Iran War: It’s Not Just the Economy, Stupid

Summary

Podcast Summary – To The Contrary with Charlie Sykes

Episode: Iran War: It’s Not Just the Economy, Stupid
Date: March 14, 2026
Guests: Justin Wolfers (Economist)
Host: Charlie Sykes

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Episode Overview

This episode dissects the far-reaching economic, political, and moral ramifications of the ongoing Iran War, emphasizing that its consequences are far from “just the economy.” Host Charlie Sykes and economist Justin Wolfers provide a critical examination of the Trump administration’s policies, the economic shocks of rising oil prices, global impacts, leadership miscalculations, and the shifting nature of modern warfare. The conversation also considers the failures of prudence and institutional checks, the interplay of politics and economics, and the dangers of leadership isolated from reality.

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Key Discussion Points & Insights

1. Opening and Setting the Context

Timestamp: 02:28 – 03:13

• Sykes opens by referencing the unsettling events of recent months (blizzards, heat waves, geopolitical turmoil), noting it feels like the universe is “trying to tell us something.”
• Guest Justin Wolfers is introduced as “the people’s economist.”

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2. Trump’s Statement on Oil Prices & Economic “Wins”

Timestamps: 03:13 – 08:42

• Sykes challenges Trump’s social media claim that rising oil prices are good for the US, as “we make a lot of money.”
• Wolfers: “There’s an element of truth with a seven layer bean dip of stupid on top.” (04:24)
  • The US is a major oil producer—but also a major consumer—so price rises redistribute wealth within the country, not enrich it as a whole.
  • Increased oil prices benefit oil companies (and states like Texas, Alaska, Louisiana), but act as a “tax” on average Americans, reducing their disposable income.

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3. Political Fallout & International Dimensions: Russia and Iran

Timestamps: 08:42 – 11:53

• Sykes: Trump’s policies provide “a windfall for Russia,” aiding Putin even as Russia helps Iran target Americans.

• Wolfers: By dropping sanctions on Russia to offset the Iran oil shock, “we’re pulling resources away from trying to support our friends in Ukraine… to offset the political cost of… invading the folks in Iran.”

• Discussion of moral consequences, with Wolfers noting American media’s tendency to ignore ethical dimensions for economic analysis.

  “The economic case is this is dumb, dumb, dumb and dumb. I agree… But the moral questions at play are so much more important than the gallon of gas.” – Justin Wolfers (10:39)

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4. Consequences, Miscalculations, and Lack of Prudence

Timestamps: 11:53 – 21:04

• Sykes laments loss of prudence in foreign policy, referencing the moral and actual casualties (e.g., a bombed girls’ school, innocent deaths). Warns of a new US doctrine of assassinating leaders.

• Wolfers draws a parallel to the trade war—policy made on misunderstood economics, lack of planning, and a disregard for Congress’s constitutional roles.

  “All of that I know is amateur hour. All of that I know no serious previous American administration and no serious industrialized country would ever behave that way when it came to trade… So do I think it’ll be different with the Iran war?” – Justin Wolfers (14:51)

• Both criticize how “unintended consequences” are ignored, stressing the need for prudence and caution.

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5. Economic Fallout: Recession Looming

Timestamps: 21:04 – 23:45

• Sykes lists recent negative economic headlines and statistics:

  • Oil and cargo ships targeted
  • Mortgage rates, inflation, and food prices rising
  • GDP growth slumping
  • Doubling of airfares, a global “food shock”
  • Goldman Sachs and world analysts slashing forecasts

• Wolfers: US in a jobs recession already; “Don’t do anything rash or dumb that could knock us over the edge.”

  “There’s never a good time to do something stupid. This is definitely the wrong time to do something stupid.” – Charlie Sykes (23:38)

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6. Global Shockwaves—US Insulation vs. World Exposure

Timestamps: 23:45 – 27:31

• Wolfers notes global markets and economies (Europe, Asia) are more exposed to oil shocks than the US.

• Discusses a pattern from history—wars almost always involve “catastrophic miscalculation” due to overoptimism, sycophancy, and institutional failures.

  • Examples: Korea, Vietnam, Iraq, World Wars, even the trade war.

  “…the most important question to be asking is, what am I missing? What don’t I understand? What aren’t I being told?” – Justin Wolfers (29:52)

• Leaders tend to create bureaucracies that send “good news up,” reinforcing disconnect and mistakes.

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7. Dangers of Leadership in a Bubble

Timestamps: 27:31 – 32:58

• Sykes asks what Trump is actually hearing and understanding—emphasizing the hazards when a leader is isolated by “cartoonishly sycophantic” advisors.
• Wolfers catalogs the pattern:
  • Jan 6
  • Trade war
  • Iran war (and Venezuela blown past)
    All without public, Congressional, or allied support, or strategic planning.
  • “What is 2027 going to bring?”

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8. Off-Ramps, “Flexibility,” and the Dangers of Unpredictability

Timestamps: 32:58 – 39:29

• Sykes floats the idea that Trump could declare victory and disengage, but suspects this is difficult for him.
• Wolfers, in defense of Trump:
  • Trump showed an instinctive aversion to new Middle East wars (until recently).
  • Trump is flexible (prone to “flip-flopping”), which in unstable times may allow for rapid pivots.
  • But this flexibility borders on erratic and can scare allies or destabilize institutions.

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9. Economics of War: Scarcity, Unlimited Resources, and Political Weakness

Timestamps: 39:29 – 41:38

• Sykes quotes Trump on America’s “unlimited ammunition.”
• Wolfers corrects:
  • “Nothing’s infinite.” Economics is about scarcity.
  • America may have resources, but political will is finite.
  • The administration’s inability to ask Americans to accept costs is the “real” weakness, and adversaries see it.

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10. Asymmetric & Economic Warfare

Timestamps: 41:38 – 44:36

• Sykes & Wolfers discuss “the future of warfare”—how weaker states (like Iran) move from direct conflict to targeting vulnerabilities:
  • Economic pain (oil, food, cyberattacks)
  • Low-cost drones, cyber warfare
• American economic pain threshold is now itself a strategic target.

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11. The Limits of Presidential Leadership

Timestamps: 44:36 – 46:22

• Wolfers: If the President made a moral case and brought the nation and Congress along, enduring pain would be possible—but Trump’s character doesn’t allow for it.
• Sykes: “There are unique dangers in going to war with this president.”

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12. Final Economic Indicators & What to Watch

Timestamps: 46:22 – 48:59

• Wolfers tracks financial markets for forward-looking data, not government reports, which lag.
  • Markets show enormous volatility—“The fear index says strap in. These are unfortunately interesting times.”

  “If you can do a slightly better job figuring out the implications of this war for the US and world economy, you will become one of the richest people in the world.” – Justin Wolfers (46:46)

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13. Closing Thoughts

Timestamps: 48:59 – 49:49

• Sykes urges sanity and critical thinking:

  “…every single day we have to remind ourselves that we are not the crazy ones.” (49:24)

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Memorable Quotes

• "There’s an element of truth with a seven layer bean dip of stupid on top." – Justin Wolfers on Trump’s oil comments (04:24)
• "It is a different oil shock this time." – Justin Wolfers (06:14)
• "The economic case is this is dumb, dumb, dumb and dumb. I agree. But the moral questions at play are so much more important than the gallon of gas." – Justin Wolfers (10:39)
• "The story of wars is almost always this story of miscalculation… our leaders let us down relentlessly." – Justin Wolfers (23:45)
• "Nothing’s infinite... economics is about scarcity." – Justin Wolfers (39:29)
• "If the president made the case, he would bring the country along… Democrats wouldn’t be blaming him for the pain at the pump, but for the great moral mission. But he can’t do that." – Justin Wolfers (44:20)
• "We have to remind ourselves that we are not the crazy ones." – Charlie Sykes (49:24)

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Notable Moments by Timestamp

• 04:24 — Wolfers’ humorous but pointed roast of Trump’s oil logic.
• 10:39 – 11:53 — The shift from economic to moral calculations in war.
• 14:51 – 21:04 — The perils of ignoring prudence and institutional checks.
• 23:45 — Wolfers on recession, Sykes on the folly of acting rashly.
• 29:52 – 32:58 — The dangers of insular leadership and unchecked executive power.
• 39:29 — Wolfers teaches the core economic lesson: “Nothing’s infinite.”
• 44:20 — Reflection on the president’s inability to unite the nation for shared sacrifice.

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Conclusion

This episode offers a sobering, wide-ranging look at the intersection of war, economics, politics, and leadership—arguing that disastrous consequences stem less from events than from patterns of hubristic, ill-considered decision-making and failures of collective will. Both the hosts and guest stress the need for prudence, honest public conversation, and serious institutional checks, while warning of the tragic history—and present—of miscalculation and chaos when these are absent.

Transcript

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[Charlie Sykes]

I'm Charlie Sykes. Welcome back to the to the Contrary podcast. If you're listening to this, you survived Friday the 13th. By the way, have you noticed that we have more Friday the 13th this year than usual? Or at least it feels that way. We had one back in February and then again in March. It feels like a sign. We have the blizzards, the heat waves, all of the things. It's almost as if the universe is trying to tell us something.

[Justin Wolfers]

So.

[Charlie Sykes]

So let's dive in. So to make sense of this land of confusion. Good to have you back. Justin Wolfers, the people's Economist. How are you today, mate?

[Justin Wolfers]

I'm having a ripper. Fantastic.

[Charlie Sykes]

Okay, well, I want to start off with a rather extraordinary comment by Donald Trump. We get to all of the global oil shocks and the way that it is spreading through the economy, and it has really been an extraordinary week as we're sort of seeing the ripples. Oil prices not going down as hoped and one segment of the economy after the other affected. But Donald Trump said something interesting on social media. Let me just show you this. The United States is the largest oil producer in the world by far. So when oil prices go up, we make a lot of money. Now, I don't know, it almost suggests to me that perhaps Donald Trump is not completely in touch with public opinion on all of this. A little bit tone deaf to be celebrating rising oil prices, rising gas prices, but Donald Trump is basically saying, hey, this is a good thing because when oil prices go up, we make a lot of money. So I wanted to get an economist's take on that. Wow, wow, wow.

[Justin Wolfers]

The funny thing is there's an element of truth with a seven layer bean dip of stupid on top.

[Charlie Sykes]

Right.

[Justin Wolfers]

The element of truth is we do produce a lot of oil in the United States. And if the President says it's the largest in the world, who am I to disagree? I'd have to double check that. Actually, I think you may be right. We'll check it. But we're certainly a large producer of oil. The idea that that makes us rich would require us to also think about how large we are as a consumer of oil. It turns out the US Makes roughly as many barrels of oil as we consume. So therefore, we get neither richer nor poorer when the oil price goes up. That's the first order thing there. It's sort of like if the price of air went up to $10 a gallon and I still consume air, I could pay for the air, but I'd pay myself for the air. I'm not richer. When you consume as much as you produce, a change in the price doesn't make you better off.

[Charlie Sykes]

Okay, so here's my question though, okay? Because I understand the balance in the equation here, but let's talk about the we. Okay? So when Oil prices go up. We make a lot of money.

[Justin Wolfers]

Yeah.

[Charlie Sykes]

Okay. I'm not sure how I make a lot of money. I'm going to the pump. I am paying more money. I am paying more money for everything. I am not making somebody's making money. I'm not making money. Right. The people in the, the unwashed in, in America are not making money. Right, Right. This is not good for the economy of the average citizen.

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[Justin Wolfers]

I want to pause on the President's point and then dive into yours, because the President's point, if he'd said it correctly, is important. We're roughly energy independent. Now, if you're a nerd, you'll say we actually export slightly more petroleum products than we import. But it's so small, let's just call it roughly energy independent. And one reason that's important. So I'm saying President said we get rich. I'm saying we neither get richer nor poorer. That in itself is really important because in the 1970s, we were very energy dependent. And so in the 1970s, when oil prices went up, the US lost a lot of money. So it is a different oil shock this time. It's really important to understand. So that's the sense. The President moved us in the right direction, just overshot dramatically. And then you say, wait a minute, Justin, you're saying the United States as a whole gets neither richer nor poorer. That sounds like the sort of nonsense a macro economist would say it is. And a micro economist would look at individual people and say, well, Charlie's paying more at the pump. Justin's paying more at the pump. All my friends are paying more at the pump. Our audience is paying more at the pump. All of these people are going to have less dollars left over after they've paid their gas bill. They're going to be less well off. It's like a tax on them. Yeah, it is exactly like a tax. It's like a gas tax. Now you're going to be saying, well, how is it we all come out even? Well, that higher price hurts the consumers of gas and in equal measure helps the producers. And so who wins out of this? Well, if you're an oil company pulling oil out of the ground or out of the ocean, every barrel you pull out is now worth 50, 60, 70% more than it was previously. So America as a whole comes out even. But it's actually a massive redistribution from consumers to oil companies. Now there'll be some spillovers from the oil companies to the local economy. So this is probably good for Texas and Alaska. And Louisiana. And if you're a worker in the oil industry, which by the way, employs very few people, you'll probably get a few extra overtime shifts. And if you run the local sandwich shop, some of those workers will probably come by and buy an extra sandwich. So there'll be some regional gains. If you are, as you and I are, Charlie, from the Midwest, where we have a lot of manufacturing, probably this is going to be bad for our region. But across the US As a whole, this is basically a redistribution from regular Americans to oil companies.

[Charlie Sykes]

Well, and that's where the politics comes in here, because most politics, I think, is responsive to the micro economic shocks. Now, to this point that Trump is making, that when oil prices go up, we make a lot of money. Well, you know who else is gonna be making a lot of money? Apparently his bff Vladimir Putin. Because the day after Trump celebrated higher oil prices, Trump rul remove sanctions on Russia to help oil flow amid Iran conflict. Now, of course, this means that Putin presumably is going to get a flood of new cash that he can use to finance his war against Ukraine, even as Russia is providing intel to the Iranians to target Americans. But let's talk about that. So, I mean, obviously this is a windfall for Russia. There are going to be winners from high oil prices, again presuming that it does not crash the world economy. But Putin is coining money now, isn't he?

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[Justin Wolfers]

Yes, to be direct. And so what we have is by opening a front in Iran, we're effectively withdrawing not the war, but the trade war, the sanctions with Russia. So we're pulling resources away from trying to support our friends in Ukraine who were invaded in order to offset the political cost of going ahead and invading the folks in Iran. It could be that one could defend that. It would be nice to do it honestly. It'd be nice to have the conversation in advance. Might be useful to introduce Congress into the conversation as Congress officially has power both over trade and over wars. But that's just sort of a technicality these days.

[Charlie Sykes]

It is a technicality these days. Well, I mean, then of course, the irony is that Ukraine is apparently helping us by giving us some advice and technology of how to counter Iranian drones at the very time that that Russia is in fact helping the Iranians.

[Justin Wolfers]

Profoundly craven about all of this. We're going to war in Iran. It will cause the oil price to go up. That will hurt American families economically. And the president is unwilling to take the political hit that comes with that. And so he backs out of Russia. But I Also just want to pause for a moment on the conversation you and I are having here. Charlie, I know that you and I agree on a lot of things. It's very tempting when you have an economist on to make the economic case. And the economic case is this is dumb, dumb, dumb and dumb. I agree. I also think I'm the least interesting person at the table talking about Iran because the question here is, how do you feel about bombing another country? That is a much deeper question. And I've watched the American media do this all week. Let's talk about gas prices, what's going on at the pump. What about it might be, you think it's morally a good thing. There is this deep debate. Are we going to liberate 90 million people from an oppressor versus bomb the shit out of them? I, you know, you need people who are more knowledgeable than me. But the moral questions at play are so much more important than the gallon of gas, any of us.

[Charlie Sykes]

Thank you. You know, thank you. You know, I'm, I, I appreciate the corrective because we, we, we tend to be, you know, very navel gazing like me, when in fact we've invaded. Well, we're bombing another country. We still have to deal with the moral consequences of the bombing of the girls, school, 175 kids and teachers and the responsibility for all of that. I mean, these are real people in real time. The impact on the international order, the fact that, that the United States basically has decided that apparently that we can go into any country and kill their leaders, blow up their infrastructure without any sort of appeal to international law, without going to Congress. I mean, I am not sure exactly what our policy is about the assassination of foreign leaders. You know, for years it was very specifically something that was banned, that America would not assassinate foreign leaders. Just from a prudential point of view, we don't assassinate your leaders. They won't assassinate our leaders. But now Donald Trump seems to have gotten this itch to go in and kidnap and kill individuals when again now the ayatollah is not a good guy. He's a really bad guy. But so is Kim Jong Un and where, you know, he sends love letters to him. And you know, speaking of bad guys, Vladimir Putin, who's also Donald Trump's bff. So when Donald Trump says, you know, that we are morally, or Trump supporters, we're morally okay in bombing and assassinating leaders because it happens to be, Iran happens to be a terrible, you know, oppressive leadership, you know, and, you know, one of the, you know, axes of Evil. Well, we're kind of friends with apparently other parts of that axis of evil. I see that Donald Trump was talking about it when Ronald Reagan talked about the axis of evil. Correct me if I'm wrong, he meant Russia, Iran and North Korea. Well, what we're bros with North Korea and Russia and somehow it's okay to bomb Iran. So. I appreciate that. But I also think that the thing that is mind boggling is the degree of miscalculation here. And as students of history, we know that some of the worst catastrophes in world history have taken place when there have been miscalculations about war. And this one, they really did not think that Iran was capable of engaging in this asymmetric warfare. They don't have nukes, but they have the ability to wreck the national economy. They really didn't think that Iran was going to close the Straits of Hormuz, which is like, wait, this was not part of your thinking. You really didn't think that that was a possible outcome from all of this?

[Justin Wolfers]

Perhaps the best response is to pause and let that sink in. But as far as I can tell, that's right. The degree. Let me reflect a few things I know from press reporting and then try and put it in another context. So it appears that they forgot that there was Americans in the Middle east. They needed to fly out of there. It appears they calculate that there would be any ability to blockade a four mile stretch called the Strait of Hormuz. And it appears that they didn't make any plans for thinking about the fact that there would be economic consequences of war in the Middle east, which every other time there's ever been trouble in the Middle east has created economic consequences. So I want to start by, I want to be honest with your audience. I'm not a foreign relations guy on these questions. Did they plan? I'm not the person to ask. I'm not deeply sourced at the Pentagon. I, you know, I read the papers just like you. But what I do know is I'm an economist and I watched the trade war before I watched the Iran war. And if it's the same cast of characters, then I want to remind you the trade war began with the President announcing an utterly incoherent set of tariffs that had literally been decided the night before that they were so incoherent that markets melted down and seven days later he was forced to retract them. That he then moved from war to diplomacy, claiming he'd moved to 90 deals in 90 days and proceeded to fail at that 90 times in a row, and then finally went back with a different set of tariffs, which were later ruled to be unconstitutional because the whole thing, of course, was Congress's job, not the White House's. And we're currently in a mess where they've got to figure out how to give everyone back their money. And it took the White house, I believe, 11 months to finally figure out that tariffs on bananas were not going to bring banana factories back to America because you can't bring bananas here. And so we tariffed bananas for 11 months until we realized that that was nothing but a pure tax on American. And along the way, the president put a higher tax on the Swiss because the Swiss leader spoke to him in a tone of voice that he didn't like, suggesting he wasn't fully engaged in representing the best interests of the American people. All of that I know is a fact. All of that I know is amateur hour. All of that I know no serious previous American administration and no serious industrialized country would ever behave that way when it came to trade, America's place in the. In the world and so on. And so it doesn't take a lot to say, well, in the trade war, they acted like absolute clowns. Do I think it'll be different with the Iran war? And so when I hear these stories that you're hearing, I have few choices but to believe them. Because it's either that or they learned how to do homework, which is a very difficult task to learn. So it does look, they went in with no plan at all, dreaming of getting the all new iPhone 17 Pro, designed to be the most powerful iPhone ever. Then stay in bed and let a

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[Justin Wolfers]

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[Charlie Sykes]

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[Charlie Sykes]

See what's really, what's ironic, that may not be the right word. As somebody who used to be part of the conservative movement, one of the great insights of conservatives, which I still think is valid, is to warn people about unintended consequences. One of the reasons why skeptical of radical changes because the world and the economy is so incredibly complex that people sitting in government simply cannot know all of the downstream effects. So you ask yourself what are the possible unintended consequences even of something that is well intentioned. Now, George H.W. bush was mocked, I think it's Saturday Night Live did routines about it when he said that something wouldn't be prudent. But you know what? Prudence is a great virtue. It is a conservative virtue. But I also just think it is the common sense virtue. You behave in a prudent way, think before you act, understand the possible consequences of what you do. You don't see any prudence and you don't see any serious consideration of like, okay, let's game this out. What might happen. And given what's happening to the world economy right now, you would have thought that somebody in the Oval Office would have said okay, and there are political consequences to this across the board. So can we just talk about some of the fallout from all this and explain it to me why it's happening.

[Justin Wolfers]

I'm not willing to give my conservative friends prudence. Those of us who are not inherently concerned. Maybe the days have changed. Me also believe in prudence. I'm a technocrat. I believe in doing your homework. I believe in the spreadsheet. I believe in planning ahead. I'm not willing to give that to you, mate.

[Charlie Sykes]

Okay, well that's okay. You probably got it from, I don't know, Edmund Burke or something like that, just unaware of it. Okay, so let's go through just some of the headlines that were in the New York Times just in the last 48 hours. Fallout from Iran War and oil shock deliver another blow to world economy which is already was weak 16 and counting. Oil and cargo ships are growing targets in war with Iran. And of course Donald Trump keeps saying man up, just, you know, get some guts. The problem is is that even if you have insurance policies and when People see your boats blown up. Fallout from Iran War and oil shock deliver another blow to world economy. US mortgage rates rise undercutting housing affordability push gets worse. Fourth quarter GDP was just revised down to just 0.7% growth. January core inflation again. Another revision 3.1%. Politico has a piece. Five reasons oil prices won't snap back from the war. Airfares have doubled on some prices. Sticker shock for spring travel because of Iran. Goldman, Goldman Sachs. US Economic outlook cut by Goldman over the Iran war. And the fear goes beyond oil to a credit crisis. Iran war raises food shock. Fears as midterms loom. Because, of course, it's not just oil, it's also many of the chemicals that farmers rely on. So you're seeing this affecting, you know, the price at the pump that we were talking about. Mortgage rates are going up, food prices are going to go up. And I guess the question is, how long can the world economy. Does anybody know how long can the world economy sustain this kind of shock? And, well, we go that and we'll ask, you know, future question later.

[Justin Wolfers]

I think it was a little bit over two, maybe two and a half weeks ago the latest jobs report came out.

[Charlie Sykes]

Yeah.

[Justin Wolfers]

And it showed that the US Economy had created zero jobs since Liberation Day. In fact, we lost jobs. That's not how economies are meant to work. The unemployment rate's risen, the number of people in work have risen, have fallen. Opportunity is harder to find. That's not what we were promised. It's not how economies are meant to work. That's a jobs recession. At the time, I said we are either in recession or on the precipice of a recession. And so the advice to the White House would be don't do anything rash or dumb that could knock us over the edge.

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[Charlie Sykes]

This is the wrong time to do something stupid. There's never a good time to do something stupid. This is definitely the wrong time to do something stupid.

[Justin Wolfers]

Yeah. So look, that advice wasn't heated, was it? So look, the. So the US Economy was already very weak. This may tip us over. May not. It may. We just got some numbers this morning. You referenced them. Growth at the end of 2025 was very, very weak. For the rest of the world, they may not be quite as much on edge, but actually they're much more exposed to the war. First of all, if you're within bomb's reach of the region, that fundamentally transforms everything. And even if you're not, much of Europe and much of Asia is very heavily dependent on oil In a way, the United States is not. And so basically what we see in financial markets is every time the US Falls one point, those other countries fall two or four times more, suggesting they're two to four times more exposed, which means that there's real damage being done to the world, but it's being done in parts of the world that the President cares less about, which is not the Dow Jones, basically. So, yeah, I worry a lot about what this means for the world economy. People are marking down their forecasts already. And again, I think that's only half the story. So you talked about unintended consequences because you're a wise man. And I do think that I'm even going to give conservatives, they tend to put a bigger weight on this. But I also think anyone who knows any history would put a tenfold weight on it when we're talking about wars, because the story of wars is almost always this story of miscalculation. We tell the story differently because we want to respect those who put so much in. But our leaders let us down relentlessly. You know, before Korea, MacArthur told us the troops would be home by Christmas. Three Christmases later, it happened. Vietnam. Johnson was being told by everyone around him that everything would be okay and it was easy to win. In some sense, it wasn't his fault. He'd set up a bureaucracy where everyone wanted to send good news up and good news would travel up and reality would fade out. And that's what happens when you have institutional structures where the guy above you likes to be flattered. And if you think that was a problem back then, look at this White House. We saw the Iraq war most famously. You recall Donald Rumsfeld at the beginning said, we could be done in six days. It might take six weeks, but I doubt six months. It took longer than six years, which means that the duration of that war was more than 365 times longer than the experts suggested. And if you want to take that rule of thumb to the present day, where of course, the President said it could be four or five weeks or we've already won, what you learn is that even experts are wrong by a factor of 365. So as you think about things that could go wrong, think about what they're telling us and then multiply by 365, and then you're starting to understand the enormous risks. And the point is, the risks almost all point in one direction. When you think about the list of things that could go wrong in this war, as in past wars, and the list of things that could go right. The list of things that could go wrong is just much, much larger. So were we unlucky that we bombed in elementary school? At one level, it's incompetence. At another level, things happen. In the fog of war, you could call that bad luck. But guess what? You only accidentally bomb an elementary school when you're bombing.

[Charlie Sykes]

When you're bombing.

[Justin Wolfers]

Right.

[Charlie Sykes]

This is what you're signing up for.

[Justin Wolfers]

Yeah, it could have happened.

[Charlie Sykes]

So I see this point about the miscalculation is so we could devote an entire podcast to this question because it's funny. I just went to a book event with Eric Larson, who has a book about the beginning of the American Civil War, the firing on Fort Sumter. And what's interesting about that is, as you read the contemporary accounts, you want to talk about a massive miscalculation. Nobody, everybody in the south thought that this was going to be this glorious, you know, rise of the chivalry. No one had any idea what the American Civil War would be. The Union thought it was going to be over very, very quickly before the first battle of Bull Run. Massive miscalculation. World War I, one massive miscalculation. After another, World War II.

[Justin Wolfers]

Hitler thought he was going to just run his way through Russia in one campaign.

[Charlie Sykes]

Right. Well, but there's a perfect example because Russia and Japan both probably knew Japan. We do not want to have a prolonged war with America. Right. Hitler did not want a two front war. And yet the logic of war dragged them into making choices, making miscalculations that ended up destroying them. I mean, this whole history of all this. So when we talk about miscalculations, and you briefly mentioned the fact that we're now dealing with a president, a very, you know, one man who is making decisions, who is in a hermetically sealed bubble surrounded by actually, it's almost cartoonishly sycophantic. I mean, the, you know, the analogies to North Korea are not over the top the way things are going. So what information is Donald Trump getting? Is he out of touch? Does he understand what's going on? What is influencing him? What could, what could possibly go wrong when your sources of information detach you from reality? I mean, that's what's really, I think, the scariest thing about this, as he's, you know, rage tweeting about these, I'm gonna, you know, kill all these scumbags in Iran. Well, what's the next button he's going to push? And is he going through this process of prudently thinking about the consequences. And we think we know the answer to that. Right? So this is what is concerning.

[Justin Wolfers]

So, Charlie, let me freak you out a little further. So I agree with everything you said, that, look, here's what leadership is in that situation. It's recognizing that history says that you're not getting the full story, that you're likely overly optimistic. The most important question to be asking is, what am I missing? What don't I understand? What aren't I being told?

[Charlie Sykes]

Yes. Yes.

[Justin Wolfers]

If those questions aren't being asked, that's a failure of leadership. It's very hard. That's why leadership's so hard. It's not just turning up and dancing to ymca. But now, let me put this in a broader context. So if you think some people have a story of psychology and psychiatry, that it's something about how the President's brain works, some have a story about institutions where you surround yourself with sycophants and you end up in a medically sealed bubble. Whatever your story is, it is a story that allowed. Let's now put these in a row. The president to participate in January 6th and to continue to work absolutely relentlessly to overthrow an election, a democratic election, and to this day, not admit the truth that he lost. It's a president who started the global trade war and turn the global economy upside down based on a Misunderstanding of Economics 101 and a Constitutional Theory that was incorrect and the whole thing was unconstitutional from start to finish. And he did that. And it's worth bearing this in mind. He did this without bringing along the American people, without bringing along Congress and directly offending our allies. The third step in this play is he goes to war in Iran, and I've just blown past Venezuela. He goes to war in Iran without bringing along the American people, without bringing along our allies, without getting what many would argue is constitutionally, if not politically required, bring along Congress and without a plan. Now, if that's the Trend, what is 2027 going to bring?

[Charlie Sykes]

Well, yes, you did succeed in freaking me out.

[Justin Wolfers]

I mean, that is an absolutely serious question. Right? If those.

[Charlie Sykes]

Well, yeah, especially when he's. When he's pumped up with the kind of hubris that he is apparently at the moment.

[Justin Wolfers]

We don't need to know what it is. I mean, it'd be great if we did. Is it literally a psychiatric disorder? Is it aging? He has fools around him? Is it. He has a mistaken ideology? Whatever it is, let's just put those three events next to each other and say that he gets to do something like this once a year. By the way, this guy with a lot of energy does stuff like this twice a year. And then the question is, what's your lucky dip like? What are you forecasting for 2027? And unless he goes and has a really long sleep and a bit of a lie down and a bit of a think about whether this is the way to lead, then I think a lot of stuff's on the table and a lot of really scary stuff.

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[Charlie Sykes]

I like to think of alternative realities. For example, he has some off ramps here. You know, a prudent president could basically declare victory. A lot of people are saying this, declare victory, just stop, pull out. You know, pretend it never happened. That Sort of thing. I think that's very, very difficult to him. But, and he made still do that. I mean there's, there may be the, the Trump taco. Although again, this is going to be hard. This is going to be hard to get your, your dick out of this particular meat grinder. I mean, it's going to be a little more complicated, isn't it?

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[Justin Wolfers]

No, that hurts just to think about Charlie.

[Charlie Sykes]

Yeah, I know.

[Justin Wolfers]

I, I want to say two things in defense of this president.

[Charlie Sykes]

Okay.

[Justin Wolfers]

Totally. Seriously. One of the things I really liked about him, the only thing actually I really liked about him is he hated. He seemed to, this was Absolutely true until 2026. Hated it, did everything he could to avoid it. And I thought finally someone who wants to slow down, who thinks in that domain it's better to be careful, thoughtful and right it than Rush and get it wrong. So I really, really thought, past tense. He promised no more Middle east entanglements. I thought that might be a strength. The second thing I really like about him is many of our past leaders. One version of leadership is you state a path and then you follow it, no matter what. The worst thing that was ever said about Mitt Romney was he flip flopped. But actually when conditions change or you learn new things flipping fantastic and the President lacks dignity and is actually happy to just bail out in the dumbest freaking ways possible, which actually means we are more flexible than we would be under many previous presidents. So I think we're more likely to see, declare war, declare victory and go home under Trump than we would have been under Bush. I don't know that as a fact, but he does have the. He did once he turned on the dumb tariffs. He did turn them off seven days later.

[Charlie Sykes]

Yes. Although even after the Supreme Court ruled against him, he's doubled down on it. I mean, a prudent thing to do would be, by the way. Well, is like take the, take the l, blame the court, have these refunds flow back into the economy, you know, which helps you on affordability, might actually juice the economy just a little bit. But he's not going to do that. So this is the flexibility is a close cousin of being completely erratic. Erratic and unpredictable. And I know there are some people who think that maybe it's a virtue. You become unpredictable. The rest of the world doesn't know. The rest of the world is scared of you. Well, that works. Until it doesn't work, it doesn't work. You know, when the rest of the world goes. The fact that, that even his friends in like the governor, the government of Italy, which has been, you know, kind of, you know, Trump adjacent. They're going, wow, we're out of this. Okay, can I just read you what he wrote yesterday? Because there's one word that I want you to comment on as an economist. Okay, this is. This is Trump, apparently, after. After midnight Friday morning. I'm very, very upset at the negative media coverage of this. We are totally destroying the terrorist regime of Iran, militarily, economically, and otherwise. Yet if you read the failing New York Times, you would incorrectly think, we are not winning. So, of course, here we are at a time of war, and he's obsessed with the newspaper, with the messengers. And Iran's navy is gone. The air force is no longer. Missiles, drones, and everything else are being decimated, and their leaders have been wiped from the face of the earth. Well, most of them. Some of them we have.

[Justin Wolfers]

Have.

[Charlie Sykes]

Now we're getting to where I want to ask you about. We have unparalleled firepower, true unlimited ammunition, and plenty of time. Watch what happens to these deranged scumbags today. So I want to start. Stop right there. We have unparalleled firepower, unlimited ammunition. Okay. Actually, nothing's unlimited. We're getting this from people like Pete Hegseth that talks about we have an infinite amount of, you know, missiles and things like. Isn't economics all about scarcity and the recognition that nothing is unlimited? It's a strange moment because one of the concerns about this war is that we deplete our weaponry. We draw down those things because it's not. But the President apparently thinks it's like there's an infinite number of missiles in the world, which seems concerning.

[Justin Wolfers]

So on the point, you want economists to say nothing's infinite.

[Charlie Sykes]

Yes, that's what I want. That's exactly what I was hoping for.

[Justin Wolfers]

Lightly glib, but I know that you will take it the right way. There's a deep point that he's making. That's correct. Which is, we have many more economic resources than potential foes. That's absolutely correct. But that's not the only. Money or bullets are not the only resources that matter. The President is also remarkably politically sensitive to changes in gas prices.

[Charlie Sykes]

Yes.

[Justin Wolfers]

And that actually means his unwillingness to go to the American people and say, this is a moral issue. We have to suffer somewhat in order to make the world a better place. Means at the moment, the Iranians do anything that affects oil markets, that affects prices at the pump, that creates political pressure that this president finds close to irresistible. That's a remarkable weakness. That's a huge weakness.

[Charlie Sykes]

So we don't figure that out.

[Justin Wolfers]

We might have close to infinite bullets, but we don't have infinite ability to withstand what they're throwing at us, which is a form of economic warfare. Yes, asymmetric, more important, way more important than the number of bullets. Because if the President's going to just walk away the moment voters are unhappy, and if the Iranians see that, then we go there and we get nothing. Our biggest weakness is somewhere between the American population and the present. It's not having an adult conversation about whether we want to move forward, whether we're willing to take some costs. If we're not, don't go. Because you gain nothing. You go, you fight for long enough, we bear the cost, we withdraw, we got nothing. American troops die, kids in elementary school die. And the world's the same. That weakness is way more important than the number of bullets.

[Charlie Sykes]

I think this is a really profoundly important point and also an indication of perhaps the future of warfare and deterrence. The Iranians, and I'm not giving them any credit here, clearly cannot counter the US Bombs and bullets. Their navy is gone, their air force is decimated. So the next generation of warfare will be, what can we do? How do we find those vulnerability points, those weak points? Recognize that Americans have a lower threshold for economic pain than we do. So you have, have not just the oil, interestingly enough, we're seeing the role of low cost drones in warfare, but also cyber attacks. Now, I don't have a clear picture of all of this, but the Iranians are certainly making noise and there are alarm bells going off that they've created this network where they can go after banks and they can create a lot of havoc. Which again is like, what do the, the powerless countries in the world, the countries that do not have nukes, how do they deter attacks? What can they do? And maybe we're seeing a little bit of all of this. People are going, okay, we cannot fight the US Military. So we're gonna change the rules of the game. We're gonna start taking down businesses, we're gonna take down medical institutions, we're gonna take down banks. Your thoughts about that? Because that changes the formula of the way we see the world and what we think of as power. What we think of as power. Power, strength and weakness.

[Justin Wolfers]

Absolutely. I think there's always been the reach from lower income countries to find ways of fighting asymmetrically. So in some sense, our dependence on electronic commerce means that cyber attacks are sort of uniquely painful but before that. So is chemical warfare the ability to exact great pain on others. So is terrorism. Yes, the ability to impose great pain on others at fairly low costs really does undermine the ability of a great army to have enormous dominance. I don't want to go too much further out of my lane there, Charlie, because I really am not a defense guy.

[Charlie Sykes]

Well, no, I just think that we're sort of seeing the. I mean, the cliche is that generals always fight the last war. And I wonder whether or not we're seeing that phenomenon as well, because we are. You know, you talk about the vulnerability. I mean, Americans, you know, don't want to pay more at the pump. They don't want to pay more for gas, by the way.

[Justin Wolfers]

We can fix that vulnerability in a heartbeat. And maybe I should take a punch left instead, but I think I'm going to punch right instead. If the president made the case, he would bring the country along. If he brought the country along, he would bring the Democrats along.

[Charlie Sykes]

Yeah, but he can't do that.

[Justin Wolfers]

And at this point, Democrats wouldn't be saying, you're paying more at the pump because of the president's misadventure. They would be saying, there is a great and important moral mission ahead of us, and we would never want to undermine it.

[Charlie Sykes]

But, see, that's where your point about who this president is, that he can't make that moral case. You know, the kind of person and president he has been means that he is not going to be the uniter, he's not going to be the person to bring the country behind him. Because, you know, everything that we've described up until, which is where I broke with some of my neoconservative friends who are saying, you know what, you go to war with the president, you have, and so we support the war. And this is my point. No, not this president. There are unique dangers in going to war with this president. Donald Trump as a wartime president is dangerous as a wartime president, but also what he would do with it domestically, et cetera. Everything else that we've talked about here today. So this is where I don't think there's anything that Donald Trump can do or say that's gonna get the Democrats to rally around his flag. I mean, this is the problem of leadership when you become a president like him.

[Justin Wolfers]

I would be mad at the Democrats for not digging in with the president. But given the nature of what the president has done, the case that he hasn't made, the absence of logic for moving right now, the absence of logic for moving with weapons before talks. The tearing up of the previous Iran deal, I wouldn't have moved either. But I think there is a world in which we should put this above politics. We're just not in that world.

[Charlie Sykes]

And it's gonna be hard to get back to that world. Okay, so what numbers, what things are you looking at? What are the IND that are the crucial ones? Is it the inflation rate? Is it the GDP number? Is it the mortgage rates? What should we be focused on? Consumer confidence? What is the canary in the coal mine for you?

[Justin Wolfers]

Yeah, I'm spending a lot of time looking at financial markets. And I want to be clear. It's not because I care about your 401 and it's not because I want rich owners of capital to be even richer. What I would want at a moment like this is some indicator about the future path of the economy. Now, when I look at at most economic statistics, they tell me about the past. So I need something forward looking. Okay, what are some forward looking things? I could turn on TV and watch the talking heads, but it turns out the neocons always say war is good, and the peaceniks always say war is bad. And so when I turn on the tv, I learn about the personalities of the two people rather than about the future path of the economy. Now, the nice thing about financial markets is these people putting their money where their mouth is. In fact, the peacenik might be betting as if there's a good case for war, or the neocon might be betting the other way. There are billions, trillions of dollars bet in financial markets. What that means, therefore, is that if you can do a slightly better job figuring out the implications of this war for the US and world economy, you will become one of the richest people in the world. That in turn means that companies like Goldman Sachs and JP Morgan and so on are running simulation models and talking to historians and at satellite imagery and learning everything that they can. And so the ups and downs of financial markets, I think give us a. The other thing we could do is we could listen to the White House, but it has lied about literally everything.

[Charlie Sykes]

Right. And may change its mind tomorrow.

[Justin Wolfers]

Yeah, so the. So therefore I'm looking at financial markets very closely. Financial markets are very worried. The US market is moving up and down literally hundreds of billions of dollars based on tiny statements by the president, by Hegseth and so on. And global markets are moving even more. So if I can tell you anything, the fear index, which is the implied volatility of future stocks, says strap in. These are unfortunately interesting times

[Charlie Sykes]

and volatile times. Justin Walfers, thank you so much. And by the way, you have a YouTube channel which is outstandingly watchable and with all sorts of penetrating insights. So if you have not checked out Justin Wolfer's YouTube channel, definitely do that. And thanks for coming on the podcast today. I appreciate it very much.

[Justin Wolfers]

A great joy Charlie and thanks for making me a little smarter today.

[Charlie Sykes]

I well, we just want to be a little more sane on any given day. Thank you all for listening to this episode of to the Contrary podcast. I'm Charlie Sykes and you know why we do this? What are you know what the through line is? Because every single day we have to remind ourselves that we are not the crazy ones.

[Farnoosh Tarabi]

Foreign.

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