132. The Mistakes That Led to Trump

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Speaker 1 Welcome to the Rest is Politics. This is a little bit of a special episode for Catty and I about the global trading system and its implications related to populism.
So, I'm Anthony Scaramucci.

Speaker 2 I am Catty Kay, and this is something that you and I have been speaking about, Anthony, for a while. And we've both had conversations.
You've dug into the history of this.

Speaker 2 and what we really want to do today is look at some of the history of the trading system and then look at the mistakes that were made that lead us directly to Donald Trump and not just to Donald Trump, but to populism around the world.

Speaker 2 And I think it's such an important subject. People don't know that much about this, but you can go back to the Second World War.
You can go back to the 1990s.

Speaker 2 We're going to dig into all of that and explain why it's so relevant today. So, Anthony, take us back in time because you're the historian, you've been reading a lot of the history on this.

Speaker 2 Take us back to the period after the second world war when there was sort of unanimity on the issue of trade and the importance of trade not just as an economic proposition but as a security proposition as well okay caddie i think it's so important to explain the actual zeitgeist of the time and the culture which is very different from today is so back then I'm going to take you right back to July of 1944.

Speaker 1 The war is still raging, but it feels like the Allies are going to win. And way up in Bretton Woods, New Hampshire, at the Washington Hotel, we have what we call the Bretton Woods Treaty.

Speaker 1 It's the Bretton Woods Economic Conference. Of course, famously, John Maynard Keynes is there, the legendary British economist.

Speaker 1 And 28 nations get together and they lay out the framework of the post-World War II economy.

Speaker 1 And so what's embedded in that are strong unions that's going to help labor, help labor collect the economic rent from the profits of capitalism it's going to limit foreign competition by allowing for the currencies to be relatively tight with each other and again not to bore people but if i want to increase my exports caddy i weaken my currency i make it cheaper for you to buy my goods and services But in the Bretton Woods Treaty, we're all in a little bit of a lock together where we can't devalue our currencies.

Speaker 2 But also some of the theory of that, wasn't it, Anthony? Was that countries that trade, I mean it's the famous theory that countries that trade together don't go to war with each other.

Speaker 2 And it was trying to lock countries, great powers, into relationships where you wouldn't have a repeat of World War I and World War II.

Speaker 1 100%. So the idea was allow for strong unions, which will keep the population happy because you want real good living wages.
You want rising wages across income levels.

Speaker 1 And one of the things that you do is you stabilize the currencies so that we can't, through trade policy and currency weakening mechanisms, game each other and trade.

Speaker 1 Okay, so this had an unbelievably powerful effect on the working class communities in the UK, France, all of Western liberalism.

Speaker 1 And the U.S. did the following thing, which is very important for people to understand, is they uneven the trading system.

Speaker 1 Before we had the World Trade Organization, we had something called GATT, G-A-T-T, the General Agreement of Trade and Tariffs, and CADI. The U.S.
set the architecture of that.

Speaker 1 They said, no problem, goods and services can come into the United States relatively unprotected, meaning we won't have a lot of tariffs up, we won't have high levels of protectionism, but we will accept tariffs and some level of protectionism from other countries.

Speaker 1 Why did we do that? Well, the economists at the time, U.S. had 2% of the world's population at the end of the Second World War, 50% of the world's output.
And the U.S.

Speaker 1 was looking around the world saying, if we don't raise living standards and we don't accept this imbalance, we're going to have a problem with the communists. They're going to march everywhere.

Speaker 1 They're going to take over Western Europe.

Speaker 2 Because other countries wouldn't want to buy American goods, wouldn't be able to afford to buy American goods. It was a kind of very brilliant, but also self-serving idea.

Speaker 2 This was not altruism on the part of the American policymakers at Bretton Woods.

Speaker 1 It was very brilliant and self-serving.

Speaker 1 And the Marshall Plan, which we all learned about in school, which was the equivalent of about $250 billion, $2,025 today, just think about the magnitude of it, $14 billion back then.

Speaker 1 But we rebuilt, we reindustrialized Europe. We gave money even to Japan.
It's historically known as one of the things where the victor is actually helping the vanquished rebuild.

Speaker 1 We set up this trading system and we made the trading system unbalanced, Caddy. And I think it's very important to explain to people why we did that.
And now we get into the crossover situation.

Speaker 1 This is usually what happens. Everything's going well.
My family, the Scaramucci, frankly, are direct beneficiaries of Bretton Woods. Why do I say that? My dad had a very high working class wage.

Speaker 1 He was able to buy a single family house. We went to school in a good public school system.

Speaker 1 And listen, we had to watch our P's and Q's from a a budget perspective when I was a kid, but there was enough money to go around. And that had to do with this sort of tight band of globalization.

Speaker 1 But we flipped the script on this in August. of 1971.
What happened, Caddy?

Speaker 1 Richard Nixon met with his economic advisors at Camp David, and they said, guys, we can't sustain this deficit spending that we've done during the Vietnam War.

Speaker 1 The French government is buying our paper and they want our gold in Fort Knox. Because remember our paper, the U.S.
dollar, was backed by gold. It was $35 an ounce.

Speaker 1 And on the 15th of August, 1971, Richard Nixon made an announcement that the U.S. dollar would no longer adhere to the gold standard.

Speaker 1 It would be a free-floating currency and it would be quote-unquote fiat currency. Now, that destabilized the economic situation, Caddy, and it caused the end of Bretton Woods.

Speaker 1 And you lived through this. I lived through this.
We went through a very big period of inflation. Tell us about what you remember.

Speaker 2 Everybody in the UK lived through this when we had energy shocks, we had power cuts, we had the three-day working week because people couldn't, companies couldn't afford to pay people more than that.

Speaker 2 It was that was a really gloomy time. And in Britain, it led to Thatcherism after the 1970s.
But I remember I was living in the UK for part of the 1970s and life felt very hard for for people.

Speaker 2 There were constant strikes, constant power cuts. It was dark.

Speaker 2 I mean, maybe it was the UK in the winter of 1970s and I was cold and a 10-year-old and I wanted the sunshine again, but it was not an easy time that period.

Speaker 1 Caddy, you and I are, I'm a little bit older. You and I are roughly the same age.
I remember meat boycotts. I remember my parents who were working class people.

Speaker 1 The prices of meat were so high in 1973 that we spent a week boycotting the meat. Now, it had a consequence consequence of putting our local butcher out of business.

Speaker 1 We used to have a local butcher before all this stuff ended up in the supermarkets. But the point being, it hit working-class people.
Exactly. And we couldn't hold the system together anymore.

Speaker 1 And by the way, people don't remember this either, but I just want to bring this up. This was the beginning of the early outsourcing of manufacturing.
So labor prices went up, food prices went up.

Speaker 1 And then we said, okay, how do we find cheaper ways to make this stuff to bring the stuff back into the Western countries? And so this had real big consequences for us.

Speaker 1 Manufacturing stagnated, real wages flattened. And believe it or not, way back in the mid-70s, the populist seed was actually planted.

Speaker 1 People felt that the old deal was breaking down. The Bretton Woods deal and the compact with each other that we were going to help each other.

Speaker 1 And of course, we flipped into the 1990s where we had this hyper-globalization.

Speaker 2 Which came as a result of the end of the Cold War, right? I mean, you'd had the breakdown of the Cold War. Everybody kind of bought into the American model of capitalism and pluralism.

Speaker 2 There was very little dissent in my memory of that period, reading of that period.

Speaker 2 There was remarkably little dissent that a big acceleration in the push to globalization, almost a kind of celebratory post-Cold War.

Speaker 2 atmosphere when the world had been divided and now the world was united around the American model and brought into that.

Speaker 2 And so there was very little dissent in the media, in think tanks that the globalization push was the right thing for America to do.

Speaker 2 Is that the right reading of that?

Speaker 1 I think so, Caddy, but you know, you were a journalist reporting on this at the time.

Speaker 1 Tell us about our overconfidence because I feel looking back on it now, remember Francis Fukuyama said it was the end of history.

Speaker 2 Yeah, history had other thoughts, it seems.

Speaker 1 Exactly, but his thought was, which was abided to by policymakers in the West, that we won, everybody else lost. Yes.
And that everybody was going to move to a form of democratic capitalism.

Speaker 1 And it made us overconfident in our policy decisions.

Speaker 2 I think, no, I think that's right. There was a period of kind of peace and prosperity where America thought it had done this extraordinary thing, which was ending the Cold War on American terms.

Speaker 2 All of these East European countries were being folded into the democratic capitalistic model.

Speaker 2 And so it seemed like America had won indefinitely, and the system that America was championing had won indefinitely.

Speaker 2 And if the Eastern Bloc countries could come into the Western democratic capitalist system, then the whole world could come into the Western democratic capitalist system.

Speaker 2 But what they didn't do, and I think Bill Clinton actually, to his credit, gave some warnings about this, even though he was the architect of NAFTA and then the architect of bringing China into the World Trade Organization later in the decade.

Speaker 2 What they didn't do was think, what are going to be the consequences of this for people like your father and for all of those union workers who depended on those good manufacturing jobs?

Speaker 1 And so, Caddy, there are two quick stories that I want to share. And the first story is February of 1972.
This is Richard Nixon going to China. He was a devout anti-communist.

Speaker 1 He was a cold warrior, a bitter cold warrior, but he wanted to create an opening to China.

Speaker 1 Him and Henry Kissinger felt that they could balance power in the world and they could check Soviet imperialism if they went to China.

Speaker 1 China at that time was a weak country, communist country, but quite poor.

Speaker 1 And this opening to China, Nixon going to China, was seen as a way to put more pressure on the Soviets.

Speaker 1 But something happens during those meetings that I think is very important that very few people talk about. And we're going to share it here.
Nixon allows Mao to link his currency to the U.S. dollar.

Speaker 1 Now, it has no big significant impact in the beginning because Mao is running a full-on communist authoritarian regime.

Speaker 1 But by 1979, Den Xiaoping takes over and he realizes that he needs to reform the Chinese economic system and he needs to bring capitalist ways into a communist system.

Speaker 1 And he has this good fortune of having his currency linked to the U.S. currency.
Now, why is this important? U.S. is spending lots of money in deficit spending.
And so what are we doing?

Speaker 1 We're inflating our dollars. We want to pay our deficits back with dollars that are worth less than the dollars that we borrowed.
And so we're running pretty high inflation in order to do this.

Speaker 1 And this is good for the Chinese because as our dollar is going down in value, their currency is also going down in value because it's linked to our currency and it allows them to become an oasis of exportation, an oasis of manufacturing.

Speaker 1 That's story number one. Story number two, and this does not reflect well on me, but I'll share this story, is way back in 1999, I was a very smug, arrogant 35-year-old Wall Streeter.

Speaker 1 And in 1999, we had the World Trade Organization protests in Seattle.

Speaker 2 I remember them.

Speaker 1 Tell me your recollection of those, that trade.

Speaker 2 I mean, my memory of those, And it was colored slightly because it came out of the Lewinsky scandal. And so, you know, that was had been the big political story that we were all reporting on.

Speaker 2 But then this thing happened up in Seattle and they were voting on whether to not to let China into the World Trade Organization, which Bill Clinton had been working on and promoting.

Speaker 2 And there were these protesters and they were sort of dismissed as hippie liberals, right? As kind of hippie lefty in American media when I was living in Washington at the time.

Speaker 2 Who were these kind of hippie lefties who were up disrupting this thing that was inevitable and was going to be so great for America.

Speaker 2 And China was going to suddenly be able to, we were going to get cheap washing machines and cheap cars and cheap exports from China. Everything was going to boom.

Speaker 2 And it was this idea that a rising tide would lift all boats.

Speaker 2 And that was the orthodox thinking in the boardroom of the New York Times, in the boardroom of the Wall Street Journal, in the boardroom of the Washington Post, all of which were based on the coasts.

Speaker 2 They were not based in Cleveland, Ohio, or in Youngstown, Ohio, or in Louisville, Kentucky.

Speaker 2 They were based on the coast, the big media organizations, and they all bought into this idea this was going to be great for the world economy and it was going to be great for America.

Speaker 2 And who were these protesters? And they were, and they were sort of dismissed, I would say, as being a little kind of as being far too lefty and out of touch.

Speaker 1 Okay. And this does not reflect well on me, but I'll share it with everybody.
And I'm sort of embarrassed about it today, given my family background. But I was a Wall Street.

Speaker 1 I was a smug, arrogant Wall Streeter. And everything you said is true.
We thought there was a bunch of hippies. We poo-pooed them.

Speaker 1 We were looking for lower costs of capital and we were looking for lower costs of labor. And

Speaker 1 we thought by offshoring all of that, it was going to lead to an economic boom, high profitability for the stock market. And oh, by the way, remember the promise from China.

Speaker 1 They were going to drop tariffs and quotas on us. They did not do that.
They were going to allow foreign companies into the banking, finance, and insurance system. Didn't do that.

Speaker 1 They They were saying, look, we're going to protect your intellectual property. They ended up stealing it.
It's a great book on this, Apple in China by Patrick McGee, talking about that.

Speaker 1 And oh, by the way, lots of farm products are going to be bought by the Chinese. And so we on Wall Street made the mistake.
Ralph Nader, the hippies that you're describing, said, please don't do this.

Speaker 1 You're going to hollow out

Speaker 1 our small-town manufacturing. You're going to cripple middle-class workers.

Speaker 1 Okay, but also remember, we were told by the Chinese, hey, we're coming your way. We're going to have more market orientation, more capitalism.

Speaker 1 We thought they would be more dependent upon us as a result of this. And so we let them in.
And remember, when China came into the World Trade Organization, Gaddy,

Speaker 1 they come in as an emerging market. So they're able to protect their economy.
and they're able to ship goods and services into the developed countries with this great advantage.

Speaker 1 And by the way, Donald Trump, like or dislike Donald Trump way back then, said this is going to be very bad for us. They're quote unquote ripping us off and they're taking advantage of us.

Speaker 1 But we thought, Caddy, we thought a richer China would mean rule of law reforms.

Speaker 1 We thought a richer China would mean more corporate transparency, more competitive private sector competition, less central planning. And Caddy, none of this happened.
So we're going to take a break.

Speaker 1 But my question after the break to you is, why did none of this happen? What do you think? What do you think happened to make none of this happen?

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Speaker 2 But before we dive back into this discussion about trade and how it led us to where we are today and to the rise of populism around the world, we do want to remind you that we have a new series out on Jeffrey Epstein.

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Speaker 2 Okay, let's dive back into this episode. So you asked the question about how we got it wrong, and I'm going to tell you a story of mine from the 2016 election.

Speaker 2 I'm up in northern Ohio, going around this town that had been a big steel town. And there was a massive building on the edge of town that had employed thousands of steel workers.

Speaker 2 I'm driving through the downtown, the main street of the town, and I would say three shops out of five, if not four shops out of five, are boarded up. Nothing going on.
There's no activity.

Speaker 2 This is one of the most depressing places I have reported from in my life. And you would never have thought that this was the United States of America.

Speaker 2 And I drive to the outskirts of the town, the steel factory, and we've arranged to interview a lovely man who was one of the remaining 200 people who worked in this steel factory.

Speaker 2 His dad had worked in this field factory. This was the place you could go and get a job, a reliable job in the United States, if you didn't have a college degree.
He came out and we chatted to him.

Speaker 2 His wife had health problems and he explained to me that he'd been a lifelong union worker, a lifelong Democrat, but he was switching parties to vote for this upstart candidate, Donald Trump, because he was fed up of both the Democrats and the Republicans who had done nothing to protect jobs in his city.

Speaker 2 And the offshoring started hemorrhaging after China joined the World Trade Organization at the beginning of the Bush administration.

Speaker 2 And one of the interesting things I found out when I went on that reporting trip is I interviewed him and then I went to Cleveland to the university and I interviewed an economist who said to me, he's right, a lot of jobs were lost to offshoring.

Speaker 2 But it was also compounded by the massive technological revolution that took place after the invention of the internet.

Speaker 2 And as likely as anything, his job may have been lost because of a computer superchip.

Speaker 2 It's a very human instinct to look to other countries, to to look to other people for taking your job away, even if it was a technological revolution and more jobs were probably lost to the technology than to offshoring.

Speaker 2 But that was the moment that I thought, this is the payback. This is the payback for all of the policy failures that failed to protect workers, to failed.

Speaker 2 to provide a safety net, not just in America, but in Europe too, to people whose jobs and welfare and incomes have been lost in the push to globalization. It was such an interesting moment.

Speaker 1 Not only agree with it, it again doesn't reflect well on me. And I just want to remind everybody listening in, we sometimes get the collective biases of the people that we hang out with.

Speaker 1 So I left the small town that I grew up in. I went to Tufts and Harvard.
I worked at Goldman Sachs. I started hanging out with the elites.
And I guess what? I started thinking like them.

Speaker 1 Donald Trump, however, okay, he saw it. I did not.
Does not reflect well on me.

Speaker 2 Well, you've always said that was what appealed to you about Donald Trump, that he understood understood that the working class had been hit.

Speaker 1 He didn't offer a policy solution yet.

Speaker 2 He felt their pain.

Speaker 1 Here's the messaging. I want you to react to this.
Don't worry, you'll move into tech, finance, and services. Did that happen for the middle class and the working class?

Speaker 2 It did not. I mean, these were men in their 50s who were not going to suddenly be retrained as tech superstars.
Okay.

Speaker 1 How about globalization will create more winners than losers? I'm pulling this stuff out of research reports on Wall Street in the 90s and the early 2000s.

Speaker 2 Well, sure, your fridge and your washing machine were cheaper, but you didn't have a job. Right.

Speaker 1 So that was another tagline. It was good for consumers.
But here are the four things

Speaker 1 that happened that has pissed everybody off, Caddy. Number one, no retraining arrived, like the promises of retraining.
Number two, no new industries came.

Speaker 1 They just shifted off of the coast of the United States. There was no safety net to protect these people.
I mean, there is a little bit of one now, but it's really unsatisfactory.

Speaker 2 And unions had been hollowed out.

Speaker 1 Unions had been hollowed out. That's something the Reagan administration pushed through.
Remember, he appointed a lot of conservative justices that ruled against the unions.

Speaker 1 The legacy of the Reagan court appointees were they went hard at the unions in the 90s to hollow out the unions.

Speaker 1 But here's the killer, Caddy, and I want you to react to it: CEOs, Silicon Valley and Wall Street, got richer while a very large swath of the country struggled.

Speaker 1 So, how do you think that went down with those people, Caddy?

Speaker 2 Well, of course, it was that helped. And then, of course, you had the 2008 financial crash, and this is exacerbated even further, and people are suffering even more, particularly the working class.

Speaker 2 If you had assets in America after 2008, you recovered in a couple of years. You were doing fine.

Speaker 2 But if you didn't have assets, if you were the working class, you were hit again after 2008, having already been hit by China's entry into the World Trade Organization.

Speaker 2 That union worker who I interviewed up in northern Ohio, he could cite chapter and verse of the World Trade Organization's rulings that allowed China to enter.

Speaker 2 He knew way more about World Trade Organization policy and China's accession to the World Trade Organization than I did. And he clearly felt that that was the problem.

Speaker 2 And the reason he liked what he heard from Donald Trump was because Donald Trump said he was going to hit China.

Speaker 2 And I came with all of the kind of, you know, conventional media and the East Coast biases, just like you did.

Speaker 2 And I said to him, but, you know, going to trade wars with China, that's going to infect, that's going to affect the price of our imports and everything's going to be more expensive and your washing machine is going to be more expensive.

Speaker 2 And he came back and he said, that's, I want. Donald Trump to go to war with China.
I want us to put up massive tariffs on steel products from Europe.

Speaker 2 I want to protect the American economy because he was at his wit's end. He had a wife with healthcare problems.
He was one of the last remaining people that had a job in his town.

Speaker 2 And I think he just, he felt none of the other policies had worked.

Speaker 1 Caddy, it's such an important point to bring up that individual's story because while he's saying all that to you, from 2001 to 2015, these think tanks in Washington that are supported by the major corporations are saying things like, well, if anybody criticizes what we're doing, it's protectionistic.

Speaker 1 It's backward. They were in full-on support of globalization and China integration.
But on the ground, what your interviewee is suggesting is happening. Factories are dying.
Drugs are exploding.

Speaker 2 Main streets are shutting.

Speaker 1 Wages are stagnating. Life expectancy in those areas of the country are actually falling.
But here's the kicker, Caddy. And I want you to address this because you've lived in Washington.

Speaker 1 The populism is emerging. At a time where the political class is refusing to admit that it was wrong.
So it deepens, it makes the rebellion even more vicious.

Speaker 1 You know, Hillary Clinton wasn't out there in 2016 saying, oh, the populists are right. Donald Trump was.

Speaker 2 Yeah, and remember as well, this is around the time when the European Union gets the Nobel Peace Prize for promoting free trade within the European Union.

Speaker 2 And I bring that up because obviously you're starting to see a populist rise in Europe as well.

Speaker 2 But it was very hard for think tanks and newspapers to accept that the orthodoxy of the last 20 years that had made them rich and had protected their jobs, that that orthodoxy could be wrong and that actually the lack of a social safety net.

Speaker 2 And then it coincides with in Europe, but also in the United States, an influx of illegal migration or irregular migration, if you want to call it that.

Speaker 2 And people are saying, hold on a second, we've got all of these migrants coming in to the country. Our jobs have been offshore to China and then to Mexico.

Speaker 2 And who is looking out for American-born workers? And the same, you're hearing this, starting to hear the same arguments from workers in Europe as well.

Speaker 2 I remember coming over to Britain at the time of the Brexit vote and interviewing people here.

Speaker 2 And then I went back to the United States and I wrote an article saying, here are the five reasons Donald Trump is going to win, because the language I heard around the UK was the same language I had heard while I was traveling around the US reporting on the 2016 election campaign.

Speaker 2 It was identical language. We've been forgotten.
The people in the capital have ignored us. They've got richer.
We've got poorer. The 2008 crash killed us.

Speaker 2 All of these migrants coming in is hurting us. And I think you heard the same language.

Speaker 2 That was the kind of gateway drug. to populism.

Speaker 1 So Caddy, before we go, elites got it wrong.

Speaker 1 I myself got it wrong. It pains me to admit this to people.

Speaker 1 But where are the elites now in this story? And where should the policies be to sort of fix this problem and to bring these people back into the social contract of the West?

Speaker 2 I think that, I mean, that's a great question. I think the elites have woken up to the problem.

Speaker 2 I think they've woken up to the political risks of massively diverging incomes.

Speaker 2 But what I don't know that they have woken up to is the risks that we have right now, which is a different threat to workers, which is artificial intelligence.

Speaker 2 And are we actually now heading into another period where workers get hit? And a lot of people at the top make an enormous amount of money.

Speaker 2 You get more divergence of income and no real discussion amongst policymakers.

Speaker 2 I'm not hearing this on Capitol Hill or in Washington from think tanks in particular about what's going to happen when we have another slew of workers who are laid off.

Speaker 2 Maybe this time around it's white-collar workers, but you're still going to have a whole load of people who are pissed off who can't get jobs.

Speaker 2 And I'm seeing repeats of the conversation we have just had happening right now in this world of artificial intelligence with no real discussion from policymakers of how do we get ahead of it this time?

Speaker 2 How do we make sure that this time we don't screw it up?

Speaker 1 Katie, there's so many great ideas, but we're not doing anything.

Speaker 1 I mean, we could have federal tax credits, we could have earned income tax credits, we could have credits for people to build plants and equipment here in the U.S., credits for job training.

Speaker 1 We don't do any of that. You know, we've got Belikovsky of rhetoric.
We've got the rhetoric of a trade war with China. But you and I both know that when he said to Zelensky, he didn't have the cards.

Speaker 1 That may be true in some parts of it, but China did have the cards. And China forced Trump to the table, and Trump blinked.

Speaker 1 And so how do we restore the trust between the government and the working people? You know, one of the things I would say is you got to end the college is the only path rhetoric.

Speaker 1 We got to figure out a way to celebrate skilled trades and industrial work. And we need an industrial policy that we don't have right now.
But what would you recommend that we do?

Speaker 2 Well, I think there has to be more discussion.

Speaker 2 I think that what I'm hearing that's a little dismaying from Washington at the moment is just the idea that exactly the same kind of thing that we heard in the early 2000s, which it will create more jobs.

Speaker 2 There will be new jobs for these people. As you just asked me, they'll get jobs in technology or they'll move from the factory floor to a different type of position.

Speaker 2 And everybody's saying that about AI right now. Well, there'll just be new jobs, but no one's actually specifying what those new jobs are.

Speaker 2 And I think actually what's needed now is a different type of skill training. I had a very good conversation with a friend of mine who founded a multi-million-dollar global cosmetics industry.

Speaker 2 she was saying, actually, what we need to in this environment is really focus on people's interpersonal skills, because that's what AI doesn't have.

Speaker 2 And we're living in a kind of high-tech, but also high-touch world where people are going to be craving human relationships.

Speaker 2 But that's one idea that we need to gear people up for being the thing that AI isn't, which is being good.

Speaker 2 client, having good client relationships, having good customer relationships, having good personal relationships with people at work, being good human beings, because that's what robots aren't.

Speaker 2 But I'm not hearing any of that really from policymakers.

Speaker 2 Policymakers are just acting the way they did in the 2000s and saying this is going to be great and having a very short-term view of all of these problems.

Speaker 2 Policymakers aren't able to fix these things at the moment. They're not discussing them.

Speaker 1 I agree with that, but I do also

Speaker 1 believe that the political candidates coming, and these are younger political candidates than Donald Trump and Joe Biden are going to start talking about working class ideas.

Speaker 2 They may have to be talking about middle class ideas because you're going to lose a lot of white collar jobs too.

Speaker 1 Community investment. How do you improve the safety nets that actually matter in these real towns? What about the whole apprenticeship model that's going on in Germany right now?

Speaker 1 This is something that the U.S. is not great at, but how about stealing some ideas from other countries that seem to be working?

Speaker 1 This is the type of stuff that we're going to need in the country on a a going forward basis if we're going to end some of the cultural resentment and the anger-based populism that's really driving our politics right now.

Speaker 1 And I'll just get you to react to this because John Major gave a speech at LSE very recently, a former UK prime minister, and he said, you know, it's now gotten to the point where the populism is not a fringe idea.

Speaker 1 It's been professionalized in the political class, and people are using this as a way to get themselves power.

Speaker 1 So the question, Caddy, is can a leader come in and rebut this and come up with policies that can bring these people back into the political fold?

Speaker 2 Well, I think that's what we're going to see. And maybe it is.
I mean, I would describe Mamdani as also a populist, a populist on the left, but he has some of that kind of populist tone to him. And

Speaker 2 I think it's going to be very interesting.

Speaker 2 Over the course of the 2028 election in the United States, a lot of these issues are going to be fought out because there is now a battle in the soul of certainly the Democratic Party between populists and more centrists, traditionalists.

Speaker 2 And I think you're probably going to see some of that in the Republican Party too.

Speaker 2 I do think you're going to see in the 2028 Republican Party primary one or two candidates who represent what the Republican Party has traditionally been.

Speaker 2 And it'll be interesting to see whether they come up with fresh ideas to address the concerns of working class and middle class Americans in a way that have not been addressed by the traditional parties over the last 20 years.

Speaker 1 Very well said, Caddy. I would just add one thing.
We have fixed the China problem, or at least we're addressing the China problem with a little bit tougher trade policies.

Speaker 1 But one thing we haven't fixed is the American worker problem. And until we do that, populism is going to keep coming back.

Speaker 2 That's all we have time for this week. If you want to listen to our special deep dive into Jeffrey Epstein, do sign up at therestispoliticsus.com.
Here's a clip from the episode.

Speaker 2 So much of his story, though, is surrounded in mystery. How did he get rich? Why did America's elite help cover up his crimes? And of course, what was Donald Trump's part in all of this?

Speaker 2 And over the next couple of episodes, we're going to dive into all of this because we think as Epstein is so in the news,

Speaker 2 Anthony, I realized I actually didn't know very much about where he got his money and what his background was.

Speaker 2 So I thought, and this is not, I realize there's so much around the Epstein story that is incredibly upsetting, really tragic, obviously criminal.

Speaker 2 But I do think he is somebody, because he has become so important in the political story of today, it's worth us going back and knowing a bit about him. What do you think?

Speaker 1 Well, first of all, I'm just out of the shower, Caddy, because I had to take a scalding hot shower after reading all the research on this slime ball.

Speaker 1 And I'm sure when we're done with this podcast, I'll have to do the same thing.

Speaker 1 But I find the story sorted, but I also find the story as a seam in our society and something that you and I need to talk about.

Speaker 1 Because as you get power, what you want to do is you want to hang out with people that have power and you get subsumed by it. And Jeffrey Epstein was a social hacker.

Speaker 1 You know, we have internet hackers, we've got different people that can hack into a safe, but he understood the the mechanisms of insecurity and he understood the mechanisms of people wanting to feel significant, Caddy.

Speaker 1 And we're going to get into all of that with our viewers and listeners. But I found the whole thing to be sordid, but also fascinating and a cautionary tale for people who are trying to rise,

Speaker 1 trying to be successful, and what they need to be careful of, frankly.

Speaker 2 It is a story of power, you're right, but it's also a story of the people who have no power, of the powerless.

Speaker 2 Yes, it is.

Speaker 2 Of women who were neglected, whose children had been abused, who really had no access to power and didn't, and weren't taken care of either by their families or friends or society or their schools or the institutions of government even that really should have looked after these girls and they weren't.

Speaker 2 So you've got this kind of two extremes of American society, the very powerful and the very powerless. And we will talk about both of those.
And as we do this series, we'll keep those victims in mind.

Speaker 2 If you'd like to hear the full episode, sign up at therestispoliticsus.com.