Ben Hunt: Direct Personal Action: Covid-19 Masks: (Front Line Heroes)

54:26
Eric it’s not gonna stop then at some
54:29
point in this crisis I know things kind
54:31
of something snapped for you because we
54:34
got to the point where the government’s
54:35
basically not doing anything terribly
54:38
productive I know at one point I was
54:40
actually following a story where there
54:42
were paramedics in New York City
54:45
dumpster diving behind the hospital
54:47
looking for n95 masks because nobody had
54:51
their act together they weren’t able to
54:53
order the right ones at some point
54:55
something snapped for you and you just
54:56
heard about this stuff and you said I’m
54:58
gonna take personal action to get n95
55:01
masks into the hands of the people in
55:04
the front line who need them
55:05
tell us what is front line heroes but
55:08
more importantly how did it come about
55:09
and what was your experience I mean
55:12
you’re you’re a very comfortable finance
55:14
guy with a great career great reputation
55:15
I’m sure you never imagined yourself
55:17
starting a charity before this all
55:20
happened something happen for you and
55:22
all of a sudden everything changed tell
55:23
us what that was like you know what what
55:25
clicked for me Eric is that
55:28
I’ve been railing about our our trickle
55:30
down economy for so long right where
55:34
where the the policy fiscal policy
55:37
monetary policy particularly it’s really
55:40
designed to support what I like to call
55:44
the the naked sinews of power and it
55:48
really comes to a head in a crisis where
55:51
you reveal that this Pleasant skin of
55:53
democracy and capitalism that that we
55:56
all believe in and and once so
55:59
desperately for ourselves and our
56:01
children it’s it’s just a skin right and
56:04
then underneath it are all these
56:06
policies which are designed to prop up
56:08
and bail out and support the status quo
56:12
wealth and an economy of the of the very
56:16
wealthy and the very politically
56:17
connected and what really clicked for me
56:20
in this this come in nineteen crisis was
56:22
it’s the same thing with medical
56:27
supplies its trickle down its trickle
56:30
down Eric where the very well-connected
56:33
the very politically connected the crony
56:36
capitalism that we see in in our economy
56:40
it’s the same thing in our health care
56:42
where you know supposedly we have these
56:45
millions of n95 masks that are
56:48
stockpiled and unavailable and yet like
56:51
you there are there are horror stories
56:56
of doctors and nurses and EMTs and in
57:00
firemen and policemen and first
57:01
responders who are forced to put not
57:06
only their own lives but when you talk
57:08
to the to these these heroes right what
57:11
they’re really concerned about is
57:13
bringing this risk home to their
57:14
families and that’s what they are forced
57:18
to do in this trickle-down system we
57:21
have not just for wealth but for medical
57:25
supplies for protecting again we call
57:28
them frontline heroes the the doctors
57:30
the nurses the EMTs the firemen who are
57:34
who are responding who are fighting this
57:36
war for us so that that’s what clicked
57:40
you know what
57:41
snapped in me Eric was was to to find a
57:45
way not to compete with the federal
57:49
government and FEMA and the state
57:52
management authorities right not to try
57:55
to buy a million in 95 masks and drive
58:01
up the price and you know do all that
58:04
which is a real problem but I’ll be
58:06
damned if I was gonna wait for FEMA and
58:09
these state emergency authorities to
58:12
find the time to trickle down masks to
58:16
the to the people who need them so
58:18
desperately so that was that that was
58:21
the I say the inspiration for for our
58:24
effort and I’m gonna I want to plug it
58:27
right now right it’s frontline heroes
58:31
usa.org all one word frontline heroes
58:36
usa.org and though the way it came about
58:39
was this is the the crazy world we live
58:43
in right Eric we’re where social media
58:45
is both horrible but he’s so many ways
58:48
but it’s also wonderful at connecting so
58:51
many people I got a Twitter DM from an
58:55
epsilon Theory reader who works for
58:57
Intel and he said you know look we’ve
59:00
got we’ve got a ton of employees intel
59:03
does over in China and I reached out to
59:07
a couple of my friends over there you
59:09
know they can they can buy these these
59:11
in 95 equivalent masks they’re they’re
59:14
pretty they’re plentiful over there in
59:16
China you know they’re not that
59:18
expensive and so I’ve had a couple of
59:20
buddies to go online order some in 95
59:24
masks ship him over here to me and you
59:28
know a bag of a DHL bag of like a
59:30
hundred masks and then I’m giving them
59:34
to a local hospital or clinic that that
59:36
really desperately needs them he was
59:39
calling from he reached out from
59:41
Portland Oregon where you know obviously
59:43
the in the early days there was a lot of
59:46
need for the for this equipment
59:48
okay so listeners who want to help get
59:51
personal protective equipment in the
59:53
hands of our frontline heroes
59:55
by going to frontline heroes usa.org
59:58
they can make a donation on the website
60:00
that directly results in effectively I
60:03
don’t want to say this too bluntly but I
60:05
want to anyway bypassing FEMA and all
60:08
the of the federal government
60:10
and actually getting the stuff to the
60:12
people who need it right now that’s what
60:14
we’ve done Eric we’ve we’ve created an
60:16
end-to-end distribution system where we
60:19
are not only able to buy and source
60:22
these masks where they are plentiful and
60:25
where they are cheap which is typically
60:27
over in China we’re getting them in
60:29
small quantities we like to call it like
60:32
an underground railroad of PPE we get it
60:35
over here to the States we get it tested
60:38
at a at a Medical Center to make sure
60:41
we’re getting quality merchandise and
60:44
then we are getting it directly into the
60:48
hands of the individual doctors and
60:51
nurses and EMTs who then distribute it
60:54
to their teams we can’t get ten thousand
60:58
or a hundred thousand masks to a
61:01
hospital system that’s not what we’re
61:04
about
61:04
what we’re about is getting a hundred
61:06
masks 200 masks to a clinic in
61:11
Indianapolis to a hospital in New
61:14
Orleans all around the country we’ve
61:17
been able to make these direct
61:19
connections with these frontline heroes
61:22
who are in actual urgent need of this
61:25
equipment to date we’ve raised over
61:27
seven hundred thousand dollars
61:29
we have bought and distributed over
61:33
60,000 in 95 equivalent masks to more
61:37
than six hundred individual clinics
61:41
hospitals EMT departments you name it
61:46
all across the country and I gotta tell
61:49
you Eric we’re just getting started man
61:52
we’ve got a lot of entrepreneurs and
61:54
business people in our audience I hope
61:57
that your actions will inspire some of
61:59
them to think about what kind of charity
62:02
they could create what what words of
62:04
either motivation or advice would you
62:05
have to someone who’s considering doing
62:07
something like
62:09
maybe they’ve figured out a different
62:10
way that they’d like to help our
62:12
healthcare heroes or someone else
62:14
through this crisis well the the first
62:17
recommendation I have is just do it just
62:20
do it right if you’re waiting for
62:22
someone to organize you if you’re
62:24
waiting for someone to give you
62:25
permission you know that’s that’s what
62:30
we’ve been so ingrained and in custom to
62:33
that that’s what that’s what government
62:36
in big corporations that’s what they do
62:37
to you they make you think you you can’t
62:40
act unless you are being led or
62:44
organized by them and so my the first
62:47
thing and the most important thing I’d
62:48
say is that’s a crock you just get up
62:52
and you just do it you just do now when
62:55
it comes to actually raising money right
62:57
and it is important I think to operate
63:00
under the the 501c3 framework both to to
63:05
take in donations and and have it you
63:08
know enjoy that that tax advantaged
63:11
properties of it which is really
63:12
important but even more so it really
63:15
enforces and requires an element of
63:18
oversight and documentation that that is
63:22
so important when when money’s involved
63:26
now to establish a 501c3 from scratch is
63:30
pretty hard takes a lot of it’s not hard
63:32
it takes time what we were able to do
63:35
and I think what what many of your
63:37
listeners will be able to do to to
63:40
really I’ll say formalize this and to
63:43
get it started as a as a registered 501
63:47
C 3 is to find an existing 501 C 3
63:51
charity and in your community your
63:53
organization and partner with them to be
63:57
a program or initiative of that existing
64:01
501 C 3 organization so somebody who’s
64:05
already got the IRS letter designating
64:07
them as a 501 C 3 piggyback on them
64:10
partner with them and use their IRS
64:12
letter correct that’s that’s exactly
64:15
what we did and I think it’s a way to
64:18
get these programs up and moving more
64:22
quickly than
64:23
the delays in the red tape from from
64:25
getting your own 501 C 3 designation I
64:28
think it’s important to have that
64:31
designation and to have the oversight
64:33
and controls that that requires but I
64:36
also think that you can move more
64:38
quickly if you find an organization in
64:42
your community an existing 501 C 3 that
64:45
you can work with man I can’t thank you
64:47
enough for a terrific interview before
64:48
we let you go your epsilon theory
64:52
newsletter is one of the most popular
64:54
and one of the most fascinating in the
64:56
industry tell us briefly about that and
64:58
where’s the website and Twitter handle
65:00
so people can find out more sure well
65:03
it’s easy to find it’s epsilon Theory
65:06
comm and on Twitter it’s at epsilon
65:09
Theory you know it comes from the old
65:13
investment equation of alpha and beta
65:16
there’s a third term on there called
65:18
epsilon and usually you know epsilon is
65:22
efore error but honestly Eric that’s
65:25
that’s where all of the behavioral
65:27
economics lives that’s where all of I
65:30
think narrative lives we call it the
65:33
error term but I think there’s a lot of
65:35
information there so that’s epsilon
65:37
theory calm and at epsilon theory on
65:40
Twitter I thought you were gonna tell me
65:43
the e is for extraordinary monetary
65:45
policy and fiscal balance sheet
65:47
expansion a fantastic reading though and
65:50
in great insights so I highly recommend
65:52
it to our listeners we’re gonna leave it
65:54
there
65:54
Patrick’s our resna and I will be back
65:56
as macro voices continues right here at
65:58
macro voices calm
66:07
macro voices is a listener driven
66:10
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the program now back to your hosts eric
66:34
townsend and Patricks resna eric goes
66:38
great to have been back on the show what
66:40
did you take away from the interview
66:41
well I thought the most important thing
66:44
that he said which echoes something I’ve
66:45
said before is the one thing that you
66:48
really almost have to get at least
66:51
mostly right in investing is you’ve got
66:54
to have a view on whether we’ve got a
66:57
backdrop which is deflationary or
66:59
inflationary or maybe it’s in between
67:02
and and you have a moderate view but you
67:05
got to have some kind of view because
67:06
the investments and the way you
67:08
structure your portfolio is either gonna
67:10
work or not going to work based on that
67:12
and I think we’re headed for a secular
67:15
shift that I don’t know Ben doesn’t know
67:18
none of our guests have been willing to
67:20
really you know put a stake in the
67:22
ground and lay out here’s what’s gonna
67:23
happen
67:24
because I don’t think anybody knows
67:25
what’s gonna happen but all the
67:26
ingredients are there over the next few
67:29
years for deflation to eventually end
67:31
and give way to inflation and I think
67:35
that the politics are gonna play a big
67:37
role in this we’re seeing all of the
67:39
different political parties seeming to
67:42
favor more what effectively is
67:45
monetization and you know it’s it’s
67:47
interesting how each of our guests have
67:49
different views on this we got a few
67:51
emails about dr. Lacey hunt making such
67:54
a big deal saying look the Fed doesn’t
67:57
have the ability to spend money all that
67:59
they can do is to loan money and provide
68:03
liquidity into the market and that’s all
68:05
based on this idea Patrick that when the
68:07
government engages in deficit spending
68:10
the Fed is not directly buying that debt
68:14
instead
68:15
it’s being sent and there’s you know
68:17
free market price discovery occurring
68:20
because a private sector party is buying
68:23
that debt from the government and that
68:25
allows the interest rate to be set at
68:28
market rates and the Fed is not allowed
68:30
to buy that debt directly from the
68:33
government well if that’s the whole
68:36
intention of the Federal Reserve Act but
68:39
in practice the way it works is that
68:41
debt has to get sold to a private sector
68:45
banker who is going to turn it around
68:48
two days later and sell it to the Fed at
68:51
a markup that that’s not you know
68:53
private-sector market price discovery
68:55
that’s just a sham that allows the
68:58
primary dealers to mark up what they’re
69:00
buying and sell it back to a guaranteed
69:03
buyer of the Fed who’s effectively
69:05
monetizing I don’t really agree with dr.
69:07
hunt and other people who say that the
69:10
Fed can’t spend money there they’re
69:12
indirectly doing so by working around
69:14
the intention of the Federal Reserve Act
69:17
and I think they’re already doing that
69:18
to a large extent anyway let’s get to
69:21
the postgame chart book Patrick you put
69:23
together another terrific chart Dec
69:25
listeners you’ll find the download link
69:27
in your research roundup email now if
69:30
you don’t have a research roundup email
69:31
that means you haven’t yet or registered
69:33
your free account at macro voices.com
69:35
shame on you you can remedy that by just
69:38
going to macro voices.com and looking
69:40
for the red button on the homepage that
69:42
says looking for the downloads Patrick
69:45
let’s go ahead and dive in here on page
69:47
two this looks like a chart of the S&P
69:51
but you got a bunch of other secondary
69:54
studies around the S&P what’s going on
69:57
here right so what we had was the sp500
70:00
we’ve been drawing on analog of what a
70:02
bear market would look like and going
70:04
through all sorts of storylines over the
70:06
last month but what what I really wanted
70:09
to touch on was what’s a growing thing
70:11
in the market is that everyone’s
70:13
focusing on the big behemoth stocks that
70:15
have been running like Amazon fresh new
70:17
highs and all these other mega cap
70:19
stocks that have been running and it’s
70:21
been driving the Nasdaq and when you
70:23
look at the Nasdaq which is the black
70:24
line on there we can see that it we
70:27
almost approach
70:28
the pre bear market high and really the
70:32
bigger question to ask is how did the
70:34
Nasdaq pull this off and what’s really
70:37
amazing is is that it’s just a handful
70:39
of stocks so when you look at the five
70:41
mega cap stocks the largest market
70:43
capital I stocks in the NASDAQ and the
70:46
S&P 500 and they just have a monstrous
70:50
weighting into the indices so in the
70:53
sp500 those five stocks make up 20% of
70:57
the weighting so that means the other
70:59
495 stocks in that index make up the
71:02
other 80% and therefore as go those
71:06
stocks goes the whole market and what’s
71:08
interesting is that when you look at the
71:10
indices that don’t have the market cap
71:13
weighting of those five stocks it paints
71:15
a much different picture so what I have
71:17
here is the Dow Jones which is price
71:20
weighted then you have the London
71:23
footsie in yellow you have the emerging
71:25
markets you have the Euro Stock 50 as
71:29
well as the Russell which is the small
71:31
cap indices and what you can identify
71:33
here is that once you take out those
71:36
five mega cap stocks the indices look
71:40
incredibly weak everywhere in the world
71:42
and this is what I continue to believe
71:45
is giving us the evidence that this is
71:47
still truly a bear market and a bear
71:49
market rally just because you have
71:51
enough market participants willing to
71:54
crowd into a few of these mega stocks
71:56
and drive their prices higher is not
71:59
really reflective of the underpinning
72:02
conditions from a breadth perspective
72:04
that of a very deteriorated equity
72:06
market once you leave those five stocks
72:08
and so to me it’s still a bear market
72:10
rally and it’s still rolling over
72:12
we’ll see certainly next week once we
72:14
get past the option expiration gamma
72:16
pins whether or not another round of
72:18
selling may be coming into June moving
72:21
on to page three Patrick looking at the
72:23
euro versus the dollar
72:26
boy this charts looking a little bearish
72:28
I guess you could call this either a
72:29
descending triangle or a wedge depending
72:31
on how you draw around that that late
72:33
march bottom there what do you make of
72:36
this well really you turn this chart
72:38
upside down and you got the dollar index
72:40
right and what’s amazing
72:42
a dollar index still has such a huge
72:44
waiting into the euro of 57% waiting and
72:48
so really as goes the Euro goes the
72:51
dollar index and so what we can
72:53
continuously see here over the last
72:55
month and a half every attempt the euro
72:59
has had to rally and make it stick it’s
73:02
lasted no more than a week and almost
73:05
immediately the selling comes back down
73:07
and and brings it right to the bottom of
73:09
the range and it’s just such a weak
73:11
price action now all you need is it’s
73:14
like a the euros at the edge of a cliff
73:16
and all it needs is someone to give it a
73:18
push and if it loses its footing here we
73:20
could be seeing a euro move down to 105
73:23
or 103 which would certainly be the
73:26
underpinning catalyst that will drive
73:28
the Dixie up towards that 104 target
73:31
that you’ve often referenced and so this
73:33
is a the must watch chart in my mind and
73:35
it has so many global macro implications
73:38
if it gives out so this is probably a
73:40
single big the most important chart to
73:42
watch in my opinion but I really don’t
73:44
want to highlight further if we go to
73:47
page 4 when we look at the dollar index
73:49
it really feels like the dollars been
73:52
doing nothing but really once you leave
73:55
the euro and you go and start looking at
73:58
the rest of the currencies around the
74:00
world and particularly when you move
74:02
into the emerging market currencies you
74:04
can see just how incredibly weak all
74:07
those currencies have been relative to
74:09
the dollar whether you go to Mexico
74:10
Brazil Argentina and the Russian ruble
74:13
here you have the South African Rand and
74:16
the Turkish lira all just so incredibly
74:20
weak and that just continues to support
74:22
that there is a fundamental US dollar
74:24
bull market underway and it’s being
74:26
disguised by the fact that the euro has
74:28
been pinned which makes the dollar index
74:30
look like it’s far more range bound but
74:32
I actually think the US dollar is in
74:35
full bull trend and in it’s just a
74:37
matter of time before the Euro gives out
74:39
and succumbs to that predominant trend
74:41
Patrick let’s move on to page 5 one of
74:44
my favorite charts of course is gold and
74:46
boy look at that breakout we’ve seen
74:48
just in the last couple of days all for
74:50
sure and and you were talking about it
74:52
and this is the big question right when
74:54
everybody is so convinced gold
74:56
going higher usually whenever you have
74:58
that kind of a strong sentiment usually
75:01
it means that the trade is crowded in a
75:03
backfills and so that and that storyline
75:06
makes sense but but you know when you
75:08
really look at the conditions around the
75:10
world and the size of the gold market is
75:13
it possible that it just keeps you know
75:15
punching higher and and making fresh new
75:18
highs I mean we’re right now only a
75:20
hundred or two hundred dollars away from
75:23
those 2011 highs it’s it will be really
75:26
interesting whether or not gold makes
75:28
the next push higher first before that
75:30
much awaited consolidation kicks in well
75:34
and that’s something I’ve been thinking
75:35
about a lot is maybe that’s the next
75:38
move is up to 1922 I think was the the
75:42
2011 that’s from memory so don’t don’t
75:44
hate me if I got it wrong folks we get
75:47
back to the the 2011 high and that’s
75:50
where we have a significant technical
75:53
correction maybe back down to 1500 or
75:56
1400 or something from there the
75:59
problems with this you know look that
76:00
you couldn’t ask for better long-term
76:03
fundamentals you know that the
76:05
politicians are gonna debase fiat
76:07
currency you know they’re gonna keep on
76:09
printing money to deal with the
76:11
coronavirus crisis and the next thing
76:14
after the coronavirus crisis is going to
76:16
be universal basic income in the various
76:18
social programs that some parts of the
76:21
the political economy would like to see
76:23
in place there’s got so many reasons to
76:25
be bullish but the problem is everybody
76:28
knows that and what propels a bull
76:31
market higher is when something causes
76:35
people to make new purchases and a lot
76:39
of them what could be the policy impetus
76:42
Patrick that causes everybody to say
76:44
okay this situation it’s more bullish
76:46
than we thought we got to double down on
76:48
our gold bets right here at this price I
76:50
mean look at what the Fed has already
76:52
done Patrick literally unlimited
76:55
monetary policy accommodation to the
76:58
tune of half a trillion dollars a week
77:00
or at least it feels that way and you
77:02
know for a while we were going a couple
77:04
trillion dollars a week in new fiscal
77:07
spending bills that Congress is talking
77:09
about push
77:10
you know that they’re going to debase
77:13
the value of paper money and it’s got to
77:15
be good for gold but how do you top all
77:18
of that how do you come up with the next
77:20
news report that makes the case even
77:23
more compelling it’s already priced in I
77:26
think that’s what got us up here so what
77:28
happens Patrick if the Fed actually were
77:30
to show some restraint and maybe
77:33
moderate the amount of policy
77:35
accommodation and what if we stopped
77:37
having two trillion dollar spending
77:39
announcements from the government every
77:41
week or two then maybe we get you know
77:44
the set up so we’ve come on awfully long
77:46
ways we’re overdue for a technical
77:48
correction I still feel like it has to
77:50
come at some point but boy this chart
77:52
still looks awfully strong the this
77:54
descending triangle if it had resolved
77:56
to the downside was the setup for maybe
77:59
a really significant correction and it
78:01
looks like it’s not happening we’re
78:02
resolving to the upside instead well you
78:05
know the one thing I’ll add to that
78:06
those I mean you took a very American
78:09
approach to that which is like looking
78:11
at what the Fed itself is doing in the
78:12
US dollar obviously is the world reserve
78:14
currency but the whole world is in an
78:17
incredibly deep recession and there’s
78:19
going to be a lot of currency debasement
78:21
in in almost every country in the world
78:24
and so why you know even if there might
78:27
be a catalyst that may not have that
78:29
gold demand from the US you have to
78:31
still think that that the the safe haven
78:34
element of gold will be incredibly
78:36
popular especially in a lot of those
78:37
other cross currencies anyway let’s move
78:40
on to page six where I just wanted to
78:43
touch on uranium we don’t talk uranium
78:45
too often and rightfully so riga rana
78:48
has been a stuck in a bear market for
78:50
many many years
78:51
and what is interesting is one of the
78:54
reasons behind that has been because
78:56
there was an oversupply and they needed
78:58
to work that through that oversupply
79:00
uranium that has caused it to trade
79:03
below its actual production cost and so
79:07
what what this co vid has done though is
79:09
is that it actually shut down a number
79:12
of mines and now the catalyst for that
79:14
supply to be worked off is actually
79:17
there and so we saw a pretty bullish
79:19
breakout in uranium and they’ll be
79:21
really interesting to see whether the
79:23
bull
79:23
can not only hold this or whether this
79:26
actually is the beginning of a new bull
79:27
market in uranium so it’s certainly
79:29
something we’re watching and folks don’t
79:32
forget Patrick does webinars with charts
79:34
like this almost every single day you
79:36
can get a free trial the information is
79:38
on page 7 to sign up for Patrick’s
79:41
trading advisory service now Eric before
79:43
we wrap up the show though why don’t you
79:45
give us a quick update on what’s going
79:47
on with the kovat 19 you know I don’t
79:49
have that much new to add this week as I
79:52
continue to learn and read more about
79:54
this there’s no you know huge
79:57
earth-shaking headline or anything but I
80:00
just see more and more evidence that all
80:02
piles up to me to say this is gonna take
80:04
longer than markets are discounting I
80:07
don’t mean the economy is gonna stay
80:09
shut down but the expectations so many
80:11
people have about a v-shaped recovery
80:13
and we’re back to normal like pre virus
80:15
normal you know three or four months
80:17
from now I just don’t see it happening
80:19
there’s no good reason to assume that
80:21
there’s going to be a vaccine for this
80:24
and there’s so many different variations
80:26
and mutations of the virus already that
80:29
if we did have a vaccine it might not
80:31
cover all the different versions of it
80:33
it could take many years before we get
80:35
completely back to normal and of course
80:37
we’re going to restart the economy what
80:40
we’re gonna get is close to normal as we
80:42
can but it remains to be seen how much
80:45
of a drag this creates and I I really
80:47
love to to get Stan Druckenmiller on the
80:49
program to go into more detail on what
80:52
causes him to say that maybe this
80:54
central bank enabled credit bubble is
80:57
finally going to pop and this would be
80:58
the catalyst to do it that would really
81:01
change everything and we could be
81:02
looking at an outright depression so I
81:05
don’t think it’s nearly as simple as
81:07
v-shaped recovery and folks we’re gonna
81:09
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82:04
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82:05
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82:08
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you

Why Stuart Stevens Wants to Defeat Donald Trump

Many Republicans have joined the Never Trump camp, but few have previously been more important to the Party than Stuart Stevens. After working on George W. Bush’s two Presidential campaigns and serving as a consultant for several major congressional candidates, Stevens was Mitt Romney’s top strategist in 2012. He began speaking out against Donald Trump in 2016 and today is an adviser to the Lincoln Project, a political-action committee formed by current and former Republicans to prevent Trump’s reëlection. In Stevens’s new book, “It Was All a Lie: How the Republican Party Became Donald Trump,” he tells the story of his long career in politics and how the party he once worked for has been subsumed by nativism, bigotry, and cruelty. But Stevens doesn’t believe that the G.O.P. was taken over by someone entirely alien to its ideology or behavior. As he writes, “How do you abandon deeply held beliefs about character, personal responsibility, foreign policy, and the national debt in a matter of months? You don’t. The obvious answer is those beliefs weren’t deeply held.”

I recently spoke by phone with Stevens, who was in Vermont. During our conversation, which has been edited for length and clarity, we discussed what a Romney Presidency might have looked like, the ethics of campaign consultants, and how we should evaluate the George W. Bush years.

Your book differs from others in arguing not that the Republican Party has gone wrong with Donald Trump, but that the Republican Party has been going wrong for a very long time. What is the difference in your mind between those two critiques, and why did you think it was important to make the latter one?

I think I wanted to believe for a long time that when Donald Trump came along he was hijacking the Party. A lot of people were wrong about Trump in 2016, but it’s hard to find somebody more wrong than I was. I predicted he wouldn’t win the primary, and I predicted he wouldn’t win the general election. In retrospect, a lot of that was that I didn’t want to believe it. He says he has ninety-five per cent Republican approval, and that’s probably an exaggeration, but let’s say it is eighty-nine per cent or so. You look at what Trump is saying, and the degree to which the Party is comfortable with it, and I don’t know what conclusion to come to other than that Trump very well suits the Republican Party. In the book, I trace the history of the Party from the post-World War Two era, and Trump is one direction the Party could have gone in. I don’t know how else to say it, but it did go in that direction.

Without getting into a question about cause and effect, and how the universe functions, and whether a different future was possible, what do you think held the Republican Party together pre-Trump, and what was attractive to you about it?

What appealed to me was a party that believed in personal responsibility, that character counts, and that was strong on Russia and free trade, and strongly pro legal immigration. It’s not just that the Party has drifted away from those principles, like parties do. As far as I can tell, the Party is actively against every one of them. We’re the “character doesn’t count” party. We’re the anti-personal-responsibility party. We’re the pro-Putin party. I think the only conclusion is that a party that said it believed in these things didn’t really believe in them. If a George Wallace type had run in the Democratic primary in 2016, would that person have won? No. Had that person by some freak accident won, would the Party establishment have coalesced around him? No. They would have said, “This isn’t what the Democratic Party stands for.”

Your book has a huge chapter about racism and the degree to which it’s always been a part of the modern Republican Party. How do you see the effect it had before Trump?

There are always these tensions. There was Eisenhower; there was McCarthy. We look at William F. Buckley now and mourn him for the loss of this erudite voice. Instead we have Sean Hannity. But we forget Buckley started out as a stone-cold racist arguing for segregation. If you go to the Bush campaign that I worked on in 1999 and 2000, when Bush called himself a compassionate conservative and was criticized on the right, he tried to articulate a different vision. Had Bush not become a wartime President, I think it’s fascinating to think what would have happened.

But the Party has existed predominantly as a white party. I think if you’re a business, and you spend sixty years appealing to one segment of the market, you get good at that and not very good at the other. What I think is really striking is that we used to admit this was a failure and talk about it. We used to talk a lot about a big tent. I go back to 2005, when Ken Mehlman, the chairman of the Party, went before the N.A.A.C.P. and apologized for the Southern strategy.

This was the same Ken Mehlman who helped run the Bush reëlection campaign, which used anti-gay-marriage initiatives to turn out Republicans in key states.

What I say about this is that we were far from perfect in Bush world. We played too much to the dark side. But we had an aspiration to be better than we were. I think that’s important. With Trump, he takes your worst self and validates that as your best self. That part of you, we all have it, that feels aggrieved, that feels cheated—the side of you that, when someone cuts you off in traffic, you have that little spirit of road rage. Trump said, That’s your best self. You should empower that. I think that that’s an important distinction.

Bush clearly is a nice guy in certain ways that Trump is not a nice guy. But when you look back at the Bush Administration, and you look at what’s going on now—when you talk about contempt for science and you look at the way the Bush Administration dealt with global warming, when you look at spurning expertise and making decisions and how Iraq ended up playing out and Katrina played out, do you think that even if we see that the intentions were different and that cruelty was not the point of the Bush Administration, to take a phrase from another writer, that there were more commonalities there? And that it’s not a coincidence that the last two Republican Presidencies are ending in failure, assuming that Trump’s Presidency is ending soon?

I think the answer is, yes, those elements were there. Definitely. Look, Bush gets elected. If you look at that picture of him signing [No Child Left Behind] with Ted Kennedy behind him, I mean, today that would be submitted in a war-crimes trial in the Republican Party. It’s unimaginable that that would happen with Trump. There was that side of Bush. What happened after 9/11? Did he demonize Muslims? No, he didn’t. He defended Muslims. There’s that side of him. Obviously, Iraq was a debacle, and we can argue about how that happened, why it happened, what they believed when they went in—but it was a disaster, undoubtedly, one of the great disasters in American history.

I think we played too much on the social-conservative side, particularly, with the same-sex-marriage referendum. I think that’s regrettable. So I don’t think it’s one or the other. I think both. What I’m describing is the tension within that party, that both elements existed. Now that’s not uncommon for a party. You can look at Joe Biden and you can look at Bernie Sanders, and they exist in the same party. There’s an argument to be made that diversity is a strength, though I think the sort of know-nothingness of anti-science is not a strength. I don’t think that’s diversity. I think it’s ignorance.

I think that Bush being there as a leader made a huge difference in an ability to at least assert values of commonality that were not our worst selves. I think with Trump that has been abandoned. Then the question becomes, Do you accept that? In 2015, when I went out against Trump, I can’t tell you how many people in the Republican Party, high levels, were e-mailing me and saying, Thank you for doing this. I can’t do it because of X, Y, and Z, right up to about ten o’clock on Election Night. Then I started getting e-mails saying, Could you maybe erase that e-mail I sent? I think in many ways everything that a lot of us said about Trump in 2015 turned out to be overly optimistic.

If I had said in 2016 that it’s going to be July, 2020, and we’re going to have the worst economy ever in the history of America, the greatest decline in G.D.P. in American history, over a hundred and fifty thousand Americans dead in a pandemic in the last four months, and Donald Trump is talking about suspending elections, people would have said I’m crazy.

It’s not ideal. Let me ask you, though, about your mental state. You write about the deficit and “out of control” federal spending being a phrase Republicans use. And then you say, “But no one really believes in it any more than communicants believe they are actually eating and drinking the body and blood of Christ.” Putting the latter aside for a minute, when you say no one really believes it, are you implying that no Republicans really believe it, or that you didn’t believe it when you were working in Republican politics?

I’ve said before that I probably represented the worst of the American political system. I was a guy who was drawn to politics because of campaigns and not government. You know, I didn’t think I’d be very good at government. I briefly worked on the Hill and I was probably the world’s worst staffer, which, there’s a lot of competition for that. The process of government, which at its base level is usually pretty boring and tedious, just didn’t appeal to me. I really didn’t think about this stuff a lot. I should have thought about it more. You’re not powerless. You can have an impact on this.

The deficit line is just something people say, in the way you say when you see someone you don’t like, “It’s nice to see you.” It’s sort of like a social nicety. If you said to them, “Are you for major deficits?” They would say, “No,” and they would have passed that lie-detector test. But if you had said, “Are you willing to do what it takes to end the deficit?” The answer would have been what happened, “No.” It’s really even worse than that. If you go and you look at the last time that the deficit got wrestled under control, it was under Clinton. In part, that was because Clinton passed a tax increase. If you go back and you look at what we all predicted, and I made a million spots, we predicted economic Armageddon after the Clinton days. Instead, we had the beginning of the greatest period of growth in American history. We were wrong. I think we have to admit that and look at what happened.

Would Mitt Romney have made a good President if he had been elected in 2012?

I think Mitt Romney would have been a great President, and every day I wish that he were President.

Maybe this gets to the fundamental issue we’ve been going back and forth on. I think a lot of people acknowledge that Romney is in many ways a pretty decent, honorable man. Certainly, I think a lot of liberals think this now, and a lot of centrists think this now. At the same time, you’ve just finished talking about how Iraq was a disaster and how Republican economic policies don’t really make much sense. Romney was, essentially, running on “doubling Guantánamo,” and an aggressive foreign policy, and the Paul Ryan budget. If Romney had been elected, would his have been another Republican Presidency that ended the way the Bush Presidency did? Is that sort of more important than the fact that Romney is an honorable guy?

I don’t think that all Republican Presidencies end badly. I don’t think that the Bush Forty-one Presidency ended badly. I think that the W. Bush Presidency is the tragedy of Iraq. I think Mitt Romney is someone who has a proven record of being able to bring people together and being able to solve problems in a practical way not driven by an extreme ideology. I believe that we would have had more control on deficit spending, because you would have had someone who actually could have done something about it, who would have actually believed in it. Unlike Donald Trump who says, “I’m the king of debt,” and can’t pass anything because he can’t bring people together.

It’s interesting why Mitt Romney picked Paul Ryan, and it’s a very personal choice and I don’t want to speak for the senator, but I think he picked him as a governing choice. I mean, he said as much. I think it’s correct. He had no experience on Capitol Hill. He thought that having that experience would be important. Paul Ryan was someone who was well liked across the aisle. I think, together, they could have brought a lot of economic sanity to the country. I think they would have tried. Is it possible in America today to bring the budget down? I think so. I don’t know anyone on the conservative side that can do the same with any credibility.

But Paul Ryan helped pass the Trump tax cuts, which, as you say, were deficit-exploding. He was the one who shepherded it through the House.

Yes, yes. I think when not combined with cuts in the budget, it creates huge deficits that we have. If cutting taxes was a unified theory for Republicans, which it is in a certain class of Republicans, I think it’s proved to be a very false religion. I don’t think that what we invested in cutting taxes has proved to be accurate.

I’m less convinced that Mitt Romney and Paul Ryan and a Republican Congress would have gotten responsible about the federal budget in this alternate universe we’re talking about. Bush also had a budget-busting tax cut. It just seems very integral to what the Republican Party is, completely independent of Donald Trump.

Well, you can’t argue with that, O.K.? Whether or not Romney could have taken the Party in a more productive, rational fiscal policy, we’ll never know. I say this in the book, and I think it’s pretty much inarguable, the idea of so-called trickle-down economics has proved to be nonsense.

Do you think Paul Ryan and Mitt Romney and George W. Bush think it’s nonsense?

I can’t speak for them.

How do you understand his 2012 campaign—that Romney met with Trump—and things like this?

Listen, both those candidates had fifty per cent favorables. Romney got a lot of criticism for not going far enough on stuff. If you go back to the foreign-policy debate, he was criticized for not trying to make Benghazi the center of all evil. In the Republican primary, I remember this well, there was one of those awful raise-your-hand questions: Who believes Barack Obama is a socialist? Mitt Romney was the only person who didn’t raise his hand.

He did write a book called “No Apology,” presenting Obama as some sort of foreign-policy radical.

I think there were huge failures with Barack Obama’s foreign policy. I really don’t know how anybody would argue with that. You could argue that those failures were inevitable, but you can’t look at Syria, the greatest human-rights tragedy in the post-World War Two world, and not think that it was a tremendous, horrible failure. You can sustain two beliefs. I can. One, that Barack Obama is a decent human being, and if Barack Obama were President today the country would be better off. I say that without hesitation, while admitting that there were failures. I think that there was a failure on Obamacare not to be able to come to some greater ability to have both parties support part of it. And probably what we should have done on Obamacare is divide it into pieces. I think it’s governmentally problematic when you have one party pass it.

He did pass a version of Mitt Romney’s health-care plan, but let me ask you, Are you in touch with Romney?

I talk to Senator Romney some. Mainly about books we’re reading and just stuff going on in mutual friends’ lives. You know, the impeachment, for example, I had no idea how he would vote. The stuff that I talk to him about is more like personal stuff.

Do you think that Romney or Bush will endorse Joe Biden? Do you think that they should?

I would be very surprised if they do. I think, particularly, for an ex-President the roles that they play—I mean, there’s a lot of talk about why didn’t President Obama weigh in more in the primary. I think it is a unique role that has serious gravity.

I would be very surprised if Senator Romney endorsed him. My experience with Romney is pretty much that on the record and off the record is the same these days. What he said is that he intends to do what he did last time. I think that’s what he’ll do.

Does that disappoint you in any way?

No. I think Mitt Romney has been heroic. I think the eternal shame of most of these Republicans is going to be, why didn’t we follow Mitt Romney? I mean, Mitt Romney went out [against Trump] in March of 2016, and, had the Republican Party rallied around him, we could have saved ourselves from this incredible debacle and disgrace and humiliation.

Did you ever figure out what his whole Secretary of State flirtation thing was? Do you think that was just trying to be an adult in the room?

I pretty much know what it was about, because I talked to him then. I think it’s pretty much what you would think—that there’s a greater duty to the country, and I think he thought that, out of respect for the office and the process, he should talk to Donald Trump. I think he’s very glad that he was never asked to be Secretary of State, because I think it would have been the shortest Secretary of State tenure in history. I don’t think he would have lasted two months.

Why are Southerners attracted to Donald Trump?

It’s a question I’ve asked myself a lot, because in many ways Donald Trump is the caricature of the rich Yankee that we’re always warned about, who has no manners, no respect for anyone, including women, who is crass, and values money over everything. That’s Donald Trump, and he’s pretty much wildly popular with a lot of polite Southerners. I think that there is a perception of Donald Trump as a fighter that appeals to a Southern Scotch-Irish tradition that loves to fight. I think there was a sense that he was politically incorrect and would tell the establishment, “Screw you.” At the same time, in a lot of these states he did worse than Mitt Romney did. In many ways, Mitt Romney was an unusual fit being a Mormon and also being from Massachusetts. I think that there’s a lot of reluctance.

I’ve found the Roy Moore thing both the most inspiring and depressing event, because you say, “What would it take to get white Republicans to vote for a Democratic moderate?” You say, “O.K., what if the Republican was a child molester?” [In 2018, the Democrat Doug Jones defeated Moore in the race for a U.S. Senate seat, after Moore denied reports that he had made sexual advances toward underage girls in the seventies.] The positive is—and not for the first time—that Alabama was saved by African-Americans and saved by, particularly, African-American women. And saved by evangelicals. You know, one of the things that drives me absolutely crazy is we talk about evangelicals and say Trump is popular with evangelicals, and that’s not true. Trump is popular with white evangelicals.

Same with the way we talk about the working class.

Exactly.

The Lincoln Project ads have obviously been very effective in getting a lot of press. Do you think that they’re aimed more at élites to signal the Republican opposition to Trump, or are you really trying to get voters to switch? I’m not saying the first is necessarily unimportant, but what’s the goal?

I think there are multiple purposes here, and I think the purposes are shifting as the Lincoln Project starts spending more money on television. I think, in part, they’ve existed to give permission to others to say what needs to be said that isn’t being said. Look, I’m just kind of a backup singer in the Lincoln Project. It wasn’t my creation. I’m playing rhythm guitar on this thing. But not having a client is very liberating. You don’t have to worry that if you go too far, it’s going to blow back on your client, because you don’t have a client. I think that part of the role that the project has been able to play is to say what people are thinking, but you really can’t say that out loud. You say it out loud, and I think that’s positive, and I think it moves the needle of discussion. I think that it helps the Biden campaign.

I know that Trumpworld gives every indication of being obsessed with the Lincoln Project, and then it’s a joke when they attack us. Are you crazy? I mean, we’re not running for President. That’s a day that they’re not focussed on the Biden campaign.

Let’s say I’m a little bit of a cynical person, and let’s say I’m, like, look, these Lincoln Project ads have been really good, but the people who are doing it are these former Republican operatives like Steve Schmidt, who was working for Howard Schultz a year ago, and John Weaver, who got in trouble for agreeing to do lobbying for Russia a year ago. It’s all these operatives, and they’re coming together to make money off anti-Trumpism. Why is that too cynical?

There are none of us that couldn’t be making a gazillion dollars working for Trump. The idea that you’re going to go out and run against your own party and that’s going to be beneficial financially is nonsense. Look, we’re political consultants. We even joked about this. “How is it that we became the conscience of the Party?” We’re supposed to be the hacks. We’re supposed to be the people who say, do anything. We don’t confuse ourselves with role models. We don’t confuse ourselves with being candidates. We’re operatives. We’re all appalled at what’s happened in the Republican Party. We have a few skills that we developed over the years, and our choice is one of three things: support Trump or say nothing; O.K., not going to do that. Be quiet; really don’t like that. Or try to use these skills that we have to make a difference.

You sound like Liam Neeson in “Taken.”

Yeah. Well, look, I mean, I don’t think society should look at the total gestalt of the political system and say, “You know, the people I really admire are consultants.” That would be a pretty sick society. You could argue whether or not we’re a necessary evil, but I don’t think that people are going to look at Jeffersonian democracy and say the problem with that Constitution is it didn’t have enough about political consultants. We’re an aberration of a system that has evolved, but it is our system, and we are good at some stuff.

Either Donald Trump is going to be elected President or he’s not. I hope he’s not. We are trying to employ that which we know how to do to achieve that goal. We’re not confusing it with personal nobility. We’re just guys and women that know how to do some stuff, and we’re trying to do it to beat Donald Trump.

Joseph Stiglitz: the Right’s China Policy was Designed to Raise Profits by Weakening Wages (Labor)

Joseph Eugene Stiglitz (/ˈstɪɡlɪts/; born February 9, 1943) is an American economist, public policy analyst, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979).[2][3] He is a former senior vice president and chief economist of the World Bank and is a former member and chairman of the (US president’s) Council of Economic Advisers.[4][5]
some ways I one has to recognize that
42:32
China may have been lucky they began the
42:37
development strategy just at the moment
42:39
when the West was very open to importing
42:43
manufacturing goods it was a moment
42:49
where because there were a large profit
42:54
opportunities in the West that sustained
42:58
the opening with wrong without regard to
43:01
the effects and workers over the over
43:04
the effects and the overall economy so
43:09
in a way China’s success is testimony to
43:13
the failures of democratic politics in
43:16
the United States in Western Europe
43:19
because the rules the game were designed
43:26
worked to advantage American
43:29
corporations Western European
43:31
corporations with no attention paid to
43:37
the consequences to the workers as the
43:41
United States d industrialized now some
43:43
countries in Europe did pay attention
43:45
and they did have active labor market
43:49
policies that shifted workers from the
43:53
old sectors that were dying into the new
43:55
sectors and Scandinavia has been very
43:58
good in these active labor market
44:00
policies which I think are really
44:02
important in the United States we didn’t
44:06
do that even though economic theory said
44:11
opening up of trade between an
44:14
banks country like the United States and
44:16
China West events would result in lower
44:21
real incomes for unskilled workers
44:24
there’s a missing Stover theorem and it
44:28
was unambiguously clear even though we
44:31
were getting cheaper goods real incomes
44:34
of unskilled workers would go down and
44:36
it’s only if you had a mystical belief
44:39
in trickle-down economics would you
44:41
think otherwise but our politicians did
44:44
have a mystical belief in trickle-down
44:46
economics and they asserted this over
44:51
and over again and so even when you know
44:54
in the Democratic Party we tried to get
44:57
Trade Adjustment Assistance we try to
44:59
have some active labor market policies
45:01
when we couldn’t because of concerns
45:04
about austerity and not enough budget
45:07
concerns they wouldn’t work we went
45:11
ahead anyway there is a growing sense
45:15
the United States though that actually
45:16
the agenda on the right was to increase
45:23
unemployment and suffering you say why
45:26
would they anybody you know why do
45:29
people want suffering well it was part
45:32
of a concerted agenda if you look at to
45:35
weaken the bargaining power of workers
45:38
and drive down the wages which increases
45:41
profits so if you look at this from a
45:45
conservative point of view the reforms
45:47
and our labor laws and reforms in the
45:51
way antitrust policy was enforced that
45:55
reform is a not the right word but
45:58
changes in those laws changes in
46:02
corporate governance and implicit
46:04
understandings the legal frameworks and
46:08
in the investment agreements in the
46:10
trade agreements the investment
46:12
agreements they gave more secure
46:14
property rights if American firms
46:16
invested abroad than if they vested at
46:18
home which meant that they were
46:21
encouraged to invest abroad which also
46:24
meant that if the firm if workers came
46:27
to affirming
46:28
we want higher wages and the firms know
46:31
if you we give you if you continue to
46:35
demand higher wages we’re going to leave
46:37
that was more credible so I think it was
46:43
a deliberate strategy to drive down the
46:45
wages of workers and it worked in terms
46:50
of the economics that I described before
46:52
it did drive down the wages but it has
46:55
now led to these this political backlash
46:58
with which we are dealing so there is a
47:04
relationship between China’s success and
47:07
some of the problems that we’re facing
47:09
it wasn’t inevitable we could have
47:11
managed it better we should have managed
47:14
it better but we didn’t but just as a
47:16
footnote the point I’m making is that
47:20
that was a particularly
47:23
Africa won’t be able to follow the
47:25
manufacturing export-led growth model
47:28
that led to the success of East Asian
47:32
countries including China in fact now
47:36
globally manufacturing employment is in
47:40
decline in any country that believes
47:44
that manufacturing should be at the
47:46
center of their economic policy is
47:48
misguided it can be part of it it can’t
47:52
be at the center well let me just
47:57
conclude by SEP some let me just
48:02
conclude by a set of remarks about that
48:07
in a way that pertain to all countries
48:10
but we’re we’re china realized this in a
48:16
way more forcefully than many others
48:18
have and that is that reform is a
48:20
never-ending process that societies are
48:28
always changing technology’s changing
48:30
and therefore the policies that are
48:36
going to make a society successful have
48:38
to change in a corresponding way
48:41
for China China’s entering a new stage
48:43
of development it’s facing critical
48:46
problems of inequality health
48:47
environment livable cities markets won’t
48:51
solve those problems in fact many of
48:53
those problems have been created by the
48:56
fact that they had markets that were too
49:00
unfettered to under-regulated
49:02
they’re going to have to regulate them
49:04
better there are further questions posed
49:09
by changing globalization the
49:12
recognition of the risks of excessive
49:14
financialization the West
49:18
I believe hasn’t succeeded in adequately
49:20
taming financial markets as you know
49:23
this is this week is the 10th
49:25
anniversary Lehman Brothers and and a
49:27
lot of people are talking about have we
49:29
done enough I think it’s absolutely
49:32
clear no and what’s particularly
49:39
disturbing is the Trump administration
49:41
is trying to undo the inadequate things
49:44
that we’ve already done again I was at a
49:48
dinner right before the inauguration of
49:51
Trump where one of his chief economic
49:54
advisors was there
49:56
I don’t normally associate with his
49:57
people might make it clearer but it was
50:02
an embassy dinner so I and I didn’t know
50:06
he was going to be there anyway
50:10
and he was talking about how he was
50:16
going to deregulate the financial sector
50:19
within weeks after taking office and the
50:26
first thing that struck me is he clearly
50:28
had no idea of our democratic processes
50:31
yeah he really thought you know Trump is
50:34
the dictator he gets to write rewrite
50:36
all the rules no no none of these
50:38
processes that we put in place as
50:40
democratic checks against authoritarian
50:43
leaders no knowledge of that was just so
50:46
clear but the second point I was going
50:50
to ask what somebody who asked it before
50:51
I did quizzically
50:55
didn’t we have a crisis in 2008 and the
51:02
implicit answer was that was ancient
51:04
history and we have to move on but it’s
51:09
not ancient history and I think the
51:12
risks are very much with us one of the
51:17
concerns that I increasingly seeing in
51:20
China is that as China grows the
51:26
influence of vested interest will grow
51:28
and you can feel it already
51:32
another just a little anecdote every
51:36
year when I go to China I often talked
51:42
to the finance minister and I’ve been
51:43
pushing them to move away from their
51:46
debt finance growth model to more tax
51:50
financed in particular I’m telling them
51:53
they need a carbon tax and it would
51:56
raise a lot of revenue it would help
51:59
clean up their air pollution exceed me
52:02
an obvious idea and the finance minister
52:05
every year says great idea and he says
52:10
we have some political problems which he
52:14
means the auto industry the coal
52:16
industry this you know steel industry
52:18
and so forth we’re gonna work on it next
52:22
year we go through the same conversation
52:27
as China has grown and it has taken on
52:31
many of the features of a modern vested
52:37
interest economy we’re getting change is
52:41
becoming more difficult and that of
52:43
course is is very worrisome but the
52:49
principles that guided China in the
52:53
first 40 years are likely to continue to
52:55
be relevant and that by that I mean the
52:57
pragmatism crossing the river by feeling
53:00
this still stone they’re going to be new
53:02
problems not fully foreseen would that
53:04
appear it will have to address these
53:08
problems
53:09
using insights from theory and past
53:11
experience and the second critical point
53:14
is openness there is much to be learned
53:18
from experiences of others and from the
53:20
ink sykes of non-ideological economic
53:23
analysis and again we’re in a particular
53:29
moment where I hate to keep coming back
53:34
to the United States but we’re a little
53:35
bit obsessed with with our problems one
53:41
can’t help but reflect on the closed
53:45
mindedness of our current administration
53:48
of not looking around you know if you
53:52
think you’re number one and you think
53:54
that you’re the there’s nothing to learn
53:57
from anybody else that is part of the
54:02
beginning of the end so we hope that
54:05
this is just a temporary interlude but
54:09
as we reflect on what makes I know
54:14
successful in the ways it is I think
54:18
there are a lot of lessons for all of us
54:19
to think about how we can make our own
54:21
economy successful for all of us thank
54:24
you
54:30

OK, Boomer

If I hear another lecture from Fred Smith and his fellow billionaires on trickle-down tax cuts and the “benefits to the United States economy, especially lower and middle class wage earners”, I’m going to lose it.

If I hear another lecture from Jay Powell and his fellow centimillionaires and decamillionaires at the Fed on trickle-down monetary policy and the “benefits to the United States economy, especially lower and middle class wage earners”, I’m going to lose it.

OK, boomer.

What’s the boomer world?

It’s a world where our current President is an on-the-make billionaire, and our most recent former President seems hell-bent on becoming one. A world where lawyers from Citadel write our securities regulations, and VPs from Boeing run our Defense Dept. A world where corporate managers can become billionaires – not by innovation or risk-taking – but by stock-based comp at scale. A world where asset managers can become billionaires – not by invention or outperformance – but by asset-gathering at scale.

It’s a world that has been systematically hollowed out for decades, through

  • narrative capture of monetary policy,
  • trade policy,
  • antitrust law,
  • mass media and the
  • tax code.

“Yay, trickle-down economics!”

It’s a bipartisan thing. It’s a Zeitgeist thing.

And the 2017 Tax Cuts and (LOL) Jobs Act was just the latest smiley-face punch in the gut.

Worried about losing your freedom to a redistributive State? I think you’ve already lost it.

Just not in the direction you thought.

As Inflation Rises, It’s Even Harder to Get a Raise

Hourly earnings in June grew 2.7 percent from a year earlier. That’s more or less in line with the pace of the past two years. But now those modest wage gains are worth less in the real world. The reason: The prices of goods and services are picking up. In May, inflation hit 2.8 percent and grew faster than wages, which increased 2.75 percent.

.. The White House has contended that corporate tax cuts, like those enacted last year, will prompt companies to make investments that improve productivity and thus enable them to pay employees more. (Productivity measures output per worker.)

So far, that virtuous cycle does not seem to be taking hold. And some economists are skeptical that it will. Companies have had the ability to invest cheap capital for years, and wages have not risen strongly.

.. “A lower cost of capital may lead to more investment that may lead to more productivity growth, but to assume that will trickle down to middle-class wages flies in the face of everything we’ve seen for the last 20 years,” said Jared Bernstein

.. the effective personal tax rate had not changed much in the past year, edging down to 12.21 percent in May, from 12.25 percent a year earlier.

.. He noted that inflation-adjusted wages had in recent years grown more or less in line with productivity, which has itself been lackluster.

But wages could soon outpace productivity, Mr. Zandi predicted, because companies will have to pay higher wages to attract and retain workers.

 

Trickle Down? Not Now, and Not for a While at Best (Wonkish)

It’s nonsense, of course. Think of the motivation: lots of companies are raising wages at least a bit in the face of tight labor markets; pretending that it’s because of the tax cut is a cheap way to curry favor with an administration that has no hesitation about using regulatory and antitrust decisions to reward friends and punish enemies. It’s basically Carrier all over: make a Trump-friendly splash by declaring that he persuaded you to save jobs, then lay off lots of workers after the cameras have moved on.

.. even if you believe economic analyses that suggest corporate tax cuts are good for wages, it shouldn’t happen right away. Any trickle-down should come about because the tax cuts lead to higher investment, which leads over time to a larger capital stock – and it’s the increase in the capital stock, which may take many years, that leads to the wage rise.

Corporate Tax Cuts Would Benefit Ordinary Americans

An E.U. Study in 2007 found, for example, that “a ten percentage point increase in the corporate tax rate of high-income countries reduces mean annual gross wages by seven percent.”

.. “workers in a fully unionized firm capture roughly 54 percent of the benefits of low tax rates,”

..A lower corporate rate leaves more after-tax profits for firms and workers to bargain over, which can raise wages directly. And lower rates increase a company’s after-tax return on investment, encouraging investment relative to consumption. This helps raise capital per worker and hence boosts productivity and wages over time.

.. Britain and Canada, in particular, have shown that it is possible to substantially cut rates without meaningfully reducing corporate revenues as a proportion of GDP.