middle East,
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Speaker 1: for example, or some of the other geographic features such
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Speaker 1: as access to water. You know, how long can America
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Speaker 1: maintain this comparative advantage? Did this road trip help reinforce
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Speaker 1: that for you or did it make you more worried? Um,
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Speaker 1: that's a great question. America's comparative advantage has lasted from
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Speaker 1: its founding literally up until recent times. But remember we've
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Speaker 1: always been swept up more and more to the world
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Speaker 1: into the world, first with ocean liners that took five
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Speaker 1: days to cross the Atlantic, but at the time we're
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Speaker 1: a great technological marvel, and now of course with cyber
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Speaker 1: with jet airplanes. But remember, attrition of the same adds
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Speaker 1: up to big change eventually. And now the the interconnectedness
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Speaker 1: with the rest of the world is at a far
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Speaker 1: more intense level than ever before. America's comparative advantage was
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Speaker 1: really built on the fact that we were the only
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Speaker 1: part of the industrialized world which did not have its
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Speaker 1: infrastructure damage during World War Two. Uh you know, Germany, Germany, Russia, China, Japan,
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Speaker 1: England were devastated by the war, but we were in
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Speaker 1: splendid isolation. We came out of World War Two literally,
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Speaker 1: you know, with I think half the world's industrial capacity
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Speaker 1: or something. And that was that advantage lasted for decades.
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Speaker 1: It really was Pax American, right, and it's wearing away now,
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Speaker 1: it's really wearing away. And as we become more and
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Speaker 1: more immersed into the rest of the world, we find
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Speaker 1: that part of our country, as I said earlier, is
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Speaker 1: succeeding at it succeeding at globalization, a larger part is not.
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Speaker 1: And so the more interconnected we become with the world,
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Speaker 1: the more divisions are exposed at home, divisions that never
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Speaker 1: previously existed. Because in the past, we had an internal market.
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Speaker 1: That was another comparative advantage we had. We had an
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Speaker 1: economy of scale that produced its own goods and services
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Speaker 1: for its own people. So let's back up a bit
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Speaker 1: for our listeners. What inspired you to take the trip
8:34
Speaker 1: the way you took it. Were you looking for something
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Speaker 1: or did you have the germ of this idea and
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Speaker 1: you thought, well, the only way I can really play
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Speaker 1: this out is by going coast to CoA. Well, this
8:45
Speaker 1: book had a very odd origin. I originally wanted to
8:49
Speaker 1: do a short book about a great American writer historian
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Speaker 1: who has now been forgotten, Bernard Devoto. And I said
8:58
Speaker 1: I should write a book on de Voto, and people said, no,
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Speaker 1: he's a minor writer. You know, the book's not going
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Speaker 1: to do well. And I wanted to write also about
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Speaker 1: my father. Devoto inspired me about the connection of the
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Speaker 1: American landscape with america projecting power, and my father Expot
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Speaker 1: inspired me with his trips across the country in the
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Speaker 1: nineteen thirties that he used to tell me about. So
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Speaker 1: I put my father in de Voto together and that
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Speaker 1: led naturally to a discovery of the American landscape or
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Speaker 1: road trip, and that led to a meditation upon America's
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Speaker 1: role in the world, which is what the last chapter
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Speaker 1: is all about. What our foreign policy should be based
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Speaker 1: upon what I saw on the road in America. So
9:46
Speaker 1: was there a point as the journey continued and you
9:49
Speaker 1: noticed these things were we thought, h Trump may have
9:53
Speaker 1: a shot, and if not Trump, someone like him is coming.
9:57
Speaker 1: Or was it only afterwards you pieced it together, thought
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Speaker 1: I should have seen it. It was both. Actually, I
10:04
Speaker 1: saw that there was a big change coming because I
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Speaker 1: saw that the middle class was not holding and it
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Speaker 1: was the middle class that essentially acquiesced to our great military,
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Speaker 1: to our involvements, not just an Iraq and Afghanistan, but
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Speaker 1: to you know, the great troop deployments in Europe and
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Speaker 1: Japan during the Cold War. So that if the middle
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Speaker 1: class is eroding, the support for a three hundred warship
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Speaker 1: navy could also erode. All the things we take for
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Speaker 1: granted could erode. And I saw a country that was alienated.
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Speaker 1: But I did I didn't piece it together with the
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Speaker 1: person of Trump because he didn't exist in the popular
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Speaker 1: mind what I made the journey. But I believe that
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Speaker 1: that there's no contradiction or very little contradiction between what
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Speaker 1: I saw and described on the road and his election. Now,
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Speaker 1: uh Bob, you finished the journey in the southwestern United
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Speaker 1: States and all the way to San Diego, and one
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Speaker 1: issue that Trump ran on and probably successfully was talking
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Speaker 1: about what a bad deal NAFTA was, on how illegal
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Speaker 1: immigration was pouring across the border from Mexico, whether or
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Speaker 1: not that was true. Now you do talk about that
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Speaker 1: someone in the book. But now uh Trump is is
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Speaker 1: uh floating or at least as press secretary floated a
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Speaker 1: tax on imports to pay for a proposed wall with Mexico.
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Speaker 1: Can can the dynamism down there be undone? So simply
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Speaker 1: you know what we're What are some more of your
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Speaker 1: impressions about the you know, Latino influenced parts of the
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Speaker 1: West and Southwest that maybe weren't able to get into
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Speaker 1: in your book. Yes, well, not so much in this book,
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Speaker 1: but in previous books of mine, An Empire Wilderness, which
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Speaker 1: I published in and The Avenge of Geography, which I
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Speaker 1: published in two thousand and twelve, I dealt at length
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Speaker 1: with Mexico, and my conclusions then were the same as now,
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Speaker 1: which is that Latin history is gradually moving north, that
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Speaker 1: as the Mexican economy grows, as its population grows at
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Speaker 1: a faster rate than that of the United States, we
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Speaker 1: our destiny is tied in with Mexico. We cannot cut
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Speaker 1: it off. It's you know, the official frontier is artificial.
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Speaker 1: It's not based on much of a geographical divide. The
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Speaker 1: Rio Grande River is very narrow there. People speak Spanish,
12:38
Speaker 1: you know, it consistently in Texas, New Mexico, Arizona. Uh.
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Speaker 1: The US dollar is the currency of choice in the
12:47
Speaker 1: northern third of Mexico. So that a new country is
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Speaker 1: coming into being called mex America, which is sort of
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Speaker 1: the northern third of Mexico and say the southern half
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Speaker 1: of a number of southwestern states. It won't be an
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Speaker 1: official country, but it will be a country in terms
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Speaker 1: of mindset, in terms of language, and in terms of economics,
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Speaker 1: and considering that we should be thinking how to build
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Speaker 1: up the Mexican economy because of Mexico wins. We win.
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Speaker 1: How to get Mexico's growth rate up from I don't
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Speaker 1: know exactly what it is now about two percent or
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Speaker 1: so up to four percent because that helps us. What
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Speaker 1: I'm worried about is this is this truculent messaging coming
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Speaker 1: out of the White House about Mexico is going to
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Speaker 1: hurt Mexico's prospects in the world economy. It's gonna hurt
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Speaker 1: Mexico's brand, just as Mexico moves closer and closer away
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Speaker 1: from third world status and into first world status. But
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Speaker 1: I mean that's built a lot on intricate global supply chains.
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Speaker 1: This just in I visited a supermarket in Mexico City
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Speaker 1: and August and I'm pretty sure those carrots, which said
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Speaker 1: product of the USA, had been back and forward across
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Speaker 1: the boarder multiple times before they ended up in that supermarket. Now,
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Speaker 1: does that supply chain ultimately defend itself, because it sounds
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Speaker 1: like you're describing the rise of an economy state, if
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Speaker 1: not a nation state. That's an interesting question because there
14:22
Speaker 1: are supply chains like that all over the world. The
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Speaker 1: Chinese want to build such a supply chain from China
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Speaker 1: to Europe through Central Asia called One Belt, One Road,
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Speaker 1: And so the question is, does do supply chains do
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Speaker 1: the Does the self interest inherent in maintaining supply chains
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Speaker 1: keep the peace? Uh, you know, that's the ultimate question.
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Speaker 1: I'm not so sure because I think that there is
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Speaker 1: a there is a large a large degree of nationalism,
14:53
Speaker 1: and I'm not talking about the new surge of populism,
14:56
Speaker 1: just you know, the normal national self interest. You know,
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Speaker 1: that could lead to disruptions and supply chains. But has
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Speaker 1: the nationalism run behind the economic story. I think for
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Speaker 1: a long time it did. I think what was happening
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Speaker 1: was that global elites, of which the media is a part,
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Speaker 1: and not just in the United States, the global elite
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Speaker 1: in Poland and Hungary, in Mexico, we all have more
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Speaker 1: in common with each other than we have with our
15:27
Speaker 1: own poorer countrymen. And we assumed that because our lives
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Speaker 1: were better and better, and we lived in a world
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Speaker 1: of high technology people with multiple identities and multiple passports,
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Speaker 1: that the rest of the world was following two. And
15:44
Speaker 1: what I saw in this road trip was that there's
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Speaker 1: a large portion of the U S which was being
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Speaker 1: left behind. And that's also true in Poland, in Hungary,
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Speaker 1: in other places, which which accounts for the populist upheavals
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Speaker 1: in those countries. So even though you have these forces
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Speaker 1: in you, not just the United States, but other countries,
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Speaker 1: like you said, around Europe, uh, you know, even across
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Speaker 1: Asia several countries, is there a reason or is it
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Speaker 1: possible to say that the geographic nature of the United
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Speaker 1: States or geographic features would uh lessen the forces of
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Speaker 1: inequality UH as compared with a place like Poland, which
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Speaker 1: is hemmed in on multiple sides by economic and potential
16:36
Speaker 1: security rivals. Our geography work to unite the country. In
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Speaker 1: the nineteen and part of the twentieth century, our people
16:45
Speaker 1: crossed the Appalachians and then found a flat panel of
16:50
Speaker 1: rich soil the Midwest, where the differences among different immigrant
16:56
Speaker 1: groups could be ground down and an American culture could
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Speaker 1: be formed. So our geography work towards unity for many
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Speaker 1: parts of our history. Our river system is not perpendicular
17:09
Speaker 1: like in Russia, which divides the country even more. It's diagonal,
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Speaker 1: so that all the waters flow into the Missouri and
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Speaker 1: Mississippi river systems, enabling trade and commerce. From the early
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Speaker 1: nineteenth century onward, it was a geography that worked towards unity.
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Speaker 1: But now this geography is being undone by the fact
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Speaker 1: that our people live in a global civilization where some
17:34
Speaker 1: do better than others, and certain parts of the country
17:37
Speaker 1: do better than others. So let's talk about what happened
17:41
Speaker 1: when you got to the Pacific. You describe in rather
17:46
Speaker 1: or inspiring terms the site of the U. S. Pacific
17:49
Speaker 1: Fleet at San Diego took a little bit about what
17:53
Speaker 1: went through your mind and your heart when you saw it.
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Speaker 1: I saw Finally, after weeks upon we of traveling through
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Speaker 1: a virtual desert, because remember the Great America, the Great
18:04
Speaker 1: Planes are technically a desert. They just happened to be irrigated.
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Speaker 1: Gets less than twenty inches of rainfall per uh per
18:11
Speaker 1: year between say the middle of Nebraska and the California coast.
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Speaker 1: For much of that terrain, you're in what is technically
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Speaker 1: a desert, desert or a semi desert. And suddenly you
18:24
Speaker 1: come upon the ocean and Naval Base San Diego, and
18:29
Speaker 1: you see, lined up as far as the eye could see,
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Speaker 1: one warship after another, one or two carriers, one or
18:37
Speaker 1: two submarines, money more destroyers, cruisers, and frigates, and that
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Speaker 1: each of these platforms cost four billion dollars for each destroyer,
18:48
Speaker 1: eighteen billion for an aircraft carrier with all the planes
18:52
Speaker 1: on it. And you see, you see essentially America's biggest,
18:56
Speaker 1: most important strategic instrument, the America Amrican Navy, because it's
19:01
Speaker 1: more important than our nuclear arsenal, because our nuclear arsenal
19:05
Speaker 1: is a taboo that can never be used and practically,
19:09
Speaker 1: but our navy is around the world on any given day,
19:13
Speaker 1: and occurred to me, we conquered a desert the Great
19:16
Speaker 1: Plains in order to become a sea power, because once
19:20
Speaker 1: we were on both oceans, then we were a veritable
19:23
Speaker 1: maritime nation. And that sea power at three hundred warships,
19:29
Speaker 1: it's actually now like to seventy eight. It's going to
19:31
Speaker 1: go up to three thirteen. But think of it in
19:34
Speaker 1: terms of three hundred warships and a coast guard, which
19:38
Speaker 1: if it count, which if it was called a navy,
19:40
Speaker 1: would be the twelfth largest navy in the world. So
19:44
Speaker 1: you see that conquering the dry land temperate zone of
19:48
Speaker 1: North America enabled us to become a world power. And
19:52
Speaker 1: you see it at a point of concision at Naval
19:56
Speaker 1: Base San Diego. Now, how many of the people who
19:59
Speaker 1: voted for Trump, who said they worried about depletion of
20:02
Speaker 1: the military have actually seen what you've seen? Very few
20:07
Speaker 1: of the Pacific. First of all, most people in our country,
20:11
Speaker 1: even elites, when they think of a military, they think
20:14
Speaker 1: of the Army of the Marines, because you only see
20:17
Speaker 1: warships if you live on the coast near a naval base.
20:21
Speaker 1: Think about it, very few Americans have actually seen a warship.
20:25
Speaker 1: But it's our warships combined with our air forces. Uh.
20:30
Speaker 1: We we have a system called numbered air forces. So
20:33
Speaker 1: there are many American air forces. It's our navy and
20:36
Speaker 1: Air force that essentially project power across the Earth on
20:42
Speaker 1: every single day. Our Army and Marines are only there
20:46
Speaker 1: for unexpected contingencies. But because contingencies cannot be predicted, we
20:53
Speaker 1: find that our our land forces are in the news often,
20:56
Speaker 1: so they think we're in decline in the military just
20:59
Speaker 1: because they heard it on say a competitive network. Exactly,
21:03
Speaker 1: it looks regardless of Iraq, irregardless of Afghanistan, America has
21:10
Speaker 1: far and away the greatest military in the world because
21:13
Speaker 1: of its Navy and Air force and because of the
21:17
Speaker 1: experience that our ground fault force has got in Iraq
21:20
Speaker 1: and Afghanistan that no other military has gotten. Essentially, we
21:26
Speaker 1: have to wrap up. We could talk about this forever
21:28
Speaker 1: and every even got to read one of my favorite
21:30
Speaker 1: passages from the book. But okay, it's twenty you're gonna
21:33
Speaker 1: do the trip again. If you do, what do you
21:36
Speaker 1: think you'll find. I think I'll find um a greater
21:40
Speaker 1: urban spread. Uh. You know, the suburbs will have expanded
21:44
Speaker 1: into exerbs. There will be no difference between Lawrence Kansas
21:49
Speaker 1: uh and uh. In Kansas City, they'll have conglomerated into
21:54
Speaker 1: one place. Um, you know, Spokane, Washington will be together
21:59
Speaker 1: with Ida. Oh. There'll be more people, more or even
22:02
Speaker 1: more urban people, and the urban terrain will take up
22:06
Speaker 1: even greater amounts of space, but they'll still be a
22:10
Speaker 1: great divide between urban and rural. Does Trump hold those
22:14
Speaker 1: supporters in those states? And isn't enough to get him
22:17
Speaker 1: across the line again? He can hold those supporters if
22:21
Speaker 1: the economy grows, but it's unclear that pump priming the
22:26
Speaker 1: economy with lower you know, doing away with regulations, with
22:31
Speaker 1: lowering taxes, etcetera, can pump prime the economy if the
22:36
Speaker 1: stock markets are increasingly upset by political news, like since
22:42
Speaker 1: he was inaugurated. Benchmark will be back next week and
22:45
Speaker 1: until then, you can find us on the Bloomberg terminal
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