Ep 327 | Lower Tariffs Will Put America First | Guest: Antony Davies

Summary

Summary of "Ep 327 | Lower Tariffs Will Put America First" featuring Antony Davies on Kibbe on Liberty

Release Date: April 9, 2025
Host: Matt Kibbe
Guest: Antony Davies
Co-Guest: James Harrigan

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Introduction

In Episode 327 of Kibbe on Liberty, host Matt Kibbe engages in a compelling discussion with economist James Harrigan and guest Antony Davies. The episode delves into the contentious topic of tariffs, advocating for lower tariffs to genuinely prioritize American economic interests. The conversation navigates through the complexities of free trade, protectionism, historical policies, and the broader implications of tariff strategies on the American workforce and economy.

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Understanding Tariffs and Their Consequences

Antony Davies opens the discussion by highlighting the prevalent support for tariffs among the "America First" crowd, who believe tariffs will rejuvenate American industry and create jobs. However, both Davies and Harrigan, drawing on economic principles, argue that tariffs carry significant unintended downsides.

James Harrigan shares a powerful analogy inspired by economist David Friedman to illustrate the inefficiency of tariffs:

“When you impose tariffs on foreign cars, you protect the autoworkers in Michigan but at the expense of the farmers in Iowa. It’s not Michigan versus Japan or China; it’s Michigan versus Iowa.”
[03:21]

He emphasizes that tariffs merely shift jobs from one sector to another within the country, ultimately reducing overall economic efficiency and productivity.

The Seen and the Unseen

Davies references Frederick Bastiat's concept of "The Seen and the Unseen" to underscore how protective tariffs create visible benefits for certain industries while obscuring the broader economic costs inflicted on others.

“We should make more cars in America, but we don't see the other economies that we're destroying while we do that.”
[07:42]

This perspective highlights the interconnectedness of various sectors and the hidden repercussions of protectionist policies.

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Historical Context and Political Realignment

Davies provides historical insights, drawing parallels between current tariff debates and past protectionist movements. He references former President McKinley, a historical Republican who championed tariffs and subsequently lost his congressional seat due to the backlash from his tariff policies.

“If the President shrinks the government to its 1892 size, I might suddenly become pro-tariff.”
[23:33]

This historical lens suggests that protectionist measures can have unpredictable political consequences, often undermining the very support they aim to garner.

Comparative Advantage and Market Efficiency

A significant portion of the episode is dedicated to explaining the economic principle of comparative advantage. Harrigan articulates that regions within the United States have differing strengths based on natural resources, culture, and regulatory environments.

“It would never make sense for Michigan to try to grow soybeans and for Iowa to drop growing soybeans. That would be a Maoist experiment in industrialization.”
[14:33]

By adhering to comparative advantage, regions can specialize in what they produce best, fostering overall economic growth and efficiency.

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Tariffs as Taxes and Their Economic Impact

Harrigan demystifies the common misconception that tariffs are not taxes:

“A tariff is nothing more, nothing less than a tax. It’s a sales tax on imported goods.”
[20:30]

He further explains that tariffs ultimately lead to higher prices for consumers without generating significant revenue. The conversation delves into the impracticality of replacing income taxes with tariffs, emphasizing the limited financial benefits versus the broad economic harms.

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National Defense and Trade

The discussion touches upon national defense arguments used to justify tariffs, particularly protecting industries deemed crucial for national security.

“Countries that engage in more trade are more peaceful. Trade fosters trust and economic interdependence, reducing the likelihood of conflict.”
[40:34]

Harrigan argues that robust trade relationships enhance national security by creating alliances and mutual dependencies, making warfare less likely.

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Psychological and Political Implications

Davies and Harrigan explore the psychological impact of tariff policies on voters and the political landscape. Harrigan points out that the U.S. has historically relied less on tariffs as a revenue source, unlike in the past when tariffs were instrumental in funding the federal government.

“For the first time since the late 1950s, Washington has demonstrated that it’s possible to cut the federal government, adding a new tool to voters' minds.”
[24:46]

This shift in the political narrative could influence future elections, as voters become more aware of the economic implications of protectionist policies.

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Proposing a Free Market America First Agenda

Towards the episode's conclusion, Harrigan outlines what a free market "America First" agenda might entail:

“Embrace freedom wherever it comes from—left or right—and stand against policies that diminish our freedom.”
[30:17]

He advocates for policies that enhance economic freedom, reduce government intervention, and promote entrepreneurship, arguing that these measures better serve American interests than protectionist tariffs.

Encouraging Collaboration and Cooperation

Davies underscores the importance of cooperation over coercion in fostering a healthy society and economy. He emphasizes that trade facilitates specialization and mutual benefit, which are cornerstones of economic prosperity.

“Cooperation is the tool. Trade allows us to concentrate on what we’re good at and exchange for what others excel in.”
[53:35]

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Conclusion

Episode 327 of Kibbe on Liberty presents a nuanced critique of tariff policies, arguing that while the intent to protect American jobs and industries is understandable, the economic realities reveal that tariffs are counterproductive. Through insightful analogies, historical context, and economic principles, Antony Davies and James Harrigan advocate for a free-market approach that leverages comparative advantage and cooperation to genuinely put America first.

Notable Quotes

• “Imposing tariffs on foreign cars protects Michigan workers but sacrifices Iowan farmers.”
  – James Harrigan, [03:21]

• “A tariff is nothing more, nothing less than a tax.”
  – James Harrigan, [20:30]

• “Countries that engage in more trade are more peaceful.”
  – James Harrigan, [40:34]

• “Embrace freedom wherever it comes from—left or right—and stand against policies that diminish our freedom.”
  – James Harrigan, [30:17]

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Further Resources

For more insightful discussions on economics and liberty, visit Free the People. To explore related content, check out the podcast Words and Numbers by James Harrigan and Antony Davies, which delves deeper into economic policies and cooperative models.

Transcript

[Kibbe]

Welcome to Kibbe on Liberty.

[Anthony Davies]

I'm talking with my friend Anthony Davies about the Trump tariffs and the case for both America first and for free trade with cooperative nations. You'll want to watch this. Check it out.

[Kibbe]

Welcome to Kibby on Liberty.

[Anthony Davies]

Anthony, good to see you again.

[James Harrigan]

Nice to see you as well.

[Anthony Davies]

I was, I was trying to remember the last time you and James were on the show and it was all the way in April of 2020 20.

[James Harrigan]

Was it that long ago?

[Anthony Davies]

Yes. Wow. And I feel negligent that we haven't talked since then, but we have some issues about trade now and I thought that might be interesting to dig into with an economist that not only knows his stuff, but you approach the subjects with people you disagree with. Empathy, and try to assume the best of intentions and, and I think that's important. What I'd love to accomplish today is to try to reach people who are instinctually pro tariff and they think that it will help rebuild American industry, they think it'll grow jobs. And both I think you and I as economists believe that there's incredibly unseen downsides to tariffs and protectionism. But I want to launch this because like we were talking in April 2020 about the lockdowns that were happening in real time at the time and the unseen damage some five years later. I can look at the America first crowd with a significant amount of empathy because there were essential and non essential employees, there were small businesses almost categorically screwed at the expense of big box and online retailers like Amazon, and then of course, the inflation. So I think a lot of Americans that voted for Donald Trump, including independents that crossed over, are feeling squeezed after five years of government mismanagement and downright malfeasance when it comes to their economic situations. So I can understand that they're looking for an alternative. But I also know that tariffs are not the answer that they're looking for, and I want to go through that today. In your mind, what's the most persuasive argument you have made generally about the consequences of tariffs on goods?

[James Harrigan]

I think the most persuasive argument I've made I borrowed from the great economist David Friedman. And he famously said, look, you want to make cars, there's two ways to make cars. You can put materials through a factory in Michigan. Now at the other end comes a car. Or you can plant soybeans in Iowa, send them across the ocean and a car comes back. And people look at that and say, well, you're really making a false comparison there because one's a factory and the other is trade. But in fact, what I'm talking about are two mechanisms for transforming what we have into what we want. The mechanism in Michigan transforms steel and rubber and plastic that we have into the cars that we want. The mechanism in Iowa transforms the soybeans that we have into cars that we want. And so when you start to look at production in that way, you realize that imposing tariffs on foreign cars absolutely protects the autoworkers in Michigan and it protects their businesses. It protects the people from whom they buy things. All sorts of Americans benefit, but they do so at the expense of the farmers in Iowa. Because what we've really done is we've encountered a situation that is not Michigan versus Japan or Michigan versus China. It's Michigan versus Iowa. And in protecting the Michigan jobs, we have sacrifice the Iowan jobs. We've just shifted jobs from one point in America to another. If you can buy that argument or at least start to see it, there's a second step that comes along that really annoys economists, and that is you've done one other thing than simply shifting jobs from one place to another. You've shifted them out of the mechanism that we were particularly good at using into a mechanism that we're less good at using. And so as a country, we become less efficient, less productive than we were before.

[Anthony Davies]

Yeah, there's maybe David Friedman perhaps borrowed that idea from David Ricardo.

[Kibbe]

Sure.

[Anthony Davies]

We should start quoting debt economists, as we do.

[James Harrigan]

Well, and that's the weird thing, and I've said this to, to many people, that economists of all stripes, left, right, center, shake their heads when it comes to this. What's going on now with trade. It is this business about tariffs is to economics today what leeches and humors are to modern medicine. We came through centuries ago and understood that leeches don't cure diseases. We figured out how this works. And so too with economics, we figured out that tariffs don't help. And yet here we are revisiting something that was actually settled 200 years ago.

[Anthony Davies]

Yeah, and I think you were the one that said this, that there are a number of states in the United States that are running very big trade surplus. So when you aggregate. And economists hate, at least good economists, I think, hate when you start aggregating things into this, into these, these abstract and ultimately meaningless concepts like trade deficits. Because it's not about the United States trade deficit with China. It may be about specific states that are, in fact, their entire economies are dependent on the amount of exports that they are sending to Mexico, to Canada, are two of our largest trading partners. And, and this gets to another debt economist, Frederick Bastiat. The seen and the unseen. We talk about him all the time because we see the opportunity to save Michigan. And it sort of makes sense on a, on a, on a sort of instinctual level, like, yeah, we should. We should make more cars in America, but we don't see the, the other economies that we're destroying while we do that.

[James Harrigan]

Yeah. And they're every bit is real. Just because we don't see them doesn't mean they're not there. And you started off the conversation by talking about our friends on the right who are now embracing tariffs. And I want to point out something that our friends on the right, 10 years ago, maybe less, were railing against our friends on the left who insisted that we buy local. Tariffs and protectionism are the same as bilocal. You're just drawing the barrier at a different point on the map, but it's the same idea.

[Anthony Davies]

Yeah. I'm old enough to remember when sort of the radical protectionism that we're debating right now was exactly what Bernie Sanders wanted. Remember when he complained that free trade was a scheme of the Koch brothers to, to undermine America? And I'm confused now. I have whiplash like which side is which. But digging into the history a little bit in preparation for this conversation. And President Trump's new favorite politician, McKinley, he was sort of the. Not the granddaddy, but one of the OG Protectionists of his time as a member of Congress before he became president. And, you know, back then, the Republican Party was protectionists and the Democrats were free trade. And McKinley actually ended up losing his job as a congressman because of the tariffs that he successfully pushed through. And Republicans got trounced in the midterm election. Maybe history rhymes. I don't know. But I'd like for people that, like all the, the Trumpists and the advocates for tariffs are acknowledging the pain, but somehow there's magic at the end of this tunnel from their perspective. I don't quite. I don't even understand the argument. Do you understand what? Like steel man, this, like, what are they thinking happens once we get through the disruption of tariffs.

[James Harrigan]

I don't think I'm a good person to steel man the argument, because I don't, I don't see a strong argument unless one ignores the unseen. And you can say, well, the terrorists will protect the American industry and bring back the factories in Detroit. That we lost all of that, even if it is so still ignores the unseen. I think it makes another perhaps error in that we have this fixation on goods versus services, that somehow manufactured goods are a better thing for the economy than intangible services are. And that's false. The fact is, a good economy produces things that people want. It doesn't matter what those things are, be they tangible or intangible or require heavy industry or require thought and software. If it's something that people want and you're good at producing it, well, you've got the first step to a strong economy.

[Anthony Davies]

Yeah. You tweeted about this recently that our greatest export is a mindset. It's the entrepreneurial mindset.

[James Harrigan]

Yeah. And I think that's worth talking about. You asked earlier what. What strong argument I have, and this one I kind of threw out there and was surprised how it resonated. And it goes like this. Our. In my opinion, our greatest, or at least one of our greatest exports isn't counted as an export. And here we have a divergence between the economic reality and the accounting definition. This great export that we have is entrepreneurship. Now, strictly speaking, you can't export entrepreneurship, but you can export the fruits of entrepreneurship. That's companies. So we sell to foreigners, stocks and bonds and American companies, and in so doing, we're exporting our entrepreneurial talent. It's one of the things we're really good at. Now that doesn't show up on the list of exports. In fact, the way it shows up is, oddly, in a trade deficit. That is, we buy more things from foreigners and they buy from us, and they end up with all these US Dollars. And what do they do with the US Dollars? One of the big things they do is they buy the American companies, they buy the stocks, the bonds, they invest in new companies. And critics will look at that and say, well, hang on, you do that. And that's a recipe for the foreigners owning all the American companies down the road. To which I respond, no, we make more. That's what we do. Go ahead and sell all the ones we have. We'll make more. It's like arguing that if we sell all our soybeans to China, we'll have no more soybeans. We'll grow more next season. And so too, with the companies. Someone who might look askance at that. I would challenge to write down the five biggest companies you can think of just off the top of your head. And I guarantee you, if we took those top five companies of a bunch of people, 90% of them would be companies like Tesla, Microsoft, Nvidia, Apple, Amazon, Google, companies that were all founded in the past 30 years, 35 years. They didn't exist before that. We made them. In 35 years from now, they'll be another set of five companies that are, by the way, in total worth about $15 trillion that don't exist now. We make companies. It's what we do. And our trade deficit is in very large part exporting those companies.

[Anthony Davies]

It's probably one of the like. As an economist, I feel like we're always the guys that have to come in and tell people that that's not going to work. But I think one of the concepts that is so fundamental to entrepreneurship and economics that you just described is the idea that we're not fighting over a fixed pie. There's not X number of soybeans. And we have to fight to make sure that we get our fair share, because the entire entrepreneurial mindset is creating something that doesn't exist yet. And that that means that there can be more for everybody, but not without exchange, not without trade.

[James Harrigan]

It's the exchange that does it. Because in the exchange, in exchanging, it enables me to concentrate my efforts on the thing I'm good at and you to concentrate your efforts on things you're good at. And then we exchange. And we do this every single day. How many of us grow our own food or refine our own gasoline or sew our own clothes? No, we do whatever we're trained to do and we pay somebody to do that. That's trade. We don't use the word trade because the two parties aren't on different sides of an international border. But economically, it's no different than us buying something from the Chinese.

[Kibbe]

Thank you for joining me today on Kibbe on Liberty and for being part of our fiercely independent audience. Every week, my organization, Free the People, partners with BlazeTV to bring you this show. My guests bring smart perspectives on everything from current events to timeless philosophical debates. If you like what you hear, go to freethepeople.org kol and support Kibbe on Liberty so we can continue to produce these honest conversations with interesting people. Now, let's get back to it.

[Anthony Davies]

Let's talk about comparative advantage, because this is one of those core concepts. And I'm. And I was talking to Logan before the show, and this seems sort of obvious when you talk about it this way, that comparative advantage and what Iowa produces and what Michigan produces are different for a reason. There's natural resources, there's culture, there's government rules and regulations and taxes that either reward or punish things. And it would never make sense for Michigan to try to grow soybeans. And for Iowa to drop growing soybeans, this would be sort of a Maoist experiment in industrialization to mandate from the top down that Iowa needs to make more cars. And that seems sort of obvious to people. And I've all due respect to the beautiful state of Hawaii, I've had their wine. It's not good. It's not good and it never will be good for a lot of reasons that have nothing to do with rules and regulations or taxes. It's just that the terrain and their natural resources don't allow for that thing. So I would hate for California to be forced to import Hawaiian wine to make sure that there wasn't a trade deficit. But when you add Canada to the mix, suddenly it's fundamentally different. Well, they're Canadians and they can't get more of, they can't export more of our stuff here. Somehow that's wrong.

[James Harrigan]

Yeah. All you have done is drawn a line on a map and said that somehow the economic reality changes. It doesn't. The same economic reality. In fact, we can go the direction you're going and say, okay, let's assume for the moment tariffs are a good idea, that it's good that we don't buy from foreigners. Okay, if that's true, then maybe it's true that Virginians also should not be buying from people in Maryland or people in North Carolina. The same economics applies. And if that's true, maybe the people in my hometown shouldn't be buying from the next town over. And if you keep following this argument, you end up logically at the point at which every household should be self sufficient. You just provide for yourself. You don't trade with anybody else. That's the logical extension. All you're doing is drawing this quote unquote trade line at a different point on a map.

[Anthony Davies]

Yeah. The response from my conservative friends will be, but Merica.

[James Harrigan]

Yeah, but that's, that's a political argument, it's not an economic argument. And you could feel good and thump your chest about, you know, we produce all the cars that we drive, okay, fine. And if that makes you proud and good and happy that that's, you know, one thing. But I'm telling you economically you're going to be way worse off than if you produce the thing you're good at producing rather than the thing that gives you national pride.

[Anthony Davies]

Yeah. Well, let's, let's take a more nationalist approach to this because I do think that if you want America to make more cars and you want to impose tariffs on steel and Aluminum coming in from Canada. You got to choose one, because I forget what the percentage is, but most American cars are majority parts and materials, foreign imports.

[James Harrigan]

Right?

[Anthony Davies]

Is that correct?

[James Harrigan]

Yeah. I don't know it off the top of my head, but it would not at all surprise me.

[Anthony Davies]

Yeah, yeah. So we're going to have to choose. Do we want a flourishing, protected American steel industry, or do we want a flourishing, protected American car industry? I don't think you can do both.

[James Harrigan]

No, I mean, you can't if you make the steel and plastic and rubber more expensive and you make it more difficult for the car manufacturers to do their thing. But I want to push back a little bit. You used the word protected protection, and that's the word we often use when it comes to tariff. And I would remind people that's the PR that's put on it. We're going to protect American business. But in fact, a tariff is nothing more, nothing less than a tax. Now, you're taxing specifically goods that come into the country as opposed to goods in general. But it's a tax. It's a sales tax. And no one, at least no one on the right that I can think of, has ever argued that the way to make America great is to increase the sales tax. Yeah, but that's exactly what a tariff is.

[Anthony Davies]

It is a sales tax. And the Trump administration, part of their plan, which I think is contradictory in many ways, but part of their plan is there's going to be all this beautiful new revenue, I think, in the President's word, beautiful new revenue. Where does revenue come from? Comes from taxes.

[James Harrigan]

Right.

[Anthony Davies]

And what are we taxing? We're taxing consumption. And they keep insisting that it's not a tax. This reminds me of the Obama administration when they were doing health care mandates tax. Is it not a tax? Well, sometimes it is and sometimes it isn't. So obviously, in their own thinking, this is a tax and consumers will pay more for goods and services. So I don't. It's some sort of semantic.

[James Harrigan]

Yeah, I think somehow there's this idea that when we impose this tariff that the foreign manufacturers are going to eat it. So, you know, there's, let's say, a $5,000 tariff on imported cars. So the foreigners now are going to get $5,000 less. That's not the case. What will happen is that foreign car that's coming in is going to carry a $5,000 plus price tag. Oh, and by the way, what was holding down the price of domestic cars? They had to compete with the foreign, and now if the foreign car is $5,000 more expensive, there's room for the domestic car price to come up to $5,000 more expensive as well. So we just end up paying more. Now, if you do the math, I think President Trump argued early on, I haven't heard him say it recently, but he argued early on that he could replace the income tax with a tariff. I'm sorry, that math does not work. You would have to put a multi hundred percent tariff just to get the math to start to work out correctly. And then you'd realize with that level of tariff, Americans aren't going to be buying any foreign goods. So now you've got a huge tariff on no imports, so you're back to zero revenue. So I think it's pretty clear that mathematically it's impossible to raise enough money to replace the income tax. And in fact, I don't even think you can come close to it with tariffs.

[Anthony Davies]

Yeah, I don't know who in the Trump administration, and maybe it's President Trump himself, have tariffs discovered McKinley's whole philosophy on this stuff? But as Phil Magnus has pointed out that the size of the federal government at the turn of the century was a teeny fraction of what it is today. And so we did. Tariffs were the original revenue model for the federal government. But back then, the federal government was in just one or two buildings in this monstrous megaplex that we live in, Washington, D.C. now. So there is that. The government's too big now. If they would agree to shrink the government to the size it was in 1892, I might suddenly become pro tariff.

[James Harrigan]

Yeah, I'd be on board there. And you touch on something that I've been thinking about as well, somewhat as a side note to tariffs, and that's all these cuts. Of course, here we are in Washington and the big news is all of the people who are being laid off. There's all sorts of economics we can talk about there that I think are important. But I want to underline something psychological that I think is very important that Americans haven't been talking about. And that is that for the first time, plus or minus, since about the late 1950s, Washington has demonstrated to voters that it's possible to cut the federal government. And that to me is something new. It gives voters something in the back of their heads. There's this new tool that really wasn't on the table before, and now it is. And I'm not defending or, or arguing against the cuts, but rather the mere fact that this is now a thing in the voters Minds, I think might be valuable next election.

[Anthony Davies]

Yeah, yeah. I mean, I would take that deal and just let Elon take a chainsaw mile style to all the agencies, and it would be a useful thing to do. The. The other thing, and this is something that I think various advisors within the Trump administration are going to get more right. And I'm thinking the Department of Energy, for instance, another way that I think economists could get on board with to make America greater, whatever your definition is, more robust, more economically vibrant, more diverse economic production would be a different way than tariffs to solve some of these problems. I'll give you a specific instance. You mentioned these great companies that fundamentally changed the way that we use technology and our phones and everything else. While there's, you know, we do have a tremendous trade deficit with China, for instance, when it comes to rare earth minerals. And all of our tech industries are fundamentally dependent on these. And then the production of batteries and Teslas and smartphones and all that stuff. One of the reasons why we have such a trade deficit is that it is virtually impossible to mine rare earth in this country. So we could come up with smarter regulations that would allow us to produce for ourselves. That would be one step in the right direction.

[James Harrigan]

Sure. Yeah. And I would put that under the broad heading of investing. We talk about investing in education or in infrastructure. This is one more type of investing, doing something that makes us more productive, more able to produce than we were before, which is a lot different than stopping competition. And somehow saying that doesn't make us more productive. In fact, if anything, it makes us more lazy because now we don't have something to push against, to strive against.

[Anthony Davies]

Yeah. And I would say this about energy broadly. Like, you know, there are natural reasons why there's comparative advantage. There are labor costs, and part of that is not created by government regulations. But of course, you know, one of the reasons that we can't produce cars cheaply is unionization of labor in places like Michigan, as much as anything else. I don't think it was international competition. Maybe it was union favoritism that drove up the production costs beyond international competitiveness.

[James Harrigan]

Yeah, possibly so. And I spoke about unions recently at an event, and I kind of shock my libertarian brothers and sisters when I say I'm very much pro union. What I am anti is government protection. And I think we've conflated the two, because unions, almost from their inception, have always enjoyed monopoly protection from the government. So if I, you know, if, if I'm in a union shop and I don't like the way the union's doing business. It's against the law for me to form a competing union.

[Anthony Davies]

Right.

[James Harrigan]

And convince the other workers to come join me. No, the union's protected. It's that protection that's, that's as bad in the, on the corporate side, I would argue as it is on the labor side.

[Kibbe]

If you made it this far into the show, it means I must be doing something right. Key Beyond Liberty is just one of the amazing products we created. Free the we tell emotionally compelling stories and produce educational videos for the Liberty Curious. Our award winning documentaries personalize all things liberty, independence, creativity, hard work, integrity and perseverance. After the show, check out our [e-mail] and if you like what you see, donate to support what we do. That's freethepeople.org now back to the show.

[Anthony Davies]

And it'syou know, I understand that there's been a political realignment where many American workers have left the Democratic Party for a lot of reasons and they're part of the Trump coalition. But being pro worker is not the same as being in favor of a closed cartel that protects some workers at the expense of other workers.

[James Harrigan]

Yes, yes, it's like being pro education versus pro public school. Yes, the two are not the same. In fact, often they're the opposite.

[Anthony Davies]

We call them government schools on this show. But what would your advice be as a free market economist to America Firsters who are trying to rebuild the American economy after five years of just inflation and manipulation and regulation. And I think a lot of Americans are feeling poor because of all the stupid things that the government did to them over the last five years. What would a free market America first agenda look like?

[James Harrigan]

Well, I think any sort of free market agenda would begin by broadly saying we are not Republican, we are not Democrat. It's not about the politics, it's about freedom. Embrace it wherever it comes from. If it comes from the politicians on the left or the politicians on the right, embrace it if they're offering you more freedom. And same way, regardless of which type of politician it is, if they're suggesting some change is going to diminish our freedom, stand against it. I think part of the problem we have in this country on the left and the right is that we have a tendency to pick our champion thinking, okay, this champion, this politician represents what I want and then not thinking any more about it. And if the politician says, let's go this way, let's go that way, we follow. And in doing that, we miss the errors that our favored politicians make. And we also miss the good ideas that our unfavored politicians might propose.

[Anthony Davies]

It's hard to do in this town.

[James Harrigan]

Yeah, it's really hard.

[Anthony Davies]

Politics is a team sport.

[James Harrigan]

It's so much a team sport. I kid you not, Matt. I was driving to work in 6:00, maybe 5:30 in the morning on the highways out in Northern Virginia the day after the election. And I have never seen such aggressive drive. You could. You could tell the drivers were mad and they're cutting people off and they're shifting lanes and they're zooming down the road at a visceral level. People were pissed off at what had happened. Of course, there are other people who weren't. Yeah, but that's, that's the.

[Anthony Davies]

Well, in this area.

[James Harrigan]

Yeah, in this area, it tends in one direction.

[Anthony Davies]

Yeah, yeah, yeah.

[James Harrigan]

But, but we've got to put that aside. I think there's too much discussion in this country about, you know, the next civil war and we're splitting and so forth. In my years of talking to people on the left and the right, I found that there is this large. It's certainly a plurality, if not a majority, in the center. They don't get the press, they don't make a loud noise, and so they're drowned out by our brothers and sisters at the extremes. And the media then presents this picture of we're at each other's throats, when really it's the extremes on the left and the right that are at each other's throats. The rest of us are reasonable people who can disagree, but we tend to disagree reasonably. We're caught up in all of this.

[Anthony Davies]

Yeah, yeah, it does. And a lot of this is the centralization of power in Washington, D.C. i just spent a couple days with a very progressive working group that I'm part of. I'm their token libertarian, and they're curious about some of the things I'll utter sometimes. But they were righteously angry about the tariffs, and they were righteously angry about the possibility that the Trump administration is not just deporting violent gang members who are here illegally, but in that net, sweeping up people that have no business being deported, including for saying the wrong thing. I thought. I thought that was the woke left, but now apparently some conservatives are on board with that, too. And they were worried about the abuse of executive power, and they had rediscovered the division of government and congressional prerogatives to pass legislation. I hope that lasts, because I'm not sure that they would have been so anxious when President Biden was. Was Trampling the separation of powers when President Biden was trampling the Constitution, when President Biden was mandating, knowing that the Supreme Court would eventually overturn it. Something like vaccine mandates. So it does seem like it's an escalating Game of Thrones where, you know, we always hear in this town, this election is the most important election of my lifetime. Well, it's starting to almost feel like it's true, because when the other team gets into power, you're rightfully anxious. Like, if my team's not in power, who's going to protect me from Washington, D.C. so there is that escalation. But as you point out, most Americans don't play that game. Most Americans want to cooperate with their neighbor.

[James Harrigan]

They do. And I think there's perhaps a recipe here for the reasonable Americans who lean to the right. Embrace your brothers and sisters who lean to the left, because this is your opportunity to do so. The right is in power. Embrace them. Assure them it's okay. Take up the. There are causes that you agree with, because four years from now, I guarantee you the shoe will be on the other foot. And if we on the right are trumping those of us on the left, those of us on the left are going to feel that they're justified in trumping us back four years from now. That's got to stop. And the only people who can stop it are those reasonable ones in the middle.

[Anthony Davies]

Yeah. You talked about spending cuts being back on the table, and I'm wildly enthusiastic about the possibility of reforming failing government institutions, getting rid of failed government institutions like the Department of Labor. I would love to see Elon's counsel when it comes to usaid, which I. I find to be just a toxic institution that's been manipulating and stirring the pot internationally. All of that has to happen, in my judgment, in the next two years. The President, and this is a political statement. The President has a Republican House. The President has a Republican Senate. The margins are quite tight. The party in power historically loses power in the midterms. Now, I mentioned what happened to the Republicans under McKinley's tariff plan. They got wiped out in the midterms. Perhaps a more famous example is what happened to Herbert Hoover and his party after the Smoot Hawley tariffs, which were, I believe, even larger than what McKinley proposed, but perhaps quite comparable to the kinds of tariffs that Trump is talking about. If you don't care about economics and you want to play the Game of Thrones, or if you do care about economics and you would love to see these kinds of government reforms actually happen. It's only going to happen if the economy is healthy. I think, you know, for all of the other dynamics, ultimately I think it was, you know, the Democrats mock this now, but it was the cost of eggs, it was the cost of groceries, it was the inflation that was created by all of those trillions of dollars in spending of money that we didn't have. And, you know, we just turned on the printer presses and created all that. Voters in the midterms will not be forgiving if once again, the cost of everything they need to feed their families goes up again.

[James Harrigan]

Right.

[Anthony Davies]

So if you're watching this and you don't buy our arguments on tariffs, be brazenly political and say we need to grow the economy and this ain't gonna work.

[James Harrigan]

It's not gonna work. And we, you know, we don't even have to wait for the prices to go up. Take a look at the stock market. It lost 20% over the past 30 days. This is investors everywhere giving the thumbs down to tariff policy.

[Anthony Davies]

There was, I won't name his name, but there was a MAGA influencer who dismissed your concerns about the stock market. Those are just numbers. Those are just digits. They don't matter. They do matter to people who are actually saving for their families.

[James Harrigan]

Right? Yeah, Yeah. I can't, I can't look at my, my savings. I'm afraid of my reaction. I just, you know, but, but I've got, you know, plenty of years for it to come back. What about, what about the, the family whose, you know, their parents are looking to retire this year? Yeah, they're 20% down.

[Anthony Davies]

Well, that's the, you know, we talked about this in 2020, you and I, for better or worse, were essentially part of the laptop class, so we could afford to slog through lockdowns. I mean, our libertarian instincts were outraged, but we also were able to keep doing our work from our laptops. But of course, people at the margin could not. People that actually had to earn a paycheck that week to feed their families. And I think that's again, what, what people that are arguing that this is short term disruption, but long term, some sort of magical economic realignment is going to happen. That does not matter. I don't think it's true. But it doesn't matter if it's true or not, because it does not matter to people at the margins who are living paycheck to paycheck. And so there's, oddly, there's a sort of elitism in this philosophy that, that is very contrary to what I understand America first to be one before we.

[James Harrigan]

Stray too far from tariffs. One argument that proponents have made is the national defense. We need a steel industry because if we're ever attacked, we need our own sources and so forth. It is the case that countries that engage in more trade are more peaceful. Not only cross borders to each other, but they tend to be more peaceful with regard to their own people. And so when it comes to arguments about protecting the people, protecting the national border, I would argue that trade is a tool that helps you. It doesn't stand in your way in large part because what you get is we're in two different countries and if I'm trading with you on a regular basis, I know you, I deal with you, I trust you, at least to the extent that we can exchange things. And it's profitable for me and so also for you. And for a war to develop between us, it's bad for business. And we don't buy the argument from our leaders that, oh, those guys over there on the other side of the border are evil. I deal with Matt every day. He's not an evil guy. I know. And vice versa.

[Anthony Davies]

Even though he's Canadian, even though he's.

[James Harrigan]

Right, that's perfectly fine. And, and so I think, you know, when we talk about taking care, being careful of the people who are marginalized, or protecting the country, we start to feel protective of ourselves and each other. Keep in mind that trade is your friend there. It's not the enemy.

[Kibbe]

At Kibbe on liberty. Freedom is a lifestyle 24 7, something you live and breathe and wear every day. If that describes you, you need the very best liberty swag in the market today. Just like this shirt I happen to be wearing. Go to freethepeople.org kol and check out our exciting merch. You too can love liberty and look cool.

[Anthony Davies]

I'm stealing this from Phil Magnus. But I think this, this argument on a very practical level, because I believe, and you know, supposedly Frederic Bastiat said this, that when goods cross borders, troops do not, for all of the reasons you just explained. And as someone that thinks that the endless wars and the cost of the endless wars and the collateral human damage of all the wars that our so called neoconservative foreign policy has created, I'd like a little bit of peace. But what Phil argues, again on a more practical level is like, say we worry about steel production and say that's a practical concern about protecting America from our enemies. You just should be trading with more countries, not fewer. Don't be dependent on China. But why not have China and Canada and Mexico and Brazil and Vietnam all competing for our business? Because even if China goes rogue and decides to declare war against us, suddenly we have allies, economic allies, political allies, people that we know and trust and trade with and would pay an extraordinary cost for, not for abandoning those relationships. So it seems like the. The practicality of cooperation is compelling, even if you are worried that one of these countries will become our enemy. But that was more of a speech than a question.

[James Harrigan]

No, that's absolutely right. I think along those lines you'll hear a related argument that, well, we should have tariffs, we should have protectionism if the foreign country is subsidizing its exports. So China, for example, is using the government's revenue to ship lithium to this country at below cost. How do we deal with that? I want to underline a weird thing when, when our favorite retailer has a sale or they send you the coupons in the mail, nobody argues that. Well, you know, they're subsidizing this. Good. And we're up in arms. No, this is a great opportunity. Let's go buy something cheap. And so too here, if a foreign country subsidizes the product that it sold exporting to the U.S. we're getting this product courtesy of the foreign country's taxpayers. It is literally forcing its taxpayers to subsidize these things so we can get them more cheaply. Now, we don't argue that Walmart, for example, is doing something horrible to its stockholders. No, we'll say, give me the thing at 50% off. But it's the same thing. China, its taxpayers are like its stockholders. That's where it's getting the money. And it's subsidizing by giving us low prices.

[Anthony Davies]

And, you know, if they're doing that, I don't know, you know, mercantilism. But this sort of small F government, we can't say the F word because it's overused. But when government is sort of controlling and subsidizing and choosing winners and losers in the production sector, it's a losing strategy. Oh, it is unsustainable.

[James Harrigan]

It is. And I'm not advocating subsidizing this. This is horrible for the Chinese taxpayers, no question. But from our perspective, if we're going to argue against it, we should be arguing, hey, you're hurting your own people.

[Anthony Davies]

Right?

[James Harrigan]

Not that somehow you're hurting us.

[Anthony Davies]

Yeah, yeah. What about. What have we forgotten? We're trying to persuade here, and I'm afraid we've slid back into sort of libertarian theology here. But if you had a sit down with President Trump and Peter Navarro was not allowed in the room or the other knee jerk advocates for tariffs, what would your pitch be?

[James Harrigan]

I think my pitch would have to go back to the beginning and say you're choosing how we produce cars, not that we produce cars. You're choosing that we produce them through the Michigan method rather than the Iowa method. And that's good for the Michiganers, but it's bad for the Iowans. And it doesn't have anything to do at step one with the Chinese. It has to do entirely with us. And you're only seeing half the picture.

[Anthony Davies]

I can't do a Trump impression to respond to you.

[James Harrigan]

I think his response would be that it has nothing to do with the economics. I'm left with only two alternatives, and I'm not sure which is correct, that either the man is brilliant or he's out of his mind. The out of his mind model is he's just doing things randomly. The brilliant model is that what he's doing is forcing our trading partners to the table. Because the fact of the matter is, although prior to all of this nonsense, tariffs were extremely low, they weren't zero. And the average tariff that our trading partners imposed on us was markedly higher than the average tariff we imposed on them. Now, when I say markedly higher, I'm talking fractions of a percent versus 1% or 2%. So they're very small numbers. But nonetheless, there's this difference. If I go with the model that demands brilliant, then I would conclude what he's doing is forcing everybody to the table. This is a prelude to, okay, let's zero out everything. But the angel on the other shoulder says, no, he's just out of his mind. I don't know which is correct.

[Anthony Davies]

So I'm hopeful that he is. In fact, this is an argument that Larry Kudlow, who I've known for decades, and a very respectable supply side economist who was eventually part of the first Trump administration, He argues that Trump is trying to negotiate tariffs down and there are competing forces within the Trump administration. I think there are absolutely advisors in the Trump administration that think that tariffs are a good thing, period. And there are others that would like to see tariffs lowered across the board. I want to believe that that's what's happening here. And I was mentioning before the show that I think in 2015, 2016, I made the mistake of taking everything that Trump said literally. And that's obviously a bad strategy because quite often he's, he's dealing he's bullshitting. He's throwing trial balloons out there. I don't think, for instance, that President Trump plans on building vacation hotels in Gaza. I think that's bullshit because he's trying to do something else. So one of the reasons I wanted to do this show, because if the goal and if the people watching this show and if you support President Trump and you're watching this show, if the goal is to lower tariffs and hopefully not trigger a trade war in the process, that that'll be a very successful thing and we can all get behind that and support that. If, in fact, you think that tariffs are the end goal, I think it's going to be an economic disaster, and I think it's going to be a political disaster. Disaster for the Trump administration.

[James Harrigan]

Yeah, I agree 100%.

[Anthony Davies]

Let's end it there because I want to talk a little bit about words and numbers and maybe you can plug your not so new book, which I love.

[James Harrigan]

Thank you.

[Anthony Davies]

And shamelessly promote what you and your buddy James are up to.

[James Harrigan]

Yeah. James Harrigan is a political scientist. He and I have been doing, doing our podcast, Words and Numbers every week without fail, for seven years.

[Anthony Davies]

It's impressive.

[James Harrigan]

Well, we're dogged, if nothing else. And, you know, we talk about things that are going on in the, in the economy and in the government. We try to, we try to follow the logic and the facts wherever they lead. Now, they seem to lead more often than not to a free market view of the world, but from time to time, they lead elsewhere and leave us surprised. But we change our minds. So if you're listening, I encourage you to check us out. Words and Numbers on all the podcast players. And the book you referenced is Cooperation.

[Anthony Davies]

And Coercion, which is a matrix that applies to virtually everything we ever talk about.

[James Harrigan]

It is that that humans throughout, from the dawn of time, to solve whatever problem they have in front of them, employ either cooperation or coercion. Those are the two models.

[Anthony Davies]

Yes.

[James Harrigan]

And everything else is commentary, but that's it. And I would warn our libertarian brethren here that libertarians can tend to go too far and say, well, cooperation is the model every single time. And it turns out it isn't. In an ideal world, perhaps, but in the practical world we live in, coercion is necessary. Also, the trick to a healthy society is knowing what problem requires which solution.

[Anthony Davies]

But when it comes to the conversation we had in 2020 about lockdowns versus local knowledge, and when it comes to the conversation we just finished Trade versus Protection.

[James Harrigan]

Cooperation is the tool.

[Anthony Davies]

Cooperation trumps Coercion.

[James Harrigan]

Yes.

[Anthony Davies]

Thank you, sir.

[James Harrigan]

Thank you.

[Kibbe]

Thanks for watching. If you liked the conversation, make sure to like the video, subscribe and also ring the bell for notifications. And if you want to know more about free the people, go to freethepeople.org.