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- [00:01]
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- [01:10]
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- [02:02]
Josh Barrow
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- [02:14]
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Josh Barrow
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Josh Barrow
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- [02:32]
Charlie Sykes
I'm Charlie Sykes. Welcome back to the to the Contrary podcast. A lot going on. Texas Democrats decide they actually want to win an election. The Trump administration is going back and forth about whether or not to blame Israel for going to war with Iran and the AI wars apparently have Just begun. A lot to dive into today. And joining us on today's podcast is Josh Barrow, who is the co host of the Central Air podcast and the author of the Very Serious Substack newsletter. Josh?
- [03:05]
Josh Barrow
Hi, Charlie.
- [03:06]
Charlie Sykes
Thanks for coming on today.
- [03:07]
Josh Barrow
Absolutely. Thank you for having me.
- [03:08]
Charlie Sykes
Can we do this as a little bit of a. Can we start with a little bit of a palette cleanser before we get into the really, the heavy stuff like war and artificial intelligence? Would you mind? I want to start by. In case anybody missed this rather extraordinary moment in the United States Senate where the newly liberated Senator Thom Tillis is questioning Homeland Security Secretary Kristi Noem. Actually, he's kind of connecting the dots, reminding people that she got the job because she shot a puppy. Let me just play. Let's just play a little bit of this and then I wanna comment on the other side. This is Senator Tom Tillis, who is giving a. This is kind of an epic smackdown of Christino, who took time out, by the way, from making her coast playing videos and quality time with Corey Lewandowski and hunting down migrants to. To come and sit and listen to this secretary.
- [04:00]
Senator Thom Tillis
I read your book last week and honestly, some of the parts of it impress me, but some of it distresses me. And I'll give you a good example of one that does. The passage where you talk about killing a dog that was 14 months old. I trained dogs. All right? And you are a farmer. You should know better. You should know that if you're going out to a hunting lodge and you're putting pheasants out and you're putting dogs out, you don't take a puppy out there. A 14 month old dog is basically a teenager in dog years. You decided to kill that dog because you had not invested the appropriate time and training. And then you have the audacity to go into a book and say, it's a leadership lesson about tough choices. It's in your book. We could play it if we had time at that same lunch hour. You killed a goat. And you killed the goat because you said it was behaving badly. You are a farmer. You don't castrate a goat. They behave badly. You should have probably done that before. But my point is those are bad decisions made in the heat of the moment, not unlike what happened up in Minneapolis.
- [05:08]
Charlie Sykes
Okay, Josh, There's a lot going on there. My first thought was Thom Tillis was pretty worked up there. This is a man with a lot of regrets and feels the need to get a lot of things off his chest. What do you think?
- [05:19]
Josh Barrow
Yeah, I mean, I think that, you know, there's a certain amount of embarrassment about they all confirmed this woman into this job. Yes. And it was, you know, it wasn't just Thom Tillis. John Kennedy, the Senator from Louisiana, also went pretty aggressively against Secretary Noem. There's a weird thing going on in the Trump administration this time, where last time Trump fired a lot of people. And obviously that's his brand that he fires people. And I think he decided that that had, you know, created a blood in the water effect and encouraged Democrats and the media to pile on trying to get him to fire more people. So this time their rule is no scalps.
- [05:50]
Charlie Sykes
Absolutely.
- [05:50]
Josh Barrow
And he, you know, he basically hasn't fired anyone. There's been a few low level people. There's been a couple of people who, like, you know, Michael Waltz sort of got kicked upstairs. He, you know, had to leave being National Security Advisor. But they make him, made him ambassador to the UN as his, like, farewell job. Kimberly Guilfoyle is the ambassador to Greece because Don Jr. Decided that he was no longer sexually interested in her, I guess. But, you know, for the most part, they're not firing people. And so, you know, I guess maybe that has made the media a little bit less aggressive, although I don't know how much less aggressive. But the flip side is that when you have people in your administration who suck and who are causing you lots of political trouble, in addition to being substantively bad at their jobs, you sort of have to keep them around. And so that's Kristi Noem. It's also Laurie Chavez, Darimer at the Labor Department, producing all of these sort of weirdly alcohol soaked scandals. And yet still being there, Pam Bondi. There are people who are clearly underperforming in certain ways.
- [06:49]
Charlie Sykes
We could spend an hour going through the entire Cabinet. Right. I mean, we could go through this. I mean, it did strike me that here we are at a time of war and, and three of the key people that we're now relying upon to keep America safe. Kristi Noem, the Director of Homeland Security, Kash Patel, the Director of the FBI, and Pete Hegseth, who feels like he's a cartoon version of a Secretary of Defense and is, to your point, Secretary of War.
- [07:14]
Josh Barrow
It's the War Department.
- [07:15]
Charlie Sykes
Yeah, I'm just not going along with all of that. But we are winning without mercy and we don't have any these silly rules of engagement under the personal leadership of Donald J. Trump and whatever. But you're right, he's stuck with these People, even though they are absurd and even though you can tell that members of the Senate are going, okay, this is ridiculous.
- [07:36]
Josh Barrow
Yeah. And I think there was also. I mean, Kristi Noem is still in her job running the department, although she's been Bigfoot in certain ways. I mean, I know when the government shut down, there was that announcement that they were going to turn off TSA Precheck. And then eight hours later they turned around and announced they weren't gonna do that. And it was clear that what had happened was that at DHS, their strategy, the government shut down. Now 11 of the 12 appropriations bills pass. The government is funded, but DHS, including TSA, and FEMA are not funded. And so their brilliant idea to put political pressure on Democrats was we'll turn off TSA Precheck and everyone's gonna get really mad at the airports. But that was not workable in part because you need more staff to run the checkpoints at the airports if you don't have pre check on. So they announced that it immediately got walked right back around in Minneapolis. Specifically, it's clear that they pulled her guy Greg Bovino off and sent Tom Homan in to run stuff on the ground there. But she has not been completely removed from the day to day operations of the. And there's all sorts of political sensibilities. I mean, a key part of what Tillis is upset about is that she's imposed these draconian spending limits at FEMA where like anything that costs more than $100,000 has to be approved personally by the secretary. And it's caused this big backup in disaster relief and other important things that people want done in their districts. And that is apparently still ongoing, even as, you know, she's flying around on her fancy jets that she had the department buy for her. So I don't know that they really have an approach to cost control there.
- [09:00]
Charlie Sykes
You're right. I mean, there's so much going on with. I also think that what came up during the hearing was how much money she spent on making these video ads about herself, that her job is cosplaying. As she gets dressed up and she makes these sizzle reels about herself. We're talking about millions of dollars promoting herself. And you can tell that, look, I agree with you that Donald Trump is not gonna give any scalps. But in any normal world, this woman would be on the hot seat. I just got the sense though that the senators felt that they. I mean, the lack of respect and I don't think she deserved much respect But, I mean, they, they basically felt, you know, look, we, you know, we, we have the green light to really go after this woman. I mean, Tillis doesn't care what Trump is. But the fact that Kennedy went after her as well, the fact that there are just so many conflicts of interest, it is just such a swamp of incompetence and cruelty and corruption, and it's all like, sitting right there in front of them.
- [09:57]
Josh Barrow
Yeah. I mean, I think, you know, in addition to her being awful, I think that there's a feeling that she's embarrassing for the party. And even, you know, sometimes Republicans in Congress, when they want to criticize the administration, they do this thing where they talk about how the people are not serving Donald Trump well. And, you know, if, like, if only he understood. And I think there may even a little be a little bit of sincerity about that here, because she isn't serving Donald Trump well. And I think, you know, one of the ways to frame, if you're, you know, going hard after her is that she, you know, she is politically undermining the administration. I think that is a, you know, an almost fair way to think about it if you're a Republican on the Hill.
- [10:33]
Charlie Sykes
So let's talk about the administration and how they're doing. We're in the second week of the war in Iran, and of course, we have the usual fog of war, but what is really extraordinary about this particular war is the fog about almost every aspect of it, including why we are fighting this. Now, one of the problems the administration has is it can't keep its story straight. You had the suggestion from Marco Rubio the other day that basically Israel kind of forced our hand that they were going to go and we had to go because of Israel. So blaming Israel. And then other people in the administration, including Trump, said, no, it's not Israel. But, you know, in terms of the various nightmare scenarios, the idea that you would have the Secretary of State of the United States saying that we have gone to war at the behest of Israel feels like some weird fever dreams. Your thoughts about that?
- [11:24]
Josh Barrow
Yeah, yeah. I mean, the buildup to this war was super strange in that there wasn't an effort to make a political or a policy case for the war. I mean, it's very different from the lead up to Iraq or to the lead up and the eventual pullback in Syria under the Obama administration, where normally there's a public debate and a public case made by the administration about why you would take certain action. And the Trump administration has basically just decided, well, like many presidential administrations before them, they have an expansive view of executive war powers and what the Congress actually needs legally to sign off on. And then they also just don't seem to care about building support, which is weird. The poll numbers for this war, it's the rare war that's already underwater when it starts. Something like 60% of Americans saying they oppose the military action normally. Part of why you do that political effort to build support is that it convinces some people they didn't even really try. And so partly because you didn't have that effort, you don't have people on the same messaging page about why it is that we're even doing this. There isn't a message that's been beaten into people's heads over some period. I think part of the specific we had to do this because Israel was going to strike and then Iran was going to retaliate. And this is preemptive of that. Some of it might be a legalistic thing around why the administration could act now without Congress's approval, that if we were going out and doing this as a war of choice, that maybe they should have gotten asked first. But if it's a response to an attack, then the administration can react on a dime. And so that's a theory of why it was responsive rather than proactive. That's not really a political or substantive an argument.
- [13:02]
Charlie Sykes
But if it's a legal theory, it should have been a little bit more clearly thought out and then explained. Right. As opposed to it feels as if they're making up stories moment by moment on the fly, basically trying to sort of reverse engineer whatever the hell actually happened.
- [13:21]
Josh Barrow
I mean, and the other thing is, you know, like, Israel's our client state, and we've even seen with the Trump administration their ability to pull back the Netanyahu government in specific military action areas when they have felt necessary to do so. I don't think it's true that Israel would have gotten us into this war over the objections of the president if he had been unwilling for them to do that. So I think as a substantive matter, I just don't think it's true. But I do think that they want to be able to say that we had no choice but to do this. It also reminds me a little bit of some of the stuff that's been going on with the third country, deportations, where it's when we have a legal reason that we can't sense someone to Sierra Leone or whatever, but if we send them to Cameroon, then what the Cameroonian government does is out of our hands. They sort of like this thing where they can offload responsibilities to foreign governments and say, well, you know, this was outside of our control. That, you know, that that's an Israel thing. So just like a general, you know, Trump never, never personally responsible for anything.
- [14:21]
Charlie Sykes
Yeah, but given. Given the. How fraught American political support is for Israel, it seemed like the potential for real disaster. So, you know, you mentioned, and I think this extraordinary thing, the lack of building public support for all of this, and I'm having, of course, flashbacks to the Iraq war and flashbacks to Colin Powell and the Powell Doctrine, which basically laid out, is a vital national security interest threatened? Do you have clear attainable objectives? No. Have all other nonviolent policy means been exhausted? No. Is there a plausible exit strategy? We are not sure. And then the key to the. The Powell doctrine. I'm not trying to whitewash everything that Colin Powell did, but he kept arguing, is the action supported by the American people? Do we have genuine international support? And he argued, look, one of the things we should have learned is that we cannot go to war if the American people do not support it. And there's no indication the American people are supporting it. In fact, there are real fissures in Trump's own base. People who actually believed him when he said that he was not going to be the peace president.
- [15:27]
Josh Barrow
Well, I mean, I guess the one flip side thing to that is that we don't have boots on the ground yet, and it's not clear to me whether we will. I mean, I think, you know, that there is a. If they set out clear objectives, one of the problems is that you might come up with objectives that could only be achieved if you achieved if you put boots on the ground. I think that what the administration thinks is that, you know, what they did in Venezuela worked out as well as they could have hoped for.
- [15:49]
Charlie Sykes
Trump is saying that over and over and over again. Yeah, right. And even though people point out Iran and Venezuela, very, very, very different countries, very different politics, very different culture, of course.
- [15:59]
Josh Barrow
And also. And it's also not clear yet how well the Venezuela thing has actually worked out. Like, is the Delsey Rodriguez solution, in fact, a solution? I think the jury is very, very much still out on that before you even consider how the Iranian regime was much more ideological and much longer standing, et cetera. But so I think that their hope is that basically we can launch a bunch of bombs and a new government will come to power there that will be more pliable in certain ways rather than a true regime change toward A liberal democratic Iran. And, you know, maybe. But my guess is that that is not where we're going to end up here. And at some point, you know, you could imagine an administration that feels compelled to put boots on the ground to try to assert more control over Iran, but you could also imagine one that doesn't. And then, you know, God knows what chaos has been unleashed in the Mideast and what enters that vacuum there. But I think, you know, I think the president, you know, feels like he's on a hot streak after the Venezuela thing. That's why he came in with this nonsense, trying to badger Denmark into handing over Greenland. And after a week, it became clear to him that that wasn't going to work and was going to cause some problems, and he backed off of it. So my guess is that he has a similar plan here, that if, you know, that if this doesn't pan out, he'll just move on to the next thing. But I think it's a little harder to walk away from than the Greenland talks.
- [17:15]
Charlie Sykes
Yeah, I wouldn't use the word plan, but I think you're probably right. He probably thinks that at any given moment, he simply declares victory and just stops everything and pulls out. Right. That he thinks he can do. But the problem is that other people get a vote as well. And that, you know, once, once you basically, you know, stuck the stick into the hornet's nest, you just can't say, okay, kind of done there, objective done, walk away. Because the hornets might have something to say about that.
- [17:40]
Josh Barrow
Well, we've started a wider regional war already.
- [17:42]
Farnoosh Tarabi
Yes.
- [17:43]
Josh Barrow
I mean, one. I mean, one interesting thing is, you know, like, we have more international support than you might have expected because the Iranians, like, responded to this by attacking everyone. So I guess, you know, our side is less fragmented than it might have been. But that also means that, you know, more destruction, more death, and much less ability to just be like, oops, sorry, carry on.
- [18:02]
Charlie Sykes
Well, and there's also other collateral damage, including, and you mentioned the damage done by his threats against Greenland. Obviously, Europe has not gotten over that. I don't think Europe is gonna get over that. I talked about that with Anne Applebaum the other day. But there's kind of a war of words now going on with Spain and Germany, and Trump is lashing out at them because they are not supportive enough. So once again, whatever happens here, those, you know, I think those fissures which had already been opened are widening, are widening. As you know, you have the President, United States, saying, we're done with Spain, we don't want to have anything to do ever again with Spain. You know, presidents used to not say things like that about countries that were, you know, vaguely allied with us.
- [18:47]
Josh Barrow
No.
- [18:48]
Charlie Sykes
And yet, here we go.
- [18:50]
Josh Barrow
Yeah. I mean, I don't know. I wonder about the extent to which people are sort of numb to that at this point. I think.
- [18:54]
Charlie Sykes
Yeah, I think they are.
- [18:55]
Josh Barrow
Europeans have to be used to him talking that way. And I think that the thing for Spain is Trump is probably a little bit busy in the coming future to focus too much on the Spain thing. The other area where I'm wondering about the impatience the President is going to develop is that this obviously has pushed up energy prices. And one of his key economic goal is that he would like to tame inflation more in the United States and create room for the Fed to lower interest rates. And he even cut the tariffs on coffee and bananas. He was convinced that. Well, that maybe, at least in certain areas, he can trim his sales on trade policy there. This is going to significantly frustrate that objective. It's interesting to me that the President announced this week that they're going to insure oil tankers sailing through the Straits of Hormuz, which actually strikes me as a pretty good policy idea. I don't know what.
- [19:49]
Charlie Sykes
And it's apparently kept the price spike down. There was some positive reaction that if, in fact, you keep the Strait of Hormuz open.
- [19:57]
Josh Barrow
Yeah.
- [19:58]
Charlie Sykes
Then things are going to be relatively normal.
- [20:01]
Josh Barrow
Yeah. I don't know who's paying for that. Like, didn't we need a congressional appropriation? But I don't know if. Is that a thing anymore? Yeah, but, like, substantively, it's like the rare Trump policy idea where it's like, actually, that seems like a pretty good approach here. So maybe Congress will codify that at some point, but it shows that he's sort of making things up.
- [20:20]
Charlie Sykes
Well, I mean, this is the old story. You set the house on fire, and then you're running to save the cat. Like, are you the hero? Wait, no, you just. You just set the house on fire. Okay, so let me just shift to. Because we're in this fog of war and there's all this talk about what public opinion is going to be. You never know at the beginning of a war. Except that usually at the beginning of the war, everything looks great, the public is behind it. None of that's happening. But if you want to the answer to the question, what happens with the MAGA base? Get back to me in a couple of weeks, find out whether I actually find it, you know, I know that you're having this, you know, the MAGA influencers who are ripping one another and engaging in that kind of civil war, I think that's less significant. That's kind of performative then, really. What about all of those voters who, going back to 2016, actually believe Donald Trump, this was really part of his appeal. The end of endless wars, the rejection of, you know, neoconservative regime change. Is that going to have any effect with that base? I don't know yet, but I think that's actually obviously a much more interesting story than whether Megyn Kelly and Ben Shapiro were mad at each other this week.
- [21:26]
Josh Barrow
Yeah, I mean, I think it will matter a lot if and when we send in a bunch of troops. I mean, I think to the extent that this is mostly an air war, it's going to have sort of a strangely small footprint in the same way that, like, you know, Trump likes to go around saying he ended eight wars. And, you know, those, those claims vary from, like, overstated to made up. But the, you know, those conflicts, like, no one in US Politics cares about the conflict between Thailand and Cambodia, regardless of, you know, the, the, you know, the extent to which the president played a role in getting that cooled down, it's heated back up again. Nobody notices, like, even here, like, to the extent that we're just firing missiles into Iran. This is going to be weirdly like a, B or C issue in American politics, which feels very screwed up. But, like, you know, they, they made no point. Big, positive case for this war. I don't think if you make a list of issues that are firing up Democrats ahead of the midterms, this is definitely still below ICE and immigration enforcement with the broader public. It's definitely still below cost of living. So we can have this weird situation where this just goes on at a medium level of intensity. And it's unpopular, but it maybe isn't that salient,
- [22:36]
Charlie Sykes
except for the drip, drip, drip, and the whole sense of, wait, this is not what we, we voted for. And whether or not you have accumulation, we can get back to that. And I want to talk about, by the way, what's firing up Democrats? We had the big primary in Texas, which I thought was fascinating. You've written about very, very extensively. But can I talk about something else that is absolutely freaking me out and tell me whether I should be freaked out about it. There's a lot of hype about AI and you wrote about that big memo that crashed the stock market temporarily, that AI is going to destroy the economy. I want to get to that in a moment, but I want to get your thoughts on this debate that's going on right now involving Anthropic and OpenAI about are we going to turn over this massively powerful technology to the Pentagon? And you know, Anthropic said, okay, we're willing to work with you, but we don't want you using our technology for autonomous weapons that might kill people on their own and for mass surveillance. And as a result of that, the Trump administration has basically not just canceled their contract, but essentially, you know, put this massive black mark on them, saying they're part of a supply chain risk, which means that nobody that does business with us can do business. Give me your thoughts about it. Because OpenAI looked like it was, okay, we're going to cooperate with the Pentagon. They're walking this back. But it strikes me as kind of this fundamental issue now who controls AI and we're going to see this fought out on this issue with the Pentagon. You're, how do you come down on this?
- [24:07]
Josh Barrow
Well, so I think there's two separate issues here. One is what should the contract with Anthropic say? And the other is what should be the reaction if they are unable to come to terms with Anthropic. On the second part where the Pentagon could not come to terms and they announced this supply chain risk designation that you mentioned, this is basically an attempt at a corporate death penalty because it's saying to Amazon and Microsoft and Google that they can no longer do business with Anthropic. And so Amazon is, I believe, the number one player for web hosting in the world. And so they rely on the, these technological interfaces with these other huge companies that obviously have their own business with the Defense Department. And so it's an attempt to put Anthropic out of business and therefore an attempt to basically, it's not quite nationalizing Anthropic, but basically saying that the federal government gets to decide what the corporate policies of Anthropic are going to be, on what terms it's going to sell products to the government. And then they also basically comply or die.
- [25:00]
Charlie Sykes
Right? I mean, this is the heavy hand. You either do what we say say, or we as the all powerful federal government will put this private company out of business for not doing what exactly what we want you to do for us.
- [25:13]
Josh Barrow
Yeah. And then they also considered another authority under the Defense Production act, where the government can instruct private firms to build stuff for the Defense Department. And the idea with this originally was like, you know, in World War II, you could make Ford build tanks instead of building cars. But they were going to, in what is theoretically peacetime, they talked about imposing this on Anthropic and basically saying, well, if you won't cut the contract that we want with us, we'll just impose it on you and force you to sell us your services on our terms. So they're both very statist, very government controlled visions for the economy. And that's going to work through the courts. I mean, this is not, these are old laws and there were sort of total war situations in which we did these sorts of things. But the attempt by the Trump administration to basically use this to say in any dispute that we have with a private firm, we just get to impose whatever, whatever solution we want. I think that is very concerning in a country where, you know, we're supposed to have a free market and a private sector and attract business investment into firms that, you know, expect to be able to do business on their own terms under clear laws. So I definitely worry about that part in terms of, you know, what kind of AI should the Defense Department actually have at its disposal? You know, I think some of the arguments from the Trump administration side here are not crazy, actually, where it's like, you know, if the, if we buy, if we buy artillery shells from a defense contractor, they don't come with software. That means that we can only fire them with the approval of the defense contractor. We have laws that govern our activities, but once we own the product, we decide how to use it and we interpret those laws. And the courts are the ultimate arbiter over those laws. The thing with AI, it's really a service rather than a product. And so the company is providing it on an ongoing basis. They're not just selling them software on a CD rom. And so I think it's a little bit of an interesting question exactly what kind of interface you want to have there. I don't think it's crazy to say that the ultimate authority over what US Defense policy should be shouldn't be a private company CEO. It should be vested in the government and in the laws. Maybe Congress could involve itself somehow for once. So I think it's actually a little bit of a hard question exactly what the contract should say. But I also think it's a free country and that if Anthropic doesn't want to be a defense contractor on this term, they shouldn't have to be.
- [27:35]
Charlie Sykes
Well, I mean, it's a little bit like, you know, the scientists who are working on the nuclear bomb who decide that this violates their conscience. I mean, they could walk away. But I agree with you. I think there are just so many unanswered questions about AI and in terms of its ability to disrupt everything. I think, you know, we're looking back 50, 100 years from now, many of the things we discuss will be completely forgotten. But the AI revolution is going to be everywhere, like the industrial revolution or the tech revolution. Now you had a really interesting piece, piece about this viral memo that was predicting this 2028 market crash because there was just too much AI driven productivity growth. And a lot of people were completely freaked out about it. And you said good things are good. And I mean, look, fire is good until it's not good, right? I mean, it's like the Internet is good until it's not good. Nuclear power can be a really, really good thing. But nuclear bombs. So I guess the question is, is AI the nuclear power of the future and are we concerned that it's going to destroy the economy? But I'm sorry, going back to this memo, it was this dark memo that all of these jobs would be lost, all of this income would be lost. And therefore. And people freaked out about it.
- [28:52]
Josh Barrow
So I mean, I think there's two separate questions here. One is should we be worried about AI? And then another is should be worried, should we be worried about AI for the specific reasons that are discussed in this memo and this memo, as you note, it's not just that people freaked out about it. The stock market moved on it. There are companies that are discussed in here, very diverse companies. DoorDash, Blackstone, ServiceNow that their stocks went down substantially after this memo came out. The memo didn't really contain any news. It was just a scenario laying out this idea that AI could cause an economic crash not by the machines taking over and killing people people, but simply because it would become too useful and basically would outcompete human workers that people would find that ServiceNow is one of these software as a service companies. And the idea is, well, you'll be able to vibe code your own company software with Claude so you won't have to pay for this expensive stuff from ServiceNow. So everyone who works at ServiceNow is gonna lose their jobs and then they're not gonna be able to pay their mortgages and then we're gonna have a financial crisis like we did in 2008. So it's this weirdly kind of boring AI doom scenario where it's like the machines don't kill us, it's just the machines cause the banks to become insolvent.
- [29:57]
Charlie Sykes
The machines make us irrelevant and unemployed.
- [29:59]
Josh Barrow
Right, but the thing that, there's a few problems with that theory. I mean, one is just throughout history when you have gains in productivity, that means higher living standards, a larger economy and better life. So it's a very unusual thing to say that people are going to be more productive and therefore they're going to be poorer. There are theoretical ways you could describe it would happen, but that is not, not usually the way that that would go. And then as they describe in the memo, it's like, you know, it's June 2028 and the unemployment rate is now 10.3%. So obviously that's elevated. It's more than twice what the unemployment today.
- [30:31]
Charlie Sykes
Yeah, but that is like depression era level, right?
- [30:34]
Josh Barrow
Yeah, but, well, I mean, so it's not depressionary level because that, you know, it was like 25% in the, you know, okay, big recession. A big recession. But that still means, you know, more than 90% of people or almost 90% of the workforce is employed. And not only are they employed, as they describe in the memo, they're enjoying all these big productivity gains. And they describe, you know, you don't have to pay for a buyer's agent anymore when you buy a house. And that costs the cut to buy a house, cuts the cost to buy a house by 2 or 3%. There's all this stuff about people become much more efficient at buying insurance and travel and various things. And you always get the best price on your razor cartridges because the machine does the price comparison for you. All these things, it's describing all this stuff where if you're someone who, who didn't lose your job, if you, you know, if you're a nurse, one of these fields where, you know, you are still needed to provide your in person service, not only are you still working, but your real income has gone up substantially because of all of these benefits. And so presumably if that's the case, you go out and you buy more stuff. Now you don't necessarily buy more AI related stuff. It might be, you know, well, I, I saved all this money on my insurance and my house purchase and therefore I'm going to renovate or I'm going to send my kids to six weeks of summer camp instead of three, three. That sort of stuff that not only improves standards of living, it also creates jobs. It just creates jobs all over the economy, not necessarily in the places you know where to look because of AI. And so that's like what the Normal story would be in this sort of situation, you do have some transition costs, but that has to be, you know, offset against the, you know, the real gains from those gains in productivity. And then we also, we have macroeconomic tools that deal with these situations where you have dislocations in the economy. This is exactly the situation where you would expect the Fed to cut interest rates in order to support the economy. And we have a president who is, if anything, much too eager for Fed interest rate cuts. So I don't think the Fed would have a problem cutting rates if we got into this situation where the economy needed that kind of support. So maybe the machines will take over and kill all of us. There's other AI doom scenarios that are far beyond my area of expertise that involve all sorts of unknowns. But I'm not worried about this scenario where basically just the AI becomes too useful and that's somehow crashes the economy.
- [32:39]
Charlie Sykes
Okay, so I agree with your analysis, but let me just push back a little bit on all of this because a lot of this argument sounds like exactly the sorts of things that we heard from economists about globalization a couple of decades ago, how this will improve the overall economy. And yes, there will be transitional costs, yes, there will be winners and losers, but the reality is that that transition has proven to be massively disruptive. And we're already in a sort of feels like a revolutionary time. And we're talking about the possibility of, yes, productivity will rise, things will get cheaper, but there will be whole sectors of the economy with real people in real time who will be out of work. So I understand from the macroeconomic level that maybe this works out, but this just sounds very, very familiar to me with the argument about globalization. And we've seen what the political and social cost of those disruptions have been. We're living through it right now.
- [33:42]
Josh Barrow
Well, I just, I think the story about the, you know, the perils of globalization has just been oversold. And in some cases, the time series just doesn't line up like the period of, you know, real stagnation in US income is in the 1980s and the early 1990s. And we actually had, you know, much, much better real income growth sort of starting around the year 2000, when you have the real opening up to China there. And so I think that, you know, I think we had other, you know, the aftermath of the global financial crisis and the very slow climb out of that and the period of extended unemployment there. That was obviously extremely painful around in the US and around the world. But that was not A globalization story that was a story about, you know, financial markets that were ill designed and that, you know, that misallocated risk and then an underreaction in terms of macroeconomic response that we did not have enough stimulus of the economy. Then a lesson that we unfortunately then overlearned coming out of the 2020 crisis when we overstimulated the economy and got a different set of problems. And then also I think that there are regrettable geopolitical impacts of globalization. I think that we thought that as China got wealthier, it would become more liberal and more friendly. And that did not pan out. And so I think that there are good arguments for decoupling from China, but the decoupling from China is, is economically costly and actually lowers standards of living in the US it's worth doing for geopolitical reasons because the Chinese government is not, is hostile and we don't want it to be powerful. But it's not that Americans are made richer when they lose access to cheap Chinese. I mean, there's all these cheap, as far as I understand, good quality electric vehicles being made in China right now that are drastically cheaper than what's on the US Market. And we're keeping those out for, for geopolitical reasons. A combination of trying to limit China's growth in power and also trying to protect the US Auto industry. And I'm not really opposed to that policy. I think there are good reasons that we're doing that. But it makes a car more expensive. And if we just let those cheap Chinese imports in, Americans would have cheaper cars and more money that they would spend on other things. So I think the globalization, the access to higher quality, lower cost goods is a good thing for consumers. And when it's a problem, it's a problem for reasons other than that.
- [35:51]
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- [37:52]
Charlie Sykes
Okay, so do you foresee any sort of an anti AI political backlash? I mean, I can imagine at times of economic anxiety people are looking for someone to blame. Donald Trump obviously built a lot of his political movement on saying, if you are hurting, it's because of those people over there. These are the scapegoats. I could certainly envision the possibility of a revolt against the elites, including the technical elites, by people who feel that the system is now no longer working for them. They've gone to college, they've gotten degrees, they're out of work. Just from a political point of view, it is interesting that AI related interests are dumping lots of money into politics. They've become major players. But I'm wondering whether or not not you think that there is going to be a moment where suddenly we realize this is one of the dominant issues in American politics.
- [38:47]
Josh Barrow
Well, so I think there's going to be a couple of possible areas of backlash. One is we're seeing all of this consternation about data centers and obviously the driver of all of that data center demand, why it's so high right now is the need for computing power for AI. I think to the extent data centers are unpopular, it's not really about AI itself. It's about they are a huge electricity suck at a time when there's upward pressure on electricity prices and people are concerned, often reasonably concerned, that they will raise electricity prices locally. And I think there are policy responses to That I think we need a regulatory environment that is much more favorable to the construction of all kinds of energy infrastructure, including new electrical power plants and transmission lines. So I am concerned about backlash that specifically has to do with electricity. I think people are over reading that a little bit bit and thinking that when someone doesn't want a data center in their backyard, that that's about broad hostility to AI versus, you know, specific concern about local impacts from the data center. I think, you know, in terms of how people will feel about AI, it depends on how they're interfacing it with in their, with it in their daily lives. But to the extent that they're finding it useful, I think it's likely to be more popular. You know, we're in this period of, you know, everyone hates all the institutions and the poll numbers for everything. Worse, the things that poll best are like, you know, large consumer facing companies, Google and Amazon on, you know, they, they're, they're a lot more popular than, you know, big corporations in general or the federal government or banks or like these, these more impersonal things. And that's because, you know, people have daily interactions with Google and Amazon and they're institutions that do what they're supposed to do. You order from Amazon and the stuff in fact shows up on your doorstep.
- [40:24]
Charlie Sykes
Yeah.
- [40:25]
Josh Barrow
And so if that's why my dogs
- [40:26]
Charlie Sykes
are barking, because things are showing up on my doorstep and. Right, go on.
- [40:30]
Josh Barrow
And so, you know, to the extent that AI and this, you know, this is in that Citrini research memo, the theory of how it causes the financial crisis, it's basically describing how in all sorts of everyday consumer processes people are, you know, they're finding the AI really useful so they're leaning on it more and that disrupts non AI incumbents in these areas. If that's what's happening, I think people are going to feel quite good about it. They're going to be happy that they're getting a better deal on their razor cartridges and that sort of thing.
- [40:55]
Charlie Sykes
Well, you're right. You know, nobody's actually mad at their smartphone. They may complain about it more, but I don't know that there is a groundswell of support. Okay, so shifting gears once again in the few minutes that we have left, let's talk about what happened in Texas earlier this week. You had on the Republican primary. John Cornyn is headed off to a runoff with the deeply deplorable Ken Paxton. I think Cornyn overperformed, but that's now three months of vicious infighting on the part Of Republicans, Democratic voters rather decisively nominated James Talarico as opposed to Jasmine Crockett. You have written very extensively about this. So again, what was your reaction for the Democrats? Democrats had a very interesting choice. You had an extremely progressive, kind of meme oriented, vibe oriented candidate in Jasmine Crockett, big in the MSNBC crowd, versus James Talarico, who sometimes described as appealing to more moderates, but he's not actually that moderate. So about this, give me your take on this.
- [42:02]
Josh Barrow
I mean it's not really clear that there was significant ideological distance between the two of them. They have very different styles and very different approaches to trying to appeal to the electorate. And I think Talarico is clearly the better choice for Democrats among the two
- [42:14]
Charlie Sykes
in terms of electability.
- [42:16]
Josh Barrow
Yeah, I think that he, you know, he's at least out there trying to win over voters in the center even if, you know, he won't be as effective at it as he would if he was himself more centrist. Okay. Whereas Crockett was out there saying that, you know, Democrats just need to turn out power better. And you know, Texas is a very diverse state. Right. And if, you know, if more voters of color show up, then we'll win. I mean set aside, you know, how poorly Democrats have performed with Hispanics in Texas in some of the most recent elections. But so he at least understands the assignment. Whereas I, you know, the Crockett is, you know, she's liberal, she has a liberal voting record. She doesn't have like AOC's voting record. She's not in fact like one of the most liberal people in the Democratic caucus. She's just very partisan. She's very, you know, I happy to go out there and offer whatever weak argument is available for Democrats saying after the 2024 debate that actually Joe Biden was over prepared and that's what, you know, that's what went wrong in his debate performance. So you know, I kind of assume she wants an Ms. Now anchoring job or something and maybe she will get it after having lost this election. Talarico seems to get that. He's running in Texas. However, you know, I wrote about this back, you know, last year is he had a, he has a liberal voting record in the state legislature. He represents a liberal district in Austin, Boston. And you know, when they, they had one of these fights over trans participation in sports which probably isn't at the top of, you know, voters list of concerns. But it's an issue where Democrats position is very unpopular and he's out, you know, arguing against this bill to, you know, to segregate sports by sex. And he says, you know, well, because he's a seminarian, he's saying, well, God is non binary.
- [43:53]
Charlie Sykes
Yeah.
- [43:54]
Josh Barrow
Which is just it. He feels to me like a liberal's idea of what a conservative would be interested in voting for. And I think that's part of why a lot of liberal voters, you know, were enthusiastic about him. And you know, again, you know, it's the election's in eight months and he has time to customize himself to the electorate and he seems to at least understand that he needs to win over some conservative voters. But it's not, you know, he's not a candidate like Mary Paltola in Alaska who wins in a red leaning state by actually being more to the right on certain issues that matter a lot in that state. In Alaska, it's national. It's natural resources and oil loyal. And she breaks with the national Democratic Party in a way that is aligned with the state. In Texas, Democrats haven't really figured out how to do that yet, which is part of why they haven't broken through statewide. But it's going to be a good year for Democrats. Ken Paxton is an awful candidate and James Talarico seems to get that. He needs to try to appeal toward the center. So while he was not my ideal candidate, he's certainly better than Crockett would have been.
- [44:52]
Charlie Sykes
Yeah. Okay. A couple of my observations about Tallarico is a reminder that, you know, candidate personality and style does matter. Actually, campaigns matter. He's actually a rather talented politician. You know, leaving aside some of the subs, he's a talented politician. He ran a very, very well funded, very well organized campaign. Clearly one of the reasons he won so decisively was because he had an organization that went after the Hispanic vote. And apparently they, they did extremely well there. Jasmine Crockett was more into all of, all of the vibes. And by the way, just a shout out to Brendan Carr and the folks from the fcc because that, that whole pressure on CBS not to air the Talarico interview on, on, on, on the air kind of backfired a little bit when, when, when CBS said, yeah, you can't have him, you can't even mention him. You can't show his picture because of the equal time rule. That, that seemed to put rocket fuel in his campaign. So again, you know, yeah, good work, Brendan Carr. Yeah, fcc.
- [46:00]
Josh Barrow
I mean, I find the FCC stuff funny with, you know, it's obviously not just this, it's the Paramount acquisition, all these things. The amount of political energy that the Trump administration has put into trying to, you know, bend the law to their will in this area of just like terminally declining. Relevant what goes out over the, over the federally regulated airwaves. I mean, like, you know, like, like, like CBS News is some great prize in the shaping of future American public opinion. I just, I just, it, it feels very retro in a way that sort of makes sense for our, like, permanently 1980s president.
- [46:32]
Charlie Sykes
Well, that was, I was going to say. Well, you know, it makes sense if you understand that Donald Trump is basically fighting all of the fights and the grudges of the 1980s and the 1990s. And he's just playing, he is playing it out. One last thought about the Texas vote, and I wrote about this in my newsletter. The fall of Dan Crenshaw is such a fascinating story because he was such a prominent, he was a MAGA Superstar in Trump 1.0, former Navy Seal, really high energy, bright guy who tried to walk the, that tightrope. I mean, he, he tried various things. I mean, you know, he, for a while, he was the conscience of the new right, you know, about the tone. And then he was the, you know, performative, you know, maga, you know, toe kisser and everything. But in the end, apparently he still had that little spark of independence and cannot have that in maga. And he went down big time in that primary. And it's kind of all the people to lose in a Republican primary. Boy, I wouldn't have had Dan Crenshaw on my list.
- [47:33]
Josh Barrow
Yeah, yeah. Well, I mean, you know, Ted Cruz endorsed his opponent and also, I mean, to some extent, he was weakened by this Republican redistricting that, you know, basically made his district more, moved it farther out from Houston, picking up more ex urban areas outside of his base. But yeah, I don't, I mean, it's, you know, it's Trump's party, right. And so there's, you know, there's, there's less of a room. There's less room for cutting out your, you know, your own independent personality. And we've seen this with, you know, with a lot of fake figures, you know, but people like Ben Sasse and so many others who, you know, had sort of had their own, their own conservative vision of what it is that they were going to do. It's not necessarily that they were moderates, but they're just, you know, there isn't a lot of space for it in the party these days.
- [48:14]
Charlie Sykes
Yeah, well, I'm going to be interested in hearing what Dan Crenshaw has to say afterwards, because, I mean, this sort of like we end where we began with, you know, Thom Tillis who had gone along. I mean, you know, Tillis, you know, thought, okay, I can appease these guys. I'm going to vote for these nominations. I'm going to play ball with them, them. Until you realize that if you are not absolutely groveling to the feet of Donald Trump, that you're going to be exiled. And he said he's not going to run for reelection. And so once again, we see these Republicans who are liberated who go, okay, let me tell you what I really think. But you're right, this is Donald Trump's party, which seems to me to be a significant problem in the midterms. If Trump's approval rating continues to drop, Republicans pretty much know there is no way for them to distance themselves from an unpopular president. There's no way to create the kind of distance that a normal political candidate would do.
- [49:08]
Josh Barrow
Well, and the president won't allow that is the other thing. I mean, normally a president who's unpopular and trying to save his party bacon in the midterms creates a little bit of space for people to break with him. And Trump just can't deal with that ego wise. You know, for example, on the tariffs, they really tried to prevent, prevent Republicans in Congress from voting against Trump's unpopular tariffs. So now they're all gonna face attack ads about how they supported Trump's policy that made X and Y and Z more expensive. It's gonna cost them seats. But it protects his ego.
- [49:40]
Charlie Sykes
It protects his ego. And as you point out, he does seem to have created a bubble around himself where despite all of these setbacks, he does seem, I think, genuinely does seem like somebody who feels that the wind is at his back all the time. And you kind of wonder. It's like, you know, Mr. President, here are these poll numbers, here's what the Supreme Court said. And yet, you know, he's, he's really at the YOLO phase of his presidency, isn't he?
- [50:05]
Josh Barrow
Yeah, I mean, I don't know. The way he talks about the tariffs is a little funny because it's, it's, you can, you can detect tariffs is one of the few things that he has a long standing, sincere view about. That's.
- [50:14]
Charlie Sykes
Oh, yes, he does obsessed.
- [50:17]
Josh Barrow
He, he believes in his heart that these are good public policy. And some, sometimes he'll talk about it and sort of acknowledge that they're not that popular and almost seem wistful, like wondering why, you know, I gave this wonderful thing. Why aren't you grateful about it? So I think it has punched through a little bit that, you know, that they're not the, like the electoral juggernaut that he hoped. But he, you know, the. So, so he has that awareness. But, but it hasn't actually caused him to rethink the policy.
- [50:43]
Charlie Sykes
No. I think that there's, there's, there's, there's some place back in the recesses of Donald Trump's mind where he's thinking, we need those tariffs because otherwise how can we compete against Japan.
- [50:51]
Josh Barrow
Yep.
- [50:51]
Charlie Sykes
Because he's still in the 1980s.
- [50:53]
Josh Barrow
They're going to buy Rockefeller Center.
- [50:54]
Charlie Sykes
Again, Josh Barrow, thank you so much. Thank you so much for all of your time. You can read Josh's stuff at the Very serious Substack newsletter and the Central Air podcast. Josh, it's been great talking with you. Thank you.
- [51:06]
Josh Barrow
Thank you, Charlie.
- [51:07]
Charlie Sykes
And thank you all for listening to today's episode of to the Contrary podcast. I'm Charlie Sykes. We continue to do this and I promise we will do this every single time to remind you that we are not the crazy ones. Thank you.
- [51:34]
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