Latest / Trumponomics / `Hamilton the Protectionist' Is a Show Trump Might Like

Transcript

`Hamilton the Protectionist' Is a Show Trump Might Like · Trumponomics

• 0:06
  Speaker 1: Pace, you're walking up and I hope you're here. It's well. Then,
• 0:16
  Speaker 1: newly elected Donald Trump had plenty to do about the
• 0:19
  Speaker 1: show and its cast, highly overrated, very rude. But if
• 0:24
  Speaker 1: a show were done about Hamilton's economic policy, after all,
• 0:28
  Speaker 1: he was the nation's first treasury secretary, the President might
• 0:32
  Speaker 1: find much to applaud. Welcome to Benchmark, a show about
• 0:41
  Speaker 1: the global economy. I'm Daniel Moss, executive editor for Global
• 0:45
  Speaker 1: Economics in New York, and I'm Scott Landman, an economics
• 0:48
  Speaker 1: editor with Bloomberg in Washington. Well, little known amidst all
• 0:52
  Speaker 1: the buzz that's been running for a couple of years
• 0:54
  Speaker 1: now about Hamilton's is his role as a protector of
• 0:58
  Speaker 1: American manufacturing. He was, as I said, our nation's first
• 1:02
  Speaker 1: treasury secretary. He wanted to protect industry in the fledgling
• 1:08
  Speaker 1: United States of America. He wanted, now wait for this,
• 1:11
  Speaker 1: to roll back globalization and replace foreign made goods with
• 1:16
  Speaker 1: domestically produced ones. Here to explain it is Rich Miller,
• 1:21
  Speaker 1: economics correspondent in Washington for Bloomberg, who wrote about this
• 1:25
  Speaker 1: last week. Rich. It's great to have you back. Thanks
• 1:28
  Speaker 1: very much to have me. What Rich described the scene
• 1:31
  Speaker 1: for US. It wasn't Jana or bad hombres in Mexico,
• 1:35
  Speaker 1: though the US did have wars with Mexico, and you know,
• 1:40
  Speaker 1: there wasn't even really a rust belt per se. What
• 1:43
  Speaker 1: was going on economically at the time. What was happening
• 1:46
  Speaker 1: was the US was just coming out of the Revolutionary War,
• 1:50
  Speaker 1: victorious Revolutionary War of the British. But what by that,
• 1:54
  Speaker 1: Hamilton and George Washington, was that the US was heavily,
• 1:58
  Speaker 1: heavily dependent on aid and help from France, and so
• 2:03
  Speaker 1: anticipating the possibility of more conflict a head, Washington asked
• 2:07
  Speaker 1: Hamilton's to develop a report to develop the fledgling US
• 2:11
  Speaker 1: manufacturing industry so that the US would have its own weapons, nails, clothes,
• 2:20
  Speaker 1: and wouldn't be depended on imports in case of a conflict.
• 2:23
  Speaker 1: That hasn't the US come a long way since then?
• 2:25
  Speaker 1: That you know, for a while the US was making
• 2:29
  Speaker 1: this stuff. Then, you know, with with the advent of
• 2:32
  Speaker 1: global trade, rise of China and the last twenty thirty years,
• 2:36
  Speaker 1: you know, a lot of this stuff has increasingly come
• 2:38
  Speaker 1: from abroad. What what's the difference between the situation now
• 2:42
  Speaker 1: and the situation two hundreds something years ago. What isn't different,
• 2:47
  Speaker 1: I guess Scott right, Well, now we have a multilateral
• 2:50
  Speaker 1: trading system. Textiles were the big big thing back then,
• 2:54
  Speaker 1: and uh Hamilton's advocated putting tariffs on imported text dales.
• 3:00
  Speaker 1: Britain then tried to ban the export of textile producing
• 3:06
  Speaker 1: machines to the United States and kind of a early
• 3:10
  Speaker 1: mini trade war. But you know now, of course textiles
• 3:13
  Speaker 1: are mostly made in as a president say, Jaina, as
• 3:17
  Speaker 1: you say, and in other areas where where you know
• 3:20
  Speaker 1: where the where the cost of the labor is cheaper,
• 3:23
  Speaker 1: and some of it's moved on from China because parts
• 3:26
  Speaker 1: of China and out too expensive. The margins don't justify
• 3:30
  Speaker 1: making T shirts for the malls in America. But you
• 3:34
  Speaker 1: raise an interesting point. So for much of the say,
• 3:38
  Speaker 1: the post nineteen world economic history, the garment model has
• 3:43
  Speaker 1: been the way nations have initially sort of industrialized and
• 3:48
  Speaker 1: begun to escape poverty. If you wanted to be uncharitable,
• 3:51
  Speaker 1: you'd call it a sort of a sweatshop model. So
• 3:54
  Speaker 1: that was the way to go even then, that that
• 3:56
  Speaker 1: was that was the way to go even then. I
• 3:58
  Speaker 1: mean there was also you know, there was protection thrown
• 4:00
  Speaker 1: on tariffs on nails, for example, because you know, nails
• 4:05
  Speaker 1: are very important in a whole bunch of things, including
• 4:08
  Speaker 1: in weapons. But textiles was a big benefit or from
• 4:13
  Speaker 1: the Hamilton's policy. Hamilton's actually favored more subsidies to industries
• 4:17
  Speaker 1: than tariffs, and the tariffs he recommended were relatively restrained
• 4:22
  Speaker 1: for the for the for the time. But he, you know,
• 4:24
  Speaker 1: he was as Jefferson opposed him, and Jefferson had had
• 4:28
  Speaker 1: initially at least had a vision of uh us as
• 4:31
  Speaker 1: an agrarian you know, economy, which it was basically then,
• 4:35
  Speaker 1: and wanted to build up the farming side of the economy.
• 4:38
  Speaker 1: Kind of funny when you think about it. The musical
• 4:41
  Speaker 1: Hamilton's has become part of our American culture now, and uh,
• 4:45
  Speaker 1: this particular part of the of Hamilton's economic policy was
• 4:50
  Speaker 1: not anywhere to be seen in the musical itself. I
• 4:53
  Speaker 1: haven't seen it, full disclosure. I've just listened to the soundtrack. Yeah,
• 4:58
  Speaker 1: there's a whole other episodes of done in the French.
• 5:02
  Speaker 1: You need a lot of money. But if the if
• 5:06
  Speaker 1: the writers, if if linn Manuel and Miranda who created
• 5:08
  Speaker 1: the show had known about this, you know it, maybe
• 5:11
  Speaker 1: it wouldn't have become more of a cultural touchdown or
• 5:14
  Speaker 1: it would become maybe even more of a debate, which
• 5:18
  Speaker 1: which kind of leads me to thinking about the broader
• 5:21
  Speaker 1: question of globalization. Is the advent of globalization a relatively
• 5:27
  Speaker 1: recent phenomenon in our world? Or was it was this
• 5:31
  Speaker 1: something that has kind of come and gone Over the
• 5:33
  Speaker 1: last two hundred and twenty years since the founding of
• 5:36
  Speaker 1: the Republic, We've had ebbs and flows and globalization, and uh,
• 5:41
  Speaker 1: right now we seem to be uh having an ebb.
• 5:45
  Speaker 1: The Trump policy is basically he wants to replace imports
• 5:50
  Speaker 1: with US made goods, which is a real throwback to
• 5:53
  Speaker 1: Hamilton's and the sort of pre globalization era. You know,
• 5:57
  Speaker 1: China and Mexico have been cast for much of the
• 6:01
  Speaker 1: past eighteen months as the quote villains quote in this
• 6:06
  Speaker 1: narrative here, Who were the China and Mexico's back then?
• 6:13
  Speaker 1: As far as the US was concerned, Britain was was
• 6:16
  Speaker 1: was the main sort of villain. You know, we just
• 6:19
  Speaker 1: fought a war with them, and as I said, there
• 6:22
  Speaker 1: was kind of this that they were trying to prevent
• 6:25
  Speaker 1: the US from developing its own industry through various means,
• 6:29
  Speaker 1: and and we had a subsequent war, in the War
• 6:31
  Speaker 1: of eighteen twelve, so they still Britain still had its
• 6:35
  Speaker 1: eyes on getting back the colonies. It gives a whole
• 6:38
  Speaker 1: other dimension to the phrase bad embres when you think
• 6:42
  Speaker 1: about the British and the context of the Revolutionary War,
• 6:45
  Speaker 1: War of eighteen twelve and so on. Doesn't it they
• 6:48
  Speaker 1: had embres probably doesn't describe how they were viewed by
• 6:53
  Speaker 1: Washington and others who sort of survived through Valley Forward,
• 6:56
  Speaker 1: et cetera. Now, what places like China and Japan names
• 7:03
  Speaker 1: frequently associated with trade disputes in the post ninet era?
• 7:08
  Speaker 1: Were they on the radar at all? I mean, Japan
• 7:12
  Speaker 1: was largely closed. This was during the tak you go
• 7:15
  Speaker 1: a shogunate period. But were those countries on the radar
• 7:18
  Speaker 1: screen at all? Or economically you may have been talking
• 7:22
  Speaker 1: about Mars, Jupiter and Satin. Well, I think it was
• 7:25
  Speaker 1: mostly a Eurocentric trading system. There was trading with the
• 7:29
  Speaker 1: far reast, but I must confess I don't know how
• 7:33
  Speaker 1: how much was going on, but it was it was
• 7:35
  Speaker 1: a euro Centric system. Well, actually some of this then
• 7:40
  Speaker 1: we learned from a guest that we had a few
• 7:42
  Speaker 1: weeks ago, John Ponfred who wrote the book about the
• 7:44
  Speaker 1: two hundred years of relations between the US and China.
• 7:47
  Speaker 1: And you know, there was a fair amount of trading
• 7:49
  Speaker 1: going on between the U. S And China, between many
• 7:52
  Speaker 1: Western nations and China, and uh, these kind of disputes gout,
• 7:57
  Speaker 1: came to a head and in the opium or in
• 8:00
  Speaker 1: nineteenth century, uh, you know, and even before World War Two.
• 8:04
  Speaker 1: You know, it's just fascinating to keep reading Pomforts book
• 8:07
  Speaker 1: that that the U. S Was developing a deeper trading
• 8:10
  Speaker 1: relationship and there was a huge amount of trade going
• 8:13
  Speaker 1: on the and the rise of the Communist Party in
• 8:16
  Speaker 1: China actually put an end to that for a number
• 8:20
  Speaker 1: of decades. So yeah, it's it's really fascinating to see
• 8:23
  Speaker 1: how the ebb and flow, not just a globalization but
• 8:26
  Speaker 1: of China in the American psyche and American trading world
• 8:31
  Speaker 1: has been enriched. The economic dependence on France that Hamilton's
• 8:36
  Speaker 1: was concerned about, did that principally just reflect well, my enemies,
• 8:41
  Speaker 1: enemies my friend, or was Hamilton's looking down the barrel
• 8:46
  Speaker 1: here at political upheaval in France that happened in the
• 8:50
  Speaker 1: decade it's following the revolution there. I think He was
• 8:54
  Speaker 1: just worried about the US being dependent on anyone basically.
• 8:57
  Speaker 1: I mean, it was just France sort of was a
• 9:00
  Speaker 1: big age to the U S. I don't I don't
• 9:02
  Speaker 1: think he viewed them viewed France as a threat per se.
• 9:06
  Speaker 1: But he just realized that it was necessary to have
• 9:09
  Speaker 1: a sort of homegrown industry, sort of nation military industrial complex,
• 9:15
  Speaker 1: so to speak, because there were a lot of bad
• 9:18
  Speaker 1: ombrees around. Now, if you had had a trade dispute
• 9:21
  Speaker 1: in those days, what did you do? Did it actually
• 9:25
  Speaker 1: become a trade war? Where trade wars actually real wars? Uh?
• 9:30
  Speaker 1: That happened? I mean today we have this whole set
• 9:32
  Speaker 1: of agencies, international dispute resolution courts and things that w
• 9:38
  Speaker 1: t o all sorts of areas where sort of you
• 9:40
  Speaker 1: kind of sort of raise a civil dispute and you
• 9:42
  Speaker 1: can escalate it. But you know, countries don't seem to
• 9:46
  Speaker 1: really go to war over those things, or do they
• 9:49
  Speaker 1: or did they? Well you're pushing the limits of my
• 9:52
  Speaker 1: knowledge here, but but but that certainly was no you know,
• 9:55
  Speaker 1: huge international apparatus like there is today. Um And as
• 10:00
  Speaker 1: as I mentioned earlier, there was kind of this uh
• 10:03
  Speaker 1: tip fit tat going on between the US trying to
• 10:05
  Speaker 1: sort of build up a textile industry in Britain, trying
• 10:08
  Speaker 1: to prevent it by preventing the export of textile manufacturing machines, etcetera.
• 10:14
  Speaker 1: But economic issues did lead to conflict. I mean that
• 10:17
  Speaker 1: was what the you know, the tea party was all about, right,
• 10:20
  Speaker 1: you know, So there wasn't anything like what we have
• 10:23
  Speaker 1: today where we have this sort of international overlay that
• 10:27
  Speaker 1: that sort of to keep the the economic piece, so
• 10:30
  Speaker 1: to speak, so to take a break from the issue
• 10:33
  Speaker 1: of trade wars and imports substitution. You also wrote in
• 10:37
  Speaker 1: your story rich about how, of course there are other
• 10:42
  Speaker 1: other ways in which Trump and Hamilton's are not so similar,
• 10:46
  Speaker 1: and a key, a key thing that you mentioned is immigration.
• 10:51
  Speaker 1: He's Hamilton's is lionized in the show as as an
• 10:55
  Speaker 1: immigrant from the Caribbean who came on a on a ship,
• 10:58
  Speaker 1: came from nothing and made it. You know, I think
• 11:01
  Speaker 1: the cast of Hamilton's, the creator has has has elevated
• 11:04
  Speaker 1: this as a key issue. They even put out a
• 11:07
  Speaker 1: a mix tape of of about twenty additional songs that
• 11:11
  Speaker 1: are based on the show or you know, or other
• 11:14
  Speaker 1: original songs. One of them is about is called immigrants,
• 11:18
  Speaker 1: we get the job done. It's it's just a whole
• 11:20
  Speaker 1: song about a line, and it's it's a fairly aggressive
• 11:25
  Speaker 1: stance against you know, the Trump and the other an
• 11:28
  Speaker 1: anti immigrant policies we've seen. So should we really avoid
• 11:33
  Speaker 1: getting maybe two carried away and the similarities between Trump
• 11:36
  Speaker 1: and Hamilton's or is that something that you know, is
• 11:39
  Speaker 1: really something to look at in our time where you
• 11:41
  Speaker 1: have one historical figure that's been elevated in Broadway and
• 11:45
  Speaker 1: another one, uh that's you know, that's the president right now.
• 11:50
  Speaker 1: The story just tried to, you know, make the point
• 11:52
  Speaker 1: that there that perhaps surprisingly given as you say that
• 11:56
  Speaker 1: the approach each took to immigration or the way they
• 11:58
  Speaker 1: both received on subject, you know, surprised they actually had
• 12:03
  Speaker 1: some similarities. But I agree with you that you know,
• 12:05
  Speaker 1: you can you can, you know, stretch the similarities so
• 12:08
  Speaker 1: far that they snapped back into your face. And hopefully
• 12:11
  Speaker 1: the story didn't do that, but it is something you've
• 12:13
  Speaker 1: got to be careful about. And when you look back,
• 12:16
  Speaker 1: whose vision ultimately one Jefferson's, well, Hamilton's. Well, Jefferson actually
• 12:24
  Speaker 1: came came over to Hamilton's side later on, I think
• 12:27
  Speaker 1: he realized that. But Hamilton's wasn't totally successful. He he
• 12:32
  Speaker 1: he advocated his emphasis was as much on subsidies for
• 12:37
  Speaker 1: sort of fledgling industries as it was for tariffs. But
• 12:42
  Speaker 1: Congress was more inclined to pass the tariffs than they
• 12:45
  Speaker 1: were two spend the money to help the fledgling industries.
• 12:49
  Speaker 1: But but Jefferson eventually came around to Hamilton's view that that,
• 12:55
  Speaker 1: you know, the U. S couldn't remain a totally agrarian society.
• 12:59
  Speaker 1: I mean that was okay when when when we were
• 13:02
  Speaker 1: the thirteen colonies and you could, you know, import manufactured
• 13:05
  Speaker 1: goods from Britain, etcetera. But if the RS was going
• 13:10
  Speaker 1: to become a country, we would have to develop our
• 13:11
  Speaker 1: own sort of manufacturing base and then and that's you know,
• 13:14
  Speaker 1: does have echoes in the Trump campaign, though, to be
• 13:18
  Speaker 1: be fair, you know, Hillary Clinton was also emphasized that, uh,
• 13:23
  Speaker 1: you know, the the role of manufacturing in Hurricane on. One.
• 13:26
  Speaker 1: One big difference though, it was pointed out by h.
• 13:30
  Speaker 1: Danny Roderick, who's a hobby professor, between Trump and Hamilton's
• 13:34
  Speaker 1: is that, you know, Hamilton's was trying to sort of
• 13:36
  Speaker 1: nurture fledgling industries. The U S didn't really have any
• 13:39
  Speaker 1: manufacturing industry. He was trying to sort of bring these
• 13:42
  Speaker 1: infants industries along. You know, Trump is trying to sort
• 13:45
  Speaker 1: of protect industries that have been around for a long time, steel, aluminum,
• 13:51
  Speaker 1: at those I mean, that's obviously important, but arguably that's
• 13:55
  Speaker 1: not necessarily where the source of innovation and the real
• 14:00
  Speaker 1: driving forces behind growth is going to come from in
• 14:02
  Speaker 1: the US in the future. Isn't it fair to say
• 14:05
  Speaker 1: that to this day, the protection of the US military
• 14:10
  Speaker 1: supply industry continues. I mean virtually everything the military uses,
• 14:16
  Speaker 1: the planes, weapons, and so on. I'm not an expert
• 14:19
  Speaker 1: on this, but I feel like they're all still made
• 14:23
  Speaker 1: in the USA, and you know, through procurement policies and
• 14:27
  Speaker 1: patriotism and whatnot, and the need to always sort of
• 14:30
  Speaker 1: be you know, the US is need to be prepared
• 14:34
  Speaker 1: for war seems to be ingreded in the culture. You
• 14:37
  Speaker 1: know that's going to be this This kind of policy
• 14:40
  Speaker 1: of supporting the weapons and defense industries in the U
• 14:45
  Speaker 1: S seems to be something that actually could be Hamilton's
• 14:48
  Speaker 1: legacy that continues today. I'm no expert either, but I
• 14:52
  Speaker 1: think that that that that's true. I mean, we have
• 14:54
  Speaker 1: a whole process here that not to go to anchronyms.
• 14:58
  Speaker 1: There's a group under the heading of the Treasury UH.
• 15:01
  Speaker 1: You know, we're called Cipius, which which basically UH reviews
• 15:07
  Speaker 1: takeovers by foreign companies to see if they're gonna, you know,
• 15:11
  Speaker 1: UH endanger the UH security of the US. So if
• 15:15
  Speaker 1: you have a you know, Chinese company commity to try
• 15:17
  Speaker 1: and to buy a U U S semiconductor company, and
• 15:21
  Speaker 1: that semiconductor company is deemed as vital to the US
• 15:25
  Speaker 1: UH military, then the Cifius process bands that Chinese company
• 15:30
  Speaker 1: from taking over. So I think you're you're right. I
• 15:33
  Speaker 1: think there's definitely enough material here for a Broadway sequel. Reach.
• 15:37
  Speaker 1: Thanks for sharing this perspective with us. Thank you. Benchmark
• 15:41
  Speaker 1: will be back next week and until then, you can
• 15:43
  Speaker 1: find us on the Bloomberg terminal and Bloomberg dot com
• 15:46
  Speaker 1: and our Bloomberg app, as well as on iTunes, pocket casts,
• 15:49
  Speaker 1: and Stitcher. While you're there, please take a minute to
• 15:52
  Speaker 1: rate and review the show so more people can find
• 15:54
  Speaker 1: us and let us know what you thought of the show.
• 15:56
  Speaker 1: You can follow me on Twitter at at Scott Landman
• 16:00
  Speaker 1: Dan you are at Moss Underscore, Echo and Rich You
• 16:04
  Speaker 1: are at rich Miller twenty eight. All Right Benchmark is
• 16:08
  Speaker 1: produced by Sarah Patterson. The head of Bloomberg Podcast is
• 16:11
  Speaker 1: Alec McCabe. Thanks for listening, See you next time.