Kind: captions
Language: en
Trump dismantles the Department of
Education. Lutnik gives a mostly true
history of tariffs and income tax that
we're going to be factchecking. The
world gets introduced to mortgagebacked
burritos. Village Road Show files for
bankruptcy as Legacy Hollywood continues
its death rows. Pokemon Mania has people
stampeding in stores. And Alec Baldwin
dies inside on the red carpet. Drew,
this administration is running around
the world, DC specifically, with a
chainsaw. And even though they promised
to do it, it is still a trip to watch it
actually happen. It is official. He
signed the executive order. The
Department of Education is going bye-bye
to the legal extent that he has. Now,
since this is a Congress branch of
government that they started, they have
to officially vote to get it completely
struck off the record, but he's using
everything he can in his executive
orders to strip it down, get it as lean
and mean as possible. So, we shall see.
What's your initial reaction of the
dismantling of the educ department of
education? you have to do something
dramatic. So, this is one where I get
the emotional response at the level of a
headline makes a lot of sense, but when
you actually look at what's been going
on, this is not about dismantling it is
about protecting our kids and making
sure that they get educated. The
Department of Education itself has not
functionally been the thing that
protected our kids. So, uh look at the
rate of spending. These are all
inflationadjusted dollars. The
Department of Education came into
existence in 1979. It officially went
into action in 1980. In 1980, these are
inflationadjusted dollars. We were
spending
$7,429 per student. Flash forward to
2021. We're spending almost double that
at
$13,820 and we have not moved the
educational achievement of the students
basically at all. Uh we're not even at
the top. It's not like we've had to pay
an increasing amount to stay at the top.
We've been in the middle of the pack to
low in the pack depending on which thing
you're looking at uh which aspect
whether it's science, reading, math. So
our outcomes are blah at best and the
expenditure is going up up up. We also
spend more per student than any other
developed nation for worse results. So
this is one where you should judge a
tree by the fruit that it bears. And
this is a tree that simply refuses to
bear fruit. So you have to make a
change. Now just abolishing or reducing
it as much as you legally can the
department of education does not
instantly mean that education is going
to be good for kids. And so people are
going to have to ferociously look at
what do we do next? Not just what do we
stop doing, but what do we do next? Um
that's going to be the real question.
What about the teacher salaries? What
about the actual impact that it's going
to have at that level? So I know from a
doge level we want to slash the deficit.
We need to save money. This is a way to
save money. But what are those second
order consequences that we'll see
happening to the rest of the education
community? So this is where I encourage
people whenever you have a hypothesis
like hey we want to uh reduce spending
on the department of education. Is there
anything that we can look backwards at
to see if this is a smart move? We have
a graph. We should pull this up of what
has actually happened as you've spent
more money because you would think that
this is the kind of thing that if you
threw money at it, if you had uh more
teachers, if you had more qualified
teachers, that this is going to lead
somewhere good. But the reality is when
you spend your money, what you end up
getting is more employees. And
unfortunately, this has not been going
to making sure that we have smaller and
smaller class sizes over time. What this
ends up going to is admin. So looking at
the graph uh on there you see total cost
is skyrocketing. The outcome that we get
is virtually flat and the one thing that
goes almost in lock step with the amount
of dollars that you're spending is just
the overall staffing the administrative
burden. This is the same thing that
we're seeing in higher education. As we
spend more and more in higher education
we are not seeing more students getting
into these elite universities. What
we're seeing is uh that you're getting
this massive administrative bloat. And
so the increase in cost is not yielding
an increase in ability of student that
graduates. Whether you're talking about
middle school, high school, or secondary
education, you're just seeing a
bureaucracy that gets bigger and bigger.
And this is a big part of the thing that
culturally people can feel, which is
what they I think are groping a little
bit in the dark. But Trump resonates
with this idea of this thing isn't
working. And the reason it isn't working
is because what he calls the swamp. But
it's really just this bureaucratic
nightmare that from a metaphor
perspective I think of as barnacles on a
turtle. If you put too many barnacles on
a turtle, it just sinks and drowns. And
we're in that territory. And again, I
want people to look at the amount of
money that we've been spending per
student. We have tried with love in our
heart, with a desire to see kids be the
future. We've said spare no
expense. It doesn't matter that the rest
of the world spends less. we are going
to keep spending more on this, but it
has not worked. And so to look at that
and say this is a money problem is to
fundamentally misunderstand all the data
that's pouring out. Like this is
available for anybody to go and look at.
And despite our willingness to spend
more and more and more to educate our
kids, it isn't educating them better.
And so we've just got to say, okay, we
now need to do something different. And
I think something that that's really
important here that I don't want to get
lost is there are going to be a lot of
objections like what do we do with um
special needs kids? What do we do about
kids that are using school for food?
Isn't getting rid of the Department of
Education going to hamper that stuff? Um
and I think that they've taken care of
this. There's a pretty funny sketch that
I saw online um that covers this. Hit
it. Trump dismantling the Department of
Education is going to have horrific
implications. I actually think this is
going to be super beneficial for us. But
like what are your concerns? Kids are
going to lose access to their breakfast
and lunch programs. Yeah, that's huge.
The kids have to eat, but thankfully
that's already funded by the Department
of Agriculture. Okay, but what about the
special needs children? What about the
children who need IEPs and special
education services? What about them?
Super important. And I fully agree with
you that we need to protect these
children. However, all of that is being
moved to the Department of Health and
Human Services. So, none of that is
going away. Whatever. But what what
about the grants and scholarships? What
about the PEL grants? Where are those
going to come from? Yeah, absolutely.
You know, I was on a PEL grant myself
and I understand the importance of
having these grants and scholarships
available, but thankfully all of that is
being transferred to the Department of
Treasury. Whatever. Okay, we need more
funding, not less. You know, more money
is just it's not always the answer.
Interestingly enough, adjusted for
inflation, even the Department of
Education's budget has grown from 14
billion to 80 billion in recent years,
while student outcomes have actually
gotten worse. It's not just that, but
nationwide less than 32% of our children
are proficient in reading and less than
31% are proficient in math. The system
is failing our children. It's time for
it to go.
Dude, you can't have less than a third
that are proficient in reading in math
and be competitive on the world stage.
And anybody that thinks that you don't
need to be competitive on the world
stage, uh that is a luxury belief that
you might have been able to get away
with when we had uh stability globally,
but that era is rapidly coming to a
close and we are going to be back in the
uh just naked battle for power that
ultimately runs the world. And so um to
be in a situation where China is
outperforming us on educational
attainment is a very bad place to be as
you are revving up a cold war uh that
could obviously I hope it never does but
could spill kinetic. So um just an no
matter what even in a time of peace I
think it's grotesque to have less than a
third uh of people be proficient in
reading and math. That's nuts to me. It
it doesn't make sense to me either. Uh,
if I were to toss you the keys and kind
of figure out what's the best approach,
how should we fix this problem? You're
right. We can't just say more money and
the results are going to improve, what
do you think should be the approach of
fixing education in America? If I were
going to really boil it down, this is
30,000 foot. You're going to need to get
into the weeds. But at a 30,000 foot
view, this is already being played out
in charter schools where it's what I
call expectations and execution. So, you
have to have high expectations for the
students, high expectations for the
teachers. absolutely um no tolerance in
a student that isn't giving it their
all, especially the way charter schools
are now. A lot of them are operating um
in underserved neighborhoods. So, it's
like, hey, there's a lot of people that
want your spot. And so, if you're not
taking this seriously because they're
doing it on a lottery, uh if you're not
taking your spot seriously, then we're
going to bump you for somebody who is.
So you can really hold the kids
accountable to doing their work, uh,
holding themselves accountable to
getting good grades. Um, and that you
can hire and fire teachers. And this is
where, and I know that this is going to
be controversial, but from a union
perspective,
uh, part of the problem, unions can get
to the point where they become so
powerful that they themselves now become
the barnacles. That you're no longer
able to hire and fire effectively. So
people that aren't good at their jobs
are not yielding results are protected
by the unions and now instead of looking
at the outcomes or the fruit that the
tree is bearing, uh you're just ignoring
that and saying even though the outcomes
here are terrible and we're paying more
and more for terrible results, we're
just going to let it keep going because
people are fighting for the wrong
things. So, if I'm right that this is
expectations and execution, what does
execution look like in a world where um
this is all being pushed down to the
state level, the local level? I think
that is step number one. What's crazy is
if you find yourself arguing for the
Department of Education, go back and
read their mission statement, which was
to ensure that uh state and local
governments, they don't use the word
autonomy, but that was the idea, are
able to decide locally what's best for
their kids. And that just isn't how this
has played out.
So, if we're going to push this down to
the state and local level, I think the
way to approach this is twoprong. One,
the idea of the federal government
giving each student a budget so that the
budget follows them. This was an idea
you and I were debating on the live. So,
shout out to you to really um showing
the benefit. I'm not even sure that you
and I come out in the same place, but
you showed me the idea that letting the
dollars follow the students overcomes
the part that I was stuck on, which is I
don't want the government to have to
preund a school because now you get into
do we want them funding religious
schools, etc., etc. So letting the
dollars go with the students, letting
the parents vote on what school they
send their kids to, but because I can
see how that can derange itself, I think
there has to be some output that that
school has to have from an educational
achievement perspective in order to
qualify for students to be able to spend
their educational savings account. I
think it is ESA um for them to spend
those dollars at that school. So schools
need to remain in good standing in order
for parents to spend money on that
school so that they're not they don't
just get good at selling parents that
they actually are good at selling
parents based on the fact that they're
hitting these educational um levels. So
again, it's very high level and there's
going to be a lot of stuff in the weeds
that are going to need to be worked out
by somebody a lot closer to the problem
than me. But that's what I'd say at the
high level. Yeah. And I think that
there's room for criticism of America's
education without it being a
condemnation of teachers. My sister's a
teacher. I have no teachers. So, you
know, we have family in the educational
system. So, by no means are we saying we
need to try something different. That
means teachers are evil and they don't
deserve a raise. Like, not two things
can be true at once. We definitely need
to support teachers in the classroom. We
need to have smaller class sizes. All
those things I think are true. But we
also have proof and the data in the
graph shows that the Department of
Education as it is assembled right now
isn't giving us the outcome we want. So
we have to do something different.
Agreed. And this is also all happening
at a time where if I were sending my kid
to a school, I would absolutely insist
that AI be integrated deeply into what's
happening. I think AI is going to be far
better at um explaining a lot of this
stuff. it's going to be far more
knowledgeable uh and it's going to be
far better at recognizing the patterns
in like what's working and actually
yielding outcomes. Now, one thing you
and I were talking about the li in the
live that I think is a really good quick
barometer for whether your educational
system is moving in the right direction
or not. Do wealthy people who can afford
to send their kid anywhere they want, do
they want to use the public system? If
the answer is yes, if they're like, "Oh,
cool. I've got the dollars and I know
that this school that's local to me is
absolutely doing a bang-up job of
delivering these incredible results. So,
yeah, I'm going to send my kid to that
public school." Um, if wealthy people
who could send their kids anywhere
decide to leave them in the system,
you're building a good system. If
wealthy people are like, "Hell no," and
they run in the opposite direction,
they're like, "Yo, I'm sending my kids
anywhere, but I will build my own school
if I have to." Um, that tells you that
there's something wrong with that
system. And that's exactly where we are
now.
Nice. Um, jumping into DC and economic
news, the All-In podcast went to DC and
they sat down with Howard Lutnik, our
new secretary of commerce, and they
talked about a couple things, but we
wanted to start at the top, which is the
history of US and tariffs.
Yeah. So, first of all, shout out to the
um All-In podcast, Chimamoth, and David
Freeberg. David, who was on the show,
David, I love you. Amazing. uh Donald
podcast is killing it. Like these guys
are very impressive and getting some of
the strongest business leaders in the
world to do a podcast. It it's a pretty
extraordinary time. And getting them on
a cabinet as well because Dave Sax
definitely have reached. But yeah, I
wanted to start off with tariffs because
I know that's been hot in the news right
now.
America was built on tariffs with no
income tax. no income tax till 1913.
Okay, pause. None. That isn't true. Now,
he's going to boil things down in this
uh explanation to get people to
understand where all this is going, but
I do I am going to punctuate this with
the um actual timeline. So from 1789 to
um early federal taxes uh were tariffs
and excises for sure. Uh but in 1861 to
1865 because of the civil war that's
when we had our first federal income
tax. So it isn't true that it didn't
kick in until 1913. Uh but it was
temporary. But something that I either
he doesn't know or he is intentionally
leaving out is that there was a growing
ground swell for a long time before 1913
uh of people saying you've got to start
taxing people. Of course, in the
beginning, they wanted it to just be a
tax on the rich. And as we go through
his explanation, I'll hit the beats of
when that ground swell became strong
enough that we started taxing the
wealthy. Uh sorry, taxing not just the
wealthy, but everybody. Uh, so we'll get
to that, but a lot of this stuff is
pushed forward by war. So not 1913
because he's about to say that it was
really World War I that drove it. It was
the Civil War was the first time.
Greatest, richest country in the world.
So when Donald Trump says make America
great again, what he's talking about is
from
1880 to 1913 when the country had so
much money that we had blue ribbon
commissions, which you guys would have
been on. Yeah. Right. To try to figure
out how to spend the money. Right.
Right. and no income tax. Then we put in
the income tax in 1913. Why? Because
we're entering World War I. Yeah. And
don't we all need to contribute to
protect democracy and protect our just
to punctuate one thing really fast. From
1894 to 1895, we did have an income tax
uh revival. Uh but then the Supreme
Court rejected it. Basically saying in
the beginning the Supreme Court said you
can't charge income tax. And so it's not
till later that they're like okay
actually you can. It had to do with
proportion of population by state. um
and that got struck down. So you had the
income tax again. It gets rejected
anyway. It's gonna rear its ugly head
again, but let him keep going. Way of
life, right? Then what happens is the
world goes into
chaos. We come out of
chaos, right? And then we're starting to
think of what do we do? What do we do?
And then 1929, the stock market crashes,
right?
1933 we start to say oh god we forgot we
need to do tariffs the US did not forget
about tariffs the reality is that um
there's a lot of debate going on you get
in 1909 you get the first corporate tax
is introduced um people propose the 16th
amendment um so ultimately the 16th
amendment is the thing that allows for
modern income tax and that's when the
supreme court goes actually okay you can
do
Uh so to divorce this all from like a
growing sentiment in the US population
that we should be charging an income tax
is inaccurate at uh best and insincere
at worst. Now keep in mind I love this
interview and despite some of the
inaccuracies of what he says I think
there's a lot directionally to take away
from this. Um but I want to be arguing
on terapirma of like this is actually
what happened. Uh, and now that we know
what happened and we know that people
were pushing for this and we know that
there was a constitutional amendment,
um, like this is the lay of the land.
This is where we're at now. What do we
want? And because there are going to be
several times in the history as we go on
here where tax gets insane. So when
people are talking about like, yo, there
have been times where we've taxed the
wealthy in a progressive tax system, but
where we're taxing like I think 96% at
one point. So um, all of that is real.
And so looking at the beats of when did
we do what, what was the effect of it, I
think is very worthwhile to figure out
what's going to be the best America for
the average American. Now, I think as
they lay it out, they've got a pretty
strong case to be made that if we can
balance the budget and get to the point
where we're making um we're making sure
that the low and middle class people
aren't paying tax, like that would be
[ __ ] huge. So he goes into to great
detail on that later. But again, to make
sure that we're on terapirma, hit these
beats.
1933, how can you do tariffs when the
markets crash, the world's in going into
depression, and you're going to do
tariffs in 1933? You can't charge the
rest of the world money unless the rest
of the world's okay. That's right. So it
was too little, too late, right? So then
we come out of World War II. It's
1945. We need to rebuild the world.
Okay. So, we decide we're going to take
our tariffs
down and we'll let them, here's the key,
we'll let them have tariffs be up and we
will export the power
of our economy to let them rebuild and
we'll let them rebuild and that's what
happens. So 1945, we have the Marshall
Plan, right? And we do it in Japan, of
course, because they need to be rebuilt.
What's the difference, right? So, they
need to be rebuilt. And then what
happens? We have the 50s and we have the
Korean War. So we let them rebuild which
means low tariffs here, high tariffs
there. Low tariffs here, high tariffs
there. Then we have the Vietnam war,
right? So now all of a sudden we have
all of Southeast Asia. Low tariffs here,
high tariffs there. You know what the
best example I can give you to make it
crystal clear?
Kuwait. We spend what almost hundred
billion dollars freeing Kuwait, right?
You know who has the highest tariffs
against the United States of America?
The number one country with the highest
tariffs against the United States of
America.
Kuwait. And you think what? That's But
here's what it is. If you go back to
this understanding the way America
thinks, you need to be rebuilt. You were
just destroyed, right? all their oils
were. You remember red? The guy's name
was Red something and he was the guy who
capped all the there were fires in all
the the the oil wells and he capped them
all and it was amazing.
So we let them put up high tariffs. But
you know what the problem is? Then we
forget, right? And we let it go. Yeah.
So Donald Trump comes in and says it's
got to stop. We'll be back to the show
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show. So, um, walking through some of
the different beats here. So, he glosses
over what happens during the World Wars.
Um, that plays out, uh, a little bit
differently than the picture that he
paints. So, it goes something like this.
1920s postworld war I tax cuts known as
the melon plan. Um, the US government
moved to reduce the very high wartime
taxes. I mean, we were throwing them up
into the skies. the top individual
income tax rate fell from 77% at the
worst peak. So at the war peak we're
like yo everybody's going to contribute
to this and there was this real sense of
patriotism that paying your taxes and I
would say maybe even more so in World
War II there's a sense of like it's our
duty to pay these taxes. Um but that
ends up coming down uh down to 25% by
1925. Um so but then again in World War
II you end up getting a huge spike in
taxes. Um it's a progressive rate but
people are paying really exorbitant
taxes. Uh 1932 to 1936 you've got the
Great Depression tax increase. This is
part of Hoover's New Deal. We've got to
pay for all of this stuff. Now there's a
whole debate about whether by leaving
the income taxes as high as we did
during the Great Depression that we
actually elongated that. Um that's
beyond the the scope of today's episode,
but um at one point they actually um
there was a revenue act of 1935 that was
sometimes called the Soak the rich act
because it imposed a um mar a top
marginal income tax rate of 79% on the
highest incomes during a period of
peace. Uh so it's like huh that that is
very high. again known as the uh there
was a dip known as the uh Roosevelt
recession um in the late 1930s that
people debate whether if they had
brought down the taxes sooner if we
would have gone through that. Um so
something there 1940 to 1945 World War
II uh they call it going from class tax
to mass tax. So this is where it was
like hey we're really just trying to tax
the wealthy to get us through these
times of trouble. But now in World War
II, um there's a growing sense that
everybody would be willing to contribute
to the war effort. So we start taxing
everybody. So obviously the wealthy are
getting taxed at a much higher rate. Uh
but now everybody's getting taxed and
down to like $500 being your annual
income and anything above that is being
taxed. Now the exact uh inflation
adjusted dollars, I don't know, but it's
going to be a pretty low number. Um but
yeah, the top level during this period
um was in the 90s. I don't see it um
here in my notes, but it was very very
high. And so after the war, then we
start talking about really starting to
bring these down. By 1964, the Kennedy
Johnson tax cut uh gets proposed while
Kennedy is still alive. Johnson ends up
being the one that actually pushes it
through after the assassination. Um but
yeah, cutting the top marginal tax rate
from 91% which was a leftover from World
War II and the Korean War levels down to
70% uh and lowering the bottom tax rate
from 20% to 14%. It also cut the
corporate tax rate slightly from 52% to
48%. Uh and then all of those um tax
cuts were phased in from 64 to 65 and
amounted to roughly a 20% across the
board reduction in tax liabilities.
So, it's a lot more complicated than
what he's saying. To some degree, you've
got to simplify this stuff to make it um
understandable. I like the
interpretation. I think the data is
there for it, but it is an
interpretation of, hey, this was all
about letting people rebuild. I think
it's actually pretty brilliant to use
that to partly export the power of the
United States economy to these countries
that were hoping uh through the Marshall
Plan to make them allies to help them
rebuild. Um, fantastic. But when they I
don't know that we know what is going to
happen to the economy as we try to
renormalize trade. But there's a reason
that Trump has been banging on about
this since like the 80s, saying
basically this trade imbalance is crazy.
For people that don't know, GDP, gross
domestic product, the way that you
calculate that is what you export uh
minus what you import. So all the things
you're paying another country to buy
their goods and services subtract it
from the number that you export. And
we're in the negative. though with some
countries. Uh so we're actually in and
people have certainly heard Trump use
this word in a trade deficit where we
pay other countries more for their stuff
than they pay for ours partly because
we're letting them tariff the life out
of our goods. Take Japan. It's easy. We
dropped a bomb on you. Uh we absolutely
destroyed your economy. If we want to
see you rebuild, then we want to make
sure that you're able to sell into what
was the undisputed heavyweight champion
of economies at that time, which is the
US market. So, we're going to have low
tariffs versus the high tariffs that
you're going to put on us so that we're
not selling our goods into your country.
So, it gives you the opportunity to
rebuild. And this is the part given that
we're in a cold war with China that I
really um think people need to look at
and ask themselves the question, how do
we bring some manufacturing back to the
US? And again, we're not trying to
manufacture everything, but if we can
find a sensible way, and I'm not Trump
is there's a certain amount of chaos. I
love hearing Lutnik talk about it
because he makes it clear and it sounds
so controlled and lovely. Um, but we do
need to find a way to incentivize
bringing that manufacturing back. And
when I look at what we did with Japan or
other countries, it's the exact
playbook, but in reverse. You keep your
tariffs high, we'll keep, sorry, uh,
yeah, you keep your tariffs against us
high, and we'll keep our tariffs against
you low. That way, you can sell into us,
but we'd have a hard time selling into
you. And so, he's basically flipping
that and saying, at a minimum, we're
going to be balanced, but in some
industries, we're going to be
aggressive. So what I'm gleaming from
both the history of income tax and tying
that with the tariffs is there was a
historical
uh precedent for going in this direction
and treating the economy in this way.
And I think you're saying it's better if
we move toward that to just get a better
balance. Not necessarily saying that
this should directly replace income
taxes or we should stop taxing people.
Like is there a I'm trying to think is
there a balance between tariffs and
income tax or once we get tariffs 100%
rolling we can then he's going to
explain it so I'll let him talk about it
but to set it up the gist goes something
like this. If we can reduce a trillion
dollars in spending and can make a
trillion dollars from tariffs and the um
Trump gold card that now we're in a
really great position. And then if we
can monetize America's assets, whether
it's uh minerals, oil and natural gas,
lumber, whatever, whatever, like all the
things that we have um that are on
America's balance sheet, um then we can
put ourselves in a position where we
don't need to do the income tax,
certainly not the way that we're doing
it now. And I actually don't understand
people's emotional response to like
clowning on the idea of income tax
versus um sorry the internal revenue
service versus external revenue service.
And I would ask people run a thought
experiment. If we could do it and
because it's very possible that what
Trump and Lutnik are doing ends up just
being too hard, complicated, and it
tanks our economy. That that's very
possible and everyone needs to be eyes
wide open. But run the thought
experiment. If this could be done well
and we could make enough money off of
other countries wanting to sell into our
economy that we did not need to tax
people's income inside this country and
we gained it all through call it a
membership fee. Just again this is just
a thought experiment. Would you not be
excited? Would that not be awesome? So,
I would love to hear people's push back
on it because if I were to step into it
and steel man it, the only thing I could
see is if people were like, uh, you just
there's the allyship that you have with
people by allowing them to sell into the
economy that goes away and you're just
weakening alliances. That could be that
there could be second and third order
consequences along those lines that play
out negatively. But if you run the
thought experiment, you say, "Okay, if
that worked, I would love it." Then
cool, I understand. And now we're just
arguing about where the rubber meets the
road. I just don't think, Tom, that it's
actually going to play out that way.
Okay, cool. Now, at least we have the
same value set where we would love to be
in a position where we don't have to tax
our own people. But if this is like an
emotional thing of like, [ __ ] the rich,
I want their money. Now, I'm like, okay,
hold on. That's that play doesn't feel
good to me. That's something totally
separate. Which is why I love that these
guys are at least saying, listen, our
goal is to get to the point where we
don't have to charge income tax on
people making 150,000 or less. If they
pull that off, it's a big if, but if
they pull that off, Trump will be
remembered positively for sure. Oh my
god. Well, let me give you the
economist's counter, which and then you
can respond to it, which is tariffs on
imports in the United States will
ultimately pass to the consumer. Higher
prices, inflationary, so the things that
our consumers that our citizens are
buying gets more expensive and as a
result, they buy less and it's
recessionary. It shrinks the economy. It
shrinks spending. It shrinks uh
consumption. Can you kind of respond to
the you know that's the typical
economist refrain on this independent
and maybe they're isolating the
imbalance.
Okay.
India has a 50%
tariff on average. 50.
We have on
average
four.
Okay. I would say to the person who said
that, can I ask you a question? What are
you talking about? They're 50 and four.
Here's what you're talking about. When
we're all equal and everything is free
and fair, if you raise tariffs and they
raise tariffs, isn't it bad for society?
The answer is of course it is. But
there's two
differences. Number
one, let's do human beings first. So, I
actually really like where he's about to
go. And it is um humans matter. You
hollow out the lower middle class by
getting rid of
manufacturing. And don't
we need to think about those people? And
I will ask people, as gung-ho as I am
about AI, I will ask people to remember
the same thing because we are about to
go through this super tumultuous period
where because he's going to talk about
deaths of despair, rightly so.
Um, AI is going to exacerbate that. And
so this is one of those things where
man, there's no stopping it. But when we
do things like globalism, AI, whatever
the case may be, there's going to be a
human toll that has to be part of the
calculus. Yeah. So anyway, let him I
just want people thinking about AI as
well when they hear these words. Bill
Clinton signs the North American Free
Trade Agreement or corporations, you can
screw Americans and go get cheap labor
in Mexico and break the unions by going
to Canada.
Now, if you were a General Motors, I'd
say it's like my birthday. Yeah. If I
take my production and move it to
Mexico, it's better for me, Mr.
Corporation. Okay. But it's not better
for me, Mr. US citizen of the United
States of America, who's working at a
car plant. That's bad news for him.
Okay? And that's number one. And now,
let's go to number two, which is the
math of it all.
If we say free and fair trade, I want to
remind you there ain't no such thing.
There is no country in this world that
is free trade. Zero. And we are the
lowest and the dumbest. Because
everybody else is higher and more
protective. Yeah. So they protect their
farmers. Here I I'm sitting at the
dinner. Modi comes to town.
And I say to him when Donald Trump we
have dinner and after the nicities,
Donald said, "Go ahead. Go ahead,
Howard." And I said, "You have 1.4
billion people and you brag to us how
amazing your economy is. Why won't you
buy a bushel of our
corn? We'll buy a bushel of our corn. So
our farmers can't go to him, but his of
course can come at us, right? Why is
that okay?" You know, and we can go into
all the stuff that oh, I mean, I don't
even want to go into it because if I had
another hour, I could retaliate stories.
Have fun with that. But just address the
pricing inflation that arises from
tariffs. Talk to the average person who
says the cost of a toy at Walmart just
went up by 50%.
Inflation comes from printing more
money. Preach. Okay. Let's say the
United States of America had $1
trillion. That's all we had. That's it.
No more. Okay. And I want to buy a
bottle of water and you want to buy a
bottle of water. One came from America
and the other one came from
Fiji, right? Then and I tariff Fiji,
then that water is a dollar and a
quarter and this water's a dollar.
That's not inflation. That means that
one's more expensive. But I can choose
to buy this one, right? Okay. So, you're
right. This toy might be more expensive
and that toy is not. I get it. But
that's not inflation. Here's inflation.
Snap my fingers. Now we have two
trillion, right? That water is a $150.
That water is a dollar and a quarter.
Yeah. Everything's more expensive.
That's inflation. This is that one. If I
could get people to understand inflation
is not higher prices. Inflation is the
increase in the money supply. It's an
increase in the money supply that causes
a rise in the prices across the board
because the dollar is becoming worth
less.
getting that one's just nuanced enough
that people just cannot interface with
it. Tariffs will selectively make some
things more important. Now, he's about
to cover the thing that I hope
everybody's asking themselves. Well,
wait a second. What if you're tariffing
something? The only way I can get it is
from Fiji. He's about to talk about it.
Without tariffs is everything is a buck
and a quarter. Now, what inflation with
tariffs is a buck and a quarter, right?
And a buck 50. And so you have to
understand
inflation doesn't come from tariffs.
Certain products, if I put a tariff on a
mango, right? We we can't grow mangoes
in America. The the we just can't grow a
mango. If you put a tariff on a mango,
the mango would be more expensive. Yes.
Okay. But if the president chose to put
a tariff on a mango, then the mango is
more expensive. That's just becomes a
consumption tax. It's like a sales tax.
Yes. Right. It's a sales tax. It's a
consumption tax. If I want to buy a
mango, it costs more money. And you can
offset that with a reduction of I just
want to give flowers to to David
Freeberg. Like he has this so dialed in.
He knows exactly the pain points because
if you say mangoes are going to be more
expensive and all the things like
mangoes that you just can't get in the
US, so that price is going to go up. But
commensurate with that, I tax you less.
Now you get to decide. Do you want to
save that money or do you want to pay
extra for the mango? But you're put in
the driver's seat. And this is where I
don't understand people's reaction to I
don't want to be in the driver's seat. I
want you, dear government, to make that
decision for me. That's so weird. Now,
if you tax it and you drive the price up
and don't give me a tax break, that I
get why people would have beef with. So
that's why like this is going to come
out in the wash. If these guys can't
drive the cost down from an income tax
perspective, but they're driving the
cost up of the goods with all the
different tariffs and stuff, then we're
going to be in trouble. The idea is to
not do that. Yeah, that's the idea. The
idea is to is to choose things that are
going to reshore. Yeah, exactly. Come
here. This is so important. Hire my
people. Yeah. Bring it home. Yeah. And
by the way, I want to just speak as an
entrepreneur. I see the economic
incentive when I see the price for
certain things go higher because you
have to import and pay a tariff. I'm
like, why don't we make that here? We
should be doing that. And there's going
to be a lot of that kind of
entrepreneurial opportunity that will
arise from making things. And this is
just how the markets work. Someone will
say two trillion so far. I mean, he's
been in office right like seven weeks,
eight weeks. Yeah.$2
two trillion dollars of committed
domestic production coming back because
of his tariffs. This is one of those
he's Lutick man. Would I ever want him
on my team? Like this guy represents
Trump's policies a thousand times better
than Trump does. Trump and unfortunately
Trump's may be the more accurate
assessment of what's really going on. Um
Lutnik makes it sound like no no no.
This really is the tesseract chest that
Tom keeps swearing just can't be
happening. Um it it's going to it will
need time to play out for us to see if
this is actually going to work. But I am
deeply comforted by the fact that at
least Lutnik has a um he looks up in the
sky and he shows me the constellation of
dots. Whereas when Trump talks about I
just see [ __ ] dots and they seem
chaotic as hell. Uh so that is very
encouraging. Knowing that people in the
stock market are listening to this, I
hope that this begins to calm some of
the sentiment that we see knocking at
the um prices of stocks. Now, if it
actually does just in reality play out
poorly and it takes so long for people
to onshore or friendshore and this just
ends up being terrible for the economy,
prices are going up everywhere, the
consumers stymied, we're in a stealth
recession, the stealth recession becomes
too obvious to ignore it. It is very
they're playing a game of chicken and it
is very possible that we get in the
head-on collision before we're able to
reap the benefits of this stuff. But the
dots as he's laying them out connect so
well, it really does feel like there's
at least a shot that this stuff plays
out well. And given that when I look at
it and I'm like the only thing that
makes no sense is making no change
because the status quo is so horrifying
to the poor and middle class morally.
You can't keep doing it. Now, I've said
this a thousand times, but hopefully
what people know I mean when I say that
you cannot keep printing money, which
means you absolutely have to balance the
budget.
It's from that perspective, it does make
a lot more sense than the average
headline that I think a lot of voters
have seen in the last couple weeks. So,
listen, the average voters uh defense,
Trump talks like a maniac. And so, it is
so he's playing hokeyp pokey tariffs. I
get it. create chaos, negotiating, blah,
blah, blah. But you're living in a world
where all of this stuff is happening in
in the open. And the fact that it's
happening in the open causes the
negotiation itself to change. And I
don't think it's causing the negotiation
itself to change for the better. I think
that all of Trump's ideas were made in a
time where this was all happening behind
the scenes. And ironically, he has the
impulse to do everything out in the open
because he loves the adoration. Not even
that. Like, he just loves the attention.
I do a [ __ ] live show. I want the
attention. So, I fully understand the
impulse to be like, "Hey, America, let's
do this together. It feels awesome. I
feel engaged with you." Like, chat to me
is what America is to Trump, right? Some
people love me, some people hate me.
They're all saying a thing, but you do.
It feels vital. It feels like we're
really doing something here. And so, um,
I get the impulse, but at the same time,
the other side is listening and they're
like, "Okay, now we're just mapping.
What if this is manic? I know you're
going to have to go back and tell your
people what you're doing. There's going
to need to be a certain amount of
discrepancy between what's what you tell
the public you're doing and what you're
actually doing with me. Otherwise, I can
map you perfectly and you're
telegraphing every move. So, that's the
only thing I know isn't happening. The
only thing I know isn't happening is it
is a onetoone what he says in public and
then what he's doing privately because
it just won't work. So, that's where
it's all like I don't know. Like, is he
going to piss people off enough that we
really do just burn our allies out? Are
we gonna confuse the stock market so
much that they're just like, Jesus
Christ? And sentiment drops because
people like, I can't make long-term
plans. And without being able to make
long-term plans, I cannot steer my
public company. If I can't steer my
public company, well, I can't tell the
investors what they need to hear to have
a narrative to invest. So, it is
possible that this all spirals into
madness. But that felt that's at least a
um way to string the dots together that
is coherent and if it plays out that
way, advantageous to the average
American. Okay, so this was probably my
favorite headline yesterday. Uh, I was
laughing at the memes. My finance
background is starting to peek out. Uh,
Door Dash and Clara have signed a deal
where customers can choose to pay for
food deliveries and entrance fee
installments. There have been so many
memes from the big short from hedge fund
from all the stock movies. Somebody had
Tony Soprano, who's going to be the head
of Door Dash collection fees repo. Um,
but this is my favorite one here. Born
too late to buy a home. Born too soon to
explore space. born just in time to
finance a pizza from Domino's. This is
hilarious as a meme. I think the reality
here, I don't think there's a big thing
to be in a panic about. I think that
there is a psychological principle at
work here that they're tapping into,
which is that it really does make things
seem cheaper. I can afford to buy a
computer, but when I go to buy something
from Apple and they tell me, "Or you
could do this for 47 payments of $87,"
I'm like, "Oo, that actually sounds
better." And then I'm like, "What? like
why would I do that? But even I have the
impulse to be like, "Oh, cool. That's a
lot cheaper." Now, it is also very
possible that you buy something more
than you could buy or you buy something
you're just fine with, but then when it
comes due, you're not able to make the
payment. And so now you get yourself in
trouble because you're doing everything
on credit and you're just not managing
things well. And of course, the only
reason this business model works is some
people are going to pay the extra money.
I want to live in a world that is of
course not real where only the people
that can afford it are the people that
and ah damn whoops I forgot to pay for
it but here let me pay the fee and make
up for it. It will not be that way but
this comes down to the dumb voter
problem. So knowing that there are some
people they lack the self-awareness they
lack the money management skills or they
just outright lack the intellect to
manage their money. Should the
government step in and say no, you can't
do that? And my answer is no. The
government should allow people to run
their lives the way within confines, but
those should be very light touch
confines. And this to me would be way
overreach to say no, we're not going to
allow people to finance it if that's
what they want to do. Because like I
remember growing up my we could only eat
out on payday. And so I mean what was
payday? Every other week. So, it was
like every other week we could get
delivery pizza or go out to Charlie's
Pizza. Shout out to Charlie's Pizza,
which I have not thought about in a very
long time.
Um, and if for instance, let's say that
uh my sister's birthday fell off timed
with that and my dad was like, "Oh man,
I completely forgot about that and I
want to do something nice for my
daughter's birthday and so if I could I
can afford this and if you give me a
week, I'll be able to pay this." I
wouldn't want somebody to go, "No, no,
no. I don't trust that you know how to
manage your money." Uh, and then put my
dad in a position where he has less
options than he would otherwise have.
You know me everything. I think you can
calibrate somebody's view of the entire
political world by asking them, "What do
you do with people you, dear person that
I'm speaking to, what do you think we
should do with people you think are too
dumb to think through these problems?"
as well. And if they say, "Yeah, they
shouldn't be allowed to vote or they
shouldn't be allowed to do with their
money what they want," uh, that person
is a tyrant. Perhaps a well-meaning
tyrant, but a tyrant nonetheless. And
that for me is the trigger that I freak
out and derail on. Yeah, I'm just here
for the memes. So, another He's been
going off on these memes literally all
day. I look over at him and he'll just
be laughing. I'm like, "What? What's up
now?" And he's like, "Oh, yeah. It's
just more memes. more memes around the
uh mortgage back burritos. Mortgage back
burritos. Things that US no longer has.
A department of education thing the US
now has finance store dash burritos.
There it is. There it is. Uh that's all
I got. So truth and memes. Truth and
memes. Yeah, there is the underlying,
you know, some people are laughing about
it. Some people are to your point are
saying it could just be bad payday. You
know, Door Dash also has groceries.
There's household essentials. So single
moms who might be off on a off week,
they can now break it up and buy. So
there are ways that I can justify this
business um plan. However, with the
economy in a recession-like mood, people
are a little bit nervous about the stock
market. Do you think that this is an
indicator of a much larger problem or do
you just think it's a coincidence
that this is now gaining this much
attention and the fact that our economy
is in its current state, it just kind of
over overlapped and happened? Uh well, I
think the reality is that people's money
is being inflated away. So there's no
doubt people are taking a step down
every day. So to say that it's
completely coincidental would be
foolish. We are inflating people's money
into oblivion. Um do I think that this
is a an option that's being put on the
table precisely because we are having a
recession? No. I think that this is um
something where people see a business
opportunity to give people maximum
choice. People either live in a world
where they're prepared to spend more
than they're earning or not. But the
thing that is really damaging people is
not the stock market because 50% of the
United States does not own assets and it
is people on the lower side of the
spectrum. So the very people that can't
afford um what some people would call
the basics are the people that don't
have assets and so whatever bad thing is
going on in the asset market has nothing
to do with them. Where they are getting
their heads caved in is with inflation.
Yeah. Well, somebody else who might be
feeling it. Village Road Show, the
legendary studio house has filed for
Chapter 11 protections and producer
Patrick talks about it. Our boy week as
an iconic studio collapses under
bankruptcy. I am producer Patrick
bringing you the latest in the ever
evolving film and television industry.
Village Road Show, which has produced
over 89 title films like Joker, The
Matrix series, and The Lego Movie, filed
chapter 11 protection in Delaware court
yesterday. According to the Hollywood
Reporter, the writing was apparently on
the wall after multiple rounds of
layoffs and its CEO stepping down in
January. And at the end