Ross Douthat
Appearances
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
From New York Times Opinion, I'm Ross Douthat, and this is Interesting Times. Just in time for the debut of this show, almost as if he planned it that way, Donald Trump has taken a sledgehammer to the global economy, as his new tariff regime yields crashing stock markets, rising global uncertainty, and widespread fears of a recession.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But there isn't really, from the age of globalization, I concede that relative to how the U.S. economy was doing in the immediate post-war period, the age of globalization has been a disappointment. But it's not like there is some counterexample where you say, you know, oh, the French practice more protectionism or the Germans or the Japanese and their economies are in much better shape.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Isn't the U.S. economy still in the best shape of any developed nation, of any big, rich, developed nation right now? And doesn't that suggest something about the potential scenarios on the table?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
economy, where the tariff debate centers in, before we get into the Trump tariffs themselves, so that hopefully the conversation will still be of use, even in a future in which the audience knows more about how all this plays out than we do. So that's the plan. And I want to start with a big picture question.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Okay, let's take a quick break there, and we'll be right back. So what do you make of other arguments for tariffs? We've been focused on manufacturing, but in the swirl around President Trump's tariffs, you've had a lot of other cases made, right? One is pretty clearly linked to the rebuild manufacturing case. It's a national security case. It says that
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Look, you know, China is a great power competitor. It's possible that a global pandemic originated in certainly it originated in China. It could have originated in one of their own laboratories. They could invade Taiwan. There's all kinds of ways where we could have to. We already did briefly decouple and could have to decouple from them.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And so therefore, again, it's worth a little bit off GDP to have more of our supply chain domestically and so on. I assume that you find that argument somewhat convincing as well.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
When Donald Trump was reelected and entered office, a lot of people thought he had gotten very lucky, that he had inherited an economy that was in really good shape, with low unemployment, with inflation finally coming down after the Biden era, with a high stock market, and with a sense of big technological breakthroughs potentially on the horizon.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But isn't that partially just a case for industrial policy of the kind that, for instance, the Biden administration tried to pursue? I'm sort of looking for substitutionary policies that serve the same kind of goals without taking the growth hit from tariffs. It seems like you could argue, well, we have a certain set of industries that aren't technically part of the defense industry.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
budget, but that we want more of in America. We want more chips and so forth manufactured in America. Why not just make that part of our spending program, right? And support those industries because we know the specific things that we want instead of putting up general barriers around the world that slow growth.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So, Oren, to begin with, what's wrong with that narrative from your perspective? What is wrong with the American economy in the year 2025 that could make anyone interested in any kind of radical or dramatic restructuring?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And what about deficits? One of the arguments that, again, has floated around in the last few weeks is that tariffs are a way to raise revenue, right? Which they obviously are. The U.S. has a big deficit problem. And the deficit problem is itself taxable. connected to the global trading order. And it has to do with the strength, in part, the strength of the dollar relative to other currencies.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So you have people arguing, one, tariffs will raise revenue directly, helps cut the deficit, and you don't have to do some kind of grand bargain between Democrats and Republicans. That's very difficult. The president can just go ahead and do it. It's the only way a Republican president can ever raise taxes. I've heard people say that.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And then maybe people say it can also be linked to some global negotiation where countries come to the table and all agree to change sort of how their currencies work or accept lower rates on U.S. debt or something that – helps us deal with our budget deficits.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
The difficulty there, right, is that, especially in the first case, if tariffs do what you want them to do and lead to the reshoring of manufacturing, over time they raise less and less revenue. So a successful tariff that helps reindustrialize America is not going to be a big revenue generator. So where do you see the deficit-cutting stuff fitting into this?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And do you buy the idea that you could do some sort of grand renegotiation of U.S. debt?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
budgeting process has been known to do that.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
All right, let's take a break. And when we come back, we'll talk about what the Trump administration is actually doing. Okay, so this you have brought us to the actual tariffs, not the theoretical tariffs. And I'm going to put words in your mouth and say briefly that the Oren Cass preferred tariff program is one that specifically tries to isolate China.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
generally imposes a 10 percent global tariff that is sort of stable, persistent and compatible with global trade and maybe include some other country specific tariffs related to negotiations. Now, you could argue that is what Trump has done. The tariffs on China are quite high. There is a flat 10 percent tariff.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And then there are these country by country tariffs that people have been arguing about. But I want you to tell me because I read your take on the tariffs and it seemed like it was very general praise wrapped around a pretty actually specific critique. So I want you to tell me what you think is wrong with what Trump is doing on tariffs.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And what about the country by country tariffs as they exist right now? Because there was the Trump administration used the rhetoric of reciprocal tariffs, which implied to most people that essentially we were saying, if you have X tariff on our goods, we will have the same tariff on your goods. And we want to mutually then negotiate down from there.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
In practice, instead, the Trump administration has a formula seemingly that's just designed around trade deficits with other countries, where if you have a trade deficit with us, we are putting a big tariff on you. And it seems to me pretty obvious that in a global economy, we're going to have lots of countries that we have trade deficits with.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Maybe we want to have trade surpluses with more countries. Fair enough. And that's what we're working towards. But it seems completely bizarre to say, you know, any random country that has a completely different economy from ours, if you're not importing exactly as many American goods as you're exporting to us, we're going to tariff you. Isn't that just daft?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
One is— You can say it's just daft. You can just say it's daft.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But you were just telling me in the case against industrial policy from the right that the conservative, the free market oriented conservative would say, you know, we're not going to be able to micromanage. you know, which factories to build exactly, which industries to support. We want to set something low and flat in tariff policy that just encourages domestic manufacturing in general, right?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
It seems to me like the same has to be true with this country by country stuff, that you're not the idea that we're going to be micromanaging the trade balance with, you know, Italy, Hungary, Turkey, India, Bangladesh to figure out like, you know, how do we get them all back in balance? One, that seems unworkable. And two, And this is something that just hangs over this whole conversation.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
It just seems like a way to fit in with the president of the United States' particular obsession with the idea that, from his perspective, all trade deficits seem to be bad, at least in the way he talks about it. So everyone who's designing these policies in the White House is sort of working around a core Trumpian perception that probably is wrong. Thank you.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Thank you. Thank you. Thank you. Thank you. Thank you for watching.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So let's be a little more specific about those broader challenges, because as you mentioned, U.S. GDP has continued going up throughout this period. And in fact, so has, to some extent, middle class incomes, not just middle income, but working class incomes. They went up in Trump's presidency. They went up in Biden's presidency, even though then inflation ate into them.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
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Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And overall, middle class Americans, just in terms of the numbers, are meaningfully better off than they were in the 1970s. But you don't think that captures something really important, right? There's something those numbers are missing?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
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Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So to try and understand where this radical policy came from and where it might be taking us, our 401ks, our unemployment rate, I'm joined by Oren Kass, who's the founder of American Compass, a populist conservative think tank that has for a while now been arguing for tariffs and for some kind of dramatic change in America's relationship to global trade.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Okay, so stipulating that there is a big debate about all these numbers, as you mentioned, the American Compass Index of Human Flourishing is hotly contested and much argued over. Stipulate for the sake of argument that there is some kind of stagnation here, especially for young men. What does trade have to do with it?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Okay, but so is the issue that we've lost manufacturing or that we've lost manufacturing jobs? Because one of the arguments that you often hear is that American manufacturing in terms of how much stuff we produce is still roughly where it's been for decades now. We've lost ground in comparison to China because China has become such a powerhouse.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But the American manufacturing sector has not collapsed. What's collapsed is the number of Americans who work in jobs in that sector. Do you agree with that?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So what is so special about a manufacturing job as opposed to a service sector job? Because someone might say, look, yes, the U.S. economy has fewer people working in factories than it did in the heyday. of, you know, Detroit and the big three auto manufacturers and all the rest. But America is also a lot richer than it was back then.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And I think most people argue that global trade has led to lower prices in at least some areas for some goods. So what's wrong with a world where someone works in a service sector job instead of a manufacturing job? enjoys lower prices. And then beyond that, presumably the richer U.S.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
economy can pay for under an income tax credit or a larger child tax credit to essentially increase wages and give a kind of premium based on the surplus of a wealthy society. Why is that not just as good as a world with many more manufacturing jobs?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So, Oren Kass, welcome to Interesting Times.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But suppose you had a resurgence of manufacturing jobs right now. Wouldn't they look quite different from manufacturing jobs in 1985 or even just before the China shock? Because yes, manufacturing jobs have even now have some of the features you describe, but we have passed through an age of automation and robotics. We are entering some kind of age of AI driven automation.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
I hope it is. So, a podcast, like everything, is a moment in time. And the moment in time in which you and I are speaking is Monday morning. The markets are open and down so far for the third day since Donald Trump announced the great liberation of America from the foreign yoke.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And when I hear people talk about the factory jobs of the future, even people who are bullish on there being good factory jobs, it's sort of taken for granted that these are not actually the kind of jobs that, you know, a blue collar steel worker would have had in 1977, right? The argument is, well, these are actually better jobs, they're less backbreaking, they require more skills, and so on.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
But then, if that's the case, and maybe it's not the case, aren't they not filling in the same niche in the economy, right?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
So when I interviewed the vice president before he became the vice president, and we talked a little bit about this issue, and he talked about the idea of, you know, the six or seven million American men who have dropped out of the workforce, who are particularly vulnerable to opioid addiction and family breakdown and all of these things.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Are those the kind of workers who are likely to be hired in the factory of the future that is highly, highly automated?
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
Right. But do you think that there is a cost to overall GDP from using tariffs, essentially to wildly oversimplify the argument for tariffs that is implied by what you're saying is that you raise the cost of importing from factories outside the United States. So it becomes more economically viable to build factories inside the U.S.,
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And this podcast, therefore, may not cover events that transpire between now and Thursday morning when it's released, but we're going to try and have a fairly high-level discussion about the condition of the U.S.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
The typical economist responds, that may be true, and you do get some potentially specific benefits, although they would have doubts about how all this works. We'll get into in a minute. But they would say, but look, your overall, the overall society is going to be somewhat poorer.
Interesting Times with Ross Douthat
This Instability May Be Worth It. Here's Why.
And is that a tradeoff we should be willing to make some points or fraction of a point off GDP to have more people working in upstate New York and central Ohio?