Chanos: Is a Big Change Underway in Global Capitalism?

By Lynn Parramore, a senior research analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

Milwaukee-born short-seller Jim Chanos, founder and managing partner of New York-based Kynikos Associates, teaches University of Wisconsin and Yale business students about corporate fraud. During his life and career, he has witnessed seismic shifts in economic thinking and the relationship between labor and capital. Chanos shares his thoughts on the world emerging from the election of Donald Trump and the tumultuous political events of 2016.

Lynn Parramore: Leading up to the election of Trump, we had eight years of Obama, and before that, eight years of Bush. Before we get to the president-elect, how do you assess the records of those past presidents in terms of basic policing of markets and corporate fraud?

Jim Chanos: Bush was the MBA president who was going to be pro-business, cut taxes, and deregulate. Meanwhile, he had two recessions on his watch, less employment than when he started, and two bear markets in the stock market — probably the worst president for business since Herbert Hoover. The business guy!

Yet, he did tighten up the Justice Department and go after corporate crime. The Ashcroft Justice Department, as bad as it was in lots of other things, went after corporate fraud and accounting fraud, criminally. In 2002, we got Sarbanes-Oxley to curb fraud.

I don’t know that all this was Bush’s predilection — remember, his biggest supporter was Enron. But because of Enron and the other dot-com era scandals, he got backed into a corner to go hard on them. I’ve joked that the only person who put more corporate executives in jail than George W. Bush was his father during the Savings and Loan Crisis.

On these issues, I’d rather have Bush any day of the week than Obama. Both Eric Holder and Lanny Breuer of Obama’s Justice Department said in TV interviews and testimony that they factored in non-judicial aspects as to whether to mount prosecutions. I think that this had political costs to the Democrats. The crony capitalism still bothers people — the idea that Wall Street got off scot-free and they are still struggling. That lack of justice applied equally under the law was corrosive, not necessarily for Obama personally, but certainly for the party following him.

LP: How do you see a Trump presidency in this light?

JC: You and I have talked about how it has become a cost calculus for lots of corporations and financial institutions to cheat. “If I get caught,” they say, “I’m just going to pay a fine.” How does this change with new faces in Washington?  You still have this very pro-corporate group on Capitol Hill whose main bailiwick, in my opinion, is to protect the corporate class and the very wealthy. You’ve got what ostensibly is a proto-populist in the White House with a cabinet that is a mélange of different types, so who knows?

In my overall view, stuff happens to change people. If we go back to Bill Clinton, his “Putting People First” manifesto in ’92 was quite left-of-center, but he didn’t govern that way. If you look at things like NAFTA, Welfare reform, and cutting capital gains taxes  — well, in many ways, Ronald Reagan would have been proud of him.

Events conspire to derail our perceptions of presidents. When we look at their platforms, we think we know where things are headed. But in modern times, the only two presidents that I can think of who really got their ideas and platforms enacted wholesale were FDR and Reagan. Everybody else has gotten compromised, or has had events overwhelm them.

LP: What do you make of the expectations of the economy under Trump?

JC: I worry about the heightened expectations from the people who voted for him thinking that he’s their savior. That’s what scares me — unmet expectations. For the swing voter in the Midwest who voted for this guy because he thinks coal-mines are coming back or the plants are going to reopen — it’s not going to happen.

LP: What about the rise in bank stocks since the election? Are banks anticipating deregulation?

JC: Almost all stocks are going up, mostly because of the belief of lower taxation. But after Obama’s election, most stocks went down and kept going down until the following March — and then they tripled! So I wouldn’t read a lot into the first month or two.

It could be that banks are anticipating deregulation, but so what? Deregulated to what end? They’re still going to have the capital requirements, which are international. Putting capital standards on them is the biggest way in which they were regulated.

In the bigger picture, if you think this is an uncertain presidency and we’re not quite sure where he’s going and how events will conspire, it’s not that important to get too worked up because things will happen and you’ll have to react. If, however, this is a once-in-a-fifty-year change in global thoughts about capitalism, then you have to pay attention.

LP: If this is a once-in-fifty-year change, what’s at stake?

JC: Part of my view is that in the 1930s, we rejected the individuality of the ’20s and before. After the crash and the Depression, we finally put the corporate class and bankers to the sidelines. Whether it was Keynesianism or the New Deal in the West, or state fascism or the advent of Stalinism, you saw more government control over the economy. This was good for workers and large governments. It was more nationalistic and led, obviously, to the next conflict. But the rise of government planning and government involvement was good for nominal GDPs. It was not good for the asset-holding classes — stocks and bonds did terribly over that period, right? You wanted to be a worker, you wanted to be labor, not capital.

The period from the late 1970s to 1980 changed all that. You had Thatcher and the U.K. and Reagan in the U.S. Mao died in 1976, the Solidarity movement in Poland began in 1978, and the Soviet Union peaked in power in 1979. You saw that the pendulum had gone too far and now we’re going to cut taxes on capital, we’re going to be more globalistic, and trade was going to improve. Since then, capital has risen and assets have done better than labor. Taxes have been light on financial assets and heavy on labor. Everything was reversed on its head.

If we look at the events of 2016 — Brexit, the Italian referendum, Trump, and the rise of nationalist China — are these the harbingers of something bigger? Or are they just a coincidence?  The ground seems to be fertile for things to change globally. If so, does this give rise to a more nationalistic, protectionist, statist scenario?  Are labor prices going to go up again? Are we going to tax capital and emphasize wages?

We’ll see….

LP: Going back to Trump’s promise to bring jobs back to the U.S. — can the government even do that?

JC: In the case of the ’30s, you had massive public works spending and government spending, so you created construction workers. But on that front, we’re not going to compete anymore, as the Carrier guy said. Mexican labor is $3 an hour. No amount of retraining for a lower-skilled assembly job is going to change that. The only thing that will replace that Mexican worker himself is a robot. And a robot is infinitely cheaper than even the cheapest labor.

Surveys show that there are jobs open in the economy, but there’s just not a skill level to fill all of them. Our problem is the displacement in things like mining, assembly, low-end manufacturing – that’s where the job losses have occurred. It is just very hard under almost any scenario no matter what your politics are to see where those jobs are going to come back.

To the extent that you have wholesale, large, construction-like projects, then you will put people to work at relatively high rates, but the jobs are episodic and not necessarily career paths. When I was making $14 an hour working steel in Milwaukee in the summers in college, a steel worker could basically say, “all right, as long as I understand that I’m going to work in this factory, I can have a nice living for my family.” Those jobs are gone. The plants closed. So the whole idea that someone can now say, “I can work in the Carrier plant for $20 an hour and be assured of a job for life and security and put my kids through college” — that doesn’t exist anymore.

That’s where the problem and discontent will come — when you’ve sold that dream and it doesn’t happen. In that scenario, Trump begins to have a pretty short honeymoon.

LP: You’ve long been linked with China. What do you make of the positions of China and the U.S. in the international economy, and how do you think they’re changing?

JC: To me, the rise of Xi Jinping is a big event still underestimated in the global political economy. He is more of a personality than either Deng Xiaoping or Mao Zedong, certainly higher in stature internally than his predecessors. He is not first among equals in the Politburo Standing Committee — he’s first. This goes along with the theory about the rise of nationalists such at Putin in Russia. Xi Jinping is also a nationalist. He talks about the China Dream, China getting back to past glories, and not exporting communism. What you would have heard Mao say.

He’s a member the Chinese Communist Party, but the Party exists now as a political apparatus, not an ideology. China would not have the type of capitalism it has today if this were not the case. So these are not Marxist-Leninists, but rather just a fantastic single party in control. We have to understand it in that light.

China is increasingly a geostrategic rival. In the past, China looked toward protecting what it had — making claims on Taiwan and Tibet and ancillary areas, but the Chinese were really content not to compete in the global Cold War between the Soviet Union and the United States. Now we have this multi-polar world, and China sees itself clearly as the prime actor in the Pacific willing to fill any vacuum that the United States begins to pull away from.

Xi Jinping comes in and immediately he rewrites the passport maps. He sets the air traffic and extends the air defense zones. More ominously, he begins to militarize the South China Sea, and puts military bases on the islands, which alarms pretty much everybody. (And yet if you look at a map of the Pacific, the only country that really needs to traverse the South China Sea is China itself —oil going from the Middle East to Japan goes around it. The South China Sea is symbolic more than it is geostrategic).

I think, however, that Trump has decided that China makes a convenient media punching bag. You can claim that China took your jobs and China is a bogeyman. It seems to me that president-elect Trump does best when he has someone to fight against. However, the broader issue will be that foreign policy and national security events have a whole different dynamic than beating up on a defense contractor for an air conditioning plant.

What will be the ramifications? How will China react? What do you do about countries like the Philippines that are in the middle — a country that has elected its own interesting president, someone who seems to want to embrace China after decades of being staunchly a U.S. ally? What does this do for Japan? Japan itself has a nationalist, Shinzo Abe, who wants to increase military spending and take off the yoke of the Japanese constitution block on an expanded military.

There are many questions, but whatever you might think, China and Japan, while big trading partners, are not the best of friends in that neighborhood. Finally you’ve got the wacky guy in North Korea. What’s he going to do?

This whole area just keeps quietly but relentlessly getting to be more dangerous. I think that at some point in the first four years of the Trump administration, the Pacific is going to heat up again.

People are talking about starting a trade war with China but they haven’t really thought it through, because if you talk to corporate execs in the United States, they’re sort of quietly terrified.  Often the supply chain, even in U.S. manufacturing, relies on parts from Mexico and China coming in. We are pretty interconnected. Lots of businesses, and workers, too, will get disrupted in ways we can’t even think of in a trade war. There’s a reason why people studied the 1930s with the tariff walls that went up and the disruptions that happened. It’s negative for growth.

So stay tuned, it’s going to be interesting.

LP: To turn to Europe, you’re a Greek-American, and you have been critical of the Eurozone’s attitude toward Greece. What do you make of the situation there now?

JC: The key issues for Greece now revolve around two entities that are not Greek. First you have the EU as a whole. We continue to have these bombshells, like the Italian referendum and Brexit — and you’ve also got elections coming up elsewhere in 2017.

I think Greece was sort of the Spanish Civil War to what’s about to be the EU’s WWII in that it was the opening preview of all of the problems that are going to come to the fore if Catalonia wants to become independent, if Italy wants to leave, if France wants to leave. The EU is being held together by chewing gum and string right now.

With this rise of nationalism  — if that’s what it is and it continues — the EU is going to find itself increasingly a victim of people wanting self-determination in northern Europe. That’s the first thing. Second is something I’m much more concerned about which nobody’s paying attention to, and that’s the continued rise of Erdoğan in Turkey. He has not only consolidated his power through a series of purges —thousands and thousands of journalists and academics have been thrown in prison since the aborted coup — but increasingly he is becoming more militant and Turkey is becoming a pro-Islamic state that is part of NATO. He’s throwing wild monkey wrenches into the whole Middle Eastern situation by making claims on land that was owned by the Ottomans, pre-WWI, like modern-day Iraq, modern-day Syria, and modern-day Greece and Bulgaria. He’s warned the EU that he will open Turkey’s borders to undocumented immigrants if EU membership talks are frozen.  Like Xi Jinping, he’s putting out these old maps and saying: this is our real land. Erdoğan is yet another nationalist.

Poor Greece is at the crossroads of all these seismic events and Ottoman Empire II. You’ve got the possible weakening or dissolution of the EU, and Greek debt problems are about tenth on the list of issues in that region. They’re going to struggle, no doubt about it. Every time the Greek economy starts to show some green shoots, it seems to stall and fall right back down again.

LP: What do you hope might happen in this emerging world?

JC: This is the tough thing about being in the financial markets. You can have opinions on all this stuff and either get it wrong or have it not matter.

First, I hope our system of free trade holds up. That’s one thing I believe in fervently. The evidence seems to be that a rise of tariffs and trade walls and barriers will be bad for global growth. Given the debt overhang that’s out there, which is relentless, the ability of economies to service debts in a global trade war will be greatly curtailed, so I’m clearly watching that.

I also continue to be concerned, on a stand-alone basis, with the giant debt bubble occurring in China. It has done nothing but just gotten bigger since you and I last sat down. Despite all the talk of reform, there really hasn’t been any. The Chinese are more reliant on the state than ever — on state lending and state banks. The debt continues to grow at twice the rate of growth, and now the currency is depreciating.

We’re getting a situation where the Chinese economy is still a very important driver of global growth, but increasingly it is using the old methods that the Chinese themselves said only a few years ago that they would have to change. But they can’t, because every time they try, the economy slows too fast.

China continues to be half of the demand for global commodities. It basically supports Africa and countries like Australia and Brazil. Almost 40 percent of global GDP is either China or commodity-exporting countries whose prime market is China. That’s considerable. So we have to look not only at China’s role with us, but China’s role on its own because it is such a driver for global growth, Chinese growth represents 1 point of the 3 percent GDP growth, so if China were not growing at all, we’d be at 2 percent. Doesn’t sound like a lot but it is. We have to keep our eye on what’s going on there. A global trade war would probably send China into a really steep recession.

How would an average worker navigate a rising trade barrier globally? It’s scary. If we look back at the ’30s template, one major outlet was, of course, a giant arms race. By the late ’30s, you had the whole world realizing the threats of fascism and rearming rapidly. Keynesian government spending was what pulled up the economies; it just had some really bad repercussions from 1939-45. But if we get into any kind of global arms race with China, either conventionally or otherwise, that would be Reagan-like. I don’t know what the numbers would mean in terms of employment, but you would take a lot of manufacturing people and turn them to making other things.

LP: How do you rate the current moment with big periods of change you’ve seen in your lifetime?

JC: I had this odd personal journey from being a union pipefitter and boilermaker as a college student — I made more money in two-and-a-half months making steel than I did my first year on Wall Street. I went from being a product of the industrial Midwest and putting myself through college by working in a steel mill, to being the beneficiary of the Reagan-Thatcher era. I saw the world change, but I didn’t really understand until years later what an important period the late ’70s/early ’80s was (and a great period for music, by the way!).

If we’re in one of those periods now, if 2016 is like 1932 or 1979 — then you not only have to change your portfolio, you have to change your lifestyle. That’s one of the things we’ve been telling clients. If this is a major shift to populism, nationalism, greater state involvement, and less globalism, then you really have to rethink almost everything in your life.

Certainly, if you were a capitalist in 1932, you might be best served to change your outlook. And if you were a union leader in 1979, it would have been good to change your outlook. The question will be, in 2016, would it be best for the Davos man and woman, the globalists, to change their outlook? 

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  1. fresno dan

    Bush was the MBA president who was going to be pro-business, cut taxes, and deregulate. Meanwhile, he had two recessions on his watch, less employment than when he started, and two bear markets in the stock market — probably the worst president for business since Herbert Hoover. The business guy!

    Yet, he did tighten up the Justice Department and go after corporate crime. The Ashcroft Justice Department, as bad as it was in lots of other things, went after corporate fraud and accounting fraud, criminally. In 2002, we got Sarbanes-Oxley to curb fraud.
    On these issues, I’d rather have Bush any day of the week than Obama. Both Eric Holder and Lanny Breuer of Obama’s Justice Department said in TV interviews and testimony that they factored in non-judicial aspects as to whether to mount prosecutions. I think that this had political costs to the Democrats. The crony capitalism still bothers people — the idea that Wall Street got off scot-free and they are still struggling. That lack of justice applied equally under the law was corrosive, not necessarily for Obama personally, but certainly for the party following him.
    If we go back to Bill Clinton, his “Putting People First” manifesto in ’92 was quite left-of-center, but he didn’t govern that way. If you look at things like NAFTA, Welfare reform, and cutting capital gains taxes — well, in many ways, Ronald Reagan would have been proud of him.

    I have harped on this quite a bit – the image of the dems, their “brand” and their reality are two WAY different things. Poor Hillary – she was the one where people caught on that the advertisements just weren’t true.

  2. Webstir

    I’m having a difficult time separating anything Chanos said, from what Paul Krugman might say. Just another mainstream neoliberal economist focused on growth-growth-growth-growth-growth, and utterly ignoring the ecological realities of carrying capacity and resource scarcity. *Yawn…

    1. susan the other

      He seemed to be leaving the possibility open for global nationalism, each former free-market country would turn to nationalistic economics, but still trade. (Steve Keen talks about this too.) Chanos saw a problem with free-market growth when he said those days were probably over – we have no way to create permanent good paying jobs. And the underlying unspoken bit is that if we do stimulate economies with infra jobs it will create demand via “wage inflation” and after 20 years we’ll have a big mess to clean up. Because capitalism doesn’t balance its contradictions in real time – but swings from capital to labor economies over time. About China, last night on the BBC there was a discussion about China’s attitude toward US protectionism – they said if we impose tariffs they will “look at agriculture”. So trade wars. It amazes me that nobody sees the perfect opportunity to clean up the planet. As soon as they can tame profiteering, the planet will be a gift that keeps on giving.

      1. John k

        Our infra is so bad we could have millions of jobs that go on for decades.
        The SF bay bridge has a paint crew with permanent jobs… when they finish at one end it’s time to start again at the other end.
        Sewer lines, crumbling roads, outdated airports, endless. Not a short term need.

        China trade… in the 30’s we took the biggest hit, had the largest unemployment of the major countries, because we were the biggest exporter. Today that’s China, then Germany. A trade war would devastate china. A tax based on the deficit, say 1% for every 20 billion net deficit (currently 340 billion) which in this case would mean 17% duty on all 440 billion imports, would encourage them to preferentially buy from the US rather than our competitors.
        A great deal for US oil producers, including Exxon. It’s a great time to boost oil taxes…
        The bottom line is that the big importer has the power to define the rules of trade, just has to be firm.
        then the duty could be earmarked for us infra, which helps sell the deal politically.

        1. susan the other

          makes sense; PCR was talking the same. Now if into infra we combine environmental cleanup – because it is the ultimate infra – then we are talking centuries and if we include maintenance we could be talking forever. kinda like that.

          1. animalogic

            Yes, wouldn’t it be nice: spend those necessary billions (trillions?) on infrastructure & the environment….Would the political/economic “masters” ever agree to such a non-military fiscal stimulus ? Would the central bank sit idly by as a government tried such a stimulus, or would they fight back with the ultimate blunt instrument of interest rate
            rises ? Given the existing levels of debt, how far would a CB need to go before a flood of bankruptcies, margin calls etc panicked everyone ? Anyway, it would be nice….

        2. skippy

          China is already starting to emulate America in offshoring jobs… seems the mainstream econnomists that went over like Jesuits and Priests of old… can fast forward the effects of their – code – due to the clear transmission signal the PRC affords…

          Von Neumann on Roids….

          I wonder if old John ever considered that his dynamic equilibria was just a nosier series of linear equations…. Uber being the hydrogen reaction….

          But hay the equation squares… too bad about all that natural stuff… orb or human brain….

          Merry xmas from hence time begins at Little Cove – Tea Tree…. far removed from the multitudes of – individual – screams…. Rosebud~~~~

          With mate Philips new book to read [The Reformation in Economics­­­­: A Deconstruction and Reconstruction of Economic Theory], fish to catch, rays to absorb, looks like a nice swell for some surf action, month+ old aged rib rack marinating right now [ Lea & Perrins, tabasco chipotle, garlic, Himalayan salt, and some aged balsamic vinegar] slow cooked after searing in pan at 135C for yonks….. just to the point of the boarder between rare and medium rare and rested….

          disheveled…. next year is going to be a real eye opener for some methinks…. till then… libations all around…

        3. Fiver

          This way of looking at things is exactly wrong – China has made an enormous, perhaps fatal, mistake by making ‘catching up’ to the US the top priority, rather than recognizing the obvious, evident and intractable truth that the US (and wealthy West) have for 3 generations now proven completely incapable of altering a fundamentally insane trajectory, one which we are now so completely alienated from our complete inter-dependence with the natural world it is at best a horribly diminished, terribly damaged shadow of itself that we pass on to our kin – imagine most of the animals, fish, birds, trees, insects, forests, waterways. etc. we grew up and ‘owned’ as surely as we ‘owned’ anything of our world, simply gone. Anyone who believes ‘jobs’ comes ahead of everything else is simply not thinking. We don’t need ‘jobs’. What we need is a society and civilization that seamlessly meshes with our environment in authentically sustainable ways. We have not even begun to adapt to the fact that the reality we’ve created for ourselves has zero, and I do mean zero, chance of succeeding for even another decade – for the obvious reason that even though populations might not believe what’s coming, States and corporations certainly do and are preparing for a free-for-all indistinguishable from a global scramble for survival.

  3. JerryDenim

    Jim Chanos sounds like a classic neoliberal when it comes to trade and tariffs. Chanos blames tariffs for tanking trade and destroying the economy in the 30’s without ever wondering if they played a part in the great moderation that followed with high wages and strong unions. When it comes to the issue of $3.00 an hour labor across the southern border he refuses to consider tariffs as a possible remedy. TINA- American manufacturing henceforth will either be accomplished by $3.00 an hour Mexicans or robots. Tariffs? Nope – not an alternative.

    Chanos: “First, I hope our system of free trade holds up. That’s one thing I believe in fervently. The evidence seems to be that a rise of tariffs and trade walls and barriers will be bad for global growth.”

    What??? The current neoliberal system of “Free” trade is the root of all of our problems. Sectoral imbalances, unproductive bubbles, huge debt overhangs, global race to the bottom with labor having no leverage over capital. He seems delusional to me.

    1. sd

      The first half was quite rational. But he completely lost me when he said he hoped free trade would hold up. Is it possible what he really wanted to say was, “I really hope ‘free trade’ holds up becuase that is how I make my living…”

      1. polecat

        I think he misspoke … what he meant was ‘Farengi’ trade …..

        or in other words : All MINE & OURS !

        short selling should be made a capital offense IMNSHO

        1. winstonsmith

          It should be a crime if the signal of the short is concealed or reversed as in ABACUS, otherwise it’s a corrective to bubbles.

        2. John Wright

          Short selling does give evidence that someone believes the shorted security is overvalued and is willing to bet that the stock will get cheaper.

          It is not riskless, as there is a saying “He who sells what isn’t his’n must buy it back or go to pris’n.

          For example, Chanos shorted the company Autonomy after looking at their financials, only to lose, possibly a lot of, money when a foolish buyer (Hewlett-Packard) decided to acquire Autonomy, paying a premium.

          About a year later, HP wrote off 8.8 billion of the 11.1 billion cost.

          HP claimed they were the victims of fraud, but Chanos placed his short position, and told the world about it, prior to the acquisition. HP didn’t look or thought they knew better.

          Here’s a link about the Chanos Autonomy short.

          Making short selling a capital offense might remove some valuable information from the market.

          Short selling is not a can’t lose game.

    2. Vatch

      There is some truth to what he said about the Hawley Smoot Tariff of 1930, but it’s completely irrelevant to the present day. In 1930, the U.S. was a net exporter, so it was possible for foreign governments to retaliate in a meaningful way against U.S. tariffs. Today, the U.S. is a net importer by a wide margin. What are the foreign governments going to do, raise tariffs on products that they don’t buy from the U.S.? Will they raise tariffs on products that are no longer manufactured in the U.S.?

    3. Suomynona

      In what scenario can you replace low wage, low benefit labor with high wage, high benefit labor without disastrous effects for both the business and end consumer? And that’s before even considering any sort of retaliation. Tariffs as a long-term solution seems delusional to me.

    4. economicminor

      I would hope that any tariffs imposed would be better planned than how India is stopping corruption. If they were phased in and orderly they might work but to just do them could cause such production disruptions that trade could virtually stop. Then how would anyone get their car parts or air conditioner parts or washing machines or refrigerators… This could easily be a disaster.

  4. Chauncey Gardiner

    Wow!… extraordinary capacity to comprehend, summarize and communicate the scope and depth of key geopolitical and macro developments in a historical context; drilling down to the personality characteristics of pivotal national leaders. Thank you Lynn Parramore for the interview, and to Jim Chanos for sharing his views.

    Chanos cited private debt levels in China and that nation’s pivotal role in the global economy, the emergence of an authoritarian and geopolitically ambitious regime in Turkey, potential fragmentation of the EU, and the unclear nature of the incoming administration in the U.S. But he left out the possible roles of other global players, such as Russia; central banks and their monetary, currency and markets regimes; and supranational organizations. I have also wondered if policies won’t be implemented by sovereign governments to address their private sector debt overhang, and whether those policies will be fiscal, monetary, or confiscatory in nature.

    So where can Davos man and woman dance globally?… Dang if I know, or care. But it’s an interesting question after three decades of enormous debt growth and damaging neoliberal policies. Maybe they’ll take tango and samba lessons.

  5. DJG

    I don’t care for his dismissive “analysis,” about how the jobs have gone away and aren’t coming back. This is now cliché among centrist Democratic Party types. Maybe if we put this as *your* job is now going to go away, people like him would detect more urgency. Further, the bipartisan consensus is that unemployment that is unusually high (by German standards or Netherlands standards) is a healthy incentive to layabouts, which is what many mean when referring to the “white working class.” So the center of this interview is a tad malodorous. Let’s have a jobs policy. Let’s make full employment a goal of public policy. Stop telling me, in ironic professor-speak, Those jobs just ain’t gonna come back.

    1. Kris Alman

      I agree DJG!

      Are we ready for a Socialist Economy?

      When it comes to economics, the Democratic and Republican parties exist as a political apparatus. They differ when it comes to social issues like abortion, gender rights, etc. But social justice cannot be divorced from economic justice. Both parties’ economic ideology is the same: serving the wealthy and corporate elite.

      The Dems “owned” Congress in 2008. But who owns Democratic leadership? President Obama’s message of hope and change did not materialize.

      An opinion piece in the NY Times today asks, “Was Barack Obama Bad for Democrats?”

      To be truly transformative in the way he wanted, however, his success had to translate into electoral gains for those who shared his vision and wanted to reform government. On that count, Mr. Obama failed.

      One should take a good look at Greenberg Quinlan Rosner, where the authors are partners.

      Self-proclaimed as “one of the world’s premier research and strategic consulting firms” that specializes in political polling and campaign strategy, it’s easy to wag a finger at the outgoing President for Hillary Clinton’s horrible campaign and political legacy.

      A few notables clients ( Former President Bill Clinton, Former Congressman and Mayor Rahm Emanuel, the Democratic National Convention, the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee and the Democratic Legistlative Campaign Committee.
      (Note: I just cut and pasted those clients and am not responsible for the misspelling!)

      If achieving political “wins” makes a pollster respected, we’re in big trouble since money in politics fuels propaganda. Ya’ know: “fake news”

      1. animalogic

        “To be truly transformative in the way he wanted, however, his success had to translate into electoral gains for those who shared his vision and wanted to reform government. On that count, Mr. Obama failed.”
        Honestly, Obama had a “vision” ? As for “transformative” ? The Obama presidency was a doubling down on “business as usual”.

    2. reslez

      If the jobs have gone away and “aren’t coming back”, let me tell you the political system is also about to go away and not come back. Our economic system requires people to have jobs to survive. It seems these facts are too obvious for our commentator.

      Chanos talks about potential tariffs and the disappearance of free trade with evident horror, saying these will decrease global growth. And that’s funny because 80% of the population has experienced 0% growth for 40 years and this will not continue. As Ian Welsh says, we have three possible routes from this place:

      1. Right wing populism
      2. Left wing populism
      3. Police state continuation of the current system

      Things are going to change. The only question is whether Chanos and his friends on Wall Street will be able to impose a police state to keep their free trade, or not.

    3. H. Alexander Ivey

      Ha! The joke is really on him, or on the students of his university. The true, professor job is long gone. Tenured professors, the real reason to go to an American university, are mostly gone. Nowadays, tenured professors are simply ‘teaching’ superstars (if not outright propagandists, like Prof. Chanos is in my opinion).

        1. Ulysses

          Yes, Chanos is not an academic.

          I, for one, feel that a better summary of our current predicament comes from the unabashedly academic Prof. Galbraith:

          “There are some parts of the plutocracy that just don’t care what happens to the broader population… So again we come back to the crucial issue: it’s the power and the instability associated with having the economy run by bankers and hedge fund managers that is the problem.”

        2. Dodge Terence

          “teaches University of Wisconsin and Yale business students about corporate fraud”

          From the intro above, his wikipedia page may not have been updated or annotated recently.

          Perhaps he is adjunct faculty and not a “professor”, unless it is the old testament definition?

    4. economicminor

      Those who believe that lower end family wage or manufacturing jobs will return in enough numbers to make America Great again believe in Magical Thinking. Chanos did a realistic discussion of most of the issues presented to him. No one has a clear crystal ball.

      It is unnerving that so many people can’t see the chaos that would/will come from any major changes that are connected to Trump’s making of America Great Again considering how much personal and commercial debt is out there. How do they think these debts are going to be paid during this major change period? (even if it could work) Do they really imagine that the planning will be perfectly executed and there would be no glitches..

      And what about the raising interest rates? They won’t factor in to any of these plans?

  6. Romancing The Loan

    “a robot is infinitely cheaper than even the cheapest labor.”

    This is such a bizarre assumption, resting on so many presuppositions, and yet he makes it so casually.

    1. a different chris

      Seriously. The outsourcing of technology from the US has resulted in the group with the largest microphone (which I swear they don’t even know how it gets turned on) being also the most completely clueless as you can imagine. I like to think Keynes, et al had a much better grasp on mechanization.

      Look, we banged stones together, then we got good with iron and made decent hammers and axes, then we pasted it and wood together into looms and such, then we figured out how to make compact power sources so we could stop pumping the pedals or diverting the streams… and jobs never went away. “Robots” are just another machine, and “intelligence” is… well what is it? Bob Cratchit is an actual human being with “intelligence”, but he’s still just a tool for Scrooge’s use.

      The Luddites thought all their jobs were going to go away and instead everybody wound up spending their entire life in a h***hole factory. That’s actually what we have to guard against. We won the battle once (in the West, anyway) and now we need to understand that it has to be fought again. We don’t even need a 40hr week to get 7 billion people fed and housed, but everybody works, completely inefficiently (look at me, I’m typing on the Web, granted during lunch but still), more than that.

      The Chinese “one-child” policy would be a great worldwide start* – reduce the number of laborers -, but human beings are too stupid to do it or too soft-hearted (that’s me) to tell them they should. I generally like kids better than adults so it’s really tough to say chunks of them shouldn’t exist…sigh.

      *I would have once said 2 would be OK because death and misadventure puts 2 children a bit below the replacement rate but now it’s rather late to say the least

      1. reslez

        China’s “one child” policy was draconian and unnecessary. All you have to do is educate women and give them control over their fertility, and they take care of the rest. Fertility has fallen to approximately 2 or less in every country that has done this. In countries where children are prohibitively expensive and economic prospects are poor the fertility rate falls even lower.

        1. RosieRiveter

          Birth rates fall naturally– or come into balance– when people’s lives come into balance. When we have meaningful employment, adequate wages, education that fosters critical thinking, including media literacy in these modern times, secure housing, clean air and water, and when we don’t feel attacked at every turn by a stacked deck in which the WS banksters hold all the cards. No threats of war, no need to flee one’s homeland, no instigations against one’s religion, just freedom to be our peace loving spiritual selves.

          Notions that are fundamentally inconsistent with capitalism, or at least, our current version thereof.

        2. economicminor

          Easy to say but when the Chinese government put in that policy people were starving. At least they understood math. Exponential growth on a finite planet is not possible. So exponential growth policies are not just stupid but insane. Only one of the fatal flaws of unregulated corporatocracy.

      2. Hoyeru

        surely you’re forgetting one thing: numbers. The sheer numbers of humanity. We were mere 3 billion in the 1960s and now we’re 7.5 billion. SO when you talk about the past, you have to take under consideration the numbers of people and the “jobs” available back then vs the people available. the modern concept of a “job” began with the Industrial Revolution. No wonder the world had to go through 2 “world wars” to reduce the population in the 20th century Think hats a coincidence? . So yes the upcoming robotic revolution will hit the humanity really hard. There will be literally billions of people who will \be without a “job”, without an income, and no food to eat.

    2. Romancing The Loan

      To expand on this a little, most of the reasons robots are cheaper than labor is due to our country’s tax structure (a robot is valued by the company as a depreciating asset on their bottom line, a worker only shows up as an expense) just as most of the reasons manufacturing is “gone” are due to deliberate changes in trade policy.

      People like the author do yeoman’s work for some very evil people in persistently (and cleverly and subtly, whether by accident or design) depicting policy choices as equivalent to immutable natural laws.

      …A little off topic but I’d like to hire our laid-off coal miners to plant huge forests where their mines were, including in the blasted valleys created by mountaintop removal. Our grandchildrens’ air (and renewable heating fuel supply) would be much the better for it. But Medicare for All and a Postal Banking Service first. At this point I won’t vote for any politician who doesn’t endorse those two simple ideas.

        1. animalogic

          The neoliberal 0.01% want genuine neofeudalism (for what is the point of power unless you can utterly savor it ? What Nietzsche, I believe, called the “pathos of distance” )But, I think they might settle for some kind of functional dystopia.

      1. Carla

        @Romancing —
        “But Medicare for All and a Postal Banking Service first.”

        — I entirely agree.

        “At this point I won’t vote for any politician who doesn’t endorse those two simple ideas.”

        1. I guess you won’t be voting much, then.
        2. When will we ever learn? A politician endorsing an idea means nothing.

  7. timbers

    Don’t recall where I read it (here at NC?) but using tariffs today is different than in the 1930’s, because in the 1930’s we were the China of the day with our cheap exports. Today we are the opposite, importing much more than we export. So imposing tariffs will not have the same affect, which today will be to increase domestic demand and jobs. Which is what we need.

    What can China do? It doesn’t order that much from us. It will lose much more if it retaliates and will lose much more in a trade war.

    Tariffs threaten profits of the globalists and that’s where the resistance will come from. Would love to see Trump make Apple move a lot of jobs to the US – or face big tariffs.

    1. craazyman

      America can’t make inflatable lawn ornaments and plastic dinosaur toys anymore! LOL.

      Here comes the Asteroid!

      1. craazyboy

        The S&P 500 won’t be able to sell us name brand, crappified, made in China consumer products anymore. That’s worse than a asteroid!

        Also too, the S&P 500 tells the Mexican government that Mexican workers need to get competitive with China. They need to get rid of meddlesome government stuff like the minimum wage.

        But the bright side is the South may rise again and make those lawn ornaments and American dinosaurs have gone digital.

        1. craazyman

          They can make any kind of Chinese stuff here any time anybody wants, what a joke, look at Chinese food!

          They make Chinese food in every neighborhood of New Yawk City.

          They even deliver it to your door. But do they make American food in China? Probably not very much. Maybe Trump is right!

          However, I like what Mr. Chanos says about the unpredictability of presidential regimes. I think, speaking personally, that just about everybody has Trump analyzed wrong. I think I have a very unique and special insight into the likely contours of a Trump presidency phenomenon but I’m too lazy to type it now.

          1. craazyboy

            I make Chinese food. When I’m too lazy, I can walk a block to the “Wok And Roll”. But come to think of it, my Korean(that’s almost China) Hyundai Sonata w/ fashionable leather seats and fancy wheels is made in Alebame! But I’ve checked the labels on everything else I own and it’s all Made in China. Except my Hoover vacuum cleaner. It says Made in Mexico. Well, Roma tomatoes here are made in Mexico too. Lettuce is still Made in America, even tho it’s picked by Green Card people.

            KFC makes American food in China. Taco Bell makes Mexican food there. This is a case where we are exporting intellectual property. One of the reasons America Is still Great!

            I still don’t know what to think of Trump. At this point, unpredictable would be a plus.

            Looking forward to seeing your insights.

    2. a different chris

      I agree with your post, but let’s extend it: What is this “much more” that they are “losing”?? Dollars, which aren’t even pieces of paper in this situation but numbers in a database.

      Our pretend “clean economy” seems mostly just a result of offshoring the dirty stuff for use in mostly China… well, how long do you think the parts of the world providing the dirty stuff will “stand with us” and let the Reminbi/Yuan (? somebody needs to explain the Chinese currency to me again but you know what I am trying to say) deteriorate so that the Chinese can’t buy stuff? I’d say about 10 minutes.

      We are less than 5% of the world’s population. Things can go bad for us in a real hurry.

  8. Norb

    The answer to the last question is an unqualified yes. However, i’m afraid the conclusions drawn by those who most benefited from the globalist experiment has been to secure their gains instead of working toward some form of redistribution or reforming the economic system to be inherently more even handed as to income. This prescription does not alleviate the built up tensions brought about by globalism, the tension only festers.

    The argument is always made by globalists that manufacturing jobs in America are not coming back. Why can’t they? On one level, it seems only to be a matter of national industrial policy. Millions of people have already changed their lifestyles by being driven into poverty and are racked by feelings of hopelessness. What better, and safer way in terms of potential global conflict than supporting a strong nationalism based on self-sufficiency.

    A strong nationalism based on an ideology of conquest or a new colonialism seems doomed to failure. Technology and power are becoming too evenly distributed. Nations that focus on building steady state economies will be able to weather future storms more effectively. They will be stronger and more resilient.

    When considering the populist swell in politics, one way or another, the people will secure the necessities of life. This movement can manifest itself in an ugly fascism, which seems the compromise position of holding onto wealth characterized by violence of varying forms, or a populism steered toward egalitarianism. Historically, both ideologies have roots in the American system. In America, we are approaching the crossroads and must choose our path between fascism and egalitarianism- there is no compromise position as is becoming painfully obvious.

    1. reslez

      It’s mystifying to me how millions of manufacturing jobs were moved to China over the course of 20 years, yet it’s somehow impossible for jobs to ever move again. And they flat out say it: “Impossible”. “Never going to happen”. Are they protesting a bit too much? Repeating things like a magic incantation until they become true? Do they truly prefer this world they’ve built?

      When I look around this great country of ours I see so much work that needs to be done. To say jobs are never coming back also says we need to just get used to our decaying infrastructure and a crumbling ecosystem.

      I don’t think anyone in the West would object to manufacturing staying somewhere else, or automation taking over, if our workers had the means to earn a living. There’s so much that needs to be done. Yet the rich would rather strangle the system that created them than let people work. That’s all we want. Let us work.

      1. marym

        When I look around this great country of ours I see so much work that needs to be done. To say jobs are never coming back also says we need to just get used to our decaying infrastructure and a crumbling ecosystem.

        +1000 Adding our crumbling human systems as well – public services and social programs that have been eliminated, diminished by privatization, or never were robust enough.

      2. Carla

        I’m totally with you, reslez —

        “There’s so much that needs to be done. Yet the rich would rather strangle the system that created them than let people work. That’s all we want. Let us work.”

        But we also want to work for pay. There’s the rub. There’s always plenty of work; the problem comes with peoples’ need and right to be paid. All women know this, by the way. We worked without wages and agency for millennia…

  9. Gaylord

    This economic thinking is human-centric, ignorant, and obsolete; as though our existence and activities are independent from the ecosystem. That is the crux of the predicament we now are faced with and it is reaching a devastating conclusion that we have no control over, in which the forces of nature out of balance overwhelm and kill us all because of our negligence. The evidence is all around us and yet we refuse to learn. If any kind of economic reform were even feasible to minimize the destruction of our habitat on this finite earth, I think one should advocate massive taxation of all short-term gains and massive punishment of activities resulting in environmental damage. That will never happen and the human species has no hope for survival because of our blindness.

    1. Code Name D

      –> Dart board with news paper clippings.

      That was easy. Now I am off to sell these to the media for millions of dollars.

  10. Fool

    That was interesting — and definitely a pleasant and refreshing surprise to read a financier (and billionaire) who can make lucid arguments. Granted I disagree with him on a number of things and consider his net worth to be sinful. But as Vox would say: “That’s OK!”

  11. Persona au gratin

    Bush was the MBA president who was going to be pro-business, cut taxes, and deregulate.

    Hard to believe anyone could regurgitate that line with a straight face. Bush was an MBA in title only, even considering most schools’ lax requirements for admission to the MBA “guild,” as the Bush familial legacy has unlocked every door that he’s ever walked through.

    Coming from a working class background and “aspiring” to an “advanced” degree rather late in life, I viewed the whole MBA experience as a rather humorous diversion, as the faculty mostly pretended that they were actually teaching us something, and in turn we all pretended that we were actually learning something. As a “capstone” to my educational “career,” I considered it altogether fitting, as it seemed to sum up my experiences in the industrial education complex from about the 9th grade on.

  12. baldski

    Well let’s see here, the first thing Mr. Chanos should do is get some lessons in geography! He is completely wrong about the South China Sea being only needed by China for traverse. All the oil that goes to Japan from the Gulf goes through the Malacca straits around Singapore and up through the entire length of the South China Sea. This is some of the heaviest maritime traffic in the world. I know because I sailed these waters for over 15 years.

    Secondly, Mr. Chanos alludes to a “union job” he had in Milwaukee that made enough in the summers to put himself through college. How did he come by this plum “union job”? Where are these summer jobs today that can finance a college education? Where have they gone? How do we get them back? Wall streeters like him, I guess, are not concerned with these problems.

    1. craazyboy

      I’ll concede to your knowledge of the South China Sea, but nay to mid seventies Wisconsin. U of W Madison tuition was $400 a semester. [but I went out of state for $450]

      In high school, I knew 19 or 20 year olds* making $15 an hour in factory jobs [min wage was $2.50]

      As late as 1978, a friend was able to rent a 1 bedroom apartment in a good area of town for $200/month.

      I’d say the math probably works. But it doesn’t fit the narrative that we’ve had progress under neo-liberalism. Other than that we have better phones and TV sets.

      * They were graduated from high school, but spent all their money on hot rods and Harleys.

      1. different clue


        You have supplied half the answer to Baldski’s question. Probably in his student days, Wisconsin taxpayers supported/ funded Wisconsin state colleges and universities heavily enough that those colleges and universities only had to meet some of their costs through low tuition.

        Between then and now, state citizenries went into tax-revolt mode and elected legislatures which would boycott their states’ state colleges and universities. So the state colleges and universities now have to raise the money they need through high tuition, since the state publics keep boycotting their state colleges and universities.

  13. RBHoughton

    Delicious article and a delight to read. Jim Chanos seems a lovely fellow.

    1/ The interconnectedness derived from globalization seems to be something feared in the west. Why should that be? It is our initiative, something we demanded of a reluctant world. Whilst TPP and TTIP have been frustrated there are many other bilateral treaties with the same sort of terms.

    Is it the case that we have become reluctant to negotiate? Can we not look Mexico, India, China, Brazil and the rest in the eye and settle terms with them? I hope we are not continuing the old GATT policy of telling everyone what we expect and accepting nothing less – that earns us a ‘go away.’

    2/ I agree about the rise of nationalism and I am fairly confident its because the political and commercial classes tried to slip the demise of the nation state into law without the consent of the governed. A furtive way of proceeding never wins adherents to a cause. In spite of the inconvenience of discussions and negotiations, its the only way – the electorate has to be persuaded. That’s the salient message of Brexit and the murmurings of discontent in southern Europe.

    3/I understand the fearfulness expressed about the financial system but we have to be bold. We have destroyed the faith in paper by our foolishness in the last several years to the point we are now looking down the barrel of hyperinflation with trade stagnation. We have to abandon paper, cancel all bets and replace exchange with a new digital global currency.

  14. william Powe

    All these experts are full of it, no better than cab drivers,
    look at the rust belt, look at the roads, look at the income
    inequality, look at the anger, Trump is a snake oil salesman,
    sooner or later this whole thing crashes and then this
    idiot will send in the troops to kill descent, this will be
    more chaotic than 1968 and far more dangerous.
    But by then the safety net will be gone and all hell
    will break lose, but hey just keep looking at Wall
    street earnings with your head in the sand.

  15. duane

    cause our “system of free trade” is really a way for super wealthy people or entities to make more profit, and close the door behind them.

  16. Tom

    For someone recommending a change in outlook chAnos doesn’t say much especially when supporting more free trade and invoking nostalgia. Very disparate points without a coherent theory or narrative binding it together. The focus should be on completely changing the current thinking and language away from cold inhuman corporate power to warm humane collective power.

  17. Jack

    Interesting article but it seems to me Chanos is just another neo-liberal. He doesn’t really seem to offer any alternatives other than to continue what we have been doing, like free trade, only better. The economy we have today is a failed system in my opinion. I agree to some degree about the jobs and automation. But that really only applies to repetitive assembly line work. What we as a country must do going forward is change our paradigm. Streamline and automate manufacturing. Rebuild infrastructure. Employ the unemployed in repairing and strengthening the social fabric by improving every ones quality of life. That means many more workers to ensure better education (more and better paid teachers), child and day care workers, elder care, mental health, environmental clean up, parks and green area management and improvement, and urban mass transportation. The days of having a successful economy with “every man for himself, work harder, up by the bootstraps” are over. Morris Berman described America as “a nation of hustlers”. That is what must come to an end.

  18. Thom Prentice

    Doggone good read. But left out of presidents were Kennedy/Johnson New Frontier Great Society which was pretty much all enacted into law except “KiddieCare” … and which of course, had the tailwind of Mr. Kennedy’s assassinationto push it on through.

    Although it is worthy to note that MEDICARE failed the Senate by ONLY ONE VOTE in August, 1963, which may have pissed off the capitalist and deep state security class even more than everything else he did like vetoing shooting and nuclear wars all over the place, civil rights, jawboning steel prices down, you name it. Johnson’s “Great Society” was all off-the-shelf from Kennedy and New Deal liberals but it was enacted into law

    It is only at THIS LATE DATE that the “Businessman’s War Against the New Deal” and the Lewis Powell Memo helped along by the neoliberal fascists Hayek and Friedman are close to ending the New Deal et cetera although rather than a frontal onslaught, they used subterfuge: Recruiting the Clintons and Obama to take it far further than Reagan would have dreams and here we are, looking down at the abyss, facing the apocalypse, and arguing whther the Russians hacked the DNC. Exception Nation or what?

  19. Sound of the Suburbs

    The idea:

    If the wealthy are taxed less they will invest and create jobs and wages.

    The reality:

    This is exactly what happened.


    The jobs and wages were created in the East, which is far more dynamic, wages are lower and profits are higher.

    The investor gets the best returns on his investments almost anywhere apart from the US due to its high costs of living with rent, healthcare and student loan repayments. A high cost of living necessitates high wages.

    The Consequence:

    The hard work of the US produced profits that were taken by the wealthy and invested in the East.
    The balance of power shifted from West to East.

    The US started to worry about the powerful China Western investors had created (commonly known as “shooting yourself in the foot”).

    In the hollowed out and decaying West the populists started to rise and social unrest followed.

    The Solution:

    Get the money off the wealthy before they can invest it in the East and further shift the balance of power away from the West.


    If Trump is going to make the US great again it will require capital controls as those tax cuts are going to become further investment in the East and further shift the balance of power away from the West.

    Trump can pick a battle with China but investors can choose most places in the world to pay lower wages due to the high cost of living in the US.

    This is the problem Trump, work it out.

    The high cost of living in the US necessitates high wages leading to lower profits making the US almost the last place on Earth anyone would invest.

    You need to get housing, healthcare and student loan costs down to make the US competitive in a global economy.

    OR high tariffs and capital controls.

    You choose.

    Larry Summers and the IMF are recognising the problem is now demand and so you need to get more money to consumers and better, higher paid jobs will help but in the longer term those tax cuts need to go to the majority, the consumers.

    Getting the cost of living down will increase purchasing power within the economy too, helping with the demand.

    Supply side economics was the solution to yesterday’s problem.

    Larry Summers:

    “But that was yesterday’s problem, Summers said. The economy now faces secular stagnation, or a chronic lack of demand.”

    Come on, stop living in the past.

    1. Anonymous

      I think the mobility of capital makes it difficult to say for sure where American investment money goes. After all, the Chinese are investing prodigious amounts in the US by financing our budget deficits. Money that would otherwise have to be taxed out of Americans can be put to other uses. One can argue that the trade deficit is a good thing, because it allows some of us to invest in American innovation, which on the whole provides better returns than government bonds. It’s an arbitrage that works to the advantage of the US. The problem is that, so far, innovation in Silicon Valley and other tech locations produces only a limited number of high paying jobs. I’m not sure what Trump or anyone else can do to change that.

      I think that Trump SCOTUS appointments may have an important long term effect if the arguably outdated Griggs vs. Duke Power decision is revisited. The rise of college as the pathway to better paying jobs was driven by Griggs. In its absence, companies might just test high school graduates, rather than requiring a college degree. The substance of Griggs was that tests had to be very job specific, because African Americans were disadvantaged by substandard segregated schools and thus were unlikely to do as well on more general tests. Since de jure segregated schools have been gone for fifty years, this should no longer be a factor. Imagine the expense that could be avoided if one didn’t have to be a college graduate to go into management.

  20. darms

    I have both a degree & almost 40 years exp. designing, building & testing prototype electronic hardware plus also doing mfg. support for same. No way my job is coming back, the Donald is a fraud…

  21. Mickey Marzick in Akron, Ohio

    “People are talking about starting a trade war with China but they haven’t really thought it through, because if you talk to corporate execs in the United States, they’re sort of quietly terrified. Often the supply chain, even in U.S. manufacturing, relies on parts from Mexico and China coming in. We are pretty interconnected. Lots of businesses, and workers, too, will get disrupted in ways we can’t even think of in a trade war.”

    To me this issue will shape domestic politics as it pits internationalist, transnational business interests against the smaller, more nationalistic, local/regional business owner. How you square this circle without antagonizing one or the other remains to be seen. For 40 years the former have expanded with few restraints. How many former small business mom-and-pop stores have disappeared, unable to compete with Wal-Mart, Home Depot, etc? Corralling these transnational forces into a more nationalistic, “America First – Make America Great Again!” path will prove difficult. The expansion of markets and access to them has shaped US foreign policy with transnational business interests leading the way. Antagonizing these interests is not without consequences, even for the President of the US. And given Trump’s proposed Cabinet appointments thus far I don’t see these interests being brought to heel. Many well-paying jobs in this country are tied to the current trade regime. Honda, Toyota, Nissan, Bridgestone, to name but a few. How will these Americans fare in a more nationalistic, inward looking business environment? Let’s be honest, they have benefited from the relocation of transplants to this country. While US firms outsourced manufacturing capacity, many Japanese and German firms have invested heavily in building new plant and equipment in this country, creating American jobs.

    How you turn inwards without sacrificing these transnational interests in the process and the ideology that justified it will be a challenge.

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