Transcript
Andrew Santino (0:00)
Hello, everybody. The stock market is nosediving faster than Conor McGregor at a Colombian cook. How people are concerned, anxious, terrified. So we've asked someone to come on the podcast to calm your nerves, put you at ease. No, not her. We've asked our richest friend, Chamath Pineapple, Porta Potiplatypus, the former owner of the warriors, one of the earliest hires at Facebook, a legit billionaire and the host of the biggest business podcast in the world. All in. If you would take some time away from surfing on the top of a train to explain why the stock market looks like Saxon Ratliff the morning after a sibling stroke off, we're going to find out the real end game for Trump's tariffs. What happens if they don't work, and why we might already be in a recession. Indulge in this bonus flagrant episode. Why don't we just start at the tariffs in general? What exactly is Trump doing? What is best case scenario? What is worst case scenario? And then what are your personal thoughts?
Chamath Palihapitiya (0:55)
Let's, let's look at your Air Force ones or your dunks that you guys are wearing there, or your converse. Those things are made. Or Jordans, Those things are made outside of the United States, even though the company that makes them is an American company. And what happens is they're made over there and then they're shipped to the United States and then they're sold to you guys somehow. Right? And you would think that that's all fine and good because you're like, well, hold on, I'm, you know, this is an American company. I'm supporting an American company. And it turns out that the details are a little bit more complicated than that. So starting in about the year 2000, what happened was there was this. Everybody thought that the right thing to do was, was to push every country in the world to this form of capitalism. And they looked at countries like China and they were like, how do we make China more capitalist? And you would say, well, why would we do that? And the governing logic at the time was, if they're more capitalist, they'll also become more democratic. If they are more democratic, they are more predictable, the way that we normally think about countries. So let's not repeat a cold war. Let's not repeat maybe some other political regime in the 40s or 50s or 60s. And so what happened was we let China into the wto, the World Trade Organization, and what that allowed corporations to do is basically of an enormous form of arbitrage. So let's say that those Jordans were Made in the United States. And you were paying a worker 25 bucks an hour to work on a line to make that shoe. And then you would send it to Foot Locker and sell it. I'm just being very simple, just to kind of explain this example. But now instead of having to pay sort of any typical form of taxes, Nike, after the year 2000, was able to ask the question, where else could I make this Jordan? And the Chinese raised their hand and they said, hey guys, we have these really great factories, we have extremely good workers, and we can do it for much cheaper than 25 bucks an hour. And so what does Nike do? They send the job over there. Take that one narrow example and apply it across every industry you can imagine, from shoes to iPhones and everything in between. And what has essentially happened over the last 25 years is we have hollowed out an enormous part of the middle class economy in the United States. And we've explained it away by saying, hey, we don't want to do that kind of work. Instead we're going to, like, all of us, like we'll do a podcast or, you know, somebody will be a consultant, like, you'll, you'll just go up the stack, right? They'll, they'll say up the stack. And so over the last 25 years, that's been happening. And all of these other countries have benefited from America's largess. And the reason you can say that is we are the big buyer of record for everything, right? We have the largest economy. The way our economy works is we are all buying shit, all kinds of shit, all manner of it, from that water bottle to that shirt to that hat. 80% of our economy is just consumers buying stuff. And the rest of the world makes an enormous amount of money by feeding that beast. And so you would say, okay, well, what's wrong with that? Now the cost of Jordans is much cheaper. The cost of that, you know, those jeans are cheaper. Life is good. Except it's not. It's more complicated than that, which is then when we turn around and we try to sell our product into those same countries instead of it being allowed to just come in. So that, you know, I'll make an example. Let's say that hat is made in the United States and we want to sell it to somebody in Cambodia or Vietnam. The same way that those dunks enter the United States with no tax. We would expect that that hat can go into Cambodia and Vietnam with no tax. But that turns out to not be the case.