The Exchanges

Q is, in every single market except one, is it that we were just lucky in a 174 markets and one we were stupid? No. So I think that the Mar-a-Lago Accords, this sort of Bretton Woods two point O is the outcome Ezra. It will basically use tariffs as a way to get these governments to a table and allow us to negotiate a much fairer economic quid pro quo.

A Here's my concern with this theory. I want to leave out, I'll leave the sort of question of what the real economy looked like to Larry. This world, In which what is happening is a business leader who represents a country is calling you and saying, okay, what do we need to do to deal, right? They're coming to Donald Trump and they are going to come to Donald Trump. As Larry said earlier, there's no doubt that the U S economic leverage is enormous and virtually every country faced with our might is going to try to cut a deal with us. But then there's a call they're not making to you that they're making to someone else, which is We have allowed, or we have approached the U.S. as a functionally benign partner for a very long time, and now they're becoming a dangerous partner. They are very, very strong and they will use that strength to crush countries smaller than them when it suits the whims of a personalist regime run by a person who his feelings, even about people that the U S or countries, the U S traditionally considered allies like Canada or much of Europe, uh, change. And so, yes, on the one hand for the next year or two, we want to avoid getting a big tariff slapped on us. And so we got to figure out What is it that if we offer it to Donald Trump, he will say to himself, that was enough, uh, of a give that, you know, I can move on to someone else. I can make them the, the …

AI assessment note: “Here's my concern with this theory.”

Q I don't matter. Ezra, are you happy about Doge? Your book seems to be a plan to do Doge-like things.

A I think building state capacity is two dimensions. One is what the state can do, and the second is the rules under which it doesn't. Doge seems to me to be fundamentally destructive of state capacity first. And this goes again to my endless frustration that I feel like goals are not clearly laid out in the Trump administration. What are the measures we are looking at and how will they achieve them? Is it just trying to save a trillion dollars? They've been very, but that's not efficiency, right? I could save a trillion dollars. No, I could save a trillion dollars in ways that will make the, let's put it this way. What Larry was just saying, right? If you cut everybody at the IRS, right, just cut every single one of them. On the doge measure of how much did you save in headcount, that will look like it counted up towards your save a trillion dollars goal. But in terms of what Larry is saying, which is the long-term efficiency of U.S. tax collections, you would have just made the IRS much, much, much less efficient.

AI assessment note: “Doge seems to me to be fundamentally destructive of state capacity first.”

Q Ezra, you, uh, are hearing this debate. I think there's no debate that this was done in a very extreme fashion at a minimum. Do you wonder if this could have been done in a more gradual or thoughtful way? What's your take on the execution here by the administration of these tariffs and their response to the markets?

A I can't say I wonder if it could have been done in a more gradual, thoughtful way. It could have. I, I, I defer to Larry on the markets. I'm more of a connoisseur of arguments and something I've been thinking about over the past very long eight days is covering the 2024 election and covering Donald Trump's tariff promises. And it was a thing that liberals like me were doing. Where we do these shows and say Donald Trump is promising a 10% to 20% global tariff and then 65% tariff on China. And if he does that, it'll have this set of effects, higher prices, it'll create financial uncertainty, et cetera. And what I would be told, like the, the counter argument was, oh, you libs, you always take him literally when you should be taking him seriously. I had Vivek Ramaswamy on my show. He said, he's not going to do that. That's just a negotiating ploy. And this was the common line from Trump allies on Wall Street. And then I watched is he began doing not just that, but layering a series of them bilateral tariffs on top of that plan. The markets began freaking out. While they were freaking out, a bunch of his defenders said, no, no, no, actually, these tariffs, which we told you were never going to happen, are actually a great idea. We need to reset the entire global financial system, and you can't, uh, ship those tectonic plates without creating a few earthquakes. Then, the moment the …

AI assessment note: “I defer to Larry on the markets. I'm more of a connoisseur of arguments”

Q long here, but I wanted to talk about the future of the Democratic Party while we're here. Ezra, you have been on a tour talking about exactly How incompetent, how terrible of a campaign they ran. What is the future? And I'll let Larry get, you know, his, uh, his two cents in here as well. Is there any saving this party? And if so, what would it look like?

A Well, there's the problem of the party and the campaign. Let me bracket that. Cause so my book abundance is more about how Democrats govern at both the state and local and federal level. And some of the pathologies of governance there, they make it hard for For liberals to achieve their goals. There are versions of this on the right, but I'm not really writing about that in, in this. So my book Abundance with Derek Thompson is about the tendency Democrats have to subsidize things where they are choking off the supply of the thing they want people to have more of. So think about housing in California, you get rental vouchers from the federal government, but we make it incredibly hard to build homes. Clean energy, which a lot of the Biden administration's policies were about putting huge subsidies behind the building of more clean energy. But they didn't really do anything to make the permitting, the siting, the state capacity to do all of that, uh, capable of building that amount of, of clean energy at the pace they foresaw us building it, right? That they wanted us to build it. And behind this, and I can sort of go into a lot of detail here, but is a, a diminishment of state capacity that comes from wrapping the state itself in red tape and regulation. I think we think and have an intuitive way of thinking About the idea of deregulation on the private sector, right? When the go…

AI assessment note: “Well, there's the problem of the party and the campaign. Let me bracket that.”