Brace for impact! Radical economists Richard D. Wolff & Michael Hudson pull no punches in this explosive Dialogue Works breakdown of Trump’s reckless new tariff war—and why China’s response could devastate the global economy.
5 HARD TRUTHS THEY REVEAL:
✅ Trump’s 60% tariffs = economic suicide (Who really pays? YOU do!)
✅ China’s 3-pronged counterattack (Yuan manipulation, rare earth chokehold, dumping US debt)
✅ The hidden class war – Billionaires sacrifice workers for profit
✅ Dollar dominance at risk – BRICS nations preparing alternative system
✅ Global recession warning – 2008 could look like a picnic
⚠️ "This isn’t just trade—it’s economic mutually assured destruction!" – Wolff
🔥 Is this the beginning of the end for US economic hegemony?
#EconomicWar #TrumpTariffs #ChinaFightsBack #Wolff #Hudson #TradeWar2024 #GlobalRecession #EndOfDollar #BRICS #WorkingClass #LateStageCapitalism #EconomicCollapse #DialogueWorks #ClassWar #Geopolitics #InflationCrisis #USChina #DebtBomb #CapitalismFail #SocialistEconomics
5 HARD TRUTHS THEY REVEAL:
✅ Trump’s 60% tariffs = economic suicide (Who really pays? YOU do!)
✅ China’s 3-pronged counterattack (Yuan manipulation, rare earth chokehold, dumping US debt)
✅ The hidden class war – Billionaires sacrifice workers for profit
✅ Dollar dominance at risk – BRICS nations preparing alternative system
✅ Global recession warning – 2008 could look like a picnic
⚠️ "This isn’t just trade—it’s economic mutually assured destruction!" – Wolff
🔥 Is this the beginning of the end for US economic hegemony?
#EconomicWar #TrumpTariffs #ChinaFightsBack #Wolff #Hudson #TradeWar2024 #GlobalRecession #EndOfDollar #BRICS #WorkingClass #LateStageCapitalism #EconomicCollapse #DialogueWorks #ClassWar #Geopolitics #InflationCrisis #USChina #DebtBomb #CapitalismFail #SocialistEconomics
Category
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NewsTranscript
00:00:00Hi, everybody. Today is Thursday, April 10th, 2025, and our friends Richard Wolff and Michael
00:00:12Hudson are back with us. Welcome back. Glad to be here.
00:00:18When it comes to the conflict right now, the economic conflict between the United States and
00:00:24China, many people are asking what is the main strategy on the part of the Biden administration?
00:00:31And here is the way that the Treasury Secretary of the United States,
00:00:39Scott Besant, is talking about. It's fortunate that the Chinese
00:00:45actually don't want to come and negotiate because they are the worst offenders in the international
00:00:51trading system. They have the most imbalanced economy in the history of the modern world.
00:00:57And I can tell you that this escalation is a loser for them, that they have some very smart
00:01:04economists, the academicians, technocrats within their bureaucracy, and they would be telling the
00:01:11leadership that we do not have the edge here. They are the surplus country.
00:01:16Yeah. What's your take, Michael? Let's start with you. What's your take on the way that the
00:01:25Trump administration is trying to talk about this strategy on their part? Even we've heard that CNN
00:01:30was reporting with talking with GOP Senator Ron Johnson. He said he has no idea what is the strategy.
00:01:40What's your take on that, Michael? Well, when Besant said that China had an unbalanced economy,
00:01:47what it meant was that it was successful. And him, for his idea, a balanced economy is one without
00:01:56any government. And ideally, for Trump, without any income tax. But that's not how China looks at it.
00:02:04China believes that it's a mixed public-private economy, with the government playing the same
00:02:12kind of active role that it played in the United States industrial takeoff in the 19th century,
00:02:18and that it played in Germany's takeoff, and earlier in British mercantilism. China knows that it already
00:02:28is the central provider and refiner of many raw materials that the West needs. And that if indeed,
00:02:40it says, we're not going to be bullied, which is what its foreign minister has said,
00:02:46we're not going to negotiate when somebody says, we're going to hurt you if you don't want what we
00:02:52say, we're going to raise tariffs and prevent you from trade. China's gone rope-a-dope. It says,
00:02:59okay, we're on with that. You want to balance the trade more with us? Well, we're stopping our exports
00:03:09to you of critical materials. We're stopped. We have a whole list of products that we're not going to
00:03:16send to you. These are the products that your industry needs. Without importing from China,
00:03:25American industry, after a few months of depleting its reserves of parts, pharmaceuticals, various
00:03:35chemicals, raw materials, the American economy will have to stop producing. And China has said, well,
00:03:44we're now going to need licenses to get the critical materials that we can produce. And China has the
00:03:53ability to stop, to just interrupt America's production relations and assembly lines and just stop things.
00:04:05So it says fine. But I talk often with Chinese policymakers and their view is not that they will
00:04:16lose from the United States, but they think the United States is committing economic suicide. And mostly
00:04:23they think that America is going to end up the loser in this terror war because it doesn't have an
00:04:32industrial policy. Simply imposing tariffs isn't industrial policy. It merely makes it more expensive for
00:04:41companies to import from their affiliates, automobile parts in Canada and Mexico, as we've discussed in
00:04:49that program, but also telephones and iPhones made by Amazon that are made there, shoes,
00:04:58shoes, Vietnam that are imported by the big shoe company, screws, all sorts of things. And China sees above all that,
00:05:14you know, why is America not recognizing why China has been so successful in developing what Americans call
00:05:23unbalanced. And that is because China has kept public infrastructure in the public domain. It hasn't let it be
00:05:33privatized. And the most important public utility that it's kept, that neither America nor other Western countries
00:05:43have kept in the public domain is money. China doesn't have a domestic financial class that makes money by speculating and
00:05:51buying out other companies, buying out industry and de-industrializing or deciding, let's find a cheaper
00:06:01way of doing this to lower the wage costs and make more profits. The whole aim of China is what used to be the
00:06:10aim of the United States, Germany and other countries. You raise wages in order to increase productivity and you
00:06:19provide basic infrastructure to provide basic needs, electricity, communications, you know, railroads,
00:06:29at cost or at a subsidized rate so that the industrial companies don't have to pay their labor high enough wages to
00:06:39afford this services that are monopolized in the United States. So China has made finance part of the
00:06:50industrial growth pattern. And Trump and the United States is not. And Trump doesn't realize why China is
00:07:00developing, but America isn't. He simply says, they're developing and we're not. They're ahead of us and
00:07:07that makes them the rival. We have to stop them. He doesn't say, why don't we're doing what China's doing?
00:07:14Why don't we follow their model that's made them so successful? And the irony is that this model that has made China so
00:07:23successful is exactly the same model that the United States followed in the 19th century to develop its industrial takeoff.
00:07:32It's a model that Germany followed in the 19th century to takeoff. There's a certain logic of how do you industrialize?
00:07:41And you industrialize with a mixed economy and you take the banking system and you use it to finance
00:07:50industrial development, not to create monopolies and create trusts and essentially try to make money at
00:07:59the expense of industry and the rest of the economy. There's no recognition of an industrial policy
00:08:06to back up industrial tariffs. So the result is that Trump thinks that he'll win the war with China and the
00:08:14Chinese say, well, we're looking at who's trading what and who needs what. If he wants to do that, let's
00:08:21let him go right ahead and do what he's doing and we'll see where the American economy stands in three
00:08:30months. Richard? Well, you know, just to piggyback off what Michael said,
00:08:38it's embarrassing. I listened to that clip of our treasury secretary and it's embarrassing what comes
00:08:46out of that man's mouth. I mean, I'm beyond words almost indeed, but let me try. Why is he calling what
00:08:56the Chinese do somehow self-evident? They're technically smart people, he said that, are aware that they
00:09:06shouldn't be doing this, what they're doing. Let me remind everyone, 70 years ago, China was among the
00:09:14poorest countries on this planet. It was an exemplar of the depth of poverty. It was the place that
00:09:25Pearl Buck described in her book, The Good Earth, as almost beyond human suffering, the level of difficulty
00:09:34for their people. And over the last 75 years, and particularly over the last 30 or 35 years, they have
00:09:42become one of the economic powerhouses of the modern world. Why in the world would you want to call that not
00:09:53what it is, what Michael says, success? Of course it's success. They've become the manufacturing center of the
00:10:02world in that period of time. I mean, it blows my mind. I recently saw a map of bullet trains in China,
00:10:14the complex network of their super-fast chains. The only thing in the United States that comes close
00:10:24is the Acela, the train line that runs from Boston to Washington, which is only slightly faster than the
00:10:33convention. We basically have no bullet trains, and they've connected every place in China with bullet
00:10:39trains. By the way, Michael reminds us, what was the big breakthrough of the 19th century? The trains, which
00:10:47unified the country, which opened up the Midwest to the rest of the world, so it could become the food producer,
00:10:55the grain producer, transforming everybody else. The Chinese are the success story of our time. You know, earlier
00:11:06government administrations in the United States wanted to make the Chinese change their regime, change their system.
00:11:17We justified bringing them into the World Trade Organization because that was going to make them like
00:11:24us. But there's no reason for them to be like us. They don't want to have slow economic growth. In 2024,
00:11:36according to the IMF, U.S. economic growth about 2.8 percent, Chinese economic growth about 5 percent.
00:11:45And now I know there'll be the conventional nonsense about how you can't trust Chinese numbers. I have
00:11:52heard that story uninterrupted for 30 years. Now it's beginning to fade away, since obviously it was
00:12:01nonsense all along, and it's nonsense now. And by the way, those are IMF numbers, not numbers from China.
00:12:09So the crucial reality here is that it's the American government that's in trouble. It's the American empire that's declining,
00:12:22and it's the American capitalist system that has dug itself into a hole. If for the last 40, 50 years, you have run a trade
00:12:33imbalance, which we basically have since the 1970s. And you've paid for it by a massive export of dollars
00:12:42that come back as debt. You're deepening a level of debt that will one day lead people to hesitate
00:12:52to absorb more debt. That's what happened on Monday of this week. That's why the bond market freaked them
00:12:59all out. Look, it destroyed a British government two or three prime ministers ago when she, the woman,
00:13:08Liz Truss, when she tried to push beyond the level of debt that people will give London,
00:13:16crippling that economy still further. They're in trouble here. And the imposition of tariffs, I mean,
00:13:24let me take another way of getting it. The president of the United States declared economic war on the
00:13:33whole rest of the world by a tariff on every country, with a handful of exceptions. Nobody has ever done
00:13:42that before. What is this? This is not a sign of a calm, collected, this is desperation economics.
00:13:51And if you doubted it, the on again, off again, just shows you how desperate they are. Two days of
00:13:59something. Monday, it has to be reversed, because the bond market goes crazy. And then Wednesday,
00:14:05it has to be reversed, because our allies are going to hurt us back. The Chinese showing it, even the
00:14:11Europeans, the Europeans, courage less as they so often nowadays are, are thinking maybe to find some
00:14:23resort. But this is not the United States of the 20th century. This is the United States going down
00:14:31and flailing around with these gestural policies on again, off again. Wow. This is, and the whole world,
00:14:42one last point, the whole world has been given a gift. My old teacher, Georg Wilhelm Friedrich Hegel,
00:14:53would have told me to expect this. Mr. Trump attacks the world for cheating, and hopes it will get him
00:15:04by doing what he's doing. What he has given is a gift to every other leader of every other country,
00:15:13who will now be able to point to the economic problems of his or her country, and blame Mr. Trump.
00:15:23He has taught them. And there'll be a grain of truth to it, because the tariffs make a difference,
00:15:29hurt people in his country, and they're going to yell in every country. And their leaders are going to
00:15:35have to blame someone, and Mr. Trump has shown them how to do that. Blame him. And there'll be more
00:15:42truth to their doing that than there was to Mr. Trump, who initiated it. As Mr. Hegel would have
00:15:49said, his plan was to burden the rest of the world and make them pay for the problems he has.
00:15:58His result? They will blame him. The opposite is buried right in what he did. And he doesn't seem to
00:16:06understand any of that. And he keeps doing it. 90 days were to wait. In other words, the uncertainty
00:16:15of the last few weeks will now be for the next three months. What? May, June, July, nobody knows how to
00:16:25make an investment, where to make it. You won't know what the supply chains are, because you don't know
00:16:31where the tariffs will or will not be, or for how long they'll be, or for what height. How do you make
00:16:37a decision? You don't. You wait. And as Mr. Keynes told us, when the employer class waits, we all discover
00:16:46how capitalism makes the mass of us hostage to what the few of us do with their profits.
00:16:53If they don't roll them over and spend them, we're screwed. And suddenly, what are we looking
00:17:00at? Stagnation from the holding back, from the uncertainty, coupled with inflation from the
00:17:09tariffs, and we get that stagflation horror that comes back to haunt us. This is chaotic economic
00:17:18policy born of desperation, whose likely outcome is going to be a lot of trouble.
00:17:28I don't think it's born of desperation at all. Trump is not desperate. He is quite confident that
00:17:35he has a solution to the problem. And I think if we take a step back, we realize that this whole
00:17:44tariff issue isn't really about tariffs at all. Trump and the Republicans have one political aim
00:17:54above all others, and that's behind what he's doing. They want to cut taxes, above all for the
00:18:01progressive taxation that falls mainly on the highest incomes and on personal wealth. And it seems that
00:18:09at some point, Trump must have asked some economists whether there was any alternative way for governments
00:18:16to finance themselves. He said, how do we cut taxes? What can we do? And somebody must have told them that
00:18:22actually, from the time of American independence in 1776, all the way through the eve of World War I,
00:18:31by far the dominant form of government revenue was customs revenue from tariffs. So you can see that a
00:18:40light bulb went off in Trump's brain. Tariffs don't fall on his own rentier class of real estate,
00:18:47financial, and monopoly billionaires. Tariffs fall primarily on labor, also on industry for imports of
00:18:56necessary raw materials and parts. But the whole idea of introducing tariffs is, he said, the more tariff
00:19:06revenues we can raise, the more income taxes we can cut. And right now, before Congress, the Republicans
00:19:16and Trump are saying it's time to renew all of the vast tax cuts that Trump enacted in his first administration,
00:19:28that is what pushed the US budget into deficit to begin with. Trump claims that tariffs can enable the
00:19:42United States to keep his tax cuts and replace the taxes. And he wants to cut taxes even more
00:19:52on the wealthiest classes, as if somehow this is going to create an incentive for the wealthiest classes,
00:20:02the financial classes, the monopolists, the real estate people, to rebuild American industry.
00:20:10It's as if giving more wealth to the financial managers, they're the ones who've deindustrialized
00:20:16the American economy. Giving them more money will simply repeat the industrial takeoff that was peaking
00:20:24in the 1890s under the president that Trump idealized, William McKinley. Well, what his narrative leaves out of
00:20:35account is that tariffs were merely the precondition for nurturing industry by the government in a mixed
00:20:43public-private economy, just like China has a mixed public-private economy. The government shaped markets
00:20:53in ways that were designed to minimize the cost of living and doing business. And that public nurturing is
00:21:00what gave the United States its competitive international advantage in industry. But given
00:21:09Trump's guiding economic aim to untax himself and his most influential political constituency,
00:21:18what appeals to him is simply the fact that government didn't have an income tax. It was able to finance
00:21:25itself through tariffs. Why can't it do it today? And it's as if all that enabled America's remarkable
00:21:36industrial takeoff to occur was cutting tariffs. And also, what appeals to Trump is the super affluence of
00:21:46a robber baron class in whose rank he can imagine he thinks of himself as joining the ranks of the robber
00:21:53barons. And this self-indulgent class consciousness has a blind spot regarding how its own drives and
00:22:02predatory income and wealth destroy the economy around it. It's as if the robber barons made money
00:22:10by organizing and driving industry. Trump is unaware that the Gilded Age of the 1890s did not emerge as
00:22:21part of America's industrial strategy for success or that the great fortunes were made possible by the
00:22:30failure to regulate monopolies and the failure to tax rentier income. If you read a book, Gustavus
00:22:39Myers, History of the Great American Fortunes, told the story of how railroad and real estate monopolists
00:22:46were carved out at the expense of the economy at large. And the Democrats and Republicans alike
00:22:56in the 1990s said, we've got to prevent this robber baron class. So they passed the Sherman antitrust law
00:23:06in 1890. Then came Teddy Roosevelt, the trust buster, stopping them. And then came the finally an
00:23:15introduction of the American income tax in 1913. And what was so unique about this tax is that it only
00:23:24fell on 2% of the Americans. Only the very rich had to file a tax return. And who were the very rich?
00:23:34They were the monopolists. They were the real estate magnets. And most of all, they were the bankers
00:23:42and the financiers who were trying to turn the economy into a trust economy and who were trying
00:23:50to fight against government regulation, against government policy to shape an industrial economy.
00:23:58And so what Trump admires in the 1890s and the late 19th century is everything that ended this whole
00:24:11century-long development of an industrial philosophy and policy to enrich America. So he's admiring
00:24:19the dismantling of the dynamic of monopolization, of financialization, of anti-government legislation
00:24:31that is the opposite of what made America rich. That's what makes all of this so ironic.
00:24:36Richard, just Richard, here is what Donald Trump said about the why has he decided to
00:24:47to pause tariffs on some countries. And we know that China is not one of them.
00:24:52It's not a question of that. You have to have flexibility. I could say here's a wall and I'm
00:25:09going to go through that wall. I'm going to go through it no matter what. Keep going and you can't
00:25:14go through the wall. Sometimes you have to be able to go under the wall, around the wall or over the
00:25:18wall. These guys know that better than anybody, right? You got to go around them sometimes. You're
00:25:22not going to go through them. So I consider, you know, I think in financial markets because they
00:25:28change. Look how much it changed today. We went from, you know, pretty moderate today, but over the
00:25:35last few days, it looked pretty glum to, I guess they say it was the biggest day in financial history.
00:25:42That's a pretty big change. And I think the word would be flexible. You have to be flexible,
00:25:48like he said. Richard, how do you characterize the U.S. donor class as Michael was talking about
00:25:57and its influence on policy? Well, they seem to me to live in a fantasy world, that they can do
00:26:06things that clearly they can't do anymore. For me, the overwhelmingly interesting thing is,
00:26:14as I keep saying, that they live in a world in which the United States' economic, political,
00:26:21ideological, cultural, and military position are weakening. That's why the military strategists keep
00:26:29saying time is on China's side, not ours in this conflict. But he doesn't want to face any of that.
00:26:37He's going to do this, that, and the other thing. No, he isn't. It isn't going to work for him.
00:26:44A declining empire does not have the options that a rising empire does. The last time we tried with
00:26:52the tariffs was in a time of the rising U.S. empire. That's gone. That's over. We didn't have a major
00:26:59competitor on the scale that the Chinese are today back then. And by the way, Mr. McKinley got the
00:27:07tariff through when he was a representative. By the time he became a president, he turned against the
00:27:12policy of tariffs because he got into too much difficulty from the very class that Michael is
00:27:20talking about. Michael is right. There's no question that deep below all of the rest of this BS is a
00:27:28desire to avoid what for him is a catastrophe, which is the expiration of the tax cut that was passed in
00:27:382017. If that is allowed to expire and that legislation has a self-ending, I believe on the 31st of December
00:27:47of this year. So if he doesn't get that problem solved, his donor class will get an enormous tax
00:27:55increase comparable to the one they decrease that they got eight years ago. So he has to deal with
00:28:03that. And Michael is also right. He's promised more tax cuts on top of making sure that that other tax
00:28:11tax cut doesn't expire. And given that we are already projected to have almost a two trillion dollar
00:28:18deficit now, he's looking at unbelievable risks of a bond market breakdown because people won't lend to
00:28:29the United States anymore because it's too dangerous to do. It is what happened to Liz Truss in England
00:28:36not so long ago. She tried to come up with a budget that looked like, oh, we will borrow more. No,
00:28:43said the bond market, we're not going to lend you any more. And her proposal disappeared and she
00:28:49disappeared. She's gone out of political politics, out of politics in Britain. I don't make predictions,
00:28:58but Mr. Trump, who has had in the long historical sweep of things, a meteoric rise to the top,
00:29:07could very well now be on the cusp of an equally meteoric rise down into oblivion because this doesn't
00:29:18work. There is an element here that people should understand. To the degree that people and businesses
00:29:27around the world lower their prices lower their prices in order to hold on to the American market,
00:29:35despite the tariffs, then Mr. Trump will have achieved at least a part of what he's after. He will have
00:29:45made the rest of the world pay a tribute to the United States because that's what it is. You want to do
00:29:53business here. You pay us. And the way you pay us is you lower the price of your exports here.
00:30:01That way the American people can keep buying them. The price will not go up and the revenues from the
00:30:08tariffs will be paid to the American government and it will be at the expense of the foreigners.
00:30:16They don't want it. They will be looking to every way to evade it. They will be likely to be successful.
00:30:24So the end result is that Mr. Trump will get a small portion of the fantasy he thinks is waiting there
00:30:33for him. That's for me what's going on. And again, they only get it if the rest of the world
00:30:42pays tribute. And that is going to make every other leader receive the rage and the bitterness of
00:30:51all those other countries who are being required to pay that tribute. And that's a wellspring of
00:30:59hostility that makes the United States, not China, the world's rogue nation in everybody's mind.
00:31:08U.S. allies and enemies alike. This is an extraordinarily risky ploy to undertake.
00:31:20Yep. Michael, we had some analysis in the mainstream media that it says that if iPhone,
00:31:29for example, iPhone is produced in the United States, it would triple the price of iPhone to
00:31:353,500. And how might Trump's tariff policies affect American labor and consumers?
00:31:45Well, he could do that by rolling back history for 100 years or so. There's a reason that the United
00:31:55States is so expensive. And we've discussed that in the last few shows, that the economy's been
00:32:03financialized. That if a product is made in the United States, you have to employ American labor.
00:32:11And you have to pay it a living wage. And as we've discussed before, American labor has to pay
00:32:18enormous housing costs that are higher than those of any other country. It has to pay rising consumer
00:32:26prices for prices, largely for products that have been monopolized, as the American economy has been.
00:32:33There's been a tax shift off the financial sector, off real estate, and off monopolies, off rentier income,
00:32:41on to labor. All of that has to be done here. The whole American neoliberal plan since the 1980s,
00:32:52of Thatcherism, Reaganomics, and neoliberalism has been to make money for the wealthiest 10% and above
00:33:03all the 1% at the expense of the American economy. So you've seen, as we've said before, since 2008,
00:33:12the 50% of Americans have a teeny share of wealth that has not increased at all.
00:33:20All of the increase in wealth since 2008, really almost since the 1980s, has accrued to the 10%. This
00:33:31wealth has added to the cost of production for the 90% for the employers. And so if you look at
00:33:40the stock market, look at how wonderful the stock market has been doing. See, American economy is
00:33:46successful. Well, the stock market, because it's owned basically by the 10%, that's not the economy.
00:33:57The real economy is the employment of labor to produce goods and services, and that's become
00:34:06offshored and essentially financialized in a way that's increased the cost of doing business.
00:34:14So what Trump would have to do would be to have an industrial plan and say,
00:34:20my economic class, my donor class has done it all wrong for the last 50 years. We've got to get rid of
00:34:27the donor class. We've got to restore progressive taxation and tax away all of their predatory income.
00:34:35We've got to tax away the real estate rent by a land tax. We've got to tax away monopoly rent by
00:34:45restoring monopolies as public utilities in the public domain so that they can provide their services
00:34:54at a cost or a subsidized rate instead of at the monopoly rates. We've got to have public health
00:35:01insurance so that people don't have to spend 18% of GDP on health insurance costs. And if employers
00:35:10don't have to contribute to their employee health insurance plan, they can lower the cost of production
00:35:16so that it's not going to cost so much to produce. The government can say, we can go back to the original
00:35:24democratic plan of public education. Everyone has a right to a college education at public expense,
00:35:32paid for by the rentier class, instead of having student debt that is so high that employers have,
00:35:40when they hire people, have to pay the employees enough to pay all the debt that they've taken on
00:35:46in order to get the job in the first place. All of these factors are what has made America a failed
00:35:58economy and a failed state. And in contrast to China, which has done exactly what the United States
00:36:07and other countries did to industrialize. There's a logic to industrialize. You want to increase labor
00:36:13productivity by increasing the educational status of labor, increasing its housing, lowering the cost
00:36:22that it has to pay for basic utilities. And that's how China has made a low-cost economy. That's why Asian
00:36:32labor doesn't have to pay the wages that American employers have to pay, because they don't have to
00:36:40pay the medical costs, the housing costs, the monopoly prices that America has to pay. And
00:36:51the likelihood is that America's trade deficit is going to get, over time, much worse and will achieve
00:37:01exactly the opposite of what Trump says is going to do. Trump says that as a result of these tariffs,
00:37:12other countries are going to want to move to the United States to produce here to cut the costs. Well,
00:37:18there's no way that they can do that because he's sort of Democles over the heads of foreign investors.
00:37:29If they are successful, somehow, America's going to say, well, we're going to do to you what we did to
00:37:38China with TikTok. You've built a nice affiliate here. And now, you've got to sell it to American
00:37:46investors so that we can buy it. We're forcing you to sell on national security grounds. Any
00:37:53dependency on a foreign investment, and that would include Volkswagen, BMW, Germany, if Trump decides
00:38:00that he doesn't like what Europe is doing. Everything is national security, meaning whatever
00:38:08the president wants to impose as a takeover to reward his campaign contributors by turning trade policy
00:38:21into a weaponized tool of foreign policy. Now, just imagine, I think we've said this before, Volkswagen and
00:38:30BMW have relocated the United States. Trump is now essentially forcing them to disinvest because,
00:38:43he said, well, we're going to impose high tariffs on the engines you make. Yes, you may produce the
00:38:49cars in the United States by adding to the chassis and putting on the tires and assembling them, but the
00:38:56largest cost of an automobile in the United States is the engine. And we're going to keep the taxes on
00:39:03the engines that you're importing, just like we do for Canada and Mexico. What Trump is doing is saying,
00:39:13we're going to prevent you from making the lower priced key to automobiles, the engines in Europe. And
00:39:24on top of that, you're going to have to pay all of the high wage economy that we've created in America.
00:39:34But what's so ironic is the slogan for America's industrial takeoff that the protectionists used was
00:39:42the economy of high wages. And their idea was to make wages
00:39:48high in order to increase the productivity. Well, the problem is that the industrial capitalists
00:39:59didn't want to pay high wages, say there was a pretty vicious class war in the 1980s, 1990s, and
00:40:07riots. That's what led to the populist party and ultimately to socialism. And so the government had a
00:40:16solution. It said, all right, you industrialists will not have to pay labor high wages. Labor is going to
00:40:25get high wages because we are going to have public investment to provide the services that labor needs
00:40:34to live. As I said, education, public health care, social spending, social structure,
00:40:42public subsidized transportation, public subsidized communication, all of these things so that labor's
00:40:51living standards can rise without the industrialists having to actually pay more. Well, that was a mixed
00:40:59public private economy that with the government taking over more and more of the expenses and the
00:41:08provision of services that labor needed to increase its living standards, industrialists were able to
00:41:17avoid having to pay these costs themselves. Well, look at what privatization has done. By privatizing
00:41:26education, healthcare, communications, transportation, public utilities, they've been turned into monopolies,
00:41:34and their owners now charge monopoly rents on top of profits. And the financial sector has financed
00:41:45investment takeovers. They borrowed money to take firms private or borrow money just to buy control of firms,
00:41:54adding the debt service and interest charges that companies have to pay to provide hitherto public
00:42:02services. You have interest charges, you have medical insurance charges, you have monopoly profits,
00:42:09monopoly rents over and above profits. That's what's made the American economy so high priced. And without
00:42:19recognizing that what we're living in today is not the industrial capitalism of the 19th century,
00:42:27but the finance capitalism that's been put in place over the last 50 years, that makes its money by carving
00:42:36up and de-industrializing the economy, not by industrializing it. It's a whole different kind of
00:42:42capitalism that nobody in the 19th century imagined could actually develop to untrack
00:42:51the progressive line that industrial capitalism seemed to be taking prior to World War I.
00:42:58Richard, it seems that Donald Trump and his Treasury Secretary are totally confused on the way that
00:43:07China has responded to the United States. How do you see the response coming out of China? We know that
00:43:16it's totally different from what it was in Donald Trump's first term. And what is that about the confidence
00:43:24that China possess right now? Is that about the huge changes, geopolitical changes that has happened
00:43:31since then? Or how do you see that? Yes, I think that the Chinese have become much more confident
00:43:40because they ought to. It's the logical inference from what they have experienced. At least as far back
00:43:48as Obama, we know from the statements made by Obama, those around him, and everybody in power since,
00:43:58that we need to quote unquote pivot to Asia, that the American adversary now is China. And everything has
00:44:09been done imaginable. Whether it's stationing the the seventh fleet in the South China Sea,
00:44:16or rediscovering this dead horse called Taipei, you know, Taiwan, and that issue, or the series of
00:44:27sanctions, the series of tariffs by Trump, then worsened by Biden. I want to remind people,
00:44:34Biden not only did not undo what Trump did, he raised it. In the case of the electric cars that
00:44:42I think I've mentioned before on our program, the BYD company's electric cars have 100% tariff. They've had
00:44:50it already from Mr. Biden. They didn't wait for this crazy last few days. 100% was already a democratic
00:44:59contribution. And what do the last 10 or 15 years, because that's what it's been. 10 or 15 years
00:45:08of effort to slow, to stop Chinese growth. It has failed. It hasn't done that. China is a bigger
00:45:16and more powerful force now than it was 10 years ago, or 15 years ago, or five years ago.
00:45:24The alliance it has constructed, the BRICS, is a bigger alliance, more powerful than before.
00:45:33You know, the BRICS produce now about 35% of total GDP in the world, whereas the G7,
00:45:42the United States and its major allies, produce about 27-28%. And that gap is growing each year.
00:45:50The United States is not the dominant economic power anymore. That is the most, for me, the most
00:45:59important difference undermining everything. So yeah, the Chinese are very confident now. And you can see
00:46:07it. Their response to these tariffs is much more confident than the ones that they suffered,
00:46:14you know, in the first term of Mr. Trump, when he did that sort of thing. It doesn't seem to work.
00:46:21They're able to maintain much faster rate of growth. I mean, the United States now has to even,
00:46:29and hence, you know, I'll go back and bother Michael again by saying desperation. But you know,
00:46:35when you turn on your allies in Europe and Canada and Mexico, that's another sign of desperation.
00:46:42You know, here's a little statistic to remember. The United States has 4.5% of the world's people.
00:46:52The BRICS alliance around China has 60% of the world's people. I mean, you need unspeakable
00:47:03advance odds industrially and even militarily to offset that. That's not going to happen.
00:47:13The United States is losing each day that this continues. And around the world, the question
00:47:22really is, given that what the United States still has is perhaps a military preponderance.
00:47:32Although I must say, the Ukraine war to date, which a couple of weeks ago, the New York Times revealed
00:47:39has been a US versus Russia war all along, in terms of the level extent of American military
00:47:48control of operations over there. Even that may be atrophying. We are not in a strong position.
00:47:57And that's what I see here. I see economic policy, you know, crazy stuff, Hail Mary passes,
00:48:06long shots that are taking enormous risks with very dubious chances of succeeding.
00:48:15Okay, let's go with Richard's point of desperation and what they have to be desperate about. The problem,
00:48:24you can say, how can the United States recover its former international dominance if it's no longer
00:48:32an industrial power? If it's industrially dependent, it's as if it's a weaponized trade
00:48:40against itself. How can it recover dominance when it's become an international debtor, not an international
00:48:48creditor? And most of all, there's a moral issue here. The United States in 1945 was able to pretend that its
00:48:58self interest in creating a new system of world trade, of world finance through the US dominated
00:49:06International Monetary Fund and the World Bank, they could say that this is creating a level playing
00:49:13field, the word they love to use, so that all nations are treated as equal. That's been the ideal of
00:49:22international law ever since 1648. And other countries thought that the United States was wealthy enough
00:49:32that it could actually afford to believe that in spreading democracy, meaning you have regime change to
00:49:40assassinate or remove any government that doesn't support the United States, democracy like you have in
00:49:48Ukraine under Zelensky, that somehow this was going to let other countries trust the United States.
00:49:59Trump has destroyed the trust in a way that is irreversible. What he said is that the United
00:50:07States has to be the gainer in every trade agreement or economic agreement or loan agreement or military
00:50:18agreement that it makes. Everything is a win-lose situation. Well, right after the initial market plunge,
00:50:30after he announced the enormous increase in tariff rates, he said, well, all of this is open for
00:50:36negotiation. And that, of course, is what he just said the other day. He said, well, all right, we'll
00:50:41give you three months, so I'm going to suspend the tariffs and I've told you how much I can hurt you.
00:50:47That's what America has to offer the world. As we've said before, America has the ability to maintain
00:50:54the power it had in 1945 by its ability to hurt other countries, by weaponizing foreign trade,
00:51:02by weaponizing international finance, grabbing Russia's $300 billion of saving, grabbing Venezuela's
00:51:11gold, grabbing Iran's foreign reserves when the Shah was overthrown. Trump says, we can hurt you
00:51:20if you don't do what we want. Well, if other countries say, any agreement we make with the United
00:51:28States, we're going to be hurt and we're going to be the losers. Can't we try to make a different
00:51:37arrangement? There must be an alternative. Well, they've been trying for an alternative ever since the
00:51:44Bandung Conference in Indonesia in the 1950s under Asikarno. But as we've said before, they couldn't achieve
00:51:53an alternative because they didn't have a critical mass. Now, thanks largely to China's growth and also
00:52:00the post-Soviet growth of Russia, they have an alternative. This is why the United States says
00:52:07China is our number one enemy, that the size and magnitude of China and its alternative economic
00:52:16philosophy to that of American and European neoliberalism is what makes it a threat that for
00:52:25the first time now, other countries have an alternative. They can join together with mutual
00:52:32arrangements. And that's just what they're doing. You're already having Asian countries, South Korea,
00:52:39Japan, other countries trying to say, isn't there a way that we can trade with each other?
00:52:45And do without the American market? Well, obviously, there's going to be pain in a three-month or
00:52:53even one-year changeover from trade with the United States to trade with each other.
00:52:59But now they see that mutual trade with each other, with the BRICS, with the Global Majority,
00:53:06with the Global South, that are consolidating their trade. They don't need the United States
00:53:12because what Trump has done in trying to isolate other countries, by trying to divide and conquer
00:53:21every single country by making one deal with you, one deal with you, with having no unified tariff
00:53:28policy, but just a, what can we do to hurt each country in order? Other countries can say,
00:53:34we can make the kind of world that seemed to be promised back in 1945, a world where countries are
00:53:44equal, where they follow the same economic rules, and where we don't have to go down the track that is
00:53:54untracked the American and European economies by financialization, monopolization, untaxing the
00:54:03wealthy and shifting the tax burden onto labor, and making America and Europe an uncompetitive,
00:54:11high-cost economy where only the 10% and behind them the 1% are really able to suck up all of the
00:54:20wealth into their own hands. We can follow an economy that actually enriches our overall population,
00:54:27and that will make our whole economy, including the wealthiest classes, rich. There will be, of course,
00:54:34there will be some millionaires and probably many millionaires, but these millionaires are going to
00:54:40be subject to social rules and structuring and tax policies that oblige them to use their wealth
00:54:51as part of a system of increasing the prosperity of the overall country, not using their wealth to take
00:54:58over other corporations to raid them and become robber barons, not to try to take over government
00:55:07and privatize it and turn public services into opportunities for monopoly, but the kind of growth
00:55:14that really the whole 19th century of economists, from Adam Smith to John Stuart Mill to the last great
00:55:21classical economists Marx, all developed and explained. That's their alternative, and Trump has driven them
00:55:32together just like he's driven Russia and China together. His tariff policy and his threat to treat
00:55:41every other country as an economic opponent to be exploited so that he can end up the winner, his doing this,
00:55:50has driven them together to finally seek an alternative. He's a revolutionist.
00:55:59Two little amendments and then an inference from it. One of the great beneficiaries of every one of these
00:56:08tariffed countries around the world, as they try to evade, avoid, minimize the impact of their tariff on them,
00:56:18and they look for new trading partners in just the way Michael said. One of the first places they're going to go
00:56:26is China, because that's a place you can sell. That's a place that produces lots of things you need to buy.
00:56:34That's the biggest alternative to the United States there is right now. So if you cut off your connection,
00:56:41or even if you just reduce your connection to the United States, China will benefit,
00:56:47because they're going to be approached to do the replacement activity. And if they have half a brain,
00:56:54and they do, they will make good deals. They will take advantage. They'll give you a good
00:57:00deal this year and maybe have to pay a bit more next year, but help you make the transition now. That's
00:57:06goodwill. That's political. I mean, just look at it. And if you wanted to wonder
00:57:12whether the replacement for the U.S. dollar, how it will be affected, it'll of course be speeded up.
00:57:19They've only made limited progress on that front. They talk a lot. They haven't done all that much.
00:57:25But this will be a spur, since more and more payments will be made without dollars, because
00:57:32everybody's cutting back on dealing with the United States. That means the demand for the use of
00:57:39dollars, the need to hold dollars in reserves, in private accounts, in state accounts, in central
00:57:46banks. Come on, it's going to just speed up whatever steps need to be taken for alternative
00:57:53currencies to become normal in the world, other than the U.S. That's going to happen.
00:58:01And then finally, you know, the whole world is going to figure out. The United States currently has,
00:58:08last time I looked, 800 billionaires, running from Mr. Musk with 300 or 400 billion on down.
00:58:19Okay, 800 people. If you needed to sharply and dramatically reduce the deficit of the United
00:58:30States, simply taxing them such that everyone is reduced to between one and two billion dollars.
00:58:42It means those 800 people will continue to be the richest people in the United States,
00:58:50and likely the world. But the government will get, here we go, trillions of dollars
00:59:00to use to pay, to cover its bet, to not have a deficit for the first time in many years,
00:59:08to have taken dramatic steps to make the United States more credit worthy. And even if they took
00:59:17the money that they got that way, used half of it to retire the deficit, reduce the deficit, and the
00:59:24other half to take all kinds of creative steps to enhance U.S. production, technology, productivity,
00:59:34technical education, all the things currently being cut. I mean, history will look back and say,
00:59:42you know, you actually could have changed the trajectory of your own decline, but you chose
00:59:51not to do it. You put into office leader after leader so beholden to the 800 billionaires that whatever you
01:00:02did had to leave them untouched by all of this. Giving yourself that constraint then hobbled you as to what
01:00:12alternative strategies you might have used. So you're your own worst enemy because you can't do in all
01:00:22likelihood with your steps what you could have done with those 800 who couldn't have done much about it.
01:00:30That's the irony of all of this. It's its own self-imposed constraints that prevent Mr. Trump,
01:00:42or for that matter the Democrats, from even thinking about certain options they've been so excluded from the
01:00:50beginning. That's when you see self-destruction. And the one common theme that most historians have when
01:01:00they look back on the decline of other empires is how easy it is to see what they could have done
01:01:10to prevent or slow that decline. And we all scratch our heads, why didn't they? And the answer is always
01:01:19their own political contradictions blocked them from either seeing or doing what they could have,
01:01:28in fact, done. And we're right there. And that is more evidence of a declining empire problem.
01:01:37Well, Richard, what you've described is that America is facing a similar problem to what Putin
01:01:42faced with the domestic kleptocrats. How is he going to prevent the kleptocrats from taking over and
01:01:49doing what kleptocrats do? Well, he's at least done something to draw them in line.
01:01:56China faced a similar problem. When you had Jack Ma, for instance, become so rich with his innovation,
01:02:04China sort of cut him down to sides. But if the Americans would do that, it wouldn't be America.
01:02:14And you mentioned that Trump has ended up his own worst enemy. Well, there is a historical
01:02:21precedence for this in empires that you've just mentioned. And around the fifth century BC,
01:02:29the richest man in antiquity, Croesus, decided to increase his fortunes by attacking Persia. So he went to the
01:02:41temple at Delphi and said, I want to get even richer and conquer Persia and take over its gold to add to
01:02:50mine. And the Delphi oracle told him, you will destroy a great empire. And Croesus attacked Persia,
01:03:00was defeated, and it turned out the empire that he destroyed was his own. So that sounds pretty much
01:03:10what you've described for the United States. That's what happens to over arrogant empires. That's what
01:03:19happens to hubris. And the wealthiest class, the donor class, the financial rentier class in the
01:03:26American economy combines hubris with the blind spot. They don't see what you and I recommend,
01:03:34that they would have to change who they are, because they say, well, that's who we are. We're
01:03:41not going to change who we are, because we are who we are, and we're in control. That is what has made
01:03:47the United States in danger of falling or already has fallen into a failed economy.
01:03:54Well, you know, there's another way to put the same thing. And if you think about the remarkable
01:04:01fact, if I have this correctly, that there was a million Americans went into the streets this last
01:04:09weekend in many, many cities and towns across the United States to protest Trump's economic policies.
01:04:19I know here in New York City, where I live, there were very sizable demonstrations here.
01:04:26Okay, that leads to the joke that's circulating. But maybe that joke has a lot of serious implications.
01:04:33Here's the joke. The best recruiter for the American left today is Donald Trump. Well,
01:04:42let's expand it. Maybe the best recruiter for the left as an alternative direction for the whole world
01:04:52right now is Mr. Trump. He certainly is a world actor. He has gone from being the center of attention
01:05:00in the United States to making himself the center of attention everywhere. When I read the European
01:05:07newspapers the last few days, he's in the front page every day. He's now the center of attention
01:05:14everywhere, which many people who comment on his personality, I don't, but who do say is something that's
01:05:22very satisfying for him. May it be. I'm not interested. But I am interested in noticing that he is, whatever
01:05:31his intention, mobilizing the world as a critical mass and mobilizing the United States in a rather similar
01:05:41way. And that's more evidence that this may be a very, very transformative moment in American history.
01:05:53And world history. And world history.
01:05:57Thank you so much, Richard and Michael. Great pleasure, as always.
01:06:02Thank you. Take care.