As confidence declines, they're going to have
to choose.
So capitalism is going to become much more
nationalistic.
Peter, you have thought a lot about these
issues and you coined this really interesting
term, patriotic capitalism.
What does that mean?
So patriotic capitalism is what I see arising
from the devolution of the interconnectivity
that you've talked about, which is, from the
perspective of confidence, interconnectivity
is a great manifestation of sort of that us
everywhere, forever mindset that goes along
with peak confidence.
Right.
So, you have Friedman-- you're saying the
world is flat.
Right.
And to me, that's sort of a peaking moment.
And so, part of that was the development of
transnational corporations, companies that
sat above these political states trying to
operate in a frictionless global environment.
As confidence declines, they're going to have
to choose.
So, capitalism is going to become much more
nationalistic, where corporations are going
to have to figure out which side they sit
on, recognizing that there are going to be
clear consequences.
That if the deterioration continues as it's
being articulated, you are patriotic China
or you are patriotic The United States.
Or patriotic Australia or patriotic Germany
or whatever.
Does that mean also, we're going to have an
industrial policy?
So the government says, you're not going to
invest here, you're not going invest there,
and we're going to have a government industrial
policy?
Sure, you're seeing it already.
I mean, you're watching capital flows in and
out of Saudi Arabia, to me is a very recent
example of where policymakers are framing
both the in and the out.
And I think that the United States, particularly
having outsourced so much supply, is going
to start from the bottom of Maslow's hierarchy.
Right.
Things that touch security related issues
are where you're going to see that issue first.
And so Peter, looking back, when do you think
confidence peaked and why did it peak then
and why did it start to decline?
So, I put that peaking, you know, tops are
not a v-shaped-- inverted v-shaped-- moment.
There's an arc that begins, from my perspective,
in the late 1990s with the manifestation of
the European Union and the euro and the merging
of military supplies.
There are lots of things that go along with
that, including then the exporting of manufacturing
in the United States.
And I would say that the quintessential expression
of that was Federal Express and that notion
that you could get anything from anywhere
at once, simultaneously.
And you've started to see since then, slow
degradations.
You know, nothing-- and that's very natural
with overconfidence.
Overconfidence has to be proven wrong.
The Trump administration has really tried
to enforce and to promote me here and now
rules, whether it's on the immigration front,
foreign trade, tariffs, are all based in that
reptilian brain.
Oh, I agree.
And it's basically-- it's almost-- it's definitively
an anti-economic, intellectual movement.
And then I-- and I agree with you in the cognitively--
Yeah, that's what I mean, in cognitive-- let's
take David Ricardo's basic, basic principle,
which kind of is the principle that shaped
world trade forever.
You manufacture in the most efficient place.
The lowest cost place.
No, not necessarily lowest cost, the most
efficient, where you make the most profit.
And so consequently, for instance, after England
adopted this philosophy, after the corn laws
were repealed, by 1880, England was no longer
food self-sufficient because it doesn't make
sense to grow all this food in this way any
horrible climate.
Import food, make steel and railroads, right?
So, but now Trump is saying, David Ricardo's
out.
We're not going to produce economically around
the world where it's most efficient, where
we have an integrated supply chain which is
efficient, we're going back to this nationalist
almost 1914 world view.
And it's very-- those things that are far
away when we don't have confidence equals
fear.
Right, exactly.
And so it's clearly-- and you've seen it on
the energy front.
I think behind the scenes, what's happened
with fracking and American self-sustainability
from an energy perspective is the beginning
of this trend.
So does the tail wag the dog?
I mean, you know, this is a chicken and egg
question.
Does that trend pre-date-- is Trump a manifestation?
I think we're agreeing that he is, of a deeper
underlying trend.
So that trend, you know, fracking was a scientific
paradigm shift and it was not predicted that
that would result in what it did.
It did do that, that has affected US foreign
policy, US attitude towards the Middle East,
all sorts of things.
And certainly set the stage for what would
arguably be a confidence building thing, where
we now have our own energy, but that has not
been the way it's turned out.
No, and again, that overlay of mood being
negative-- none of these are the victories
that you would have anticipated.
And what they represent to me is a hunkering
down, a turn inward where we must be self-sustaining
because everything around us is something
that we should be fearful of.
And because change is happening so quickly.
Fear of change.
I mean, think about it.
It's not that the jobs-- jobs really haven't
been shipped to China in the last 10 years,
per se.
You know, some have.
But in general, that is old news.
What's new news is automation.
You have, for instance, Trump talks about
steel town, steel town, steel tax.
1970, it took 10 people to make a ton of steel.
Today it takes one.
Those jobs didn't go to China, they went to
machines.
And it's striking that you would have this
level of fear with a almost record low level
of unemployment.
Right, yes.
It's counterintuitive.
Right and fear of immigration with basically
no unemployment.
