Why Industrial Policy Is (Almost) Always a Bad Idea (with Scott Sumner) 12/9/24

Transcript

Today is November 12th, 2024. My guest is economist Scott Sumner. His Substack is "The Pursuit of Happiness". This is Scott's 6th appearance on the program - he was last here in April of 2015 talking about interest rates. Our topic for today is his essay on government intervention versus free markets and industrial policy. Generally, the title is "What Economists Don't Know: Why Industrial Policy Will Disappoint."

Scott, welcome back to EconTalk.

"Thanks for inviting me Russ, good to be here."

"What do you mean by industrial policy?"

"Well, that's an interesting question. It's not precisely defined. In some sense, almost any government policy could be viewed as an industrial policy, but the term is usually used for policies that are directed at changing say international trade flows or national security issues, environmental issues like global warming, and maybe regional economic problems. So policies that are directed at sort of reshaping the economy in a different way than a free market would produce to achieve some important national goal - I think that's usually how the term is used."

And you start off talking about a term - I have to say I kind of had a soft spot for "vulgar mercantilism." What do you mean by vulgar mercantilism?

"Well, I would define this as people who advocate generally protectionist trade policies for reasons that reflect a lack of understanding of basic trade theory. So they often start out saying 'Well, there's this Ricardian theory of comparative advantage that says free trade is best' and then they say 'but in the real world this is wrong because of X, Y and Z.' And in fact those arguments are not correct - X, Y and Z do not in any way refute Ricardian trade theory. And then they go on to advocate protectionist policies that they believe will solve certain problems like trade deficits, when in fact typically those policies will not solve problems like trade deficits, which are reflecting other macroeconomic variables like savings-investment imbalances and so on. So these are policies that are based on, in general, a misunderstanding of trade theory I would say."

"And I could point people to Paul Krugman's book 'Pop Internationalism' which does a very effective job of refuting many of these mercantilist ideas. But they keep popping up again because they appeal to a lot of people's common sense, which is, you know, the common sense view is imports hurt the economy."

I would just add that sometimes trade advocates are criticized for being old-fashioned, not understanding the world has changed in modern times. We don't want to go back to world of Adam Smith and Ricardo. Mercantilism precedes both of them - I think the earliest version I've seen is in the 13th century, sometime in the 1200s might be the 14th century. And it's an argument that the accumulation of say gold or some monetary asset is a measure of a nation's wealth. And of course Adam Smith saw a lot of things in The Wealth of Nations, but one of them that he spends time on is why that is not the right way to think about well-being and that monetary measures are not true wealth - it's really our ability to consume goods and services.

But as you say, it is a perennial favorite on common sense grounds that trade is not always good for a nation, that it could cost jobs. Why do you think the economist's case is so unpersuasive to the average voter or advocate?

"Well, I think it's just one of many things in economics where the way the real world works is not consistent with people's common sense. I mean, we see this in other areas - the public view of price gouging and many market phenomena. The public often has a common sense view of how things work that just isn't accurate. And unfortunately, trade theory is very counterintuitive. You can see the direct effect of imports - they might be costing jobs in certain domestic industries that are competing with imports. But people aren't really looking at the big picture of what international trade is about. Every trade is two-sided - we're receiving something, we're giving something back, and people aren't really thinking through the sort of full implications of international trade."

"Interestingly, there's probably also sort of a little bit of natural xenophobia that is distrust of foreigners involved, because typically trade within the United States between states is not viewed with the same sort of suspicion. So if one state has a big trade surplus with another, the public doesn't really focus on that fact and they don't tend to think in terms of like 'this state is stealing jobs from other states.' Like if that process is occurring, they would often just blame the state that's losing the jobs."

"Let me give you an example: let's say that a lot of auto manufacturing jobs are going from Michigan to Tennessee or Alabama. A lot of Americans might just blame Michigan for not having a good business environment. But when it's a different country, there's a sort of natural incentive to view foreigners with more suspicion. And I even think it depends on what kind of foreigner - there could be even a little bit of cultural bias. There might be more suspicion about imports from Japan than Canada of cars."

Let's say now I think that, you know, for cultural reasons or something like that. I think the hard part is that in modern times—meaning the last few years, because that's what modern times means, like the last six months—common sense has been vindicated in many settings for many people. And so when they, I think, when some listeners hear you saying that economists understand things that everyday people's common sense says is otherwise, their natural thought might be, "Well, maybe economists are wrong." And that's a good starting place—you should be skeptical of experts in any field.

It would be wrong to use your common sense to figure out whether the world is flat. At least if you're looking out the window, the world looks flat. Now, if you go a little farther to the seaside seashore, you might start to get a hint that it's not as flat as it might be because you can see some of the curvature of the Earth maybe with the ocean.

I think in the case of economics, it's a complicated issue, and so your common sense can easily lead you astray. You forget to think about the role that exports play. You forget to think about the fact that you can't have imports without exports. You forget about the fact that there are trade flows in goods but also in assets and capital, and running a trade deficit means running a capital account—almost always a capital account surplus. The words "surplus" and "deficit" have all kinds of emotional senses to them which are not really accurate.

And the other thing I think that's hardest for people to notice is that if you don't allow imports, you don't have as much competition, and many of the things that you produce for yourself will be much more expensive than they otherwise would be. And you won't notice that—you'll see the expansion in the domestic industries you've protected. You won't notice that you're poorer because your cost of living and your standard of living have been harmed by keeping out foreign goods. And you don't see the new businesses that get started because of the resource savings you have because you produced things more effectively and efficiently if you allow competition from abroad.

So I think I'm pretty confident that the economist's story in general is correct. I think it's hard—I think you can make that case with logic. I just did my own 92 version of it, but I think a lot of people would want to also find some kind of empirical evidence for this. And they tend, as you point out in your article, to point to—they cherry-pick certain countries and say, "Well, they're doing well and they're not so free trade," or "They're doing not so well and they are free trade."

And you make the observation, which I think is a challenge to any thinking person on these topics, which is: every nation does some of this protecting of imports. They do some kind of industrial policy, they do some kind of favoring of certain industries, they do some kind of regional subsidies to help places they think are struggling in an otherwise free market system. So that makes it much harder to do the kind of empirical work that you might want to do, but that doesn't stop people.

So talk about how it's often misleading to just look at the world around you that way. Sure, I can give many examples, and a lot of these relate to people not really understanding the stylized facts or having a misleading notion of the data, basically. So let me give you a few examples:

South Korea is often cited as a sort of mercantilist success story, you know, for encouraging exports and supposedly discouraging imports. And yet South Korea ran a trade deficit almost every year from 1960 to 1997. Those were South Korea's high-growth years, their double-digit growth years. Most people don't know that, right? I didn't know.

Another thing that's often cited is, as you say, people will say, "This country is doing well, and they have a trade surplus." But they're almost always doing less well than the United States. So why should we copy countries that are lower in per capita GDP than the United States?

You also get a lack of understanding of the data with the effect of trade on unemployment. So people talk about loss of jobs in manufacturing, mining, and so on, but in a lot of cases, the job loss has been mostly due to either technology or regional shifts. Give you a couple examples: people cite West Virginia as a victim of neoliberalism, right? The blue-collar workers in West Virginia are really suffering, and yet if you look at West Virginia, their major industry is coal mining. Well, the US exports coal. Without trade, we'd be worse off in coal mining. So why have so many jobs been lost in West Virginia? Well, it turns out that it's a combination of rapid improvements in productivity, so we can produce coal with many fewer workers, and also somewhat of a shift in coal mining to western states where they strip mine.

Another example is Michigan. We've lost jobs in the auto industry in Michigan, but again, a lot of those jobs have been lost for two reasons: there has been a big increase in new automobile factories in southern states and even Indiana, right below Michigan, and we've also had major improvements in productivity in the auto industry. So we still build a lot of cars in the United States, but far fewer in Michigan. And yet the perception of the public is Michigan has lost out because of international trade. So I would argue even without international trade, the improvement of productivity in auto manufacturing and the big shift in auto factories to the South would have cost a lot of jobs.

In any case, it's primarily a regional problem, not an international trade problem. Yeah, so there's just many examples where people sort of use lazy thinking about the issue. The easiest thing to latch onto is international trade - this is what people complain about. But manufacturing jobs are being lost all around the world; it's mostly due to automation.

Well, I thought they were being stolen by Mars because we have a great deficit with Mars - but that's a joke. I think it's important to point out, and I have an essay on this called "The Human Side of Trade" (we'll link to it): trade and productivity changes - trade or innovation - are really fundamentally the same phenomenon. You mentioned it in passing, which is they're just two different ways to get more from less. They are two different ways to expand your output and reduce your cost of production, and that's the only way you can get wealthy as a country.

You can get wealthy as an individual by, as Walter Williams liked to say, "banging your neighbor on the head and taking his stuff." You can get wealthier that way, but your neighbor is poorer - that's a zero-sum game. If you want a non-zero-sum game where everyone gets wealthier, you need to find ways to get more from less. Either you need to find ways to get more output with fewer inputs - innovation (everybody understands innovation does that) - that's what productivity increases do, that's what a new manufacturing process does, that's what an invention does, that's what a new industrial process can do.

Trade's exactly the same. Trading with someone to produce something by swapping, building something and swapping it for that product being produced abroad, only makes sense to do it with someone from abroad if it's cheaper than doing it at home. That is why in a domestic economy, it doesn't mean you import 100% of what you need, but the mix of imports - excuse me - the mix of domestic production versus foreign production adjusts because it would be very expensive if we had to produce all our cars here or other products that we import. Doesn't mean we produce zero, but the mix adjusts because otherwise it would be inefficient - unattractive would be a better way to say it - to produce the whole thing at home in the domestic economy.

The argument against international trade is exactly the same as the argument against automation. The fact that many Americans are opposed to international trade but support technological progress, to me, indicates they don't understand the issue because they obviously see these as two different issues, and yet they're both sort of destroying jobs to create greater prosperity in much the same way, as you say.

I think there's a real lack of understanding of the issue. I know that probably to some listeners sounds condescending, but the evidence is pretty overwhelming that countries that are open to trade do better than those that are less open. I would say there's also a lot of excessive pessimism about the situation in the United States. The British magazine "The Economist" just had a cover saying the US is the envy of the world, and you have these other economies that are really struggling, like Germany. Well, Germany has a huge trade surplus, so if trade was really the problem, why isn't Germany the envy of the world, not the United States, in terms of economic performance?

Having said all that, there is an issue that I don't want to sweep under the rug - I don't think you do either - which is that it depends how effectively your labor market works and your capital markets for the readjustments that both trade and technological change cause, and how long it takes for them to happen, and how much suffering or how intense that suffering is as an economy adjusts to change.

In an economy when there's innovation and technological progress with new techniques, people lose their jobs. Farmers used to be 3% of America - is on the farm a little less than that today. In 1900, I think it was 40%. All those jobs were lost, but people found other jobs, and they found them fairly quickly, and it wasn't great suffering. There were cases that were tragically difficult at various points in American history in response to the improvements in technology and agricultural work, but in general - and this is how I like to think about it - the people who owned farms in 1900 are not sad about the financial and material well-being of their great-grandchildren a century-plus later because they can see that they did fine.

The unemployment is not 37% because agriculture went from 40% to 3%. There were new things that came along, and those new things weren't coincidental in coming along - they came along because we didn't have to devote 40% of America's capital, labor, and human resources to growing food. And that's glorious - it's not a bad thing, it's a glorious thing. If we were able to import food effectively (America doesn't import much food, but if it did), as long as they weren't your enemies - and we can talk about the national security issues - importing food is just another way to get food without having to have 40% of your people on the farm.

In a system that works pretty well - America's labor markets are phenomenally quick to adjust relative to others, say Europe - when you do have economic change either due to trade or to innovation, it could be quite challenging for some people if it doesn't work well, if your labor market doesn't respond very quickly or fluidly. The reason I think Americans are tolerant of technological improvements and skeptical about trade is they don't realize they're the same. They accept the technological change because they see there's a cornucopia of great abundance because of all these changes. They can see that televisions, take one example, are incredibly cheap - cheaper than they were - because people figured out better ways to do it.

So the punchline is: if it's slow to adjust, even though the nation's well-being may be greater, certain segments of the economy may struggle, certain regions of the economy - we'll talk about that in a little bit. So West Virginia is not punished by the import of coal; it's been punished by the coal that came from the West, and it's been punished by the improvements in technology that made the rest of us much wealthier because coal was cheaper in response to those technological improvements.

So there is distributive regional sectoral cost to some of either trade changes or technological innovation changes that a country might be concerned about and would have political importance. Yeah, I agree, and let me make a couple other points. Just to be clear, I'm not claiming every case is like West Virginia where it isn't trade. There are some regional problems that are due to trade. There was a paper—I think it was Card and... oh, the China shock paper. Yeah, and I've interviewed David about the paper. It's an interesting paper. I don't agree with a lot of it, but it's a provocative thesis.

He tries to measure the impact of—although even they argue that the net effect overall for the US of China trade was positive even in that paper. But a couple things I would point out: they looked at a period I think 1990 to 2007. Well, the US labor market did well during that period. On the other hand, I think when people were talking about the paper, it was after the 2008 recession, which was very severe as you recall, and the recovery was very slow. So we had many years of high unemployment after 2008, and I think people often conflate problems of unemployment due to the business cycle with trade.

Again, the period they looked at, the US didn't have a major overall unemployment problem. We had some regions that were suffering, but the overall employment situation was very good. And then we went into a situation where we did have an overall unemployment problem—I would argue due to monetary policy mistakes, not due to international trade. But the tendency to conflate those issues when we have 10% unemployment and people might look around and say, "Well, look at those imports coming into the country." Well, imports were coming in in 2007 when we had 4% unemployment.

I think those issues can be mixed up in many people's minds. But I will not deny that some local communities were adversely affected in their labor market by imports from China, just as local communities can be adversely affected by automation and by regional shifts in factories from Michigan to the South, or earlier from Massachusetts to the South. I don't think anyone would say Massachusetts is worse off because we lost our textile and shoe-making factories to Southern states back in the '50s.

For sure—well, they might, but I mean, we were worse off in Massachusetts probably for a decade or so, maybe longer. But I think looking back on the process, I don't think many people would say it's too bad they now have this biotech and etc. industries instead. If they'd stuck with shoemaking and textiles, they'd be better off? Even if there was pain, I think most people would look at that change in Massachusetts and say long-term that's a net positive.

I just want to emphasize the point I made earlier: the reason we could have those tech jobs is because we don't have to spend so much time and energy and resources and people making shirts and shoes. And people don't—that's another connection I think common sense struggles to see.

By the way, the paper we're referring to is by David Autor, David Dorn, and Gordon Hanson. You were, I think, confusing it with something else. I'm sorry, confused it with I think a minimum wage paper. It's okay—we'll put a link to the paper. It's "The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade" and "The Labor Market Effects of Import Competition in the US: The China Syndrome" by the same authors, and we'll link to the interview I did with Autor and let listeners think about that.

I want to turn to an issue in these kind of debates, which is national security. And you call this the more sophisticated, less vulgar argument for government intervening and trying to manipulate market outcomes from what they otherwise would be. There are, I think, two versions of this, and let's take them one at a time:

The first is a nation like China appears to be on a potential collision course with the United States, so trading with them may need to—we may want to have a national policy of how we interact with them economically that takes that foreign policy phenomenon into account.

The second issue is a lot of people will argue that trading shirts and textiles and various other things are fine, but there are certain commodities—computer chips and other things—that we can't let the market determine the outcome because it will jeopardize national security.

And then there's a third argument, which actually gets tied in sometimes to the first two, for government intervention, which is the environment, which you alluded to earlier. If we let the market do its own thing, the environment will be hurt, and oftentimes there's a "trade with China hurts the environment and risks our national security," so there's two reasons we have to intervene.

Let's start with China generally: should the potential confrontation in foreign policy between China and United States affect the way we trade with China?

Well, I can't say there are necessarily zero potential implications of that, but let me explain why I'm somewhat skeptical about claims in specific areas about foreign threats in general and their implication for US policy. If you look back over the course of my life, I've seen many claims made about foreign threats and risks associated with foreign policy that, in retrospect, proved exaggerated.

You go way back to the '50s: the missile gap with Russia, which turned out not to be the case. Then there was perception that Russia—the Soviet Union, sorry—would sort of surpass the US economically. I think weren't there statements in textbooks by Paul Samuelson and so on about how the Soviets were doing better than the US?

In the '80s, I remember a lot of worry from pundits that Japan was going to surpass the United States, and there was almost a little bit of hysteria about Japanese trade. Oh yeah, right—you had films like "Rising Sun" and so on. The essence of that fear was that we, the United States (I was in America at the time), were foolishly just letting markets allocate goods and services and importing things from Japan and elsewhere without understanding that this was a competition. Whereas Japan had this more sophisticated strategic alliance between the government and business, and that's why they were dominating us in the United States, and if we didn't play on the same turf that they did, it was only a matter of time before they would not just surpass us but impoverish us.

In fact, there were all these sinister arguments that they were going to keep all the good jobs. My first book, which is on all these topics we're talking about (we'll link to it), was called "The Choice: A Fable of Free Trade and Protectionism." I wrote that book because I saw a documentary that claimed that Japan was hoarding all the good jobs and giving all the bad jobs to America. So they would be producing some computer game, and they would keep all the innovative parts of that industry in Japan, and the call centers were what they dumped on the United States. That was again part not just of market forces, but of a strategy, and if we didn't—the United States—have our own strategy for how to counteract that, we would be taken advantage of.

Well, that turned out to be wildly—I said so at the time, many others did, not like I was a seer or prophet—I said that was silly, and obviously as time passed, people forgot about that argument because Japan went into an extended period of stagnation and its innovative edge was lost in many industries. And then, of course, Mexico was next with NAFTA.

You know, I'd like to highlight your word "sinister," which I think is important. Germany also was a very large industrial power, also ran huge trade surpluses—the anger was not directed against Germany. I think that's worth thinking about. Now you might say that's just coincidence, but go back to World War II: we put Japanese Americans into camps but not German Americans.

The Japanese Americans were viewed as more sinister. Right now we have in Europe one of the most important wars since World War II - Russia invades Ukraine and we're told the real national security threat is China. So what's going on there? We have American universities banning Chinese students, we have American states banning Chinese people from buying real estate, so it's worth thinking about how these attitudes towards trade are linked to maybe unconscious bias associated with ethnicity.

Now you're right, by the late 90s, 10 years later, nobody worried much about the Japanese threat. And I would argue that the fact that the Soviet threat and the Japanese threat didn't turn out to be what they thought at the time played a big role in the rise of neoliberalism in the 1990s. The ideology sort of in favor of free market and globalization, because the previous sort of statist interventionist arguments seemed to have been discredited.

Another point is that East Asia, which was relying more on international trade, was surging ahead of Latin America which relied on import substitution. Import substitution is a classic industrial policy - you put up trade barriers to build up your own industry, and that's what Latin America tried to do in the decades after World War II. For a while they were richer than East Asia, but East Asia decided to go for more open economies focusing on international trade. By the '90s it was clear they were outperforming Latin America. That also led to more prestige with the sort of neoliberal globalization model versus industrial policy import substitution.

That, I think in my view, was a good period in global history. It lasted for several decades - we saw by far the biggest reduction in global poverty ever during this neoliberal era. But unfortunately in the last 10 years, much of the world, not just the United States but much of the entire world, has swung away from neoliberalism towards nationalism and nationalistic economic policies. This has been occurring in many different places.

I'm very concerned about the fact that we've sort of forgotten some of the lessons that I thought we had learned from failed policies during those periods of the 60s and 70s. I feel like I need to remind people of the actual pattern of how policies disappointed in many cases earlier advocates of industrial policy. But that's where we are right now - we're heading back towards a world of less free markets, more industrial policy.

This whole conversation has been worth it Scott just to hear you use the word "neoliberalism" without embarrassment. You know it's become an incredible slander that is invoked to explain all the ills of America and elsewhere. I do think the world between that time period you're talking about, whether let's say roughly 1980 to 2010, roughly got more market-oriented in terms of globalization. The world got more globalized, China entered the world economy, which had an enormous impact - mostly for the good, not for every single person, but mostly for the good in the form of much less expensive toys, clothes, cars - you name it. Amazing numbers of things got less expensive because of Chinese being able to trade with the rest of the world.

Like having a magic Santa's Workshop is another analogy you can make for trade. These gifts effectively - things that were once expensive became much cheaper, which meant people could afford more of other things, which meant people's standard of living improved. And it's not just toys and Christmas ornaments which people would often mention - health got better because we could invest more in health technology. All kinds of other changes that took place over the last 30, 40, and 50 years have partly, if not significantly, been due to globalization.

But at the same time, neoliberalism got blamed for all kinds of things that actually never happened - smaller government, less regulation. The ideology of free marketers like Milton Friedman and certain Republican politicians like Ronald Reagan that were invoked in the 1980s - they never happened. People advocated for those things but actually over this time period we're talking about, government got bigger, there were more regulations. There were exceptions in certain pockets - there's deregulation in the 70s under Carter and a little bit in the 80s under Reagan, but overall government got much bigger in the United States.

So to blame the ills of the United States, whatever they are, on free market policies is a weird fantasy. It only happened in the little area that we're talking about, which is globalization - the world did get more open to trade with its foreign neighbors. There were certain improvements with lots of strings in free trade agreements. Milton Friedman used to say he's in favor of free trade agreements but not NAFTA. I said "What are you talking about? Why not NAFTA?" Because it's not a free trade agreement - it has well of restrictions on trade and the path towards freer trade, and it favors a bunch of different industries.

So we did not embrace the laissez-faire utopian vision of the neoliberals like Friedman and Hayek, and the people who blame them for everything wrong in America, whether it's inequality or whatever they happen to choose, is absurd. Most of those ideas were rejected by the political process and were never implemented. I have a long essay on it - I'll link to that too, but it drives me crazy. So to hear you defend the globalization, the neoliberals, without apology or embarrassment is a treat.

Well thank you. Two points before I forget - one is you're right about the United States. Now it is true that in some foreign countries there was a major move towards free markets. That's true - you mentioned China, to some extent in India there was some privatization in Europe, and you can point to some examples. You mentioned Israel - did you mention Israel?

I did not. I'm sitting in Israel but I did not mention it.

But Israel did become less socialist over this time period and its economy took off like a rocket.

Yeah, right. And so if you look at kind of like a cross-sectional test of neoliberalism, it looks a lot better than if you just look at time series. You know, like it's true that in the United States, the GDP growth rate during the neoliberal era was a little bit lower than the 60s, let's say, but there's many countries around the world that engaged in much more aggressive reforms. Typically, the countries that moved strongly towards neoliberalism did better when you compare to countries that stayed with a more statist model.

The other point I want to mention before I forget is I don't think I really answered your question about national security risks, so I'd like to follow up a little bit more on that. Mention how, you know, in the past, some of the threats were sort of exaggerated, but let's bring it up a little bit closer to the present and I'll try to explain my skepticism.

Take the Ukraine war. So in February 2022, Russia invades Ukraine, and the economists and foreign policy experts that were focusing on this problem made some very confident predictions early on. One was that the Western sanctions were going to be highly effective. Do you remember that? There were many articles about how devastating Western sanctions on Russia, which were quite comprehensive incorporating many countries, were going to severely hurt the Russian economy. A second confident prediction was that the Russian shut-off of natural gas to Europe would have a devastating effect on the European economy.

Okay, I saw these predictions widely disseminated in the press from experts. Both predictions turned out to be completely wrong. The Russian economy has done fine, and the European economy got through those winters finding substitutes for Russian natural gas. So we have to be very cautious in interpreting these claims about how sensitive we are to risks of being cut off from something during wartime.

Now if you look at Russia, for instance, they're still getting a lot of important manufactured goods from countries like Germany, which are supposed to be participating in the sanctions. What's happening is German exports go to, I don't know, Kazakhstan or Kyrgyzstan, and then you look at the trade accounts for these Central Asian republics and their trade with Russia skyrocketed after 2022 of industrial machinery. Well, it's clear what's going on.

I saw a short bit on how some of these advanced computer chips that we were supposedly denying China are still widely available in Chinese wholesale markets, and in fact, they're actually very cheap. There's so many there that they're not even causing any stress for China.

Now obviously, these are anecdotes, and you can say well, there's other situations where maybe we are vulnerable, but I would also point out that the United States is by far in the strongest position of any country in terms of foreign policy risks. And I'm not exaggerating when I say "by far." When you look at things from the position of other countries, the US position seems enviable.

Like energy is a key resource, right? Well, we've become basically self-sufficient in coal, oil, gas - everything. Or we get a little bit of oil from Canada, but that's very reliable. Food, another essential good - we're basically self-sufficient in food. What about industrial equipment like chips? That's where a lot of the focus is now. Well, think about not individual countries but blocks of countries - like who are the allies that we can rely on when there's an international conflict? We have good relations with South Korea, Japan, Canada, Europe. Well, South Korea and Japan are important chip makers. We still make some chips.

China does make computer chips, but who are the countries that China can rely on in a conflict? North Korea? What are the countries that Russia can rely on? Belarus? The US has strong connections with a wide range of important industrial countries around the world that are our allies and sources of economic strength in an international conflict. Our other major adversaries actually have very few real friends that they can rely on.

We also dominate the global financial system. We can use our banking regulations to shut off countries from money flows and so on. We have so many advantages in terms of strength in potential conflict compared to other countries that are far more exposed to international trade and have far fewer reliable allies. I think we tend to lose sight of that.

When I hear about how devastating it would be if we lost access to Taiwan's computer chips, I just think back to what we were told about what the cut-off of natural gas would do to Europe. Maybe that's correct - I'm not an expert on computer chips - but I think we underestimate the ability of industry to find substitutes, find other ways of doing things, and I think we tend to exaggerate the extent to which the US is in a fragile position in terms of geopolitics. I think we're in an extremely strong position even as it is now.

I'm not saying that the people that favor some modest industrial policies are always wrong. Perhaps it was correct to do some subsidies for chip factories in the United States. What I'm saying is these arguments should be very strictly limited. There are probably very few cases where there are resources that are so essential that we can't rely on a free market.

So when I see people argue for very expansive industrial policies making the US economy much more interventionist, that's when I get nervous. That's where I feel like foreign policy argument is being abused and people aren't recognizing the true position of the United States, the true strengths that we have in geopolitical competition.

Does that make sense? Yeah, no, the only thing I would add is that national security is often invoked as the justification for some restriction, but of course that ends up often benefiting a domestic producer and insulating them from competition that would otherwise make them poorer. One should always ask: is this really a national security issue, or is it the security of a particular player? You know, in the 90s and 2000s, the big argument was the US economy is "being hollowed out" - that we can't get rich doing each other's laundry, that we've gone from a manufacturing economy to a service economy. To a large extent, that was not true.

Manufacturing output was actually quite high. Although we have an episode with Susan Hman that's very interesting - I recommend you listen to it - that calls some of this into question about just how healthy the output part is. It turns out, I think her point was that it's almost all in computing, that in other parts of the manufacturing sector and manufacturing part of the economy, they did do relatively poorly. But they certainly do poorly on unemployment, which is again this issue of whether it was driven by trade or whether it was driven by innovation.

I don't think it's a bad thing that we lost a lot of manufacturing jobs due to innovation or trade, and in fact we have lots of output. Again, the mix is too heavy toward computers - whole separate question. I want to put that to the side. The point I want to make is that this idea that somehow we can't grow or have a decent standard of living unless we have "real jobs" - manufacturing jobs - is a myth. It's not true. It's a misunderstanding of how growth comes from.

My joke version of it is: Well, if salaries in the NBA are really high, let's just expand the NBA to more teams because more employment at high wages will make us wealthier. Well, we understand if we have 3,000 basketball teams instead of 30, the wages won't be high. People won't pay to watch me play basketball or even you, Scott (who I assume is taller than I am - I'm 5'6").

The point is that this whole scary, sinister, conspiratorial argument that foreigners are stealing our jobs, hollowing out our economy - the data aren't consistent with it. Our economy over this time period when manufacturing shrunk as a proportion of employment (1950 to 2024) were fabulous years for the United States economy. Again, hard on some people when those transitions took place, when improvements in technology or trade flows made some businesses close. That was hard on the people who lost their jobs, but overall for the economy it was very large and positive. And for those who lost their jobs, many of them found new jobs that were pretty good, and certainly their children and grandchildren, we think back to 1950, benefited tremendously from this willingness to accept economic change due to either trade or technology.

The more advanced version of this argument, which I want to put on the table, is that the reason we have to have automobile manufacturing is for national security. Why? Because if we don't have automobile factories, eventually we might lose the know-how of the industrial processes that we'll need for certain military products - fighter planes, tanks, and so on. I look at that argument and think two things: One is, well, the next war I'm never sure what really is going to be the key product. We thought in 1945 tanks were really important; they're less important to the United States in 2024. The United States does not need as many B-52s or bombers as they needed in 1945.

But I even question whether we couldn't regain that know-how if we had to. If the United States was relatively factory-free, is it really the case that engineers - and we have, I keep saying "we" (I moved to Israel three years ago and I still tend to think of the United States as "we," but I'm still a citizen so I can say "we") - if the United States lost all of its factories and suddenly found itself at the mercy of a foreign threat and didn't have the network of friends that you talked about to provide certain things and products that are crucial, whether it's computer chips or some titanium or some obscure raw material, you make the point which is fantastic - there are often substitutes. But I'm asking: Is it really that hard to restart industrial know-how in a highly educated country of world-class, first-rate engineers? I don't know the answer to that. I encourage listeners to weigh in on it, but do you have any thoughts on that, Scott?

Well, I think if you think of it in a realistic sense, obviously we've had some losses in manufacturing, but we still have a gigantic manufacturing sector. If it went to zero, then I think you could argue it might be hard to restart, but from where we are now and likely to be for decades, I don't think that's a big problem. And I would add a few points: When we think of foreign policy threats, you can think in terms of conventional World War II-style military conflict and uncertain high-tech futuristic conflict.

Let's take those two. If we think of the old-style conventional conflict, kind of like the Russia-Ukraine war - I mean, that does have modern things like drones, but it's also a little bit like a World War II-style war. We can see that Russia is having trouble with a small, impoverished country head-to-head in a conventional World War II-style war. In my view, there's almost zero chance of either Russia or China landing a D-Day style invasion on the shores of the United States. That's not the real actual foreign policy threat.

There is a nuclear threat, which might even be a threat associated with miscalculation, not something intentional, and that's something to worry about. There's also a lot of people talking about potential future threats associated with high-tech AI, what kind of weapons could AI develop - all of that. And I'm not really qualified to talk about that in detail. I don't know exactly what those threats might be, but I would point out that you mentioned earlier how our industrial growth had been oriented towards computers and not the old-style industries. I think that's true, but that actually works in our favor in terms of these futuristic threats.

Right now, I believe the US stock market capitalization is 60% of the entire world. We're like 20-25% of world GDP, but we're 60% of stock market capitalization. Why is that? Basically, the answer is very simple: our high-tech industries. That's the primary reason why we have 60% of the world's market capitalization. We completely dominate the cutting edge of high technology. Now, there are individual sectors like Taiwan in high-end computer chips and the Netherlands in machines that make computer chips where other countries do very well, but we overall dominate high-tech, and we have innovative new defense firms that are putting these to use, coming up with new military weapons and so on based on our advantage in high technology.

So in that kind of world, our ability to make tanks is much less important than our ability to keep on the forefront of artificial intelligence and things like that. Again, I think if you look at the world that way, our position is much less fragile than it looks to a lot of people and the impression you get reading the press about all these threats out there. I think people sitting in these other countries that are supposedly a threat to the United States probably feel exactly the opposite - that they're in the inferior position right now in terms of the global order.

So yeah, I think technology is actually an enormous foreign policy strength for the United States at the moment, and I think probably going forward, given all the recent developments that have been occurring here in areas like artificial intelligence. Again, the one area where I think the industrial people maybe have an argument is maybe the subsidies to move a few chip factories here - that might have made sense for national security reasons. It's hard for me to say. It's hard to speculate as to what might happen between China and Taiwan going forward. If there was an invasion, would the Taiwanese chip-making factories be destroyed? I don't know what the Taiwanese government plan is in that regard.

But I would say this: If you take the Taiwanese chips off the table, I still think the US is in a pretty strong international position relative to China and Russia because of our ability, plus South Korea, Japan, Europe, and so on in combination versus any adversary outside of that block.

Well, I think the argument with respect to AI is similar to the kind of arguments we heard in the '90s with respect to Japan, which would go something like this: Yes, the best AI companies and incredible innovations are taking place in the United States, and the talent that is being poured into that sector in the United States and startups is enormous, but we're not doing it in a systematic way. That would be the scary thing - it's just going to give you better memos and it'll write some poems for you and it'll help you plan your dinner recipes, but in China, they're doing it not for those day-to-day mundane simple things, they're doing it to dominate the world. And therefore, we have to have a similar top-down control of this new technology.

Now, as you pointed out, that could be true. I, as you admitted in your case, I'll admit in mine - I don't know if that's a plausible threat or not. What I do know is what you know, which is that - and you've hammered on this and I think it's a really important point, so I'm going to hammer on it a little bit more - which is having been alive for the last 50 years of people trying to scare people, most of those scares were exaggerated because they forgot something. In the case of sanctions or cutting off access to raw materials, they forgot that there's substitution and people can find ways around this, either with new products or by importing it from a third party that isn't part of the sanction deal.

And in the case of China, everyone just assumes China's this flawless juggernaut of economic well-being. They've got ghost cities with uninhabited buildings. To assume that because they're trying to develop an AI that can take over the world, that therefore they'll be able to - despite the lack of incentives in their system and their attempts to create those artificially through rewarding productivity and their friends - is maybe wildly overstated.

You know, I think sitting here in Israel, when we heard about the sinister nature of Iran - the world's been afraid of Iran for 40 years. Well, they don't have any missile defense right now. Israel took it out in one night. They're totally vulnerable to anything Israel wants to do. Now, we can't do everything we want to do - we might find it very hard to destroy their nuclear capability. They're smart; they put them in very deep bunkers. But it's very clear that their threat to this country was exaggerated.

They've launched 400-500 missiles at Israel since I've been here in the last six months, and I think the first attack they injured a Bedouin 9-year-old (and thank God she's fine - she went to the hospital and she's okay). The last one they tragically killed an Arab Israeli citizen with a piece of shrapnel - a piece of a rocket fell out of the sky that was shot down by the much superior technology of Iron Dome.

So it's just amazing how easy it is to be terrified by things that aren't true. Of course, the flip side is we didn't think Hamas was a threat, and on October 7th, 2023, they proved us very, very wrong. So I don't want to suggest you should never be worried about anything, but in these cases of large national policy, it's often the case that paranoia is stoked and fear is stoked by people who have a different agenda than what appears to be the case. And it's not obvious that - just as Japan did not dominate the world economy ultimately - it's not obvious China will either.

Yeah, I think I agree, and I would add a few points about China. You mentioned this perception that China wants to dominate the world. I agree that perception is out there. I think there's actually very, very little evidence to back it up. Just to be clear, I'm not saying China is not a foreign policy threat - I absolutely think China is a major foreign policy threat to Taiwan. Like that's a major risk, and if there were a war between China and Taiwan, it would have a devastating effect on the world because of its indirect effects.

So I don't mean to speak lightly of that potential threat, but beyond Taiwan, I actually don't think China's particularly expansionist power. People will point to the little islands in the South China Sea, but those are uninhabited, not very important, and by the way, the largest of them is controlled by Taiwan, which is almost never reported in the press. But China really throughout its history has not been a particularly expansionary power, given its size - certainly nothing like Russia.

And so what's going on is - I keep coming back to this term "sinister" - I think that the perception there's much more suspicion about China's intentions than about Russia's intentions. Now, part of that perhaps can be justified by the fact that the Chinese economy is much larger than Russia's, the population is larger, but you know, China has - even today China's per capita GDP is about the same as Mexico. Now its high-tech sector is more advanced than Mexico, so that's a point that might be important in terms of military potential, but overall its economy is at about the level of Mexico.

It's likely to grow further, but it's almost certainly going to remain well below US levels on a per capita basis. As far as their population is concerned, it is very large but it's also declining rapidly. It'll probably fall by more than half during the 21st century. More than half - 100 years from now, it's very possible that Pakistan and Nigeria will each have more people than China. That's where things are headed based on current birth rates.

I think that obviously China is a major power. It is a foreign policy threat to Taiwan certainly, but I don't think they have expansionist aims much beyond that. Unfortunately, China is often its own worst enemy - they're very prickly about criticism, so they sometimes will put trade sanctions on a country that criticizes the Chinese government. I think this thin-skinned nature of their government creates a perception that they're more of a threat than they really are.

Obviously, we have to have a defense capability in the United States to meet any potential threat, whether it be China, Russia, or whatever. So we need a strong military to deter, but I think a lot of the concerns that are driving industrial policy are driven by an excessive degree of fear about what the Chinese are actually interested in doing in the future.

"Well, I hope you're right, but let me just interject - I see claims that China might attack Japan and invade Japan. These seem very fanciful to me. I could not even imagine any rationale for China attacking Japan or South Korea."

"You might be right. I always worry about the downside risk, so I think one should be prepared for worst-case scenarios, whether you're South Korea, Japan, the United States, or Israel. I think Israel's security failure of 2023 in October was a failure due to overconfidence. I know you're not saying it's something we shouldn't be prepared for. The question is: should it be front and center all the time? Should it drive other policy areas and outcomes and be the main factor that drives decision-making in, say, economic policy?"

"Let me give an example: Japan responded to the Ukraine war by dramatically increasing its defense spending. I think that was appropriate. Japan looked at the situation and saw we're in a new world where countries are willing to go back to World War II-style invasions for territorial conquest. That's something that had fallen basically out of favor since World War II, other than maybe Iraq taking Kuwait. But most wars since then have been civil wars. That sort of response, I think, was appropriate - Japan is building up its military to deter foreign attacks."

"What would not be appropriate would be for the United States to say we can't buy Chinese electric cars because they have computers that can monitor where you drive. That's just not a plausible foreign policy threat to the United States. I'm sorry, but I don't really worry about whether the Chinese government knows that I've driven my car to the shopping center. If you want to say the Secretary of Defense should not drive a Chinese car, fine, but what I'm seeing more and more are claims that Chinese students shouldn't go to American state colleges because they might be spies, or they shouldn't buy real estate in Florida because they might spy on a nearby military base. These are just examples of hysteria, to put it bluntly."

"This is what worries me about the reaction to the China threat. I'm not at all arguing that we shouldn't take the threat seriously, that we shouldn't worry about the situation in Taiwan, that we shouldn't support Taiwan with military aid or whatever. I'm personally on record favoring US support for Ukraine in their war with Russia, so I'm not a pacifist. But I'm saying let's not exaggerate the risks beyond where they are and sort of tear up our whole free market model in ways that actually might make us weaker in the long run."

"It's interesting how proponents of industrial policy almost never say we need to deregulate X or Y and Z to address these policy problems. Like, repeal Davis-Bacon, repeal the Jones Act, have the US join that Asian free trade zone that we decided not to join a decade ago, which would be sort of an alternative to China. Well, we did decide to pull out, so those countries want to get closer to China to get Chinese investment. That was an unforced error."

"Accept more high-skilled immigrants from India, China, other countries that would strengthen our high-tech sector - these are all free market things that can be done. Getting back to regional poverty and working-class poverty: why isn't the industrial policy to eliminate residential zoning laws? Because the living standard of blue-collar workers in places like California is devastated by how high housing prices are. Eliminating those residential zoning laws would make houses considerably cheaper in the two coasts, and it would create many blue-collar jobs building new houses."

"There are so many industrial policies you can point to that would address the exact problems that people say they're worried about, but they would involve deregulation. Yet I almost always see proponents of industrial policy advocating more regulation, which would tend on average to make the US a little poorer. And in the very long run, your ability to have strength in a geopolitical sense is linked to the strength of your economy."

"It's a fantastic point about how often it's deregulation that would achieve a similar end, or maybe achieve it more effectively, or achieve it rather than not achieve it, or at a lower cost. I am agnostic on whether we should be worried about computers in electric cars from China or, say, TikTok, which has the ability to monitor American activity. I think the worry there is more of a blackmail issue - the ability of a foreign country to not conquer but impose certain restrictions that would reduce flexibility and responsiveness to various policy situations because of the threat that China could hold over, say, the United States. I'm happy for listeners to send me articles I should read that are from authors who are more concerned than you are, Scott. I'm not an expert on this, but I'm sympathetic to your idea that often these issues are overblown."

"China tried to pressure Australia after Australia criticized the Chinese government with trade sanctions, and Australia refused to give up on their free speech policy for government officials, and China eventually backed off on these trade sanctions. Australia is a lot weaker country than the United States, so I think China did the wrong thing, let me be very clear, and they are their own worst enemy often, but I think we exaggerate how much power China has."

"It's obviously our sheep and wool sector needs bolstering because that's obviously why Australia was able to stand up to the Chinese threat, and we don't - the United States doesn't have that kind of sheep and wool sector like Australia has, and it's obviously a crucial national security sector."

"I want to close with - I want to change gears because something entirely different. I think about you, Scott, every once in a while because you are the single person most associated with the idea that the Federal Reserve should target nominal GDP. We've had a number of conversations about that - listeners can go back and listen. Those conversations are part of, I don't know, dozens of episodes of EconTalk on monetary policy and the role of the central bank."

"It's striking to me that we live in 2024 in a world where we just in the United States had a presidential election where economic issues played almost no role in the conversation. You can debate whether immigration is an economic issue - I think it is, but I think the main focus of that was cultural, not economic, not monetary. A mere 32 years ago, James Carville said 'It's the economy, stupid,' and I don't think it was the economy in 2024, although it played a role. Inflation was one of the key issues, but neither candidate seemed to be able to have an economics-based conversation around inflation, which is a little bit weird."

"And in my experience over the last 10 years, monetary and fiscal policy, which were the bread and butter of many economists and certainly the centerpiece of many presidential campaigns - should taxes be raised or lowered, should government spending increase or decrease, should monetary policy be looser or stricter - not on the table, not on the table."

"And the last issue I would mention, which lurks in the background of the United States, which I don't think got mentioned but maybe I missed it, is the national debt. And the Republican Party is the party typically associated with being hawkish on debt, meaning worried about it, and the Republican Party chose a standard-bearer - and a standard-bearer that won - who doesn't seem to be very concerned about it."

"So I'd just like your reflections on this moment as an economist where the things that you and I were educated in and grew up in and were the central policy issues of our youth and our adulthood and now our old age - they're not - nobody cares about them. That will change, but in particular, I know you have some interesting thoughts on debt. It's strange to me that it's not an issue. There are many possible reasons for that. I just like to hear your thoughts, but do you think it's a serious issue and whether you think we're going to do anything about it?"

"Yeah, from my perspective, there's been a dumbing down of politics in general in the US, maybe to some extent in both parties. Economists are out of favor in Washington - that's widely known, and I'm sure many non-economists say well, that's good because they did a horrible job, but I think historically when we go away from economic principles, things get even worse, and we're moving a little bit in a banana republic direction in the United States."

Politically and economically, I would argue economically there's two things I could point to: One is excessive and recklessly fiscal policy, and the other is protectionism. Both of those are characteristics of banana republics. In terms of fiscal policy, this is an issue that's... You say "banana republic" - I see you're referring to a dysfunctional economic system, Argentina, someplace like that?

Okay, carry on. Maybe that term is considered not politically correct, I don't know, but you know - a country that has been dysfunctional in an economic sense for a long time and often politically as well, with even larger disparities in wealth and income than the United States is accused of, and a very low or negative growth rate over time, which shows something. Obviously, we're the number one economy in the world, so in one sense it's silly to compare us to banana republics, but I'm just talking about trends in politics and economic policymaking. In terms of levels, the US is still number one in the world.

Let's talk about fiscal policy, which is often misunderstood. I've heard my entire life about how the deficit was out of control - not the trade deficit, now you're talking about the budget deficit - the revenue that the federal government has relative to how much it spends, right? You can argue that has been somewhat of a problem for much of my life, but most of those claims were kind of inaccurate, like the boy who cried wolf in the storybook, and the public eventually tuned that out. So the public has pretty much stopped worrying about the budget deficit, at least in terms of voting behavior. It's not a salient issue.

Also, economists - and I think this reflects poorly on the economics profession - started to discount worries about budget deficits, especially in the late 2010s. Well, it turns out the late 2010s was exactly when the budget deficit finally did become a serious problem. The wolf finally got here just when people stopped worrying about it because of all these false warnings of catastrophe ahead.

If we kept running deficits starting in the late 2010s, our fiscal policy became increasingly unsustainable, and by that I mean that the national debt as a share of GDP is on track to rise sharply over time. You can almost date it to about 2016. Normally budget deficits fall during economic expansions - they fell quite a bit between 2010 and 2015, and then even though the economy was booming and we were not at war, the budget deficit started getting much bigger after 2016. This was a red flag that most economists did not notice.

Of course, during COVID it got much, much bigger, partly for justifiable reasons but also excessively so with some of the stimulus. Coming out of COVID, it has remained at far too high a level given the state of the economy, which is very strong. The labor market is booming, so there's absolutely no justification for running deficits at these levels in this kind of economic environment. That makes me very worried.

Neither candidate had any solution proposed. I mean, I don't even know what to make of Trump's policies because, you know, who knows what he'll do, but it does seem likely there'll be a continuation of the tax cuts. Unless he has some plan to cut spending in some way I'm not aware of, there's real concern about where the deficit is going forward. And that's assuming he doesn't do a lot of the things promised in the campaign: no tax on tips, no tax on overtime, no tax on Social Security, bringing the SALT deduction back. Almost every week there was another promise.

But even if he does none of those things, it would be very, very costly just maintaining the previous tax cuts when they come for renewal, and maintaining military spending and entitlement spending puts us on an unsustainable track. Maybe there'll be a solution - I mean, some of his advisers like Elon Musk are talking about big changes, but we'll have to see. Right now, I just don't see any sign that we're serious about the deficit situation.

Fortunately, the US has a lot of strengths. We can run deficits for quite a few years without a catastrophe, but we are on a much more serious track or path since 2016 than we were in the previous parts of American history when the deficit was sustainable. Clearly up until around that time it was, and now it's not sustainable long term, I would argue.

For those out there listening who hope that Elon Musk will reduce waste, fraud, and abuse - it's possible. Government efficiency is supposedly going to be an area he's going to contribute to. The track record of that plan for reducing deficits is very poor. Getting rid of the deficits we're talking about are going to require spending cuts, especially if tax cuts are kept in place, and the public has no taste for those. They're not politically attractive to President Trump or whoever might succeed him.

I remember the moment - I can't remember the issue now, but at one point Kamala Harris proposed some expansion of whether it was housing subsidies or something, and some interviewer asked her how she planned to pay for it. It was just a striking moment that she didn't feel she had to answer that - she just said "But we have to do it," and she was perfectly comfortable assuming, you know, the listener assumes, "Oh, we'll borrow the money."

So let's close with how you're now playing the sinister role, Scott. You're trying to scare the listeners about the deficit instead of China. How would I know - how would we know that the deficit is an issue? What would be the manifestation? Because a lot of times there are certain macroeconomic problems that they're not a problem until they are, and once they are, it's too late and you can't borrow money anymore because people no longer trust you to pay it back. So I assume the thing one should keep an eye out for is rising interest rates. What would be the indication that this deficit is unsustainable?

Well, interestingly, there's a good argument that budget deficits also contribute to the trade deficit. If economists believe the trade deficit is due to a savings-investment imbalance, and deficits are negative saving, so one of the problems with populist economics is it's often inconsistent. It tries to treat a trade deficit with tariffs, and that doesn't work and hasn't worked in the last 10 years when it's actually being driven by a budget deficit to some extent, which is itself reflective of populist policies.

How would it show up? I don't think it would show up as a sort of 2008-style crisis suddenly. It would show up in terms of gradual negative performance of the economy in one of two ways: either in the future we'd have to sharply raise taxes, which would be a drag on the economy, or we would raise the inflation rate to inflate away the debt. So those would be two possible ways in which we could address it in the future.

Now that could be a long way off, just to be clear. So you know, it's a hard problem to deal with politically because there's a very good chance that you could go another 10 years along this exact track with nothing all that noticeable happening. I understand why people are skeptical of the problem if that's the situation, but I do think that if you just look at the numbers, this track doesn't seem sustainable in the very long run.

Unfortunately, you know, we blame politicians, and politicians are afraid to offer solutions, as you point out with the Harris interview, but they're reacting to the public. When you poll the public on the deficit, they say "Absolutely, the budget deficit is bad - get rid of it!" But if you poll them on every single possible way you could do that - like sharply raise taxes, slash the defense budget, slash Social Security, Medicare, whatever - they don't have any answers other than like "cut foreign aid," which is a tiny percentage of the budget, or "eliminate waste" like there's a line in the budget that says "waste" - we'll just scratch that one out.

So the public has sort of a Hollywood view of economics where if some brave reformer went in and just cleaned up this mess, all our problems would be solved. But in fact, the public likes a lot of these programs that are contributing to the deficit. So we're in the - economists are in the unpopular position of pointing out that there aren't easy solutions to these problems. I wish I could offer something that was more upbeat.

My guest today has been Scott Sumner. Scott, thanks for being part of EconTalk.

Thank you, Russ. Enjoyed it.

This is EconTalk, part of the Library of Economics and Liberty. For more EconTalk, go to econtalk.org, where you can also comment on today's podcast and find links and readings related to today's conversation. The sound engineer for EconTalk is Rich Goyette. I'm your host Russ Roberts. Thanks for listening. Talk to you on Monday.

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