From Sky news.

This is connections.

I'm Evan Dawson.

Our connection this hour is made in a trade deficit.

What exactly does it mean to have a trade deficit?

President Trump made clear last week that his view is that having a trade deficit means losing.

The president views deals as a zero sum game, as he's written about in his book.

Deals have one winner, one loser.

He doesn't subscribe to the idea that deals can be mutually beneficial.

And the president says the United States is done being a trade loser.

That's where his tariffs come in.

The president's team used a rudimentary formula analyzing who is exporting more the United States or every individual trading partner.

And the tariffs were created to engineer a kind of balance.

You don't need me to tell you how the markets have responded.

We haven't seen losses like this since Covid.

Yesterday, the Treasury Secretary said that the market downturn is temporary and the recession is not at all inevitable.

But some of the president's biggest boosters say that if we get a recession, maybe we needed a recession.

Benny Johnson, for example, one of the most popular commentators on the right, said on Friday, quote, so how much money did you lose?

You lost no money today.

It's just numbers on a balance sheet.

It's not real unless you panic sell.

It's not real unless you don't believe in what you actually invested in in the first place.

Everyone loses money.

Everyone.

It costs you nothing.

In fact, it builds quite a lot of character.

In fact, you learn a lot of lessons, actually, by losing money.

Losing your character cost you everything.

End quote.

So there are some conflicting messages coming up.

But the bottom line is this the president views the United States as a long term trade loser, and he is determined to end all of that with these worldwide tariffs.

He believes at least he says he does, that it can lead to a return of manufacturing in a boom like we saw in the 1950s.

Interestingly, there are many people on the political left who have advocated for tariffs in some form.

But we should be specific with what we're talking about.

Calling for some tariffs is not the same as calling for what happened last week.

And Ford and professor and former Democratic gubernatorial candidate in this state, Zephyr Teachout, says that Trump is diagnosing the problem correctly.

But using tariffs in a wildly incorrect way.

Also in that group is CNBC's Jim Cramer, one of the most well-recognized figures in market media.

Here is the Mad Money host talking to CNN this past weekend about how he sees these Trump tariffs, the chart that they had with the with the mathematical equation.

I mean, you kidding me?

How about just like it looks like an Einstein?

I know how I said it was just wrong.

And what bothered me, Graham, was that they really did.

Over and over again the president said, listen, it's going to be reciprocal.

So you do what we do it.

And that was going to be so great.

And I really believed in it.

And I feel like a sucker tonight because I am not a free trader and I do not believe in free trade.

And I was just as tough, if not tougher, than his people.

But they screwed it up and they really made it a totally ill advised way.

And I was very let down.

As someone who really, truly believes that free trade is awful for the American working person.

This is what they came up with.

Jeez.

Come on, have some gumption.

Have some math.

It's Jim Cramer.

So let's talk about all that with our guest.

This hour.

Let me welcome to the studio George Conboy chairman of Brighton Securities.

Welcome back to the program.

Thank you.

And I'm about to be I'll doctor by to be our distinguished professor and the Arthur J. Gosnell professor of economics at RIT.

Welcome back to you.

Thanks for having me.

Tough week for your profession, professor.

Is that right?

Absolutely.

Absolutely.

What kinds of interpretations and misinterpretation?

I mean, I can't count the number of people I've heard in the last week say, well, if this goes well, I guess all the economics professors have to retire.

I mean, you're not planning on retiring, I don't think.

Not any time soon.

Okay.

And you don't think it's going to go well, do you?

Correct.

We're going to talk about why this hour?

George Conboy, do you want to start with kind of a 30,000ft view of what you are seeing in the last five days or so?

Well, we're seeing a lot of correspondence with clients, mostly on the phone.

The big bumpy market, as you mentioned in your opening.

biggest drop since Covid.

You know, we have had them periodically over the course of my career.

And, it's never any fun.

It's never any fun.

Not fun now.

But it means we've had to recalculate everything and sharpen our pencils.

And I want to be clear, this is not a financial advice program.

Our guests are sharing their expertise in their various fields.

They're not going to tell you what to do with any specific investment.

I mean, George, well, if you become a client, I think.

But otherwise, don't view this as a financial advice.

View this as a conversation about a living, breathing set of tariffs that is really moving the market.

And so in general, when you've got clients of different ages, you've got a 40 year old client and a six year old client, an 85 year old client, they're viewing their portfolios differently.

Do you have to respond differently for them, George?

Absolutely.

The same as a doctor would when you walk in the office if you walked in and he handed you a prescription when you came in and said, here you go, Evan.

You'd think the guy was crazy.

There's not a right prescription for everyone.

And if we run the clock back at 2020, when we had the last big drop, you're five years older now.

And what we talk about today might differ from what we talked about then.

Well, I mean, and I wonder, George, what you think when you hear someone like Ben Johns on Friday saying whatever's happening in the markets, it's not you're not actually losing money.

It's just numbers on an A on a computer screen.

That's not real money unless you panic sell.

You know, don't be stupid.

This is about character, you know.

What do you think?

Well, no one comes to Brighton Securities to build their character.

Let's let's leave it.

Let's leave his comments at that.

Okay.

You're there to build wealth, I take it.

But realistically, there is a meaningful psychological component to money and how we relate to money.

From the time you're a little kid getting an allowance to the time you retire and spend your last dollar, you view your money differently than anyone else views theirs, and each individual situation is different.

How we deal with that is different.

And so before I turn to your co-panelists, George in general here, you know, I want to avoid as much of the politics as we can and stick on the substance here.

But are you surprised at all by what you've seen in the last week?

a little surprised.

We all heard it coming.

There was a lot of talk about tariffs, but when it came down, it is a bit of a blunt instrument.

And it's been a huge shock to the market.

And that's what causes big moves is surprise.

And there was a big surprise element to this.

Yeah I mean part of the reason I ask about surprise Georges when I look at the formulas, I'm going to ask the professor, but to be able to kind of describe his reaction to some of the formulas, because I understand that this president really does viewed as a zero sum game, I understand he really feels like there's one winner, one loser, and we've been on the wrong side.

But take something like Madagascar.

Madagascar is one of the world's least developed countries.

The USA is the second largest destination for Madagascar goods, mostly vanilla.

We love their vanilla.

Yeah, but President Trump doesn't like the fact that this poor country doesn't buy as much from us as we do from them.

So Madagascar is getting hit with a 47% tariff and a number one.

I don't know what that does to the country.

Not good.

But I don't know what it does to the vanilla that we want that we love.

I mean, should we be looking at a relationship with a country like Madagascar saying, well, that ledger is not balanced here, let's hammer them.

Does that make sense to you?

I think that the analogy is that we talk about not letting the generals be in charge of the war.

Maybe we shouldn't let politicians be in charge of the economy.

It's a blunt instrument, but he's supposed to be a businessman in charge of the economy.

That's the selling point of this, although he's a New York businessman, and I think that's a niche category.

Right.

A New York real estate businessman, which is a niche category, doctor, about a b l okay, 30,000ft view.

Before we get more specific.

Yeah.

how's the last week gone?

plenty crazy as far as I'm concerned, but I think the basic conclusion that I've drawn from all of his actions thus far, including trade actions, is that he basically has no real plan in terms of what he hopes to accomplish with these tariffs.

And he said that he's going to stay the course.

I think a key part of his plan is to create chaos and then watch what happens.

The plan is to create maximal uncertainty and then see what happens.

He doesn't have any concrete, well-thought-out plan of action for what happens after the tariffs, for how long the tariffs stay, who gets special exemptions, if any?

Our allies are treated differently than our rivals.

That there is no plan.

It's just cause chaos.

In a moment, I'm going to ask our guests, to respond to I'm going to try to steel man the argument for tariffs this hour and really kind of work through some of maybe the best arguments for them.

Before I get to the sound from an economist who has maybe a heterodox view right now in this field, let me just follow up the point you're making about chaos.

I think when I look at markets around the world, this is not my expertise.

But clearly, you know, this morning we saw Asian markets really roiled.

I mean, nobody's doing well.

Everybody's hurting over this.

And is it possible, at the what they're saying privately in the white House is, yes, this is going to hurt us, but we're not the only one.

It's going to hurt everybody.

And we can hang in longer than they can, and we can cut better deals for it.

And then those markets will recover, and we will be in a better position to reduce the debt, reduce our trade deficits long term.

So let's grind this out because the chaos isn't just here.

The chaos is everywhere.

What do you think?

as a principle.

That's true.

And the example that you just gave of Madagascar.

So what small countries like Madagascar or Congo or Vanuatu, you may be able to play that game successfully.

But the problem is we also have the European Union, a behemoth, and China, another behemoth there.

You're not going to be able to successfully play a war of attrition with them because China, for instance, is the second largest economy in the world by some measures, the largest, depending on how you look at it.

They're not just going to keel over and say, yeah, do whatever you want.

We'll just, you know, cozy up to you, agree to whatever you want us to do.

So you can play that game with small countries who have limited options and really, really rely on their export markets.

Example Madagascar, but not big players like the EU or China.

But but let's take China that there's two very different ideas I've heard in the last five days about China.

For those who are supportive of this tariff action, it sounds something like this.

Why is China doing so well?

And they've got pretty big tariffs and nobody complains about that.

And for all the claim that tariffs can do all this damage China's doing great.

So you know does that nullify the argument on the other side what I hear is China is not the model of what you want the United States to be.

That is not the country that you point to and say they're doing great.

They're not actually doing great in terms of standard of living in many compare comparative metrics to us.

and so don't compare that way.

Which one makes more sense to you?

So China is a complicated country, but you have to remember and this is something that a lot of people in Washington, DC don't quite like to acknowledge is that we created the China problem in part, we allowed them preferential membership to the World Trade Organization in 2001, gave them developed country status, and as a result of which they were able to export to many countries, including our own, with the very low tariff rates, while doing nothing about their own trade barriers.

So to some extent, we've caused the problem that China is.

Having said that, China is a problem.

There are many trade practices that they engage in more generally, industrial practices that are anathema to the progress of U.S. firms or anything resembling free trade.

So we definitely need to be tough with China.

But the problem with China is, and specifically related to trade, it's related to a whole bunch of other things, industrial policy in general.

So using our own instruments, such as a tariff, which is designed to block or reduce trade, is a bad instrument with which to be using, to address problems that are significant, broader, for example, industrial espionage.

I see the phone ringing already.

Listeners, if you want to join the conversation, I've got a small stack of your emails already.

Well, take as much as we can this hour.

844295 talk is the number to call toll free.

(844) 295-8255.

It's 26369.

If you're calling from Rochester.

26399994, email the program connections at sheet org.

If you're watching on the Sky news YouTube page, you can join the chat there.

Let's listen to a couple of pieces of sound that I have.

and the economist in question here, is someone who I don't I think he actually is an economist, although his detractors don't love, foreign cars.

But, I want to listen to some of what he said to Jon Stewart on a daily show, of all places, last week.

And this was two days before the Trump tariffs rolled out.

But Oren Cass kind of rose to prominence working for Mitt Romney first, and would probably have been pretty prominent in a Romney White House had Romney won.

Now, Cass is one of the conservative economists in this country who has been saying that these tariffs are going to work and that they are the right idea.

And then and it's not just the tariffs are good, but these tariffs are bad.

He's defending these tariffs in specific.

So let's start with his general remarks about how he views the the situation.

of open markets.

This is why conservatives he said have been changing their minds about free trade and open markets.

We went through a period of 30 or 40 years where conservatives just had way too much faith in markets.

Just trust that you get out of the way and you're going to get great outcomes, and markets can give you great outcomes, but they don't guarantee great outcomes.

And so conservatives have been seeing or especially over the last decade, a lot of the things we care about, things everybody cares about.

Do jobs pay enough to support a family?

Right.

Are we too dependent on China for everything?

Can we make computer chips in this country?

Markets were perfectly happy to give us really bad answers on those questions.

And so conservatives are starting to say, well, wait a minute, we we actually have to care about this and we have to be prepared to do something about it.

Okay.

And so in the second clip, we're going to listen to this is Oren Cass talking about why these particular tariffs can work.

Corporations are going to respond to incentives.

And you can go all, you know, all the way back to Adam Smith and the Wealth of Nations and the idea of capitalism.

You want people pursuing profit to do that in a way that is also good for the society, where I think a lot of economists, and this is left and right of center, got it wrong, was to think that's just always the case.

As long as they're pursuing profit, it's going to be good, right?

And it's only going to be good if it's within certain constraints.

If the things that are most profitable actually are things that are good for the country, that's Oren Cass.

And let me ask both of our guests ducked about to be all first.

What do you make of what you just heard there?

Well, I agree with some of what he's saying, but I disagree with the idea that economists don't understand that markets sometimes don't work.

Well, economists have understood for at least 70 years that there are a large set of scenarios broadly, categorized under the rubric of market failure when markets do not work well, and hence regulatory intervention of one sort or the other is typically called for.

So that part I don't agree with.

But it is true that markets often give good ideas and that are good outcomes, excuse me.

And that both people on the right and on the left have placed too much emphasis, but for the wrong reasons on market efficiency.

Okay, George, come by.

What what do you make of what you heard there?

I thought of myself as always, thinking free trade was the right thing, and I've always believed it.

And recently, I'm thinking of winners and losers in a free trade economy.

I tend to be a winner in that economy.

I'm buying things that are cheaper.

It gives me a standard of living.

It's a little bit higher, but I've not worked in an industrial job in 40 years.

If my neighbor loses his job to a job that gets offshored, he's not doing as well.

And maybe that is a zero sum game.

Maybe I'm doing better by x percent.

He's doing worse.

But I'm not sure that as a society or a nation state, we do as well as we'd like to or or that we got as many benefits from free trade as we would have expected.

And so when Cass says corporations will respond to incentives, this is Cass's argument is not the cost argument.

It's really the opposite.

Cass is not saying this is all designed to spook people.

We'll get them in negotiating table.

We'll cut better deals, will pull the tariffs.

He's saying no, these tariffs have to stick.

And over time the incentives will pull these companies back here.

And we will see a manufacturing boom back here.

It will take some time and it will take some dedication.

Is that logical to you George.

It is.

And it will result in more jobs reshoring.

But you said three words have to stick.

And right now we don't have tariffs where manufacturers where employers can plan if, you know, go back to what Cramer said.

If it was pure reciprocity, I'd feel a lot more comfortable because it would be more transparent.

Right now it's a peg.

And if I'm a manufacture or how do I commit capital?

Because maybe the tariff I planned on gets negotiated away next week, or they change the plan until we have clarity.

I can't commit my capital.

Okay.

ducked back to be all same question there.

We're going to re-assure here.

Corporations are going to respond to these incentives.

in principle, yes, economic actors respond to incentives.

But the question is, they have to believe that the environment in which they are operating is a stable one, not subject to abrupt shocks, changes in tariff magnitudes, things of that sort.

But I want to take a broader approach to this particular issue.

President Trump's basic point about tariffs is that if we run a trade deficit with a certain country, that's bad, okay, that's the logic for doing all this that we run trade.

That's right.

That's that's a whole bunch of different countries.

That's bad.

That's why we need tariffs.

Let's consider the argument a little bit more generally.

Instead of narrowly focusing just on goods, let's focus on services.

We are a huge way, meaning the United States is a huge exporter of services.

And if you look at services, trade with the European Union, for instance, we run a billions of dollars worth of surplus.

Now, if the European Union use the Trumpian logic, then they would say, well, we have a deficit in services, so we're going to put high tariffs in place with the hope that Google Meet, all of these big high tech American companies will eventually move somewhere to Europe.

Does that make any sense?

Does it George?

Well, when you put it that way, he makes a very cogent argument that the difficulty for everyone, of course, is that we all, every country in this equation has a different mix of people's ability, is the ability to buy or sell and the ability to produce goods or not, or produce and sell services.

And that's where this current tariff environment, with its opacity, and that makes it kind of a blunt instrument, makes it hard.

Okay.

so let me get Jack's phone call before I take your phone call.

Jack, I want to read an email from Tim because I think Tim and Jack maybe on different sides, but same idea here.

Tim says, sorry, Evan, but Republicans have beat Democrats to the punch.

You can't say you support the working class and be in favor of free trade anymore.

Donald Trump is finally intervening in ways the Democrats didn't have the guts to do.

We don't care if it wipes out fake wealth that props up the markets, build walls both literally and figuratively.

We will take care of ourselves.

Rochester still has great buildings that used to be home to places like Kodak.

I'm sure we can retrofit those factories and get them cranking again.

Why should we accept the fact that they are empty?

That is from Tim.

What do you think there, George?

Well, I think he makes some points that are a little bit difficult to deal with.

I mean, retrofitting, Kodak or Xerox in industries that really are much less irrelevant or not relevant to their markets anymore.

That's difficult.

That's difficult.

The idea of wishful thinking, it's it's not going to happen that way.

It's not going to happen that way.

We can't go back to those industries.

Those industries are gone or on their way out, and we've got to have something else to come back with.

We're a big service provider, a lot of intellectual property in Rochester, but manufacturing, not so much.

I wish it weren't the case, because you're not going to have all of your neighbors who can work in the new economy, some of work better in the old economy.

And a lot of those people have have moved away.

Well.

And to that point here, if you look at what the numbers were, we talked a little bit about this last week with the UAW and Brad Mccreevy, who are on this program, just talking about auto tariffs before it became all tariffs.

but if you look at auto manufacturing in the United States in the 1950s and 60s, the same plant that would have employed 50,000 people then may employ ten.

Now because of automation and different advances.

It's not necessarily from my understanding, this is not my expertise.

Everything I'm reading from everybody works in the sector and analyzed sector says you may earn more, but don't assume it's a 1950s apples to apples.

70 years later, there's a lot of static analysis in conversation about all of this.

And the static analysis is if we put a 10% tariff, we'll get 10% of all of those imports and revenue.

it doesn't work that way.

It's much more dynamic.

Employment is the same thing.

Okay, doctor.

Bobby, what do you think?

Well, I think what I want to point out is a lot of misconception about the sense in which free trade is a good thing.

When economists say free trade is better than autarky, which means the absence of trade, what they mean is that as a whole, when you look at the nation in its entirety, the winners win by more than the losers lose.

Okay?

The winners win by more than the losers lose.

But the problem lies with the next step.

The next step is if winners are winning by more than the losers lose, then you should be able to compensate the losers and yet come out on top.

But as a nation, we never make those compensatory payments.

We have a trade adjustment assistance program, which is now no longer law, which is a puny amount with which we seek to offer adjustment to those displaced by the negative impact on trade.

So there are real negative impacts of trade, no question about that, a lot of which is because of free trade with China or somewhat free trade with China, but because we don't make whole the people who lose as a result of trade.

These are some people who see huge and widespread losses, and they will shout very loudly that free trade hasn't done anything for them.

And they're right.

We need to understand that, that it's winners winning by more than losers.

Losing has a specific meaning and we need to follow that up in terms of making lives better for those who do lose out.

Allison on YouTube responded to Tim's emails saying, Tim, those factories are rusted shut from Kota.

I don't know if they're rusted shut.

I think they've done their best to repurpose some of the spaces, but to George's point, a lot of that what was happening at Kodak is really specific for an industry that uses a lot of very specific chemical processes.

I don't know that the rusted shut, but I don't know that they're easily retrofitted.

Kodak itself blew up several of their large buildings.

You'll recall they don't even exist anymore when they blew up buildings to save on property taxes.

A very novel business approach.

I only get a phone call from Jack in grease.

Hey, Jack, go ahead.

Oh, I haven't, thank you.

yeah.

I'm not an economist.

I'm not a finance guy.

My background, electrical engineering.

I worked many years at Kodak until we got sold off.

So, you know, I'll come back, you know, to the point from, Tim, I think it was with his email, change what?

I was thinking a little bit, you know, the idea that the Republicans, because they defeated the Democrats so they could do whatever they have to do today.

Well, you know, a lot of people are pointing at Donald Trump as being this brilliant businessman.

Well, Donald Trump, I don't know of anybody else, have managed to bankrupt six casinos.

So as far as being a brilliant businessman, that's he's really a marketer.

He's not a he's not a guy that understands what needs to be done within a factory to build a new product.

So and he seems to be the one driving the bus on this whole idea.

Now, when I looked at, I saw a little bit that I understand at this point about the formula that was put in place for tariffs.

It was basically whoever we had a trade deficit with, we'll put in a barrier up.

Well, we have trade deficits for a lot of good reasons.

Well, a lot of reasons.

Some of them I still have trouble with.

We outsourced the heck out of Kodak and but we were late to the game of the companies did that way before we did.

And we watched jobs go and my, you know, this would have been reasonable to do if there was actually a strategy that anybody had confidence in.

And, and as far as it's just being a paper loss, that's nonsense.

I'm watching my 401, my IRAs, I should say, and watch them deteriorate.

that's real money.

I'm retired at this point.

So the idea that, you know, we outsource that Kodak, the idea of rebuild, you know, re-energizing a factory like Eastman Kodak.

But people have touched on that.

I'll just give one quick example.

I watched us build a 750,000 square foot building to build a disc camera.

Back in the early 80s.

We pumped it and the equipment side where I work.

We pumped in $1 billion in tooling.

Now you have the building is still there, but that tooling is is useless for anything else.

So somebody would have to literally spend years.

Figuring out how to build modern tooling for modern products to bring them back here.

I'm sorry.

Those days we made those decisions.

People made a lot of money off it.

The US is now the wealthiest country by far.

We have been and we still are the wealthiest country.

So you know, we have we have new businesses that now, if you want to find a way to deal with China and not have China look to take intellectual property, which is what they're doing, they're trying to take the intellectual property that people here in the US have, and that's they're trying to hold them hostage to do that.

Like when George Fisher was our CEO, he gave us an interesting talk about the trade barriers in Japan.

Those things were real.

Kodak couldn't sell their film in Japan.

Japan.

Fuji sold their film cheaper here.

Yes.

So that was unfair.

And Kodak, under George Fisher's leadership, lost the case in the World Court.

I'm sorry, but we did.

And and it was unfair.

But yet work on those things.

Okay.

What a blanket tariff in place is.

I can't believe I would say this Jack is fired up here.

So there's a couple things related.

Did you call?

Let me ask our guest about.

First of all, related to that, Elizabeth was asking, could you ask your guests?

no, that's the wrong one here.

Sorry.

Alex is asking, how quickly these tariffs work best.

Scott Bassett, the Treasury secretary, has said it's easy to just start things up at auto plants, but listeners are asking, how long would it take for us to actually see new factories, new plants from scratch, that kind of thing?

George, what do you think?

Well, your last words from scratch.

It takes quite a while, right?

If you have an existing operation and you're running two shifts, you can run a third comparatively simply.

if you're making an existing product in more than one market, you can make more in this market than in that market.

But from scratch, it can take a while because you've got to compete, not the end of 2025. no.

Even if the building exists, what your last caller said, they had to put tooling in there.

You've got to plan production.

You probably have to hire people.

It's involved.

But, professor, but to be all Jack's point, though about Fuji versus Kodak, that did make a lot of people very angry.

That made people feel like now that's unfair.

Here is that kind of scenario so still worth addressing and are tariffs the right instrument to address them?

Those kinds of scenarios are still worth addressing.

Absolutely.

Particularly with China, because they are the biggest culprit when it comes to industrial espionage and theft of intellectual property rights.

Absolutely no question about that.

But tariffs are not the way to go about it.

I mean, it's like if you have a problem with your knee, you suddenly go to the eye doctor to find out what's wrong, how should the knee be looked at, the industrial espionage, the stealing of intellectual property rights that has nothing to do with tariffs.

If is a trade policy instrument, we have wider industrial policy issues with, China, which absolutely should be pursued.

But, you know, using a tariff, one size fits all instrument, particularly to punish these smaller countries and our allies, it just doesn't make any sense.

we have a lot of feedback, and we're going to work in, as much as we can when we come back from our only break the doctor, Ahmed Bader, be our distinguished professor and the Arthur J. Gosnell Professor of Economics at RIT, George Conboy, chairman of Brighton Securities.

And we'll continue with your feedback on the other side of this only break.

Coming up in our second hour.

Thousands of Americans went out to protest this weekend in the so-called hands off demonstrations.

What is their goal?

Who are they doing it for?

Is it for their own movement?

Is it to convince others or get the attention of lawmakers?

What are the next steps after protests?

We'll talk about it with people who went out to demonstrate.

Next hour.

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This is connections.

I'm Evan Dawson.

I have a note from, the head of a company that is in manufacturing and employs hundreds of New Yorkers.

It still happens in some places, and they work with metal.

And so I reached out this morning to say, you know, as a domestic manufacturer, maybe this is good for your industry.

And here's the note that I just got it said we are already starting to see tariff charges broken out, unordered orders for purchased parts, and increases on sheet metal despite the fact that it is domestically produced.

The mills here in the States are taking full advantage and increasing their pricing as well.

No one is sure what to expect, as the leadership seems to be changing its mind to suit mood on a daily basis.

In our opinion, nothing good can come of it.

That's a domestic.

So the point there tariff charge is broken out on orders for purchase parts increases on sheet metal despite that, it's domestically produced because mills in the United States are taking advantage and increasing their pricing.

What do you think of it?

Well, in some sense, that's to be expected, right?

So supposed to make an I make the idea simple.

You are selling a domestically made product for $10.

Okay.

Now because of the tariff, your foreign rival is now being charged a price of $13.

You have the opportunity to raise your price from $10 to $13 and yet be competitive.

So if you're a profit maximizing entity and you see that opportunity for higher profits, why wouldn't you do that?

I think some of that.

But you're not going to match the price, right.

You're still going to undercut at some margin maybe maybe a dime less.

Now they'll match it.

We had this in the early 80s.

We have what were called voluntary import restrictions on Japanese cars.

We had the the gas shock in the late 70s and I was driving a Ford Pinto.

Terrible car, I might add.

And I wanted to buy a Toyota little, little Toyota.

Inexpensive $5,000 voluntary import restrictions meant the Japanese manufacturers said, okay, okay, we won't ship as much because if we if we keep shipping, you're going to hit us with a tariff.

So they restricted the importation of your Honda and your Toyota and Ford.

GM and Chrysler raised their prices right up to match exactly as it describes.

Okay.

That's again for a non economist.

That's disappointing.

But the so the possible very real the possible domestic savings don't always materialize.

Then although more profits flow into the domestic manufacturer.

That may not be a good thing but that's what happens.

Okay.

Okay.

let me get John and Fairport next on the phone.

Hi, John.

Go ahead.

Oh, yes.

Hello, Evan.

I'm going to digress just slightly.

You know, I just wanted to know if, the folks here remember the beginning of the movie The Deer Hunter, where everybody worked in a mill town back in the 60s.

And, you know, there was all these the families and everyone was there all working for the, you know, the steel mills.

And somehow I think that's Trump's notion of where we're going to go back to.

And that is not the nature of manufacturing today.

I mean, manufacturing today is more likely to be a fella sitting at a Starbucks with his laptop, figuring out how he's going to reprogram the robotics.

It's a different type of manufacturing that we would have in this age.

And again, I, I just think the Trump people and the Trump supporters have a vision that's no longer realistic for manufacturing.

And that's all I have to say.

Yeah, I mean, John, I appreciate that.

I mean, I'll let our guests respond.

I, I again, I would say as a lay person, I would like to not give up on the idea of making more stuff in this country.

You know, I think we did see during Covid when all of a sudden we needed PPE fast and we're going like, wait, nobody around here makes this.

I mean that in a crisis you want to be able to make more stuff.

but I take the point that automation is already here.

It doesn't mean all the jobs are gone, but certainly a percentage.

And it's the worst it will ever be at it right now.

Everything regarding automation and AI is currently the worst it will ever be.

It will only get better and it will only get better at taking our jobs.

So I I'm a do you do you think John's making important points there.

Yeah I mean he definitely making an important point in the sense that the nature of manufacturing and the sectoral allocation of services versus manufacturing has definitely changed.

But let me focus for a minute on people who have been adversely impacted by international trade.

So say furniture manufacturers in North Carolina.

These are a good example of a bunch of folks who had made a living for more than one generation, building furniture and selling furniture as a result of the importation of cheap.

Well, maybe I should say cheap, inexpensive furniture from China.

Many of these folks have been decimated.

Their lifestyles are.

They've now, as they've known it, have been destroyed.

But what do we tell these people?

Oh, you're having trouble manufacturing furniture.

Making furniture?

Okay, well, you can find some other sector of the economy to look at.

Why don't you move to Seattle?

There are lots of jobs in Seattle.

And, you know, train yourself to write code, and then you will find an amazing job in Microsoft.

These are folks in their 50s, some maybe in their 60s, spend their whole career.

Exactly.

That's the whole their whole lives.

They've not known anything else.

It is these people who need to be assisted with programs like the now defunct Trade Adjustment Assistance Program.

This calls for a systematic approach to place based policies.

Recognizing that the North Carolina person I was just referring to is not going to be able to move to Seattle or want to.

Precisely.

He may not even want to move to Seattle.

So we have to find a way of making the case for free trade, or close to free trade, while taking the losses of those who are adversely impacted into account.

We don't do that as a country.

Result.

Economic populists like Donald Trump come along and say, what have politicians done for you in the last four decades?

Election time, they come and make big promises.

But after they've won the election, it's back to square one.

And he is on that point.

Correct.

So let me just follow this because I'm recalling a conversation we had some what is time anymore, professor?

Two years ago, five years ago on this program where you were making the point that in terms of policy in energy, you saw some real problems with what the political left was doing in trying to move rapidly away from coal mining without really thinking about what happens to mining families, mining communities, and talking to mining communities like, well, you're doing bad things, you know, you're mining and we don't want fossil fuels and that's bad.

Or just get a job, you know, learn to write, learn to code, or get another job.

And I think what you were saying is similar at the time.

Correct me if I'm wrong, which is that when you have policy and you have to recognize the downstream effects and at least try to figure out, in real world terms, how to help people who have been affected, instead of just saying, well, Seattle has got a lot of jobs.

Absolutely.

Take West Virginia since you mentioned coal.

I lived there.

That's right.

Right.

So many coal miners there.

They see the writing on the wall that the future isn't in coal mining anymore, and they need to be able to pivot away to other things.

But that pivoting is possible for relatively younger people, maybe in their 20s and 30s.

But if you've been a coal miner your entire life, that's what your dad did.

That's what your grandfather did.

You're not going to be able to pivot away with any time soon, or nor may you want to.

This is a part of your life that you are you're very comfortable with.

This is what you've known.

So when Democrats said, well, you bad coal miners, you're destroying the environment.

Look at the climate change problem.

That's true.

But you have to have something positive to say about what these folks are supposed to do with their lives.

That's why you have a person like Joe Manchin, the former Democratic senator from West Virginia, who would have great difficulty jumping on to every Democratic legislative legislative bandwagon because his constituents are some of these coal miners.

What is he supposed to say to them?

I don't give a damn what you feel.

Well, he'll be out.

And that's that's where we've made a big mistake, not adequately recognizing those who lose from trade and how to help them out.

So if I was writing a paper in your class, I think I would sum it up.

What I'm hearing from you this way, and then I hope I got in a, we often talk about trade in the lay public in ways that, we don't really understand.

It's not purely zero sum.

Correct?

a trade deficit is not, de facto evidence of being a loser.

Very important.

Okay.

but there are still, possible the word problems damages pain that comes out of trade that needs to be recognized.

And in your view, sometimes with policy.

and that tariffs can be a useful tool when not used to set everything on fire.

Yeah.

In a very limited range of circumstances tariffs can be useful.

And if it's not a trade related issue I would have other policies being pursued first.

Okay.

George, is that close to where your mind is on this stuff?

I think about it a little bit, and I think about how for many years, the reason we would sell to a country and accept their relatively high tariffs on our exports was the case that, well, we, where you're selling our goods are undeveloped country.

We need to develop our economy.

We need to protect our domestic industries.

And we would accept that because we're relatively prosperous.

That's a little more in balance now than it used to be, certainly with the eurozone.

If not, Madagascar, for example, doesn't seem unreasonable.

But I think about the southern tier of New York, Jamestown, for example, where we have a satellite office and I think of so many manufacturing jobs that went mostly to the Far East for lower wages and left a lot of our neighbors in, upstate New York without jobs.

Now I'm asked by the government to give a dollar toward section eight, toward snap, toward whatever with a large bureaucratic scrape for the state or the feds.

And I'm wondering if it wouldn't be better for me to pay a little bit more for my manufactured goods and let my neighbor have a job.

Okay.

back to your feedback here.

This is Ariel on the phone.

Hey, Ariel.

Go ahead.

Hi.

I'm calling in because I frequently listen to the radio, and I felt like, you know, this is a topic that you guys might like a different opinion on.

I'm a high schooler, so I don't even have the right to vote.

But, the only reason that I'm learning about economics and about tariffs is a because of this radio station and because of the opportunities that I'm given in my high school, because of my economics class, because of my teachers.

and it's very, very, very important that these educational opportunities are continued, especially for, you know, younger students.

I'm going to be going to college next year.

I'm going to be able to get private education.

But for people that are continuing to be in public education, people that are younger than me, their access to this education and their access to information on tariffs is being limited.

I think it's very disheartening to that as a high schooler, as somebody that doesn't even have a major voice in the government.

there are so many people like myself in my high school that understand what's going on better than adults that have, you know, this ability to impact our lives.

first of all, I'm glad that you called.

You're welcome any time.

Although I hope you're not missing class.

And, No, I've got an appointment right now.

and, and I think it's, it's remarkable to hear you say that people your age are looking around, feeling like things are kind of falling apart and wondering where to get good info, because this is supposed to be the information age.

This is supposed to be.

We are supposed to be flooded with good information, not mis or disinformation.

but it doesn't sound like you think it's easy to access good information.

Is that right?

It's certainly not.

There are so many of my friends that we are very, very concerned.

And, it's it's difficult.

There are a lot of echo chambers online that people can get stuck in.

and a lot of people whose, you know, parents may or may not be a, a good force for, acquiring accurate information.

And all of this is something that I feel like the school districts can help with by allowing children to access differing opinions and by allowing them to express their views outside of their family, outside of their immediate friends.

and really get access to, more reasonable education.

So what do you think about your job future, Ariel?

I mean, how confident are you that whatever you end up doing is something you can do for a long time?

I am relatively confident.

I'm.

I plan on going into engineering, which is something that, you know, I think will always stick around regardless of I, you know, you always need people to program the eyes and to figure out how to do that themselves.

But, there are so many jobs that it's it's really scary that they might get taken away.

I mean, I am huge into the arts, I'm hugely into music, and there's a reason why I'm not pursuing them in college.

it's just it's not profitable.

it's it's even though I love it.

And even though I want to see that industry succeed, I will not be able to make a life for myself and advocate for that.

If I choose to pursue it.

Well, Ariel, good luck to you.

I'm going to let our guests respond.

And I just want to thank you for calling.

We appreciate your voice.

You can call, email, send us a note any time.

and good luck as you head off to where you're going next in terms of school and future.

you know, I'm thinking about your generation all the time.

My son's 13, a little younger than you, but, yeah, we're all thinking about that.

I also will tell you, Ariel, when you when you and your, your peers are looking for information, it's always a good idea to ask yourself, how do I make sure I'm not an echo chamber?

What is the steel man argument as opposed to a straw man?

Which, you know, we kind of use that phrase to say, well, what's the easiest way I can take down my opponent's argument in bad faith?

What's the best case?

Always ask yourself, what's the best case that I can make that I'm wrong, or that I'm thinking my thinking might change.

And that doesn't always work.

It doesn't always change your mind.

But it's really valuable.

Really valuable to consider that in an honest way.

And it sounds like you're already doing that.

It sounds like you and your peers are doing really well with that.

And I encourage you, and sometimes you encourage your parents to do that, too.

It's a great idea.

Benjamin George, what do you make of Ariel's phone call there?

I think Ariel, that's a great idea.

Pursue engineering if you want.

Arts and music.

Do that on the weekend.

oh.

That's painful.

Do it on the weekend.

You can't make a living at that stuff.

but, Ariel, the only critique I have for it's constructive criticism.

Ariel, you used.

I listen to everything you said.

You use the word very five times.

Just trim that back a little.

You'll do just fine.

You're tough.

what do you got?

Well, she's saying a lot of very useful things, but she's.

Since a concern seems to be determining what sources of information are useful and hence reliable and which ones are not.

Let me suggest a few sources to Ariel.

So if you want to read newspapers, whether it's online or in hardcopy, I would suggest a slightly left of center perspective would be the New York Times.

If you're interested in a more conservative perspective, read the Wall Street Journal, the Washington Post.

These are newspapers that you cannot go wrong reading about.

I'm talking about national outlets, if you're interested, if you're interested in a foreign perspective, not necessarily some navel gazing here, read a periodical like The Economist, which is published out of England.

If you want a slightly more right wing perspective, perhaps the spectator.

These would be all examples of sources of information that are useful and that can help you maintain this steel man perspective, as opposed to a straw man perspective.

Ariel, thank you very much.

Good luck to you.

Let me get Kimberly in Pennsylvania.

Hey, Kimberly, go ahead.

Hi.

Yeah.

I just wanted to to kind of follow up on that.

As a parent of kids that are 28 and 25 and starting to have kids, have, jobs that can support their family and starting out, they've also gone to college and they have a huge loan to pay.

They're not wanting to point to the manufacturing at all.

They want to use what they've learned in university, like chemistry and physics specifically.

But now all those jobs are being cut and they want the kids to go back to manufacturing.

They don't want to.

We have farmers here.

We had people who picked peaches, and the kids are not up to that job.

They just don't want to do it.

Kimberly, I appreciate that.

I mean, I think that goes to some of what Professor Bartleby was saying earlier in the hour, which is that if you did grow up in a family coal mining, manufacturing, working in a local mill, and that has been your life, and you're 49 years old and you're wondering, what do I do?

you know, I think that that's a hard thing to confront for your kids.

That is not the life that they have grown into.

And that is not something that they're thinking.

They're rooting for, unsure.

But I think there are many.

let's just set aside how likely this is if we on short a bunch of new manufacturing.

I think there'd be a lot of people eager to take those jobs.

I don't know for sure.

And, Kimberly, definitely maybe your kids are not in that category.

And, and maybe it's not an easy apples to apples thing anymore, but, I certainly wish them the best.

You know, your kids, my kids.

It's a hard thing to think about job futures for them.

A lot has changed, and I feel for you, and I feel for them.

But, it I mean, what do you make of the point?

She's making there about where people want to work?

Well, it's related to the point that you mentioned that I mentioned a couple of minutes ago, but there are some need for adaptability and flexibility.

I mean, universities keep talking about lifelong learning.

I mean, that is literally true more so in some careers than in others.

You have to be able to pivot.

You have to be able to demonstrate flexibility and adaptability given changing economic times.

So there's that.

But again, I want to go back to the inflexibility that many politicians display towards those who are negatively impacted by trade.

And that is why so many people are soured on free trade because they don't see it doing anything for them.

And we're talking about millions of Americans, not 2 or 3.

Okay, George.

so so when we think about that, I listen to the words people say, just like with Mario and Kim said the word that, it said a while earlier.

What the kids don't want to do this.

Maybe some coal miner doesn't want to do that.

Unfortunately, markets are going to tell you tough luck what you want, right?

Markets are going to provide jobs that you can either fill or not fill.

I wish we could all choose what we wanted to do for a living.

But Ariel demonstrated to us that if you want to be an artist, you probably can't make a living maybe going to engineering.

This is an email from Charles.

He says, about a decade ago, I made what seemed like the right financial decision at the time, and a few months later, the situation got significantly more complicated.

It required short term pain.

It required working two jobs, not doing fun things.

Were buying stuff for myself, putting all my energy into driving down the debt that had been created.

And you know what?

The short term pain was worth it for me.

I'm fine with seeing if this will be too.

Especially since at the present moment this country is paid for by stealing money out of my paycheck.

I'd much rather pay for it by charging other countries to do business here.

That is from Charles.

So a good place to end is to ask both of our guests.

Maybe take 30s apiece here.

How long until you really feel like we're going to know if this is working in the way we've been promised?

I mean, everybody wants to respond in 24 hours, 48 hours.

I always try to pull back and take a breath and admit there's a lot I don't know.

How long do you think it will take to really see the picture?

So I think it'll take a couple of months to see whether the use of tariffs as a negotiating tool is or is not working.

So if the objective is to negotiate it and then drive the tariffs down or whatever, negotiate other aspects of the trade relationship that we're talking about a couple of months.

But if you're talking about bringing in industries that currently don't exist, shops that don't currently exist back into the United States, then depending on the sector, it could be yours.

Okay.

George Conboy yeah.

Not unreasonable.

It's not days or weeks.

It's months to see what kind of effect we have, because I think we're going to see changes in what has been proposed, because what has been proposed is so preliminary.

And it will take longer, of course, to ensure those jobs.

Whether it'll be worth it or not, we're going to find out.

Could be.

I mean, I'm looking at Charlie's email.

He says I'm 68 years old.

I've been investing since 82.

He says this crash has me concerned.

And one ill advised person who went bankrupt six times is now creating a current mess.

He's he's hurting.

He's scared, he says.

Ben Stein and Ferris Bueller's Day Off new tariffs did not work.

And that's good enough for me.

Anyone?

Anyone?

Anyone.

That's Charlie.

I keep forgetting to pull that clip.

That's a great clip on Smoot-Hawley.

but Charlie, 68 years old, and a lot of people were calling to ask for George's investment advice.

You got to call the firm you can't call connections when George is on to ask for that.

But people are a little nervous right now.

Sure they are.

You just this is not unreasonable to happen every 5 or 6 years, and it's always something different and you're different every time.

George Conboy, chairman of Brighton Securities, thank you for being here.

Thank you.

Doctor, I'm about to be a professor.

Thank you very much.

Distinguished Professor of economics at it.

Always great to have you.

Thanks.

Thanks for having me.

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