The nostalgia economy

Speaker 1 President Trump said on Truth Social today that he had a great call with South Korea's leader aimed at making a deal on the tariffs that have set the global economy on edge.

Speaker 1 In that same post, Trump said he's waiting for China to call.

Speaker 1 The administration says these Liberation Day tariffs will bring manufacturing jobs back to America. Why is that so important?

Speaker 1 There are some really dumb ways to answer that question.

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Speaker 3 Studies have shown this.

Speaker 4 Studies have shown this.

Speaker 1 And some much smarter ones.

Speaker 5 This is a policy at the end of the day that's oriented toward helping some of the folks who have really been the losers in the economy and have been left behind for a long time.

Speaker 1 Coming up on Today Explained: The Best Minds, the White House advisor who's gone ham on tariffs, defends his position.

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Speaker 5 I always say tariffs is the most beautiful word to me in the dictionary.

Speaker 1 It's Today Explained. I'm Noelle King.

Speaker 1 Senior correspondent Eric Levitz recently wrote for Vox about the nostalgia that the Trump administration feels for a time when American manufacturing was at its peak. Manufacturing things in the U.S.

Speaker 1 makes a lot of sense if we're talking about stuff that we want to get ahead on, cutting-edge technologies like semiconductor chips, for example.

Speaker 1 It's arguably a pretty good idea to put tariffs on chips that are coming in from elsewhere.

Speaker 11 But that's not what Trump is doing. He's putting tariffs on absolutely everything.

Speaker 11 You know, clothing from Vietnam and Bangladesh, coffee, which we can't even grow at scale in the United States from South America.

Speaker 11 He's putting them on everything, and especially industrial goods, including low-value industrial goods like t-shirts, kitchen mitts, etc.

Speaker 11 That is not a policy vision aimed at America thriving in the industries of the future. It's a policy vision aimed at bringing America decades backwards in our economic development.

Speaker 11 The explanation for this can't be a rational economic one, but more of an emotional one, a nostalgic longing for an America that no longer exists.

Speaker 1 What is the America that did exist? What's the thing that the Trump administration is nostalgic for?

Speaker 11 The nationalist right has this narrative in which we used to have these really tight-knit communities anchored by stable families in which the male breadwinner worked in a factory. And

Speaker 11 this not only allowed for

Speaker 11 working class wage growth and upward mobility and the achievement of the American dream, but also for these really healthy family arrangements, stable two-parent homes, and generally a

Speaker 11 form of communitarian life that the religious right really values.

Speaker 11 And then there also is this gender element to it where a manufacturing economy puts a premium on brute physical strength, or at least the manufacturing economy of the mid-20th century.

Speaker 11 These were predominantly male jobs. And you know, this connection between

Speaker 11 the nostalgia for manufacturing and the nostalgia for a kind of different set of of gender relations was made really explicit by a speech from Republican Senator Josh Hawley in 2021, where he said, Domestic manufacturing once supported millions of American men with good wages, who in turn started and supported families.

Speaker 12 Now that industry lies all but dead on what? The altar of globalism.

Speaker 11 And so They tell this story that you hear in a lot of Trump's speeches, in the speeches of other right-wing nationalists, in which deindustrialization, the closing of factories, is synonymous with both economic devastation and decline and moral rot.

Speaker 5 Rusted out factories scattered like tombstones across the landscape of our nation.

Speaker 1 Are the two linked?

Speaker 11 I mean, yes, it's true that once upon a time more Americans worked in factories, and it's true that once upon a time more Americans got married and stayed married are those two things linked to each other though yeah so i think that there actually is some evidence that there is a link there i i think that there's even stronger evidence that there is something to be nostalgic about in the economics here because you know during the time in the 1950s when america had kind of its

Speaker 11 peak of manufacturing as a share of the labor force, you also did really see high rates of wage growth, high rates of social mobility.

Speaker 11 People born into the bottom of the American class hierarchy were more likely to move up than they are today.

Speaker 11 And

Speaker 11 you also saw just a lot of opportunity for blue-collar workers.

Speaker 11 You know, in absolute terms, Americans are much better off materially today than they are in the 1950s. But in terms of the level of progress, the pace of moving up, this was better back in that era.

Speaker 11 There is some research from the economists David Autor, David Dorn, and Gordon Hansen, who looked at localities that suffered trade shocks that resulted in massive manufacturing job losses, and they found that those trade shocks do reduce the earnings of young men relative to young women, and that those places then see a drop in marriage and fertility rates that similar places without those shocks did not see.

Speaker 11 So there's some evidence that there is some truth to this,

Speaker 11 which doesn't mean that we should value high marriage and birth rates over women's autonomy,

Speaker 11 but it just reinforces why the right is so fixated about this.

Speaker 1 So the idea is slap tariffs on everybody. That'll bring manufacturing back to the United States.

Speaker 1 That'll make our gender relations and our cultural relations, in addition to our economy, more like it was in the 1950s, when, from the perspective of these guys, America was a more stable country.

Speaker 1 Could this plan actually work?

Speaker 11 No, and there's two levels on which it's not going to work.

Speaker 11 First, Trump's tariffs are unlikely to even increase at the margin manufacturing in the United States, at least in the near term.

Speaker 11 The immediate response to Trump's tariffs among businesses and investors has been panic and a slowing down of investment.

Speaker 10 We begin tonight with a major blow to the local economy. International Recycling Group, otherwise known as IRG, has canceled its plans to develop a $300 million plastics recycling plant in Erie.

Speaker 13 Stellantis says it is temporarily laying off 900 workers in the Midwest. Now that's the company behind Jeep, Chrysler, Dodge, and Ram Vehicles.

Speaker 14 Our CEOs are split on if they are expecting to need job cuts from the tariff impact, with more than a third saying, yeah, we will need to cut jobs, and about half saying, no, or it's simply too early to know.

Speaker 11 It's generated massive uncertainty. You don't know what the tariffs are going to be a few weeks from now, let alone a few years.

Speaker 11 This is not a situation in which you are going to put in the money and time to put up a new factory in the United States that only makes economic sense if the tariffs stay in place for another five years.

Speaker 11 So, one, it's just not working on its own terms.

Speaker 11 But two, even if Trump had the most perfectly designed tariffs, was the most trustworthy steward of the American economy, so everyone knew that he was going to stick by whatever he said, you would not be able to return the United States to an economy in which 30% of the workforce is working in manufacturing instead of closer to 10% as it is today.

Speaker 11 The reason for that is that as countries get richer, people spend

Speaker 11 a larger share of their money on services and a smaller share of their money on manufactured goods.

Speaker 11 The human appetite for appliances and cars is more limited than the human appetite for better health and higher investment returns. You know, you only need so many dishwashers.

Speaker 11 And so fundamentally, we need an economic model that is able to get us some of the good parts of the mid-century economy: the economic mobility, the wage growth for people who are not at the top of the class hierarchy.

Speaker 11 But we need to find a way to do that in a world where we have a services-dominated economy, and nostalgia is just not a good guide for getting us to that place.

Speaker 1 Vox's Eric Levitz. Coming up, the gentleman begs to differ.
An economist explains why he's been telling the Trump administration that tariffs are the right move.

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Speaker 5 My name is Oren Cass. I am the founder and chief economist at American Compass.

Speaker 5 We work closely with a lot of policymakers, both on Capitol Hill and folks who are in the administration, trying to share our views on what the key problems are for America and what the best policy solutions would be.

Speaker 1 Oren Cass and I talked on Monday afternoon. It was another day of big swings in the markets, a sign of global anxiety about the tariff plan.
Oren is somewhat unusual for an economist.

Speaker 1 He's a supporter of tariffs, and he has the administration's ear. He knew that Liberation Liberation Day would shock the economic system.
So I asked him, did you know the shock would be this big?

Speaker 5 Well, I think the shock is proportional to the size of the announcement. You know, on what President Trump was calling Liberation Day, he, first of all, sort of went with an all of the above.

Speaker 5 approach. You know, he did a global tariff plus very large tariffs on China, plus across the board, what they're calling reciprocal tariffs on most other countries.

Speaker 5 And then the level of those reciprocal tariffs in particular was very high. And so I think that that has pushed the shock to the high side.

Speaker 5 The other factor that I think is very important in doing tariffs is that ideally they are phased in because

Speaker 5 people need time to adapt. If you want more domestic production, you need time to build more factories.

Speaker 5 And so I think having everything snap in immediately rather than announce what they would be as they phased in has been a major factor in the shock.

Speaker 1 So do you think the Trump administration rolled this out wrong?

Speaker 5 I think phase-ins would be better. I think the reality is that there are absolutely going to be costs associated with tariffs.

Speaker 5 I think it is worth incurring those costs in the short run for the long-term benefits to the American economy.

Speaker 5 But you don't want to bear costs unnecessarily.

Speaker 1 Give me the argument for tariffs as you see it.

Speaker 5 The fundamental argument for tariffs is that making things matters,

Speaker 5 that we care what we can make in the United States. We care whether we're making anything in the United States.
And economists had rejected that idea. Economists said it didn't matter what we make.

Speaker 5 We will have other jobs instead, and those will be better jobs.

Speaker 5 And that turned out just not to be true, particularly for the sort of folks, you know, people who are not in big coastal cities, people who might have less education.

Speaker 5 You know, the kind of industry in raw materials, in manufacturing, in logistics, infrastructure, things that can be done productively and create a lot of value all over the country with all different kinds of skills

Speaker 5 are really important opportunities to offer. And I think, likewise, you know, having a strong industrial base is just really important to the kind of innovation we do, the kind of growth we get.

Speaker 5 And we forsook all of that. And so tariffs work from the opposite assumption.
Tariffs say, yes, making things does matter. We do have a preference, certainly at the margin, for

Speaker 5 something made here versus something made overseas. And so we're going to make it relatively more attractive to produce things here and to buy things that are made here.

Speaker 1 Critics of the tariffs will concede that there are very good arguments for reshoring production of things like semiconductors or electric vehicles. Those things are the economy of the future.

Speaker 1 We should make them here. But across the board, tariffs don't aim to do that.
The way the Trump administration talks, we want to bring everything back back to the United States.

Speaker 1 And that's why we're putting tariffs on t-shirts and screws and picture frames and bicycles and not focusing.

Speaker 1 Once again, I'm just going to ask, do you think the Trump administration is doing it wrong?

Speaker 5 On this front, we support very much the Trump administration's approach. I think a global tariff is the right way to do things.

Speaker 5 And the reason is that it might sound nice to say, you know, we're just going to focus on the sexy or politically popular products like the advanced semiconductor or the electric vehicle.

Speaker 5 But there are two problems with that. First of all, the things that are going to be most politically popular are not necessarily going to be the things that are actually most important.

Speaker 5 I mean, we're already seeing this even just in the electric vehicle space, where it turns out if you don't do the critical mineral mining and processing, you're going to have an awfully hard time making the batteries and the electric vehicles and leading there.

Speaker 5 So

Speaker 5 you really have to think all the way up and down the supply chain and not just think that, well, maybe we'll bring in all the parts and just pick and choose certain things to do ourselves.

Speaker 5 The really nice thing about having a broad global tariff is maybe it sounds like a big intervention in the market. And in one way it is.

Speaker 5 But in another way, it's really the much more free market approach. It's a very simple, broad policy that conveys a value that we see in domestic production.

Speaker 5 And then within that constraint, it really does leave it up to the market. Figure out which things it makes sense to bring back.

Speaker 5 Figure out there are still going to be plenty of things that we trade with the rest of the world, and that's good too. But ideally, we start to bring that trade back toward balance.

Speaker 1 Who, in your mind, is financing reindustrialization? At the moment, every time you turn on CNBC, there's a CEO cursing or crying. Confidence is not high.
Who's paying for the t-shirt factory?

Speaker 1 Like, if I'm a CEO, I say, oh, semiconductor factory. That's interesting to me.
You know, am I going to take a risk building a factory that makes shoes or shoelaces?

Speaker 1 No, probably not. But

Speaker 1 who's paying for this?

Speaker 5 Well, I think there are two questions there.

Speaker 5 I think it's a real misunderstanding to think that, you know, something like advanced semiconductors is saying that a CO is excited to build that factory, whereas, you know, the shoe factory, I guess, I don't know, because the shoes are more basic,

Speaker 5 that's not something a CO is excited to build?

Speaker 1 No, because the shoes are going to cost a lot of money, and Americans probably won't buy the $600 shoes.

Speaker 1 And therefore, to build the shoe factory, to make shoes that people probably won't buy because they're super expensive, doesn't seem like a good way to spend money. I mean, I could be wrong.

Speaker 1 I'm a journalist.

Speaker 1 I'm not an economist.

Speaker 5 It's a great question.

Speaker 5 I was just, I'm glad we sort of dug one layer deeper because the question of what can be made here productively, it has nothing to do with sort of necessarily how high-tech the final product is.

Speaker 5 It comes down much more to how high-tech the production process is. I mean, one of the things that the U.S.

Speaker 5 does still have a significant manufacturing presence in is something like basic chemicals, because a chemical plant obviously isn't about

Speaker 5 people doing things with their fingers. It is a set of very advanced processes.

Speaker 5 And so I think the way that we have to think about it with something like a global tariff in particular, we are putting a finger on the scale.

Speaker 5 We're saying those things that maybe you're choosing to make elsewhere today, but there's the closest case that it could also make sense to make it here. Well,

Speaker 5 now we've flipped that equation. Now those things do make sense to make here.

Speaker 5 And so the answer to the question of who's going to invest here is the people who can make a lot of money producing things here under that different set of conditions.

Speaker 1 Aaron Powell, Jr.: Do you think Americans are willing to pay more for stuff because it's made here?

Speaker 5 So I think when we're thinking about the trade issue, the question is a very fundamental trade-off between globalization and offshoring in pursuit of just cheap, efficient production, as opposed to a reindustrialization that takes seriously the value of having a strong industrial economy domestically.

Speaker 5 And we saw we've made that trade-off in one direction.

Speaker 5 after the year 2000 in particular.

Speaker 5 And

Speaker 5 insofar as that's what we want, it worked, right? We did, in fact, deindustrialize and get a lot more cheap stuff.

Speaker 5 And it seems to me that people quite reasonably and rationally are not happy with having made that trade-off.

Speaker 5 And so I think offering them the converse of it, saying, you know, would you prefer an economy and a nation at the end of the day that has a stronger industrial base, that provides more of these kinds of opportunities, you know, that gets all the other benefits in terms of innovation and national security and so forth.

Speaker 5 But it also means that, you know, maybe there are some things that are more expensive. Maybe the TVs aren't quite as big as they otherwise would be.

Speaker 5 Is that a trade-off that you wish we had made instead?

Speaker 5 I think most Americans absolutely say the answer to that question is yes.

Speaker 1 Why do you think that? Is there data that suggests that's the case? Donald Trump was elected because people were concerned, people were furious about inflation, about high prices.

Speaker 5 I think it's really.

Speaker 1 Sorry.

Speaker 5 I think it's really important to distinguish between the kinds of price effects we're talking about here and what was going on with the inflation during the Biden administration.

Speaker 1 Oh, no, I totally get you.

Speaker 1 In fact, I'm sorry, I don't want to step on your answer. I thought your answer was compelling, but it does seem like we're both going on vibes.
Is there data suggesting that Americans

Speaker 1 if given the opportunity to pay more for a T V that was made in Michigan, for example, would do so? Like, surely somebody's done the studies on this.

Speaker 5 Well, there are a few studies that try to get at it, but again, I think you're asking the wrong question.

Speaker 5 The question is not, would you pay more for a TV that was made in Michigan?

Speaker 5 The question is, would you rebalance the economy in a direction that doesn't place quite such a high priority on cheap consumer goods and places a higher priority on some of these other factors that are incredibly important to people?

Speaker 5 And it seems pretty clear to me that there is a widespread understanding today that people are frustrated with the direction that we've moved on this and that they do want to see something change.

Speaker 5 You know, at American Compass, we've tried to ask the question

Speaker 5 a couple of different ways. And what we find whenever we do this is people say, yes, this is a trade-off they want to make.
Yes, they really like that message.

Speaker 5 And so to the extent that you can pull those things, I think

Speaker 5 that is what the answer indicates.

Speaker 1 In the first half of our show today, Vox reporter Eric Levitz talked about how some in your camp hope and believe that the return of manufacturing to the U.S.

Speaker 1 will lead to higher marriage rates, maybe even higher birth rates, more social stability. Is that your hope as well, that this is not just an economic revolution, but a social one?

Speaker 5 Well, I guess I'd start by saying I don't think it's nostalgic to wish that

Speaker 5 we had a society where and an economy where the typical man without a college degree can find a good, stable job that would allow him to support a family.

Speaker 5 And I don't think it's nostalgic to say that we would like more people to be getting married and

Speaker 5 building stable families and raising kids.

Speaker 5 I think those are

Speaker 5 quite noble and worthy aspirations that should be at the center of our politics. And across so many dimensions,

Speaker 5 whether it's other measures of social well-being, whether it's life expectancy,

Speaker 5 various problems we have with addiction and so forth.

Speaker 5 What we are seeing is a divergence that is very closely tied to people's economic fortunes and economic opportunities.

Speaker 5 And if you have a model of economic growth where young men ages 25 to 29 are earning the same wages after adjusting for inflation that they earned 50 years ago,

Speaker 5 I think it's fair to say we need to take things in another direction.

Speaker 1 Oren Cass of American Compass, Oren advises the Trump administration and some on Capitol Hill.

Speaker 1 Miles Bryan produced today's episode, Jolie Myers edited, Amanda Llewellyn fact-checked, and our engineers are Patrick Boyd and Andrea Christian's daughter.

Speaker 1 And a quick clarification before we let you go. On yesterday's show, our guest overstated the relationship between the combat anti-Semitism movement and Project Esther.

Speaker 1 The combat anti-Semitism movement supports some ideas outlined in Project Esther, but has not endorsed endorsed the document itself. I'm Noel King.
This has been Today Explained.

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