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- [00:01]
Scott Galloway
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- [00:36]
Jessica Tarloff
With HubSpot's built in AI, you can get more done than ever before. Breeze agents help you do things in seconds that used to take hours. And Copilot keeps you two steps ahead, giving you the right insights at the right time. Get started today@HubSpot.com AI support for ProPG comes from Sophos.
- [00:54]
Scott Galloway
When it comes to cybersecurity, many businesses think they don't have the resources for enterprise level. But with Sophos, no matter your business's size, you get enterprise grade technology and real world expertise. Always in sync, always in your corner. Their native AI technologies evolve with every threat and their experts are ready 247 with managed detection and response services to stop threats before they strike. Sophos augments your current team with expert analysts who have decades of experience responding to the latest threats. Don't sacrifice your peace of mind to grow your business. Learn more@sophos.com Foreign.
- [01:33]
Welcome to Raging Moderates. I'm Scott Galloway.
- [01:35]
Jessica Tarloff
And I'm Jessica Tarless.
- [01:37]
Scott Galloway
Jess. I just came from the Palm Beach Gardens Department of Motor vehicles where my 17 year old son now has a full fledged Florida driver's license.
- [01:49]
Jessica Tarloff
Oh, why doesn't he have a English driver's license?
- [01:54]
Scott Galloway
Oh, no, we're not doing that. That's hardcore. You have to put a big wrong.
- [01:57]
Jessica Tarloff
Side of the road.
- [01:58]
Scott Galloway
Yeah, you have to put a big L on your car. Now they take driving seriously here, no exaggeration, to get his learner's permit, you go in, you like say, what's a red light different than a yellow or a green light? And they're like, here you go, God be with you. And then 10 minutes later you have a kid, you have your toddler driving your car home and then this. He did a driver's test. But it reminds me of that Will Rogers joke that I want to die like my grandfather in his sleep, not the passengers in his car screaming, oh, that is funny. That's funny, right? I like that.
- [02:33]
Jessica Tarloff
Yeah, I remember my driver's Test.
- [02:34]
Scott Galloway
Things have changed so much. I got my driver's license. I had to force my kid to get his driver's license, although he's kind of enjoying driving now. But I got my driver's license, literally, on my 16th birthday, I spent 120% of my disposable income on my car. It was just, your car was your identity back in the 80s. Now they don't really care.
- [02:53]
Jessica Tarloff
Well, Uber has made it a lot easier. And growing up as a city kid, a lot of my friends just never did it. And some still don't have licenses. But my parents, who were good suburban kids, wanted to make sure that we could always drive. But the big differential or differentiating factor was my first car was a stick shift.
- [03:12]
Scott Galloway
I was going to ask. That's gangster.
- [03:14]
Jessica Tarloff
And we didn't know that. It was when my dad signed me up to buy one of his friends old cars that he was getting rid of, he said, yeah, no, no, we'll take it. And the guy didn't think to mention that it was stick shift. And so we show up to pick it up, and I'm like, well, what am I supposed to do with this car? So my mom took me to the Great Neck north parking lot, which is where she grew up, and she learned to drive to teach me how to drive stick. And I had a stick shift through college, which made it a lot easier to tell people they couldn't borrow your car, which is a good thing. Cause, you know, in college, everyone just wants to be able to get out. And if you have a cute car, they definitely want to take it. But I had a very good relationship with my college boyfriend, who I had broken up with, and he asked to borrow my car, and he took someone else on a date in my car, which is fine. We're broken up. No hard feelings, all of it. But I had asked if I could actually have it, and he had made up this whole story, and it turned out that he just wanted to be on a date. And then I saw him out, and I got pretty upset about it. I was like, what kind of lie is that to tell someone who is being generous and letting you borrow their car even though we are no longer in love?
- [04:21]
Scott Galloway
What kind of person that's called a dude in college?
- [04:24]
Jessica Tarloff
A dude? Yeah.
- [04:25]
Scott Galloway
Did you also give him your credit card to pay for the date?
- [04:27]
Jessica Tarloff
I mean, no, but you should be kind to those. You know, when you have a nice breakup and it's just like, it wasn't meant to be, you know? And he could drive stick, too. So I thought, you know, that was.
- [04:39]
Scott Galloway
The right thing to do.
- [04:39]
Jessica Tarloff
We can still share an asset.
- [04:41]
Scott Galloway
I have a similar story. I borrowed my girlfriend's car in college and literally within 500ft, I got rammed. And I had to call her and say, I crashed your car. And her parents, who were much richer than me, it was the first time I was ever exposed to wealth was my girlfriend's parents. And they said, no, we'll pay for it. And I said, no, I insist. And it was 500. I remember this. It was $523. It was like literally my entire budget for the year.
- [05:06]
Jessica Tarloff
Were you full of regret?
- [05:07]
Scott Galloway
Yeah. I don't know. It just seemed like I was at the point where I was trying to impress her and her parents. So it just seemed like the right thing to do. But anyways, I've, I spent all of my money, literally all of my money on more on cars. Okay, enough of that. In today's episode of Raging Moderates, we're discussing Trump's trade war whiplash. Congress moves forward to fund Trump's legislative agenda and Trump's deportation Operation mistakes. All right, let's get into it. Well, after a wave of mounting pressure, Trump blanked like the mother of all blanks and hit pause on his tariff strategy, sort of. Last week, he announced a 90 day freeze on reciprocal tariffs, dropping them to a baseline of 10%. But that excludes China, where things are only getting more and more heated. Trump and President Xi are now locked in a full on tariff standoff. Beijing just slapped a whopping 125% tariff on US goods. Trump fired back with an even steeper 145% tariff on Chinese imports. By the way, folks, when we talk about a trade war, that's exactly what's going on right now. And while the showdown plays out, the administration now has just 90 days to try and lock in deals with 150 countries. Yeah, these people are so confident that should pan out. The White House has also announced late Friday that some electronic goods, including from China, will be exempt from the tariffs. That carve out is a big relief for US Tech giants including Apple, but then said tech specific tariffs are coming. So it's off, it's on. It's off. It's on. Who am I? Who are you? Where are we? Are we in the matrix? The whiplash approach is starting to take a toll. Trump's economic approval ratings are dipping, according to a new CBS News poll. And Wall street isn't exactly reassured. Bank execs, including JPMorgan Chase's Jamie Dimon are warning of considerable turbulence ahead. Those words were probably gang banged by about 14 communications consultants. Consumer confidence is also taking a hit, with Americans bracing for inflation to spike to nearly 7%, the greatest in over 40 years. Trump is also facing questions about market manipulation after he posted this is a Great time to Buy just before announcing the pause. Jess, what do you make of this? U turn on tariffs. You basically hit pause after the markets freaked out. What's the strategy here, if there is one?
- [07:28]
Unnamed Analyst
My overarching feeling, which maybe has been kind of consistent, is that it feels like nobody is at the helm at this particular moment. They're paying attention to the bond market, which I think is a good thing, right? That there's some awareness for the fact that we need people to buy our debt and to think that we're a good bet going forward. But you're watching the dollar tank. You're listening to interviews from Lutnick and Navarro and realizing that the people that you thought were going to get pushed.
- [08:05]
Jessica Tarloff
Out, or at least it was reported.
- [08:07]
Unnamed Analyst
That they were getting more sidelined, are actually part of the inner circle now. And you know how small that inner circle is. And you think, oh, well, Susie Wiles, you know, the ice maiden, she's supposed to be in charge of this and she's gatekeeping. And you're like, no, no one is gatekeeping any of this. Scott Bessant was doing his best. Jamie Dimon has obviously realized that when he gives an interview, they listen for at least 20 minutes. But the patients are running the asylum. Is that the way that you're supposed to say it? And the world is getting together behind our backs. They're laughing at us and they're using those memes. Have you seen those AI generated memes of Americans working in Chinese factories? Those are being passed around very high level circles like bureaucracies in foreign countries, our allies. I'm watching Zelensky on 60 Minutes last night thinking, God, what have we done right? What teams have we picked in all of this? And the stories from these small business owners about what they are going through and how much they have tried to prepare for this moment because they knew that some degree of tariffs were coming and now are just beside themselves. The, the woman who she was on Shark Tank, she makes the, the silicone baby placemat where the toys are attached to it. She ended up turning down Lori, actually, who wanted too much of her company. The busy baby placemat. She's a veteran, did everything right, budgeted for 20 to 30% tariffs. Now obviously can't Afford what's going on. She talked about how she actually considered ending her life because at least she had a life insurance policy and that's what could be left for her family. She's going to try to pivot now to being a global business, but it feels like on every level order is breaking down. Monetary order, political order, geopolitical order. And I'm really scared for what's to come next.
- [10:12]
Scott Galloway
Yeah, I think you're spot on. So let's talk about what actually catalyzed the pause. And it was, I think, a combination of two things. So first off, the President has access to a more robust information set than any individual in the world. Between the nsa, more economic points of light, some of the brightest people in the world, corporations, he can call anyone, they return his call. He really is at the helm of the bobsled in terms of his vision into the most accurate up to the minute data. And I think two things inspired him to blink. I'm sure he saw consumer data that, I mean, there's a few things. The uncertainty index is now higher than it was in Covid. People feel a greater level of uncertainty than they did when we were locking down schools and telling people to return from work and wear masks outside. I mean, so this is how uncertain things have become. He saw, I'm sure, consumer data that people are getting cautious, companies are pausing hiring plans. And I'll come back to the on the ground some of the on the ground discussions I've had with entrepreneurs and small businesses. And then he said, okay, we have consumer. The economy appears to be slowing. And in about five days the 10 year popped almost 50 bips. Now when you have the economy slowing while interest rates are going up, that means that the interest rates are going to take more of people's disposable income through credit card debt, mortgages, student loans, which will even decrease their spending even more. And the rising interest rates will even further accelerate the deceleration in consumer spending. That's essentially stagflation. And it's kind of a step to, to a depression. I mean, you do not fuck around when the tenure uncouples from consumer spending and they both start going opposite ways. That is absolutely the worst of both worlds. In addition, what actually went on here? It appears that the Japanese and maybe the Chinese went into the market and sold a lot of their American T bills. I mean, basically the relationship has been with China. We buy your shit, you buy our debt, and we can continue to fund this massive deficit spending where Americans have gotten used to $7 trillion in government services but only want to pay 5 trillion in taxes. They went out and sold some Treasuries. It spooked the market. The ten year went up fifty bips, right? For every one bip, that's a hundredth of a percentage point that our debt or the cost of our debt goes up. It's an incremental $3.5 billion. 35 trillion in national debt. So for every increase in tenure by just one basis point from 4% to 4.01%, that's an additional $3.5 billion in interest payments the US government has come up with. So when it goes up 50bps in a few days, that's an incremental $175 billion in interest costs. And that's not accounting for the increase in borrowing costs of companies and consumers. So the answer is, well, we're America, we're the reserve currency. We could just print more money. But if you start flushing the market with too many new dollars and there's fewer goods because we've hammered, people have stopped supplying the US you could have runaway inflation as the consumer economy slows down. I mean this is literally sort of a bright line express train to a severe recession and maybe something you can't even control and turns into a depression. So he blinked. Now, the pause quote unquote is a bit of a misnomer because while he kind of retreated, I think to sort of a 10% universal tax, but in this little dick war with China, he said, okay, I'll show you. You go 125, I'm going to 145. If you times the amount of the tariff times the amount of trade we do the tariff pre the pause on a balanced or adjusted basis was 26.8% in tariffs. Now, even with the reduct of every country except China and a massive increase in the rate on China, the average tariff rate proposed right now is 27%. So tariffs have actually gone up because of this nonsense going on in China. And to your point, can I just.
- [14:40]
Jessica Tarloff
Add to that that this is our highest tariff rate since 1909.
- [14:45]
Scott Galloway
These tariffs are greater than Smoot Hawley, which put us into a depression in 29. They're 10 times the rates of the previous Trump tariffs in his first administration. But I spoke to several people and I'm not like the Trump administration when I say this shit's happened, it's actually happened. I'm not lying. So let me just put that out there. I spoke to the CEO of a homeware goods company. And this person has, no joke, approximately $60 million. So summer, a lot of outdoor furniture, has $60 million in product on big cargo ships already on the water making their way from China to the US mainland to the port of Long Beach. He now has to show up at the dock and in order to unload it, has to show up with a $84 million check for the tariff for the 145%. $85 million he wasn't planning on spending. I mean, this is a big public company or. No, it's not big, it's a mid cap public company. He has to find, he has to call a CFO and say if we want to offload our shit in Long beach in three or seven days, we've got to go down there with a check for 85 million. And then just to talk about some of the ripple effects, he also is trying to figure out how do I get dozens, maybe hundreds of people to show up at the port of Long beach and relabel everything and reprice it? Because now in China, they're so sophisticated, they attach the label and the price at the factory and he can't sell shit for the same price. In addition, he has stopped all shipments out of China, meaning he's going to have much lower inventory levels, he's going to have to raise prices dramatically, his costs are going to go up. So this is what's going to happen. The shit in his stores is going to be much more expensive. And on his next earnings call, he's going to throw up all over himself and say, I'm sorry folks, I wasn't planning to have to show up with an $85 million check unexpected. That comes right off the bottom line. So what do we have? A massive increase in prices for his products and stores. Lower sales volume, lower tax revenue, and he's going to absolutely puke his next earnings call. I have another friend, a fraternity brother, who's built this great family business over the last 30 years in specialty products. You know when you go to a conference and you see signs with logos on them and there's mugs and fleeces and all those water bottles you get at every conference that says Oracle on it or whatever, all the corporate wear, he does, all that stuff. It's probably a 10 or $12 million business. He probably clears half a million to a million bucks a year. He's raised a wonderful family, put three kids through school, a good, nice business, is kind of trying to round third and think about working another five or seven years and retiring slowly but surely over the last 20 or 30 years, all manufacturing, everything they've produced has moved to China. He goes to China five or six times a year. He has good relationships with them. His business has literally stopped. He can't turn around to a conference and say, oh, your Signage is now 2 and a half times more expensive. He has told them to stop shipping everything. And he said, this is worse than Covid. I'm not going to get any relief here. And I'm already contemplating layoffs because my business is ground to an absolute halt. And then this exemption bullshit for Apple and Dell, okay, he exempts the most valuable company in the world, but 98% of businesses that export things abroad are small business. So let's give the big company that gave me a million dollars and who has this radical fan base and is the most valuable company in the world an exemption. But the millions of people who depend on a small business selling everything from garage door openers to specialty tiles to small little whatever, they're importing and exporting back, to put it mildly, they're just fucked. At business schools, companies have paused hiring. They're like, oh, look, we're going to continue to hire, but we're just putting a pause on it right now. I know someone called me, a friend's son called me and said, had a great offer with a firm that is a household name. They've put a pause on hiring. And people believe that, oh, once they start hiring again, they'll double up. A pause is basically a cancellation of hiring because if they put the pause on for three months and everything goes back to normal, it's not like they hire double the following three months. So you have a reduction in employment, a reduction in stock prices, a reduction in earnings for companies, which will lead to a further reduction. You have an increase in the 10 year bond and interest rates on companies and you have a massive spike in consumer uncertainty. I mean, this is just. I've said this from day one. This is. You could not think of a more elegant way to reduce prosperity. It seems that he's shifting his whole economic strategy from trying to match China manufacturing to trying just to crush their economy. Their dream is to bring back manufacturing to the U.S. talk about that, Joss.
- [20:19]
Jessica Tarloff
Yeah, it would love to talk about that. I just wanted to, before I get into it, to note that they have also now taken back, allegedly, those exemptions for the Apples and the Dells of the world.
- [20:31]
Scott Galloway
Oh, it's off again.
- [20:32]
Jessica Tarloff
Yeah, it's off.
- [20:32]
Scott Galloway
I mean, the terrifying.
- [20:33]
Jessica Tarloff
Sorry, were you in the bathroom? You missed that.
- [20:35]
Scott Galloway
Yeah, yeah, I don't, I don't know what happened. Yeah, sorry I blinked.
- [20:38]
Jessica Tarloff
Correct. And Trump posts on Truth Social that it's off. And there is a page on whitehouse.gov that is about the exemption. So it did happen. Trump, I don't know if he wasn't briefed on it or he just decided, oh, the wind's blowing in the other direction, but everything has changed. Again, the calculus for all of these companies, big and small and just underline the fact that these are the biggest bunch of incoherent liars we have ever had to deal with. And that's dangerous in your personal life, but, you know, economic sabotage on a global scale when it's your government that's doing this on the manufacturing, manufacturing front. So the argument that they've been making is that it's a national security threat to not be able to manufacture all of these things here in America. That's what they came into this saying. I mean, he's kind of had a hard on for tariffs his whole life, but that was the argument that they were making. And you could look back to Covid to say was obviously not ideal that we had to manu. We didn't have our own, our own ppe. There are a lot of antivirals that we don't produce here. We do, of course, make a ton of them. Our pharmaceutical industry is big and wonderful. But there are some things that we get for abroad that we wish that we could produce here. So I, you know, maybe some credibility to that argument. Would it be better if we did manufacture some more things here?
- [22:04]
Unnamed Analyst
Sure.
- [22:04]
Jessica Tarloff
And Democratic presidents have said the same thing. Obviously Joe Biden wanted a huge investment in manufacturing, which he got through the Chips and Science act and in the Inflation Reduction Act. We had auto plants popping up, semiconductor chips, etc. That we wanted to be able to build here. But they are describing a world that just doesn't exist anymore. And not because it would take years to build these plants, but because we don't have the bodies to want to do it. So Cato is out with some new Polling says that 80% of Americans think that we should do more manufacturing here, but 73% say it's not going to be me. I don't want those jobs. We have tens of thousands of empty manufacturing roles and 4%, 4% unemployment, which means that we don't have the bodies to do it, let alone the interest. If you look at it over the last few decades, we've lost 5 million manufacturing jobs since 1990. And we've gained nearly 12 million in the professional services. And that's basically where everybody is going at this point. And that exposes a real problem which you talk about all the time when it relates to wealth inequality. Right. So the factory life used to be good paying jobs and a career path for people. And it was also insulation between the rich and the poor. Right. So that you had people that could go out and make a product, believe in what they're doing, support their family, be able to, you know, take a vacation every year. There was a good life there, and folks would go on and they would buy the products that they were producing. And you didn't have what we have now, which is the gig economy, right, where you're literally just paying people to service your every need and whim. Oh, I want a bagel right now. I want a cup of coffee. I'm gonna have someone run around, whatever your grocery store of choices for you Gristinos. It's very New York centric, Whole Foods, whatever, Wegmans. I'm gonna have somebody go and do that for me. And so that's contributed to the angst in society, this overwhelming feeling that the rich are just getting richer and the poor are getting poorer. This is Bernie Sanders and Donald Trump singing the same tune. But the solution cannot be what they are saying that it can be. This return to a manufacturing economy is just going never. It is just never going to happen. So what is the actual plan? And I haven't heard that from the Democratic side, and I hope that, that we will. Maybe we can ask Hakeem Jeffries about it on Thursday night. But there is a genuine nostalgia for a time past. It's common, obviously, but who is going to break it to millions of people that we are never going back? Especially when you have no interest in going back yourself. You know, it's all well and good to say you go work in a factory, but me, no, you know, I want to sit in an air conditioned office or actually I want to sit at home, right. I, I want to be able to work from home and be able to be paid a good wage and put food on the table. My kids go to a good school and we're going to be able to take a vacation. And I don't know how you fix that imbalance. Like that's, that's not only an economic problem, that's a psychological torture problem. And everyone just gets amped up for elections and they know I have to say the right thing in order to get reelected or to get Elected for the right time and then they're stuck with this massive problem and I feel are no good solutions on either end.
- [25:28]
Scott Galloway
Yeah, there's a lot there like Trump harkens for the late 19th century and talks about this great kind of Gilded age. And the reality is in the 1890s we had child labor, we had outdoor plumbing.
- [25:39]
Jessica Tarloff
Well, and I think in Florida and Arkansas you can get that back.
- [25:42]
Scott Galloway
Yeah, they're trying to get that back. There you go. But this notion that we want to go back to this bygone era, do you realize there are six times as many job openings as there are people looking for jobs? I mean, what we have is a mismatch in terms of skills and also just a total naivete among tone deaf head up your ass, inability to understand how the actual economy, the real economy, intersects with labor. People don't want to do these jobs. You can't find American workers to work outside building a home. The only jobs you can find domestic workers for renovating homes. I know this person over the last 10 years are plumber and electricians. And we're starting to lose American plumbers. They just refuse. They will not work outside. You can't bring your dog to the factory floor of a Ford plant. And now I have a lot of people just want to be at home. And let's look at Apple. The average employee at Apple domestically, I believe makes over 200 grand a year. We've outsourced all these quite frankly low paying, I would argue fairly tedious jobs that Americans don't want to do such that we can increase the profitability of Apple more aggressively, invest in new products, hire more systems engineers, more designers, more product managers, really high paying jobs. And also they quite frankly require more skill. It's more competitive to get those jobs. So slowly but surely Americans have upskilled and developed the skills such that they can garner those types of wages in a global economy. Have we left people behind? Have we done a poor job of retraining for people left behind from this transition? Absolutely. But tariffs don't fix that. Now their argument might be that the Chinese engage in enormous IP theft. They steal from us, they make it for a lower price and they sell it back to us. I think there's some truth there. But similar to immigration, if you were really serious about stopping that, I've always thought the immigration argument is just so kind of, it reflects a very ugly side of Americans priorities and how we fix problems. Because if you wanted to fix the illegal immigration problem, you would just find business owners $10,000. Or you do raids, and for every illegal immigrant, undocumented worker out of business, you charge the business owner $10,000. And you would see, all of a sudden, people would use biometrics and get much more serious about ensuring that people could legally work at their establishment. They would a lot of these jobs, the demand would go away, and these folks wouldn't come here if they couldn't find work. But we're not interested in going after nice Americans that own businesses that are wealthy. I think you could do the same thing here, and that is, if you wanted to stop the flow of illegal ip, you'd find Amazon, who is a platform for all these knockoffs. And also, quite frankly, Amazon engages in the same type of IP theft. These are real issues, but I think they're more nuanced and have to be addressed more specifically with specific negotiations. There is a court, we do sue in Chinese courts for IP theft, but I would argue that is a real consideration and a real issue here. But this is just insane. And this notion, this talking point, that 75 countries are lining up to negotiate. Your point's exactly the right one. When you declare war on everyone all at once. I want to be clear. I'm not comparing Trump to Hitler. I'm using a war analogy. Hitler likely would, you know, people in France are probably speaking German right now if he had not decided to declare war on everyone all at once. And that is, he's declaring war on olive continental Europe and then said, no, the Russians are a mongrel people. I'm going to declare war on them even though they were an ally. That was his fatal mistake. And if Trump was serious about tariffs, and sometimes tariffs can work, he would go after specific or try to negotiate with specific countries around specific issues and let pros handle it. But now all he's done is unify a ton of nations against him. You know, the EU's talking to people. And also this notion that we can hurt China. I heard this on Sunday morning from Navarro, who really is an ass. I mean, it is difficult to stand out as an ass among this clown car, and he manages to do that. But they keep talking about how much we can hurt China, that we can devastate them. And there's really two pieces of calculus. One obvious, one less obvious. The percentage of exports to the America of their total export economy has gone from 24% to 17. They have been diversifying away from us. We also have been diversifying away from them. We've reduced our exports by 4%. So we're diversifying away from each other because there's a chill and we're not getting along, but they're doing it faster. The three biggest trading partners of China. These guys speak as if we're everything. We're the biggest. We're the one person who shows up every day and you have to be nice to us. Now, the biggest trading partner for China is the association of Southeast Asian Nations. ASEAN at a trillion. The second largest trading partner for China is the EU at 900 billion, and we come in at third. So the notion that we have all this power over them is a little bit. It's just not true. Now, let's assume we could hurt them more than they can hurt us. The missing part of that calculus is the following. Women are born with a hormone such that they have a much higher tolerance for pain because they have to endure childbirth, which, from what I've heard and witnessed, is the real deal in terms of pain.
- [31:42]
Jessica Tarloff
It's bad.
- [31:42]
Scott Galloway
Yeah, yeah, I've heard that. I've heard that.
- [31:45]
Jessica Tarloff
Yeah.
- [31:45]
Scott Galloway
We're the man in this relationship in the sense that Americans, we're innovative, we're generous. We are not good with pain. There is a practice. There are riots in the street when the Jake. When the Jake or Logan Paul or whoever the fuck it was, and Mike Tyson when it doesn't buffer real time on Netflix. The notion that we would even endure $2,000 iPhones before sweeping out all of Congress. China will starve tens of millions of people if it suits their economic or political purposes. It's just so insane that we believe we would endure a fraction of the pain that the Chinese would implement on their people and their people would endure relative to what Americans. I mean, we. We left Vietnam after losing 58,000 men. The Viet Cong at that point had lost a million. And we decided to leave. We decided we couldn't take any more. They had lost a million, we had lost 58,000. And by the way, it's only gotten worse. Look at Ukraine. We don't like it. It's costing us 60 billion. Haven't lost a single single person. No boots on the ground. But that's too much pain for us. These guys, they keep anytime. They can't rationalize. My favorite is when they say, don't bet against Donald Trump. First off, he's a great businessman. He's a shitty businessman that has lost his father's money and has left a trail of bankrupt companies and unpaid subcontractors. This notion that he is a good business person is a myth and a lie. He's a fantastic reality talk show person. He built probably the best reality talk show. He made a lot of money. You got to give him that. But the notion that he's some sort of great business mind is not true. And my favorite go to when they can't rationalize the irrational is they say, well, he's playing 4D chess. You just don't see the matrix the way he does.
- [33:45]
Jessica Tarloff
We're too dumb to understand. Didn't you know?
- [33:47]
Scott Galloway
This guy is not only not playing chess at this point, we're only we're worried he's going to start eating the fucking pieces. This guy seems to be so irrational and stupid and unpredictable. Bessant said over 70 countries want to talk. That is such bullshit. 70 countries are working with each other to figure out a way to excise this tumor called indecision and toxic uncertainty of America right now. Consumer sentiment also just dropped 11% this month, its second lowest point since the 50s. And now the EU is floating taxes on US tech companies if these talks fall apart. Just insane here, Jess, when you look at that plus Trump's isolationist policies, what does it all tell you about where the US Economy is headed?
- [34:36]
Jessica Tarloff
It's heading into the toilet and the American public knows it. His economic approval has dropped 20 points since he was inaugurated. He's in historically bad territory and he's only matched by himself during the first administration. Everybody knows that a tariff is a tax on the consumer. And when I say everybody, I mean from the small business owner to the big business owner to Ted Cruz and Rand Paul. Ben Shapiro's out there saying this is likely unconstitutional or may end up in the courts with all of this. Holman Jenkins had an interesting op ed in the Wall Street Journal about Trump actually it seemingly that he would be on his way to another impeachment over this because you would want to remove him in the same way that you would want to remove a negligent CEO that was running a company in this manner. The American people are along for a right now it's at 4700 extra dollars as a result of the tariffs. It was just 2100 when we recorded last Monday. That's how quickly this is going and the level of whiplash. But I just want to double tap and then I know that have to go on to the next topic. But what you were saying about the fact that he's not a good dealmaker and he's not a good businessman, he is railing against deals that he built himself. He's saying, you know, Canada and Mexico are Taking advantage of us. You did USMCA yourself, my friend. Or. And he's saying, oh, the first people are at the table of the 75 countries that are begging to hang out. Vietnam, India, South Korea and Japan, guess what? You canceled the Trans Pacific Partnership, which had three of those four countries in it. You would have been able to be in a pack rim alliance that would be saving our butt right now. But no, you had to because a Democrat put it into place. You had to cancel it. And I was thinking about whether this comp makes sense to what happened with Biden on the border. You know, Biden and Harris got in and they inexplicably just stopped doing everything that worked in stemming illegal immigration. And I wonder if Trump has just walked in and is saying, I don't want anything that Joe Biden did. So I'm getting rid of chips and science. I'm going with, you know, 145% tariffs on China, 10% on the globe. And I thought maybe he's petty enough that he's happy to tank a thriving envy of the world. That was the COVID of Time magazine. Right. Isn't that what they called it? Economy? Because he hates Joe Biden that much. So that's kind of where I've ended up.
- [37:15]
Scott Galloway
So people say, well, and their other kind of go to is that Biden kept the Trump tariffs. Let's just talk about that in 2018.
- [37:23]
Jessica Tarloff
Well, he tripled them.
- [37:24]
Scott Galloway
Yeah. He put in place a 30% tariff. They estimated cost the US 300,000 jobs and a loss of 0.3 to 0.7% of GDP. US companies lost 1.7 trillion in stock value. Manufacturing and freight transportation sectors were, you know, hit lows not seen since the Great Financial Recession. The Trump administration ended up bailing out over about spending about $28 billion bailing out American farmers. China promised Trump that they'd buy $200 billion of extra U.S. goods in negotiations that didn't happen. They never did that. And in addition, so much of this just leads to corruption, whether it's Tim Cook flying down and getting an exemption or not getting an exemption. And small businesses don't have those contacts or that money to give to the inauguration campaign. But also April 9th will go down in history and this will come out. It just might not come out for another three and a half years as the greatest example or the greatest violation of insider trading laws in history. You saw I follow Apple options. The calls on the two hundreds were at 40 cents and popped to $4 11 minutes before he made the announcement, the market started running 11 minutes before his announcement. So one or two things happened. Either his team doesn't have the skill or the competence to keep a secret and it leaked, or he was calling people or someone in the administration was calling and saying, wink, wink. I think this would be a good time to buy stocks or specifically highly levered options. There was more trading on non public material information on that day than in history. And you saw some people and they'll be able to figure this out. They'll be able to go, okay, so you don't trade options. And then seven minutes before this announcement, you decided to lever up 50% of your net worth to go buy calls on the Nasdaq or the spy. All of this kind of leads to several places a decline in US prosperity, but also we really are becoming known is sort of corruption central. And Democratic senators Adam Schiff of California and Ruben Gallego of Arizona said in a letter the sequence of events raised grave legal and ethics concerns, noting the posting propelled financial markets to huge gains and boosted the stock of carmaker Tesla, partly owned by Trump ally elon Musk, by 18%. Who knows what's going to happen in the next few days? But I am comfortable. I mean, a couple things. One, this guy's going to blink over and over and there's even a chance they might come up with a trade deal that reduces tariffs because they're going to have to figure out a way to turn chicken salad out of chicken here. I mean, every business leader in the world's calling me going, you realize you're risking depression and this could end really badly as as much as you have a cult, people like money more than they like you, and you're about to emulate potentially trillions of dollars in value. The other thing is, I get a lot of emails, Jess, on what to do specifically in the markets right now. And I don't give a financial advice, but I tell them what I'm doing. In the short term, I'm doing nothing. I don't like to act out of emotion. Generally when I act out of emotion, it ends up poorly for me, as it does for most people, because the emotion you're feeling is similar to the emotion everyone else is feeling. So people panic and think, I don't want more pain, I'm just going to sell well. That means a lot of people are just selling. And you don't want to be a panic seller. That almost never ends well. You also want to be thoughtful about the tax implications of selling. If you have stocks that are up. What I am doing is the following. And I've been doing this for four months now. The S and P trades at a multiple of 26 or 27. The German market 22. Japan 18, China 14. So every dollar in earnings our companies make, US companies get about double the market cap or value or trade about double the valuation. I think that's going to normalize and change. The markets in the US are trading at 98% meaning only 2% of the time in economic history have they traded lower. So I'm transitioning out of US stocks. My biggest holdings are Apple and Amazon and I'm going into European, Latin American and Asian index, low cost ETF and index funds because one look at your taxes, see where you can harvest some tax losses. But also you're probably not even if you're wrong, you're probably not selling low and buying high because all of these markets have been somewhat roiled. So they're even cheaper than they were now. They're not any cheaper relative because the US market has come down. But what I'm telling people is that if you just have SPY or the NASDAQ and an index fund, you'd like to think you're diversified. You're not because you're not diversified across geographies. And I think that these wounds that while he has pulled the knife out of the back of the US economy halfway, the injury is going to take years to heal. And I think companies and countries are basically rerouting their supply chains and that's just going to have dramatic economic consequences and you're going to see a re rating down of a pe of 26 more to like the high teens. And in that instance, even if a company performs well, its stock will be flattered down anyways. Diversification is the key here.
- [42:58]
Jessica Tarloff
Oh, it's very uplifting. I feel a lot better.
- [43:01]
Scott Galloway
Right. We have been through worse is what I would say. Okay, let's take a quick break. Stay with us.
- [43:11]
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- [44:20]
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- [45:25]
Support for Proftee comes from Wondery and their podcast the Best One Yet. Every morning on the Best One yet, best friends and ex Wall street guys Nick and Jack find the top three most interesting stories at the intersection of business and pop culture. Their show, formerly known as Robin Hood Snacks Daily, delivers takeaways and laughs in a digestible 20 minute episode to start your day. What do they talk about?
- [45:47]
Well, how about their theory that Netflix.
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Is borrowing a growth hack from Ludacris? Or maybe their discussion that blondes showing their natural brunette hair might be an early indicator of a recession? Or why Apple's next product should be.
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An AI smart toilet?
- [46:00]
They want to call it the Itushy. Whether you're aiming for that promotion, launching the next big thing, or just want to be the most interesting friend at brunch, you can start every morning with business news from the Best One yet podcast. So follow the podcast on the Wondery app or wherever you get your podcast. You can also listen ad free right.
- [46:18]
Now on Wondery Plus. Welcome back. Last week Republicans barely passed their budget resolution with a 216 to 214 vote after speaker Mike Johnson had to delay the vote because far right members wanted deep. What finally got them on board, according to Rep. Chip Roy, was a verbal promise from Senate GOP leaders to go big. One and a half trillion in cuts, including one trillion from Medicaid and clean energy tax credits. That's already sparking pushback. Senator Suzanne Collins said Medicaid cuts are a non starter. Meanwhile, Republicans are still trying to extend the Trump tax cuts, which the Joint Committee on Taxation estimates could cost up to 7 trillion over the next decade. Democrats are calling it a reverse Robin Hood scheme. And even some Republicans are warning that this kind of budget could backfire in districts that rely on safety net programs. Jess, what what do you Trump loves the tax cuts and border security focus, but cuts to Medicaid and clean energy hit rural red state voters hard. Are Republicans eating their own to make this budget work?
- [47:27]
Jessica Tarloff
Yes, they're eating them voraciously and they don't or they don't care until they lose bigly in the midterms or they're not able to actually get the bill in this incarnation. Or is it just a carnation in this version, the latest incarnation? Yep, that they aren't gonna be able to get it through if that does happen. I you know, Susan Collins is always upset or deeply concerned about things and she usually ends up going along with it. I think she will probably hold her ground on this front. Josh Hawley from Missouri has said something similar in particular about the Medicaid cuts. And Senator Jerry Moran from Kansas has spoken out about the cuts to rural health care that these hospitals are going to end up closing as a result of the bill as structured from the House side. So there are definitely loud voices on the right that are saying hold up, wait a minute, you can't do this, including Tony Fabrizio, CEO, who's Donald Trump's pollster. And he has been out front and center. He did a big survey for a company that supports Medicaid that found that 75% of Americans have a positive view of Medicaid. And then when asked specifically voter support or opposed cutting Medicaid to pay for tax cut, they oppose it by a 50 point margin. And we talk a lot about issues that are 70, 30, 80, 20 like the trans women in women's sports. Right. That's one, that's, that's about the same proportion of split. Right. A 70, 30 issue. And you just think, are you really going to go ahead with something that is so obviously suicidal for a political party? Now, they love money enough that perhaps that is what they're going to do. But my hope is that some cooler heads prevail and they find a way to find somewhere else to cut from. I mean, originally they said, oh, yeah, of course we're going to be looking at the Pentagon the same as everything else. And it's, it's a travesty that they never had to have a complete audit of the Pentagon. Pete Hegseth promised us this, and now apparently they're adding to the Pentagon budget instead of going in the opposite direction. But I found this pretty hysterical. There is an ad out from the Democratic side targeting a Republican congressman who's supporting this bill and is from a district that has a lot of folks who are on Medicaid in it. And the ad starts with a clip of me from the 5 talking about this 880 billion that's gonna be cut for Medicaid. And it finishes with Ste. Steve Bannon saying, you cannot come for Medicaid. Lots of MAGA is on Medicaid. You've got to be careful. And I mean, definitely the first time and probably last time that I appear in an ad together with Steve Bannon. But there are a lot of folks that are going to be united on this and just some numbers to throw out there. Representatives like David Valadajo in California's 22nd district. He has 530,000 people in his district on Medicaid. He won by 11,000 votes. Or Mike Lawler here in New York, who has aspirations to run for the governorship on the Republican side. 239,000 people on Medicaid, and he won by 23,000 votes. These numbers could end up sinking a lot of these vulnerable Republicans.
- [50:55]
Scott Galloway
Yeah. So first off, just something you mentioned, it totally chased me. I think Senator Susan Collins, who tries to position herself, is a moderate. She's just a raging fucking narcissist and uses all this bullshit faux concern to just, you know, so she can stand in front of cameras and then ultimately every time vote exactly the way Trump wants her to vote. I mean, if, if, if the only barrier between, between Medicaid cuts and Senator Collins is Senator Collins, then we're going to have Medicaid cut. And also Medicaid and Medicare are, are very successful programs. As a matter of fact, I think one of the big ideas the Democrat needs to adopt is to have Medicare eligibility cut by two years a year for the next 30 years until everyone's covered by it. It does a better job. 45 cents on the dollar for insurance goes to provide some administration. So if you got, if you nationalize healthcare, which every other modern nation does, 40% of Americans have some sort of medical or dental debt. Imagine the stress that puts on people's emotional and mental well being. These programs are actually do a pretty good job and they're going after them. I mean, it's just insane. The Republican Party's jiu jitsu move is their ability to convince people to vote against their own interests. It's just staggering. And just because I want to bring this back to me, Jess, guess who was supposed to be on Bill Maher with Steve Bannon on this past Friday?
- [52:20]
Jessica Tarloff
Was it you, Scott? Was it you?
- [52:24]
Scott Galloway
Well, Jess, I'm glad you asked and I don't like to talk about these things. Kind of out of school, but. Yeah, by the way, I love Bill Maher. That's where I met you. I think he gets a lot of shit, but he's actually a hero of mine. I think the guy is fearless and isn't, doesn't, just doesn't, you know, zero fucks given just says what he thinks. And I think he represents sort of, I don't want to call it the silent majority, but the people who actually see some, see some license or some reason on both sides and try to just call it as it is. I absolutely love going on that show. I go to la, I stay at the Beverly Hills Hotel. I love the executive producers. They're these, these like really smart, intelligent and attractive people.
- [53:05]
Jessica Tarloff
And the handwritten thank you notes, it's just, oh my God.
- [53:09]
Scott Galloway
My future ex wife is one of those ex producers. She's awesome. Anyways, I love that show. It's. I look forward to it. And then the woman who's kind of my Sherpa, who I absolutely love, called me and said, okay, da, da, da. The guest, the upfront guest is Stephen Bannon. And I just couldn't reconcile with how do I in any way normalize, associate, and in a small way legitimize a guy who's given Nazi salutes. I just can't do it. And then I called my contact there and I said, look, I don't know how I feel, as if I would have to confront him and I don't know how to do it. I don't have the skills to do it elegantly without grandstanding or ruining the flow of the show. And I love the show. So I'm just really digesting and having a tough time with this. And that guy Naval, kind of the modern day philosopher, says if you're thinking about something too much, the answer is probably no. And so I backed out and I was totally fucking heartbroken because I would love to have talked about the tariffs. But anyways, that's my Steve Bannon story.
- [54:12]
Jessica Tarloff
It's a good one because they have rebuilt you. They've given you a different day, Right?
- [54:16]
Scott Galloway
Yeah. But not for a while. Yeah.
- [54:19]
Jessica Tarloff
America or the world will get to see you in the.
- [54:21]
Scott Galloway
Thank God.
- [54:22]
Jessica Tarloff
I know I was losing sleep over it for sure. But something on the Steve Bannon front that is important to what we're discussing happened that night because I think that very clearly Bill expected the Steve Bannon of the Gavin Newsom interview to show up and he got Stephen Bannon. The evil that was not conciliatory at all. Would probably not have even talked about the importance of preserving Medicaid if pushed about that. That wasn't their theme. But he spent most of his time talking about how Trump is going to run and be able to serve a third term.
- [54:59]
Scott Galloway
Bill was great though. Did you see pulled out the Constitution and read him to the 21st Amendment?
- [55:04]
Jessica Tarloff
Yeah. He's like, maybe you should take a look at this. It's good to have those kinds of things handy when you have a lunatic and insurrectionist or at least someone who fomented the idea of an insurrection. I don't know if he was actually there that day, but I feel as though the Trump folks are transitioning into warrior mode, all of them. And they know that you have to batten down the hatches, that what they're doing is hugely unpopular, that it's going to be really bad for the vast majority of people that they so called want to protect. All of this rhetoric about, you know, this is Main street over Wall street is absolute bullshit. It. Right. I mean, you look at the breakdown of the GOP bill, 70% of the bill's tax benefits to the richest 5 to the richest 5% costs will go up for the bottom 40%. We already talked about the extra $4,700 that Americans are going to have to be paying for this global trade war that we're having for shits and giggles. And I think you were absolutely right to not want to be on with him. And it's going to be a really tough time in Democratic or I shouldn't even say Democratic. Insane messaging that you're going to have to be pushing back so hard and at every single moment on the stuff that's coming out of their side. Because this is, this is really serious. 50% of Americans, kids. America's kids are on Medicaid.
- [56:26]
Scott Galloway
50 or 15.
- [56:27]
Jessica Tarloff
50.
- [56:28]
Scott Galloway
50% of American children are on Medicaid.
- [56:30]
Jessica Tarloff
Yes. 50% of coverage for kids is through Medicaid.
- [56:34]
Scott Galloway
Wow, that's insane. That really is in these programs. You know, I would argue I would want to cut Social Security first. Social Security is an effective program. It's reduced senior poverty. But it needs to be updated to reflect the fact that seniors now have made a ton of bank and a lot of them don't need it. And, you know, people aren't retiring. But anyways, this is, this is. It'll be really interesting to see what happens if they try to come, because the reality is all this stuff, this Doge stuff was just a bunch of jazz hands. If they're serious about cutting the deficit, they've got to do one or two things. They've got to raise taxes substantially or they've got to lower entitlement spending. And the answer is yes, they probably need to do both. Because I do think that what happened in the bond market this week has probably sent a pretty serious chill around the White House. Countries don't go out of business because they get invaded. They disappear because they go broke. And we're sort of headed that way. And when you look at other nations, whether it's Japan or Italy, that end up at close to 200% ratio of debt to GDP, their economies just go flat and their citizenry gets really pissed off. But anyways, with that, we'll take one more quick break. Stay with us.
- [57:50]
Support for profit comes from the Freedom From Religion Foundation. In a lot of circles, it certainly feels like more and more people are stepping away from organized religion. It's like they've collectively realized, wait, I don't actually have to go to synagogue on Friday or church on Sundays. And boom, sleeping in one. But here's the thing. Not everyone's cool with this shift. Christian nationalism is on the rise, and they're working overtime to make sure their beliefs are shoehorned into our laws, our schools, and even our personal lives. And people can believe whatever they want, but that doesn't mean everyone has to believe in the same thing. That's where the Freedom From Religion foundation comes in. They fight to keep church and state separate, like our founders actually intended. So whether you've always been secular or have left religion behind and believe in keeping faith out of government. FFRF has your back. You can go to FFRF US Freedom or text Scott to 511-511 and become a member today. Text Scott to 511-511 or go to FFRF because the only thing worse than someone forcing religion on you is when they do it by law. For membership information, text Scott to 511511 tax fees may apply.
- [59:08]
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Jessica Tarloff
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- [60:18]
Scott Galloway
Welcome back. Before we go the Trump administration's crackdown on undocumented immigrants is getting more extreme. Late last week, a federal judge allowed a rule to take effect requiring undocumented immigrants to self report to the government, a policy rooted in a 1952 law. That same day, the Social Security Administration, at the request of Homeland Security Secretary Kristi NOEM, added over 6,000 undocumented immigrants to its DeathMaster file, effectively declaring them dead. Being listed cuts off access to work and benefits. The administration claims those listed have ties to criminal or terrorist activity, but has provided no evidence. Many reportedly had valid Social Security numbers but lost legal status when temporary work programs ended, and most are Latino. Meanwhile, the Supreme Court weighed in on a separate case where the administration admitted it wrongly deported Kilmar Abrego Garcia to El Salvador and ordered them to return him. But on Sunday, the administration insisted that it is not required to work with officials in El Salvador to secure his return. On Monday, Trump welcomed the president of El Salvador to talk about their partnership amid their deportation push. Jess, give us kind of a big picture view of the state of his mass deportation operations.
- [61:35]
Jessica Tarloff
Well, I want to start by saying this is handling of immigration is still the only area where Trump has a positive rating and 55 to 58% approval. And when you think of how far he's sinking on the economy and his individual popularity, which is now down in the low 40s, he has taken a big dive. That's meaningful. And I want to make sure that we're giving credence to that, that but there are a lot of people out there who feel like it is a good thing that we are deporting people, that also these self deportations are taking place, that people are seeing what's going on, whether it's fair or not. And I certainly not fair. And I want to talk about the innocent people that have been sent to this El Salvadorian prison camp. But people are getting the message that this administration gives no Fs and if you're illegal, they're not going to be kind to you. And Trump in his cabinet meeting at the end of last week said, oh, well, I've spoken to the farmers and the guys who own hotels and you know, if you're a good worker, we're going to make sure that you can stay. Do not believe them. You cannot take their word at all. It, it is worth nothing. There are no assurances whatsoever that you are going to be okay in this country if you are here undocumented. And you're seeing that at labor sites in the mornings, right, where typically you could show up to pick up day workers. Folks aren't showing up, they're not sitting outside of Home Depot getting ready to be rounded up and you could be plucked out of your home, let alone if you're out there advertising the fact that you can work under the table and do outside hard labor. So that's kind of like the overhead of it. And there are a few cases, though, that I wanted to highlight that I think signify that the tide could be changing. I think it's a very big deal that the Supreme Court rebuked the Trump administration 9 to 0, that there was no one on that panel, most of which was hand selected by Donald Trump, who said, no, actually maybe it's okay that this innocent guy from Maryland who has three special needs kids, has a good steady job, should have been sent to this prison camp. And you see that the administration, they don't care. They're pushing back. They're showing up for court appointments and saying at first you know, we don't know where he is. Then they show up and say, we do know where he is. And then they had no new information. They haven't been facilitating or effectuating. However you want to say it, his return, that ruling is very much in the American consciousness. CBS did a big 60 Minutes piece last week on the folks that were on that plane that ended up in the El Salvadorian camp. They said that 75% of them, they could find no evidence of a criminal record. That's a really important stat. People thought that we were going to be getting out the bad hombres, not just the people who were here undocumented and the gay makeup artist. That case in particular is one that.
- [64:27]
Unnamed Analyst
Is also sitting in the national consciousness.
- [64:29]
Jessica Tarloff
And then there are these two others and I want to one of them I know that you know about and have spoken about the Tufts PhD student from Turkey who was taken off the street by masked ICE officials and told that it was about an op ed that she wrote and it was just came out on the Washington Post last night that the State Department, a few days before ICE came and took her, determined that there was no evidence showing that she engaged in anti Semit Semitic activities or made any public statements supporting a terrorist organization. She's due in federal court today in Vermont. She's been in custody since March 25th. It will be very interesting to see what goes on there because now you have the State Department rebuking their secretary of state and certainly dhs. And I'm very curious to how that plays out. And lastly, I realized this is a ton of stuff, but I've been thinking about these cases that maybe we can start talking about to make this issue feel more real to people, that it's not just about, you know, there was an open border and we've got to fix it, that innocent people are being affected. In Sackets Harbor, New York, which is dairy country, a mother and her three children, a third grader, a 10th grader and an 11th grader were taken from their home. These are people, no record here, undocumented, but no record whatsoever. The town, which is a big Trump town and Tom Homan actually has a house there, rallied in defense of them. There was a thousand people. There were a thousand people that turned out to make sure that it was known. All the press that was there. This got to Kathy Okal, who made a statement about it that these people need to be returned. And they were returned. And if that kind of activity is going on in a Trump area, and by the way, they Were, quote, unquote, guilty of living in the same wifi zone as somebody that there was actually a warrant to pick up. That's how Tom Homan defended it at first before he had. He was pushed and had to release them. But if you see a thousand people turning up in Trump country to make sure that an undocumented family is returned, I think that that might be a harbinger of good things to come, that people are paying attention and that there's a lot more unity than we think on what should be happening on immigration versus what this administration is doing.
- [66:47]
Scott Galloway
Yeah, there's this. I mean, there's incompetence and then there's depraved. And they take the crown for both these things. They are rounding up the wrong people with no criminal record. And then when they, when it comes to their attention that they spent a quarter of a million dollars per flight to have their kind of right wing snuff film on camera, and then they find out that they deported people who are just undocumented workers who should not be deported to a hellscape prison in a different country than they're originally from. And then they have the gall to say they can't bring them back. Bill Maher summarized it perfectly. We can bring a man back from space, but you can't get a man back from El Salvador. Of course they could get those people back on one call. So this is just not. And these are the same people that hold up a Bible. I mean, it's just so it's a different level of a lack of humanity, a total lack of comity of man. And then what people don't want to admit is that immigration is the secret sauce of America. But the most profitable part of the secret sauce is illegal immigration. Because while they pay Social Security taxes, while they pay payroll taxes, while they pay consumption taxes, while they pay rent, they tax our society at a lower rate. Few of them stick around for Social Security benefits, which they're not eligible for as undocumented workers, but they get to pay them. They call on our services. They're much less likely to either call the police or engage in criminal activity versus citizens. That's a trope. There's some very bad hombres, but on average, there's more bad men who are citizens than bad hombres because they don't want to get deported. And we've. Have we let it get out of control. Do we need borders? Yes, but be clear, folks. About a quarter of all food service workers are undocumented. If you went to the 10 biggest fast food companies and said, we're going to perform raids on a statistically significant sample of your franchise base and we're going to estimate what percentage of your workers are undocumented because clearly you're not checking. It's not that hard to check. It's not that hard to validate. And if it's a quarter of your workers, for every percentage of your workforce, it's undocumented workers. We're finding you a quarter of a million dollars a month. And before you know it, McDonald's will make sure all their workers are domestic for all those great jobs that Americans want. And once the jobs dry up, boom, your problem is solved. But we're not really serious about this problem because, wink, wink, while we want to demonize them, incarcerate them, ship them off to internment camps essentially, or prisons, we aren't really serious about solving the problem because we're making money off these undocumented workers. Has it gotten out of control? Quarter of a million people in one month? In December of 24. Excuse me, of 23. Yeah, it's gotten out of control. But be clear. We invited this. We invited this. 90% of the undocumented population of working age, see above six open jobs. For every one person looking for a job, 36% are agricultural workers. Do you realize what's going to happen at the cost of all your food if we actually figure out a way to discourage all of these folks? The other thing that kind of. Let's talk about the most legal immigration that we love. The most profitable immigration we love are people who immigrate here for two weeks and go to Disneyland. Do you know what has happened to tourism in the last 60 days? Nobody wants to fucking come here. No one wants to put up with this bullshit or worry that the, the ICE is going to ask for their phone or their immigration status might be up for risk. Or in general, they're just like, I don't need to spend my money on with. I love that picture showing the Toronto International Airport last year before spring break, packed. This year it's empty. And all of that is going to ripple through. You're going to start to see that in all sorts of earnings calls over the next eight to 12 weeks. Undocumented immigrants have generated a surplus of $100 billion in the Social Security program in the last decade. So folks, be clear. Illegal immigration may be wrong, but we have purposely opted for wrong wrong, because in this case, wrong means money. We've known what's going on here, and we have Enabled it.
- [71:31]
Jessica Tarloff
Yeah. Nine percent of our GDP is tourism.
- [71:35]
Scott Galloway
Nine percent as a country. Wow. Wow.
- [71:38]
Jessica Tarloff
Yeah.
- [71:38]
Scott Galloway
What's your favorite city to visit in.
- [71:40]
Jessica Tarloff
The U.S. you know, I love Chicago.
- [71:45]
Scott Galloway
Really?
- [71:46]
Jessica Tarloff
Chicago in the summer. And this is because I loved living in London in the summer so much. I feel like it's same vibes where everyone is just so happy. I like Lake Life, and I feel like Chicago has everything. It has a great food scene, has great art scene. It's smaller than New York, obviously. It's just too cold in the summer. But every time I go to Chicago, I'm elated. What about you?
- [72:09]
Scott Galloway
I love that. I totally see you. That makes a lot of sense. I can totally see that. Jess Tarloff would love Chicago. I describe Chicago as the old Navy of cities. It's 80% of New York for 50% of the prize. All right, that's all for this episode. Thank you for listening to Raging Moderates. Our producers are David Toledo and Chinenye Onake. Our technical director is Drew Burrows. Jess, I am going to see you in New York in a few days. You can find.
- [72:33]
Jessica Tarloff
Yeah. I'm so excited. I'm really nervous, though. Are you nervous?
- [72:37]
Scott Galloway
I'm a little nervous, yeah. I don't know how this crowd's going to react because you have sort of a progressive, like, hip crowd. I'm more just like the unwashed masses. So it's going to be.
- [72:46]
Jessica Tarloff
I'm sorry, you're the unmash. Unwashed tech, bro. Masses. That's your demo.
- [72:50]
Scott Galloway
It's going to be very interesting to see how these crowds get along when they're in one place. By the way, you can now find Raging Moderates on its own feed every Tuesday and Friday. That's right, its own feed. That means exclusive interviews with sharp political minds you won't hear anywhere else. By the way, I am interviewing the Prime Minister of Canada, Mark Carney, this afternoon. Make sure to follow us wherever you get your podcast so you don't miss an episode.