Well, He Did It

Summary

Summary of "Well, He Did It" Episode of The Commentary Magazine Podcast

Podcast Information:

• Title: The Commentary Magazine Podcast
• Host/Author: Commentary Magazine
• Episode: Well, He Did It
• Release Date: April 3, 2025

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1. Introduction and Context

The episode titled "Well, He Did It" delves into the recent unilateral imposition of tariffs by the United States, excluding Canada and Mexico, and explores the multifaceted implications of this decision. Hosted by John Podhoretz, the podcast features insightful discussions with executive editor Abe Greenwald, Washington Commentary columnist Matthew Continetti, and economic commentator David Bonson.

Notable Quotes:

• David Bonson (00:04): "Hope for the best, expect the worst..."
• John Podhoretz (00:21): "Welcome to the Commentary magazine daily podcast. Today is Thursday, April 3rd, 2025."

2. Analysis of the Tariffs

The central focus of the discussion revolves around the U.S. government's decision to impose tariffs globally at a minimum of 10%, sparing only Canada and Mexico for specific reasons. Podhoretz raises concerns about the unprecedented nature of this move, questioning its alignment with established economic principles.

Notable Quotes:

• John Podhoretz (00:56): "How momentous a shift in everything that you yourself were taught, learned...what the United States simply unilaterally imposes tariffs."
• Abe Greenwald (03:03): "The big paradigm shift is that this is coming from the right."

3. Economic Implications

A significant portion of the conversation critiques the economic rationale behind the tariffs. Greenwald argues that the tariffs undermine essential economic strengths, particularly the U.S.'s status as a net exporter of services. He emphasizes that building domestic capacity to replace imports would require exorbitant investments, likely leading to higher consumer costs and potential recession.

Notable Quotes:

• Abe Greenwald (04:09): "But the general economic pretense...the President's gone in three years."
• John Podhoretz (06:36): "Can we talk about the service sector? Because the United States is a net exporter of services. That is our great strength in our economy."

4. Political Dynamics

The episode highlights the constitutional concerns arising from the tariffs, particularly the executive branch’s overreach in imposing trade restrictions without congressional approval. Greenwald criticizes Republicans for supporting what he terms "imperialism of a President," pointing out that such actions bypass constitutional norms.

Notable Quotes:

• Abe Greenwald (03:03): "Republicans are all tolerating the imperialism of a President."
• John Podhoretz (36:52): "All laws apply equally to all federal laws apply equally to all people."

5. Comparisons to Historical Events

Podhoretz and Bonson draw parallels between the current tariffs and historical trade policies like the Smoot-Hawley tariffs of 1931, which exacerbated the Great Depression. They debate the extent to which the current situation mirrors past economic downturns caused by protectionist policies.

Notable Quotes:

• John Podhoretz (28:56): "The Smoot Hawley tariffs...create this worldwide trade war that deepened and solidified the Depression for a decade."
• David Bonson (49:52): "We don't have to get into the niceness of the Napoleonic campaigns, but nonetheless, the question is, is this Austerlitz or is it Waterloo?"

6. Future Projections and Concerns

The speakers express apprehension about the long-term effects of the tariffs, including reduced capital investment due to increased economic uncertainty. Greenwald warns that even if there are temporary mitigation strategies, the foundational impact on GDP and economic growth remains detrimental.

Notable Quotes:

• Abe Greenwald (24:06): "Capital investment does get hindered by uncertainty."
• John Podhoretz (50:46): "This is just like the same thing right? Which is, oh, national security Act of 1952...this is a very deeply important moment."

7. Recommendations and Conclusion

Towards the end of the episode, Podhoretz recommends Jude Winisky’s "The Way the World Works" as a crucial text on supply-side economics, highlighting its influence on Republican economic policies. Bonson adds that despite personal challenges during the recording, the discussion underscores the need for adhering to free enterprise principles to foster economic stability and growth.

Notable Quotes:

• John Podhoretz (62:04): "I got two things to say about that book...My late mother, Midge Dector..."
• David Bonson (65:36): "Can Javier Malay call up President Trump and just explain this policy?"

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Conclusion

In "Well, He Did It," The Commentary Magazine Podcast critically examines the United States' recent imposition of tariffs, exploring its economic, political, and historical ramifications. Through incisive analysis and compelling dialogue, the episode underscores the potential risks of protectionist policies and advocates for a return to foundational free-market principles to ensure long-term prosperity and stability.

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Note: The podcast briefly touches upon unrelated segments and advertisements, which have been omitted from this summary to maintain focus on the core discussions.

Transcript

[David Bonson]

Hope for the best, expect the worst Some preach and pain Some die of thirst the way of knowing which way it's going Hope for the best Expect.

[John Podhoretz]

The worst Hope for the best. Welcome to the Commentary magazine daily podcast. Today is Thursday, April 3rd, 2025. I'm John Pothorz, the editor of Commentary magazine. With me, as always, executive editor Abe Greenwald. Hi, Abe.

[Matthew Continetti]

Hi, John.

[John Podhoretz]

Washington Commentary columnist Matthew Continetti. Hi, Matt.

[David Bonson]

Hi, John.

[John Podhoretz]

And joining us today, honcho at the Vonson Group, economic commentator, author of several very enlightening books, and a Commentary contributor, David Bonson. Hi, David.

[Abe Greenwald]

Hello, John.

[John Podhoretz]

Welcome to Liberation, David. David and I just want to set out a quick ground rule before we start talking about Liberation Day and the tariffs. We are recording this at about 8, 10 in the morning, Thursday morning. So we do not have people are going to be listening to this. The market will be gyrating in the United States during today, during Thursday. And so I don't want to go into sort of like what the instantaneous effects of this momentous event in the laying on of the tariffs is going to be because people will be experiencing it in real time and we could get it wrong. So I think we need to pull back to a higher elevation and talk about the larger meaning of what has been imposed here and what the longer term consequences might or might not be, not whether or not things are going to be catastrophic today or tomorrow. And then thankfully, we'll go into the weekend and trading will stop for a couple of days and then maybe, you know, sweet reason will prevail by Monday morning. So having having said that, David, you educated as a, as in economics, as an economist, as somebody who advises people on how to invest money and, and that sort of thing, how momentous a shift in everything that you yourself were taught, learned, have preached, have invested on as a strategy and have viewed as a way of understanding the world. When you were talking about markets and money, how momentous a shift is this from what you would consider to be not conventional wisdom, but let's say like the laws of economic gravity or the second, you know, the second law of thermodynamics or something like that, that the United States simply unilaterally imposes tariffs across the planet at a minimum of 10% with the exception of Canada and Mexico, which have been exempted for their own tariff reasons?

[Abe Greenwald]

Yeah, I think what has switched is not the laws of thermodynamics. The expectations that we would have economically about policies like this remain. The big paradigm shift is that this is coming from, from the right. And so there's a constitutional, legal, political side to that. And then there is the economic side that the Republicans are all tolerating the imperialism of a President. The language that was not said at the Rose Garden yesterday that we saw subsequently is that full modification authority lies with the President. We are just handing an individual full discretion over tax authority which is specifically reserved for Congress in the Constitution. And we are pretending and all okay with pretending. I mean, I guess about 80% of Republicans are okay with pretending that this is a national security emergency. Nike shoes and washing machine handles, you know, the discretion being taken here to that is.

[David Bonson]

David.

[John Podhoretz]

Bananas.

[Abe Greenwald]

It's bananas.

[John Podhoretz]

Bananas. Bananas are a huge national security problem.

[Abe Greenwald]

Oh, I thought you were saying it's bananas.

[John Podhoretz]

So I am actually literally referring to the banana which we have almost no domestic market. We, we don't produce bananas in the United States. Coffee and bananas are two very good examples.

[David Bonson]

Starbucks not going to be happy today.

[John Podhoretz]

Yeah.

[Abe Greenwald]

But the general economic pretense that is being presented to us is that there is going to be some short term pain in exchange for a long term gain. The short term pain is significantly different than what some of the President's advisers understand it to be. And the long term gain is both totally untrue, most certainly immeasurable, and for very clear and easy reasons that I'll lay out in five seconds. Absolutely impossible to price into this. The idea that people will say these tariffs are imposing a large cost to us as American importers and manufacturers. So we are going to now build the capacity to do it here in the States. The President's gone in three years. The fact of the matter is that most of these things would take far more than three years to build and many, many, many billions of dollars. And if they could flick a switch and do it now and just take the, take off the political considerations that keep them from doing that, that all that would mean is that the high cost were then put through the system by nature of them becoming domestically created. It isn't like the only cost here is the tariffs. If you were to actually onshore the production of Nike shoes, it will be more expensive than it is in Vietnam. Now. The administration from a protection standpoint wants to say that that's a net, net trade off that we like. The problem with that is that it will end up along the way undermining all of the things he wants to do as the services sector, which is substantially larger than the jobs he's trying to bring back onshore, gets pummeled and you go into a Recession.

[John Podhoretz]

Can we talk about the service sector? Because the United States is a net exporter of services. That is our great strength in our economy. Right? That is our. Okay, so as I understand it, services were eliminated as a calculation in how they decided to levy these tariffs. We were only looking at goods, manufacturing and goods and therefore we were evaluating this as though we did not have a net strength and a comparative advantage over the entire rest of the planet in an enormous sector, maybe the largest single sector, if you put, if you aggregate it in an enormous sector of the planet's economy. So it is a false picture of the American economy and its relation to the rest of the world that Trump was operating from and that he made that big beautiful chart that he was, you know, carrying around on a poster board yesterday in the Rose Garden.

[Abe Greenwald]

But that big beautiful chart we now know. And I'm just utterly shocked that that Stephen Myron at Council of Economic Advisors let this deliverable come out with, with his name on, isn't calculating what the tariff policies are. These other countries, it's all over social media now. It took a few kind of amateur people about five seconds to figure out. All they did is basically take the trade deficits divided by the imports. And, and so that's why you're getting countries that don't really have tariffs with us or have very small tariffs and they're treating their non trade barriers as if there is very high number because all they're targeting is the actual trade deficit. And as you point out, they're not including services. So of course most of these countries have a large trade deficit and that is not tariff oriented. So it was, it's the most pedestrian thing you could imagine. And outside the real core philosophy of what the President says, reciprocity and fairness is not really what it's targeting. And that's why you end up with some countries that are being hit much less that have higher tariffs on us than other countries that have lower tariffs. The whole thing, even apart from my philosophical disagreement and me being more of a Milton Friedman, Thomas Sowell guy on this stuff, just from a kind of execution standpoint, they are underperforming my expectations. And my expectations were for sixth grade level delivery.

[John Podhoretz]

Okay, so I'm laughing. I'm really not laughing. I mean I am, I'm not an economist, but. And I'm not going to compare what happened yesterday to 9 11. But I do have this feeling in the pit of my stomach like we have crossed a Rubicon here and that people are still in the denial period in which they're saying, well, this could all go away next week. Somehow that he did it, he does seem to have the unilateral power to undo it. But now that it has been done, now that his desideratum has been achieved, that we have entered, we have crossed into a new economic world in the 21st century solely as the result of one person's fixed obsession, that is terrifying to me. But I also want to spend a moment and Matt, maybe you can help reflect on this. I think a lot of us who were, let's say we're dovish on immigration over the last 20 years, right? So we were dovish. And people would say to us, you know what, you guys don't understand this. You're all emotional about, you know, Jews coming in, in the 20, early 20th century and then how wonderful immigration is and all of that. But you don't cost of this illegal labor coming over, how it has affected, you know, the, the lowest quintile of earners in the United States. And that one of the benefits of tightening immigration is that yes, costs are going to go up for people who have to do things like, you know, pick fruit or do the jobs that Americans won't do in order to get them to do it. But that, that is a necessary trade off. And that in the end, over time, we will have a world in which incomes and the outcomes are properly rebalanced. The working class will get a shot, they will have a better income and America will be better off after this period of adjustment. And I never really had an answer to that except that it's not bad that vegetables are cheap or that fruit is cheap. Like the idea that that's bad if 90% of the country has access to less expensive food and that you're going to simply change that willy nilly for a larger purpose is something you shouldn't be so cavalier about. I now notice that many of the people that I had this argument with over time are absolutely horrified by these tariffs, like David Frum, for example. But isn't it the same argument? Aren't you basically saying we need to explode the. Not that because there's illegality involved in immigration. I'm not going there. But I mean, economically, aren't you saying pain for gain later, that is fairer and more equitable for, for the entire country. And if you're gonna believe that, then maybe you should be for these tariffs. I don't know. Well, you can't just say I don't like them because Trump put them on.

[Abe Greenwald]

Well, that's Right. But the question here is, who suffers? And we are being told that global elites will suffer and the working class will benefit. This issue you bring up about cost, like, why are cheap vegetables such a bad thing? It's a bigger point than you realize, John, because first of all, they try to infantilize the issue and make it silly. They don't talk about vegetables and nutritious food that all of us have to eat. They talk about, like, toasters and video games to try to downplay that basically we ruined the middle class in our country just so rich people could get a Game Boy for their teenage kids or something. They try to make it very silly. But the bigger issue to me is that these lower prices are primarily the things the working class people benefit from and that we talk as if working class people don't buy things. So there's this total economic equivocation, as if consumers and producers are two different people instead of different hats that the same person wears. I think. I think, John, that your point on the immigration side and how people are going to be aligned on this issue is very interesting. But ultimately, President Trump was elected because a lot of people believe that prices went up under President Biden and that there was this ongoing frustration of not being heard or listened to. And I forget the politics of it, he can't run again. But just from a midterm standpoint and just where the overall party is left and why I think right wing populism flips to left wing populism very quickly out of this, is that they're just simply going to realize their standard of living is not going to go higher, their prices go higher, their real wages do not go higher. In what world does that benefit the sort of steel town worker that we're told is going to be the beneficiary of these policies? But if I can very quickly, he did say something yesterday. You're saying that a lot of people with wishful thinking still hope this can just sort of reverse, but the pit in your stomach is saying, we're headed to this new economic paradigm and it's very quite dangerous. Smoot haul ish. Economically isolationist and all of these things. Nobody can say that you're wrong because nobody knows that uncertainty, that unpredictability, is one of the great problems. The market is, as we're talking right now, about to open down 1200 points today and much worse with the Nasdaq. Not merely because of the announcement, not merely because the tariff rate yesterday were on the worst end of what was expected. It's the worst of all worlds because it was a bad tariff announcement and still uncertain and still with all kinds of carve outs and waivers and presidential discretion. So you're getting bad news and uncertainty at once. And yet he said yesterday in his presser, Johnson Johnson has announced $55 billion of investment in American, you know, back on onshore. And so because my Firm owns over $100 million of Johnson Johnson, I've owned it and covered the stock for almost 25 years. It immediately hit me. It's a nonsense thing. He said Johnson Johnson has invested over 40 billion over the last four years and they announced that it would be 55 billion over the next four years. So they're in.

[John Podhoretz]

So it's. So it's consistent. So it's essentially a continuation of the pre April 2 announcement of the thrilling 100%.

[Abe Greenwald]

It was a non announcement. The only thing that was an announcement is that they were saying it out loud for the purpose of it being a headline that President Trump could repeat. I took from that yesterday what I still believe is the eventual off ramp. He just wants to announce something that sounds like he won. That's where I think so does that.

[John Podhoretz]

Mean so Abe, by the way, I think there's a way of expanding this out. Abe has been writing brilliantly in his newsletter. Please go subscribe to Abe's newsletter. You can go to commentary.org right there at the top of our page you his newsletter. Put in your email address and subscribe. You'll get Abe's daily essay around 4pm Abe made the point that Zelensky was right that the other day that after the humiliation in the Oval Office that Trump made all these assumptions about Putin, Putin is basically sticking it in Trump's craw. He humiliated Zelensky, attacked Zelensky. Zelensky came to the table, agreed to things in order to pacify and mollify Trump and there is going to be no deal. Not because Trump doesn't want a deal. Zelensky doesn't want a deal, but was willing to have the deal shoved down his throat because the alternative was worse. But because Putin doesn't want a deal. You can't make somebody make a deal that they don't want to make a deal. And if you we have now Trump announcing to the entire world that he is rebalancing the world economy and the world doesn't have to take it sitting down, doesn't have to take it lying down. Obviously no individual player on the planet has the power of the United States to launch a trade war or Whatever. But it's not like people don't have agency to respond. The uncertainty is not just what Trump is going to do at any given moment, right? Say I want to deal with Iran, and then I'm going to bomb Iran, and then I'm not going to bomb Iran, and then I'm going to bomb Iran. It's that the uncertainty extends outward from the United States to 200 other countries that now have to grapple with how they're going to deal with a reality in which their lives have just gotten a lot more expensive.

[Matthew Continetti]

Well, so, you know, did you see that? So the US Warned other countries as well yesterday, saying, look, don't. If you, if you retaliate, we're going to escalate. So, so do take it, take it lying down.

[John Podhoretz]

How can we escalate against China, by the way? We now have a 54. Depending on the way you calculate it, we either have a 34 or 54% tariff on China. What are we going to do, raise it to 84%? I mean, not that I don't want to be. I like being in kind of like daggers drawn with China. Don't get me wrong. I mean, there's a limit to how much retaliation we can do after this. I mean, I guess Europe, we could get harsher, right?

[Matthew Continetti]

I think, John, just to also broaden it, just for a second, it's kind of a side note, but this occurred to me yesterday in conjunction with what I had written about Trump's sort of denial about the nature of Russia and Putin, the denial of economic common sense here. I think all this goes to show that, among other things, he really does believe that he won in 2020, by the way. It really does show how impervious to evidence he is and to reason. But that's a sort of side point.

[John Podhoretz]

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[Abe Greenwald]

The, the part that is being missed here is the economic growth. So if we are saying that they can Undo policies that would raise prices, so therefore mitigate inflationary risk. That's part of the equation. And it is probably easier to contain the negative price impact than it is the negative growth impact. Because contrary to the absurdity of people saying that uncertainty is not a real problem, capital investment does get hindered by uncertainty. And capital investment drives productivity and productivity drives economic growth. This is a tautology. I'm not saying anything philosophical, I'm not saying anything complicated, and I'm certainly not saying anything partisan. If people believe that you get the same economic growth with declines in productivity or you get the same productivity with declines in capital investment, then I want to do a business deal with that person. It's the stupidest thing a human being could utter right now. What I don't agree with is the Keynesian idea of animal spirits, that there is this self fulfilling prophecy of the consumer feeling good and they might not go to the mall. That is something I'm very willing to mock and I've mocked it for most of my adult life and I've been right my entire adult life. Our consumers don't stop spending unless they lose credit. And I have no problem with saying that. Some consumers will say they don't feel good right now, have low, they have bad sentiment or bad confidence as they still go out to the bar on Friday night with their friends. But we're talking about the production side, which those of us on the Reaganite Republican right, as supply siders, have been saying forever, is the impetus to economic growth, to a higher standard of living in our society. And right now it will become a systemic issue, even if it's marginal. But all economics is marginal. I'm not suggesting a recessionary drop overnight, I'm suggesting a marginal drop. But when you have an economy with our metrics, a marginal move is the difference between expansion and contraction. And there will absolutely be a decline in capital investment as a result of this uncertainty. And that is the best case scenario. Okay, that's on the basis of assuming he really does reel things back and you find an off ramp and all that. Even then you have entrenched a certain degree of decline in activity that then has a lag effect. Because economic investment like this, capital goods investment, is not a light switch. A great example of this, John, is the energy sector. When they decide they want to get more wells activated and then they stop because steel prices are up 30%. The ability to go back in and change, that can be a year, two years. These are long term investments. And if anybody didn't read the Dallas Fed survey last week. I put a bunch of [e-mail] last Friday. Do you tell me one of these oil and gas executives that the Fed is serving that didn't vote for Trump? Okay, these are not left wing hacks. This is in the Dallas region is entirely Texas, Oklahoma, Permian Basin type people. Every single one of them saying we are holding back on investment, holding back on shovels in the ground, holding back on activating new wells. And there's always some geopolitical uncertainty involved in this. But almost across the board the issues were impact of prices in copper, steel, etc. Industrial production considerations. I'm sorry, but that is clearly going to have an impact on economic growth.

[John Podhoretz]

Well, I'm glad to report that Matt has solved his Internet problems. He has returned and has not been able to hear the conversation that we've had thus far. So let's move into some practical political questions. David, you mentioned we can't help ourselves because here we are, we're ideological combatants on the right and we can't help ourselves but pull back from macroeconomics in the world situation to talk about our own internal fights about matters that we've been fighting about for decades. Matt, I got into a little tussle online last night with a tariff fan and a Trump economic fan getting into the old question of whether or not the Smoot Hawley tariffs of. Of 1931. Is that right?

[David Bonson]

I think 1930.

[John Podhoretz]

1930.

[David Bonson]

And then they came in 1931.

[John Podhoretz]

Right. Okay. So the Smoot Hawley tariffs. So there was a so smooth Hawley tariffs were the theory of everything in the at the beginning of the Depression or when people were trying to analyze the Depression over time, that this create this worldwide trade war that deepened and solidified the Depression for a decade. And then came the revisionist ideas, largely sponsored by Milton Friedman, that Smoot Hawley was important, but it wasn't that important that it was monetary policy and the tightening of monetary policy that led to this worldwide calamity which has now somehow been translated on the right into Smoot Hawley was fine. Don't be dissing Smoot Hawley. It didn't do it. So if this is like Smoot Hawley, bring it on. Sure. Now that is not what Milton Friedman was saying at Smoot Hawley. He didn't deny that a worldwide trade war had calamitous, you know, knockoff consequences. It was that that wasn't the motivating driver of the Depression and that the policies that were being pursued in monetary terms hadn't been the primary factor, but it's not like they weren't a factor or that they, or that like they were good. And somehow some of our people seem to have, are trying to shoehorn Milton Friedmanism into an argument for what Trump just did. Did yesterday.

[David Bonson]

Well, first, John, it's so unlike you to get in a tussle on Twitter that I'm, I can only imagine how impassioned you are about Liberation Day that you would get into a fight with somebody on Twitter. Second, I'm sorry that I dropped out of the conversation. Clearly there was some type of retaliatory tariff imposed on my wi Fi connection here at the American Enterprise. Yes, the trade war that AI and Brookings has been engaged in, our next door neighbor for decades has finally come home to roost here. And I lost my Internet there. Briefly, having missed much of the conversation, I want to say a couple things. The first is, you know, we're now in the 10th year of people trying to retrofit intellectual explanations for what is essentially Donald Trump's personal worldview. And this, this policy that came about yesterday is the ultimate expression of how Trump has felt about the global economy. Basically, since he's been a public figure.

[John Podhoretz]

I always point, some people say since he was a teenager, I mean, friend of his from high school said his whole view then was why are we letting the world screw us? Like, that's what he said. Whole military.

[David Bonson]

That is his psychology, right? Winners and losers, you're either making money from somebody or they're ripping you off. The moment that this came home to me yesterday was when he's going through his big chart of all the tariffs and he settles on Cambodia and he says, look at Cambodia. Cambodia has been making a lot of money off of us. Sorry, Cambodia. Now, I have never, I, you know, I'm 43 years old. I have never spent any mental energy on the U. S. Cambodia economic relationship. A small country that is a far.

[John Podhoretz]

Off country of country.

[David Bonson]

I know nothing that is completely irrelevant to the American economy. And yet in Donald Trump's head, they've been cheating us with their tariffs. They're making money off our tariffs and therefore we need to impose tariffs on Cambodia. I have no idea what we import from Cambodia.

[Abe Greenwald]

So.

[David Bonson]

But that's just how he thinks. And as David observed very astutely at the top of the podcast, we're just fine with the president having this power now. You know, there are 14American trade agreements. The number of countries we have free trade agreements is higher because some of them, like CAFTA The Central America Free Trade Agreement covers a number of countries. He's just ignored them. We're just putting on these two tariffs that violate the terms of free trade agreements that Congress approved and presidents have. Past presidents have negotiated. So the role of the executive here is also extremely striking. The executive in the service of a personal vision that he feels now empowered to impose on the rest of the world. And the final thing is, I was struck during the event when Trump, you know, is such a showman, and one of his techniques is bringing people from the audience. Trump is unusual, actually, among political figures because he will take a step back on the stage and allow other people to speak again. It's that type of producer, talk show mentality he has. He brought on a UAW worker who, very impassioned, talked about how his whole career he's seen plants leave Michigan. And I just want to point out that the Michigan's economy is not something we should emulate as a society. People have been leaving Michigan because of taxation, because of pad spending policies, because of overregulation, because of labor contracts that harm competitiveness.

[John Podhoretz]

All of which what you're trying to say is that Michigan has been attempting to use government policy to deal with the deindustrialization problem for 50 years with a net effect that has been negative. Correct. To that very person that Trump was saying, I'm going to save you now with more government intervention.

[David Bonson]

That's right. The way to look at where the auto industry in the United States has gone, it's gone to red America, just like voters have gone to South Carolina, to Tennessee, places like Texas. Right. That's the policy we should be emulating. And those policies, they're not imposing tariffs on other states. As I said the other day, they can't do that. But that's not how they approach it. They get rid of taxes. They have very few regulations on any sector, and they empower workers to leave and join enterprises that they see fit, not be imprisoned by labor contracts that may benefit a few, but have much larger costs on the economy. So I feel like we're in for a great relearning of economic lessons that is, you know, maybe we're responsible for it because we haven't been able to teach the benefits of free enterprise, even though we see in real time people moving with their feet to the parts of the country that embrace free enterprise.

[John Podhoretz]

David, are you okay on time?

[Abe Greenwald]

Yeah, about five more minutes, John.

[John Podhoretz]

Okay. So I think Matt brings up a central salient point, which is that the United States is the equivalent of A is a, you know, is a continent or almost an entire continent. And it has the economy of a continent within, within a confederation. And that the key rule in this confederation is that all laws apply equally to all federal laws apply equally to all people.

[David Bonson]

A union.

[John Podhoretz]

And that these.

[David Bonson]

What it's a union.

[John Podhoretz]

Excuse me, I'm sorry, I shouldn't have said confederation, Union of American.

[David Bonson]

A lot rides on that extinction in.

[John Podhoretz]

Our history, American capitalist republics. But that and that, and that laws, full faith and credit of the country applies to everybody equally. And that states can't punish other states and do all that. Right, that's, that's one of the things that is so extraordinary about the American experiment. And so you don't have to be educated in free enterprise. All you need to know is you have your friend Harry who says, I just moved to Texas, my tax, I'm paying 15% less in taxes and there are a lot more jobs available. And I feel a little freer because I can go from working here to working there. And maybe you should come down and come move here, which is effectively all of that rolled into an individual experience without macroeconomic, without lesson in macroeconomics. Then we start having conversations at a more elevated level. David, you had mentioned, you know, it's important that goods be less expensive for people. They'll still buy things on credit. But you're still talking about the well being of people in the United States. And yeah, it matters that things are cheaper in some places and more expensive in other places. And people have to make a decision. Sometimes it's a family decision, sometimes it's an emotional decision, sometimes it's, they're locked in place because of a mortgage, whatever. They have to make a decision to stay in one place or move to another. And in the global economy, you're talking about a very flat set of circumstances. You have a country, you have the United States, you have a country and we say boom, 20% tariff on you. They don't have any. They got nowhere to turn. I mean, maybe they can turn to China. I mean, maybe they can get a different customer. Maybe. I mean, China's a pretty big economy. India is a pretty big economy. We're tariffing them like crazy also. But I mean you're not, you are creating the conditions under which the planet is going to be frozen into place, simply coping with this mad king's proclivities without recourse except a trade war.

[Abe Greenwald]

And we can focus on all the negative things that does all the bad parts. But we also have to remember that there's a bunch of good things that then aren't happening. And that's a slightly different articulation.

[John Podhoretz]

Yeah.

[Abe Greenwald]

That free trade is not just simply the avoidance of something bad. It is create free exchange of goods and services is by definition wealth creating. You are, you are undermining wealth creation and general productive activities with impediments to trade. I now believe that there was a bigger error than I realized in not insisting on winning the argument in 2015. 16 when much of this started to be said. People that were then talking about we're going to bring all these jobs back to Ohio because China's been ripping us off. And folks on my side of this were continually saying here's the problem with the way you want to go about doing it. But we weren't really making the case persuasively to the American people as to why these countries were not ripping us off by selling us things. And in fact, the issues primarily in labor data over the last 40 years deal with greater efficiencies in American manufacturing. There's no question that certain jobs were replaced as a result of trade deals. But that it was so marginally minuscule in the grand scheme of things relative to the larger issue that we can make more things in America now with less labor output utilizing leveraging technology. And the general thing. Even the Wall Street Journal sort of walked away from the Ricardo and argument about comparative advantage over time. It became a political loser because we decided it was a political loser. And so I fear that right now Milton Friedman has become what Goldman Sachs became in my business a while back, where supposedly you're making an argument just by saying the word like, oh, you know, Goldman Sachs was just supposed to be this sort of symbol of evil because Mataibi said it was. And now the people on the right are saying Milton Friedman as if we're just supposed to know that he clearly was wrong or overstated the argument for benefits of free exchange. He didn't overstate the arguments of free exchange. And on the margin there are all kinds of things we can do to better trade deals. But the general focus for all people, working class people who work at Goldman Sachs and lower income people looking for more mobility in society, the general thing we ought to be doing is pursuing greater gross trade, higher imports, higher exports. But when the president says that they're ripping us off from trade deficit and that we don't sell people things anymore, and when we are selling four times as many things to the rest of the world as we were in the early 90s when we first entered this big bad when China came into WTO NAP.

[John Podhoretz]

Globalization.

[Abe Greenwald]

WhatsApp. Globalization.

[John Podhoretz]

Yeah, globalization. Globalization has been a. Has been a force multiplier for the United States, not a net destroyer.

[Abe Greenwald]

But we essentially have an issue that we didn't make clear to the American people in the presentation of our argument that all that happened is exports went up 4x in this period of great additional prosperity, but imports went up a little bit more than 4x. And we're supposed to think that's a bad thing. It's such a ridiculous argument, but it's now just sort of the politically mainstream case being made. And I don't mind so much when President Trump says it. Like, Matt's point about the Cambodia thing is so true. You could just cut and paste it and run it on Saturday Night Live. It was, it was hilarious if it wasn't real. But, like, when Claremont is saying it, I don't know what world I'm in now. That's why. Thomas. So last night just gave me a little bit of sanity.

[John Podhoretz]

Thomas. So we should say Thomas Sowell, an economist, you know, maybe the, the great, the. The most venerable living American economist, has an interview you can see on YouTube with Peter Robinson on Uncommon Knowledge, explaining his view of the tariff. Soul is 94 years old. We should all emulate hope that we could be as unbelievably lucid and clarifying as he is at 74, let alone at 94. And everybody should look this up and watch it because it is the perfect counterpoint to what Trump was saying yesterday afternoon.

[Abe Greenwald]

Lucid and clarifying and principled.

[John Podhoretz]

And principled.

[Abe Greenwald]

And that's the issue here that I'm talking about. And I know you guys do it every day, and there's still a group of us out there, but these are basic first principles that the constitutional side that vote. You notice people can't pile on Mitch McConnell, Connell and Susan Collins for, for voting with the Democrats to not allow the president imperial authority to use pretextual falsities to impose tariffs on Canada. Because Rand Paul voted with.

[John Podhoretz]

That happened yet? Right, that happened yesterday. Yesterday, we should say there was a vote in the Senate. 4851, three Republicans voting with the Democrats against Canada. Tariffs.

[Abe Greenwald]

I think Lisa and Susan both voted along with McConnell and then Rand Paul.

[John Podhoretz]

Okay, so it was four. I'm sorry. Anyway, it was so. Yeah. So, I mean, what is notable here, of course, is that the Mr. Republican, the man who would do anything to empower Republicans, as, you know, for whatever reason, for 10 years, the great demon for the Democratic Party, Mitch McConnell, the man who prevented Merrick Garland from getting a vote for the Supreme Court, is now basically become the great dissenter and voted against the Trump administration on this, on these grounds, on. On grounds of maintaining the constitutional order under which this is the power of the Congress and not the president to levy such things and not use nonsense claims of national emergency or national security to impose. To impose these imposts on friendly nations with whom we are not only not at war, but are like, you know, it's massively intertwined on the same day as the great beautiful announcement.

[Abe Greenwald]

But I think that if there were some who decided that our free market or laissez faire or classical economic principles, you know, they don't really demonize David Ricardo the way they do Milton Friedman, because Ricardo is not a household name. But putting aside the economic case here that I refuse to put aside just on the constitutional basis alone, the imperialism of this and this idea that if you thought the policy was right, but. And therefore it's okay to use national security as a basis, there is no difference in that. And what Biden did with student loan forgiveness, he took a policy that we think was wrong, that he thought was right, and just did it in a way that's totally unconstitutional and illegal. And we did not just criticize the end. We criticized the means because the means were wrong. And this is a Nash calling this stuff national security issue means just like the nip and steel US Steel blockage. Pretending you're doing it for national security basis just means nothing is really a national security security issue. I don't think that bodes very well for the geopolitical interest of the United States. No credibility.

[John Podhoretz]

You know, reminds me that moment in the great movie the Departed, the Martin Scorsese movie with Leonardo DiCaprio and Matt Damon, when the FBI is trying to figure out who's what cop is giving evidence to giving, like in the pay of the mob and Alec Baldwin is the head of the FBI squad and somebody pulls something out to say they can, you know, they. They have some means of doing a warrantless wiretap on I guess Matt Damon's phone or something like that. And Baldwin, Baldwin in William Monahan screenplay says, yes, thank God. Patriot act, let's go Patriot Act. I mean, it's the sort of the same thing, right? Which is, oh, national security Act of 1952. You know, what did you pick your feet in Poughkeepsie? That's a national security. I mean, this is a very deeply important moment. And yeah, We've been talking about it for a decade, and the rubber is meeting the road. And of course, everybody always is delighted to drop their argument about the means by which they're getting the end they want, if they're getting the end they want. Intellectual inconsistency, it turns out, is even in an intellectual movement, not something that is all that important to people when they can get the policy enacted that they want, which is very distressing and has been the lesson of the right now for a decade in dealing with Trump and something that we've been coping with. But, you know, we're going here again, like crossing a. Yeah.

[David Bonson]

And I mean, to your point at the top of the show, John, you know, we're going to have to see what happens here because we are in uncharted waters. This is the biggest shock to the global economy in decades. I mean, certainly, certainly comparable to the.

[John Podhoretz]

At least since COVID At least since the COVID Right. So that's five years ago was the COVID shutdown. That was a huge shutdown.

[David Bonson]

And then global financial crisis was 2000.

[John Podhoretz]

2008, and then 9, 11, 9, 11, 2001.

[David Bonson]

And then you kind of go back to the Nixon shock, which I think is comparable to this in 71. So I think from the point of view of Trump and his supporters, they're viewing this as the Battle of Austerlitz with Napoleon triumphing and beginning his, you know, surge across Europe.

[John Podhoretz]

How did that, how did that end?

[David Bonson]

Well, it ended in the Battle of Waterloo about 11 years later.

[John Podhoretz]

And, and the Battle of Borodino, which, which. Right.

[David Bonson]

Well, that was.

[John Podhoretz]

Yeah, yeah, exactly.

[David Bonson]

Well, we don't have to get into the niceness of the Napoleonic campaigns, but nonetheless, the question is, is this Austerlitz or is it Waterloo? And we really, we really don't know, but it doesn't, you know, it doesn't look good. But we can make some predictions based on the economic principles that we've been discussing that say that this could be a very bad mistake.

[John Podhoretz]

I want to politically say, you know, that the I told you so never Trumpers again, not to go to a different camp of ideological friends now combatants, whatever, are doing the. Oh, yeah, this is what you wanted. You people who say it's okay that Trump won. I mean, yeah, this is what you wanted, but it's like, you know, this is the problem with our system. And this is again, I want to get to, like, why I hate liberals. So I don't hate liberals, but why liberal policy? Because in the end, all elections like this come down to two people, and you have two people, and you have to pick between one or one or the other of them. And Trump always said he wanted to do tariffs. He always said he wanted to do tariffs, but he said he wanted to do a lot of other things. And Biden and Harris and Clinton never said they wanted to do tariffs, but they always said they wanted to do a whole bunch of other things. And a whole bunch of other things were bad. And one of the things that was bad, getting to David's point, is that rather than talk about the glories of the U.S. economy and trade and the benefits of trade and capitalism and how capitalism functions, they were always on the attack. We're polluting too much. We need to impose international controls to save us from global warming. And mostly when we talked about international relationships, we talked about them in terms of extending our friendships so that people wouldn't be mad at the United States for its depredations, rather than talking about how we were a world leader in making, in opening the planet.

[David Bonson]

Yeah, well, I mean, just to make the contrast a little bit more pointed, I mean, what was one of Biden's major goals in his term was a global minimum corporate tax. Right. And so that would have been revived under a Harris presidency. And what's the other major goal of the left that continues to this day? That is a concerted global effort to reduce carbon emissions by any means necessary, whether that is through regulation, whether that's through decarbonizing economies. And what does that produce? Well, that produces the divergence between the American economy, which resisted, thanks to political efforts, the Biden ideology for much of those four years, and Europe and in particular Germany, which has gone net zero and is now, you know, an economic basket case. So we always should be comparing, and to quote the great Thomas Sowell once again in this podcast, you know, he. I think it was from him that I learned that the most important words in life are compared to what? But there's no question that compared to the Harris policies, this trade policy is. Is in. Is potentially just as bad as some of the. Some of the terrorist policies that are also bad.

[John Podhoretz]

I think that is a very, very important thing to make note of, because I don't want to turn here and say, I'm sorry that people voted for Trump. It's not that simple. And the fact is that we have a bipartisan problem with understanding the glory, strengths, purposes, and philosophical basis that has made the United States the richest and freest and most important country the world has ever seen.

[Matthew Continetti]

I also think by the way, just for what it's worth, David mentioned the off ramps of a win. You know, of Trump being able to claim a win. My prediction is he takes off ramps sooner than later as things you're very good at predicting.

[John Podhoretz]

And I agree with you. I mean, I hope so.

[Matthew Continetti]

Yeah, me too.

[John Podhoretz]

But I do think, not in Cambodia though.

[David Bonson]

I fixed on Cambodia. They're gonna, they've been making too much money off the United States.

[John Podhoretz]

But, but that just doesn't resolve the uncertainty, Right, but that just doesn't resolve the uncertainty issue. Right, David? I mean, even if he takes the off ramp, right, he took, he got on the on ramp and he, unless he blows up the on ramp, there's always an on ramp in somebody's head about what they're going to do with how much money they're going to spend building another net exporting dock in the Gulf of Mexico or the Gulf of America or whatever the hell you want to call it. In order to get oil out of, in order to get fracked oil out of the United States, that's a 6, 7, $10 billion investment. Someone's going to say, I don't know what's going to happen here. I better just hold up until 2029 when I get a better sense of what the economic conditions in the United States are.

[Abe Greenwald]

It's a structural risk premia. And the parallel is the left wing policies on oil and gas that sometimes there's a 10 or 20 year process you look at like nuclear energy, the ROI, the return on that investment is so long term. And when the left has said we're here to structurally destroy your business, even various ebbs and flows in policy that are favorable have contained investment in energy infrastructure in the United States because of the long term policy threat that the left has put in to the risk premia of the space. And I think that that's an analogy to what has happened here is President Trump can announce tomorrow that he had a great meeting with the President of Cambodia and he really feels like we're about to open up trade with this country that's been destroying jobs in Ohio and you're going to have businesses that say, but what's he going to say next week or two weeks? And that element, it only takes a quarter of a point or half of a point in GDP to tip us into recession. I don't think you could possibly right now assume that you're not going to get a full percentage impact to GDP in the next two quarters because of this.

[John Podhoretz]

Look, what was Trump's Main economic phrase during 2024, right? It was drill, baby, drill. Our future is going to come from energy exploration, net export. This is where we have gold in the ground. We pull it out, we drill for it, we ship it out, we sell it here, everything's great. Then he turns around and makes it twice as expensive to build a drill bit. Right? I mean, that's basically what happened with these tariffs. So you want to drill that, you make drilling twice as expensive, you're going to get less drilling. Like it's just. So he's punching himself in the face in terms of not punching America in the face also. But even by his own logic, what he has done is interfering with the thing that he needs in order to have a successful presidency in terms of economic growth. The one thing that the crazy guy that I. Not the crazy, but the guy that the, the tariff guy that I got into a fight with last night on Twitter did say is, you know, what he should have done was, was pair this. If they're going to claim that they're going to get $400 billion in revenue from the tariffs, they should immediately announce a $400 billion tax cut so that the tariffs immediately. So the American people believe that the money that comes in from the tariffs are going to go right to them. Now, this is not, this is nonsense. It's obviously economic nonsense. You can't do something like that. That money doesn't come into government coffers and then go out, you know, another way. But you can at least see the logic in saying we're not just. We're gonna try to figure out some way in which this is gonna benefit you, the American consumer, that isn't in 20 years, we're gonna have a functioning industrial economy for your grandchildren.

[Abe Greenwald]

But John, he did, he announced that one tax policy he announced yesterday to appease us supply siders in the midst of announcing the largest tax increase on the American people since 1968 was that he'd make auto loan interest tax deductible if you buy a fully American made car. It was like insult to injury for a supply sider. After all of the tariff announcements to go to the least broad based, most select, most distortive, most easily priced in type of tax policy. Very like when Kamala Harris announced they wanted to give money to people to buy for a down payment on a house. And a bunch of us said, I think that might get priced in to the cost of the house. As if the deduction of auto interest would not push car prices higher. I just, I think I'm living in a twilight zone zone right now. Even the tax cut policy had to offend me yesterday.

[David Bonson]

Yeah, I mean, you know, that's an important point because what's striking about the Trump tax cut round two is its emphasis on basically tax tax carve outs to feed consumption. So, you know, no tax on tips, no tax on overtime, no tax on Social Security. Now depreciation or now, you know, deductible, deductible auto loans. That's. Those are.

[Abe Greenwald]

The only thing I'll say is that behind the scenes the people on the good shoulder of Trump from 1.0 are still saying when I'm talking with Larry and Art and Steve Moore, Steve Forbes, they still believe that he will end up getting in the tax bill. Either a reduced corporate rate, bonus, depreciation, 100% business expensing things that would be very. Supplies.

[David Bonson]

That's right.

[Abe Greenwald]

And you're right, all the public side.

[David Bonson]

Is very demand political side is on tax, tax carve outs that will help or are meant to help consumers, but do not actually affect incentives to work, save and produce.

[Abe Greenwald]

Gentlemen, global financial markets need me. I have to.

[John Podhoretz]

Okay, please. David, thank you very much. Fantastic to have you. David, wait till it says you've uploaded after you close before you leave.

[Matthew Continetti]

But then just, you can leave.

[John Podhoretz]

But you have to let it say successfully uploaded a few seconds.

[Abe Greenwald]

So hit the leave. Hit the leave button.

[John Podhoretz]

Click the leave button.

[David Bonson]

Yeah.

[John Podhoretz]

Then you. Okay, yeah.

[Matthew Continetti]

Then follow from there.

[David Bonson]

Okay. Okay.

[John Podhoretz]

Fun, wasn't it?

[Abe Greenwald]

It was fun.

[David Bonson]

Can I make my recommendation, please?

[John Podhoretz]

We need a recommendation.

[David Bonson]

All right. Now since because we're on video, I'm going to leave for a second to get the recommendation.

[John Podhoretz]

This is good. This is two days in a row which someone has actually left.

[David Bonson]

But I'm not going to wear it. I'm not going to wear it like this is my recommendation. The Way the World Works by Jude Winisky, one of the first theoreticians of supply side economics. This is the 20th anniversary edition I have in my hands. You can still buy it on Amazon. It has multiple postscripts, multiple introductions. It has also an introduction by the great Robert D. Novak, who famously said that the Republican Party was put on earth to lower taxes, to cut taxes. Just briefly. June Winiski was a Wall Street Journal writer who in the 1970s, responding to stagflation, started hanging out with Robert Mondell, a future Nobel laureate, then teaching at Columbia University and also Chicago Business school professor named Art Laffer. And the three of them convinced the editor of the Wall Street Journal. Opinion pages at the time, the great Robert Bartley, that the way to get out of stagflation was to have solid money, stable prices, but then cut taxes, have free trade, reduce spending and reduce transfers. And if you had that policy mix, as they call it, and as Winniski describes it in the Way the World Works, prosperity would result. And that was the. The genesis of the Reagan tax cut and Reagan economic policy. That was the dominant economic policy paradigm on the American right up until 2016. So I urge everyone, especially the young people, get your copy of the Way the World Worked. Now I'm going to warn people there are parts of the book that are a little crazy. You know, Jude, Jude was a little crazy, but he was crazy in defense of freedom. And that's the type of crazy I like.

[John Podhoretz]

I got two things to say about that book. Number one, piety, filial piety requires me to say that my mother was the publisher of the Way the World Works by Jude Wanitsky, one of the two major economic texts that she helped bring to the market. The other being wealth and Poverty by George Gilder. So that's number one. My late mother, Midge Dector, important figure on the right and little known as an important figure, as one of the people who brought these ideas to a general audience between hardcovers in a relatively brief career as a book editor. That's number one. Number two, Jude was a crazy person. And by the time he hit the hit the 1990s, was desperately trying to enlist Louis Farrakhan. Farrakhan in the. In the.

[David Bonson]

He ended up with a soft spot for Saddam.

[John Podhoretz]

And yeah, he was. He was bonkers. But. But, you know, crazy people often.

[David Bonson]

You're crazy for freedom. Also, finally, just. Can. Can Javier Malay call up President Trump and just explain this policy? You should reconsider, Donald, because look at what I'm doing in Argentina. I'm following the classic conservative economic principles. Poverty's down, growth is up, the inflation is stabilized. Look at what works.

[John Podhoretz]

Okay, wait, I gotta check on what the tariff is on Argentina. I don't know what it is. It's at least 10%, that's all I gotta tell you, they've been taking our steaks.

[David Bonson]

Those Argent and the wine, Argentine wine. Stealing California vineyards jobs.

[John Podhoretz]

Yeah, I will. I'm gonna finish just by saying that we are bombing the crap out of the Houthis, so at least something good is happening on the. Compared to what?

[David Bonson]

Compared to.

[John Podhoretz]

Compared to what? That's right. That's right. It's compared to what? So again, thanks to David Bonson. And for Matt and Abe, I'm John Podhoritz. Keep the candle bur.