It Could Happen Here - The Economics of the Tariff Regime

Episode Date: October 22, 2025

Mia looks at the economics behind American and European steel tariffs to explain the push behind the broader tariff regime and how capitalism works. Sources: https://archive.ph/YUg11 https://foleyhoag.com/news-and-insights/publications/alerts-and-updates/2025/october/eu-proposes-new-safeguard-measures-to-protect-its-steel-industry/ https://www.piie.com/blogs/china-economic-watch/chinas-excess-capacity-steel-fresh-look https://www.librarysearch.manchester.ac.uk/discovery/fulldisplay/alma992976480893401631/44MAN_INST:MU_NUI https://endnotes.org.uk/articles/misery-and-debtSee omnystudio.com/listener for privacy information.

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Lauren Lerosa. Did you hear that exclusive? Lauren came in high. I came in telling the truth. Every day, I'm bringing you the latest in entertainment, breaking down the headlines you can't stop talking about, and giving you my very unfiltered take on the biggest stories in the industry. From exclusive news, and y'all know I got it,

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I am your host, Miaoong. And, oh boy, it has been a big few weeks for tariff news. We have tariff numbers on China that I'm not even going to bother to actually record right now because by the time this goes out, the numbers will probably be different. There are supposed to be major negotiations underway between Trump and the Chinese government to attempt to come to yet another trade agreement and stave off yet another round of 100% tariffs. Now, if you want to follow the sort of blow by blow of what exactly is, going on, I'm going to just sort of refer you to my section tariff talk on executive disorder.

However, comma, we need to take a deeper look at what structurally is going on in the global economy that is resulting in the demand for tariffs in the first place. And I think the place to go, if that's the thing that you're trying to figure out, And we've talked about the sort of ideological aspects of this in other episodes. We've talked about the ways that the sort of politics of fascism, the politics of anti-semitism, the politics of masculinity lead people towards these extremely ultra-nationalist policies that are specifically supposed to sort of protect the domestic blood and soil national industry and are supposed to protect material goods over services. But there are things that are happening structurally in the economy that make it such that people would consider things like the tariffs that have been happening under this regime as a solution to things that are kind of structural problems of the economy, specifically, and this is what we're going to be focusing on today, overcapacity and steel. Now, some of you may be asking, Mia, why are we talking about steel over capacity? And I think there's a few important notes here.

One, steel is in some ways emblematic of American tariff policy. It is, I guess you would call it the most material of the tariffs in the sense that it's the one where there's the most actual direct sort of material forces and direct lobbying groups asking for these specific tariffs. The American steel industry has been lobbying to some extent for some measures kind of like this. Steel is also one of the industries where as tariff rates are fluctuated and got up and down and whole waves of like Liberation Day tariffs got put into place and then removed and some of them got put back into place a little bit. The steel tariffs were set at 50% and they've stayed at 50%

since they were set basically. There's been a little bit of variation sort of before the final 50% number was arrived at, but the steel tariffs had been one of the most stable tariffs. And The reason why it's been this stable, if people can think back all the way to 2018, which I know that was a long time ago, but there was a miniature trade war between the U.S. and China in 2018, and significant portions of it were focused on Chinese steel production specifically. And, you know, this is one of the sort of fights that was had out. Nothing really structurally changed much from those. there was kind of a back and forth, and then both sides kind of pulled back. But, comma, that's not happening this time. And what's interesting, and the reason that I was specifically talking about steel here, is that it's now not just Trump that is attempting to institute large-scale tariffs on steel.

The European Commission for the EU has released a proposal to double tariffs on imported steel, up to 50%, which is matched in the U.S., and also reduce the amount of steel that could be imported into the EU without paying any tariffs at all. And this is actually massive because this is an example of the EU effectively following

U.S. trade policy for very, very similar reasons as the U.S. And if we can get to the bottom of what is going on here, and I promise we will, and I promise this will go towards something that is explaining really, truly the macro dynamics of the entire global economy and why it's fucked,

if we can actually trace out what's going on with these steel tariffs, we can do that. So let's talk about steel overcapacity. Overcapacity as a concept is sort of convoluted. You know, you have to sort of ask the question, what is the quote unquote correct amount of steel because overcapacity, you know, implies that there's capacity to produce steel

over the amount that should be produced. So, okay, how do you figure how much steel should be produced? Eh, very nebulous. It's also very difficult to measure because, okay, we're going to try to measure steel over capacity. There's a lot of ways to do it that rely on things like utilization rates, right?

So you look at the steel facilities, you see how much they're being used at, you see how much excess capacity there is, how many factories are sitting empty, what percentage of the factories, you know, total outputs being used? this doesn't work because the utilization rates of these factories, of this fixed capital, varies seasonally, for example, and it varies due to not just the season, but a whole bunch of other factors, things like, you know, labor supply, weather, demand poles, and of a whole bunch of other factors, utilization rates of steel producing facilities are very rarely at 100%, even in markets where demand-a-strip supply. And this makes it very, very difficult to measure China's actual, quote-unquote, overcapacity.

I am not going to even really try to give numbers because it's extremely subjective. How do I say this? Based on the research that I have done, I think the numbers you normally see in the West are inflated because they are not accounting for things like the weather because it is in the interest of sort of Western research institutions, but for example, Western financial institutions, specifically steel companies, and they're sort of like allied China Hawk, you know, sort of like academics to have the number be as high as possible. You will also see numbers from people who are tied to the Chinese government. And when I say tied to you, I mean, kind of in a loose ideological

sense in the same way that the China Hawks are or the China Hawks tend to actually be more directly connected to the US government. Their numbers are probably also too low, but I don't want to give you the impression that I have a extremely certain understanding of what the exact number of millions of tons of XSDO production is happening. What we can sort of agree on is that there does seem to be some kind of overcapacity in the Chinese economy, right? And this is something that the Chinese Communist Party also agrees on. If you go back to a document that really, really few people in the U.S. have ever seen to have heard of, which is the wonderfully titled Opinions of the CPC Central Committee and the State Council on further promoting the

development of ecological civilization, which was one of the founding documents of Chinese environmental policy and the ideological sort of underpinnings of this thing called ecological civilization, which is the basis of Chinese environmental policy. One of the things that they mentioned a lot is specifically overcapacity, right? They are actually very concerned about the overcapacity of steel from an ecological perspective. And this is sort of fascinating because we'll be looking at some scholars later who are favorably quoted in Chinese state media's sources describing how there isn't actually overcapacity because states say different things in different places and this is in fact extremely. common. But there does seem to be some kind of overcapacity and the Chinese government was to some extent making attempts to reduce it during this sort of period of trade war. Now, the other issue

we're talking about overcapacity is that overcapacity is an extremely political issue now, right? It's extremely weird because Chinese steel lower capacity is like my most niche thing that I've studied. I've had like a paper on this sitting in a drive on my computer. for over half a decade. I have never brought it out until now. But it's become an extremely political topic because the different theories of steel overcapacity have become a basis for a lot of genuine trade policy. Now, I think of a very, very interesting book at Chinese steel overcapacity is from the book, Understanding China's Overcapacity, which is written by two Chinese economists that I think is a really interesting literature survey. This is around about 2018,

but I think what's interesting about it, it's from before the period where everyone in the West had sort of decided what they think caused Chinese deal over capacity. And so you can go back, you know, it's not just useful to sort of go back in time and look at the other theories that were sort of floating ground academia before a few of them got specifically selected for ideological purposes? Now, I mentioned earlier we'd be talking about some economists who don't think that how you steal overcapacity is real. That's these people.

I think that part of their thesis is not very good. I think their survey of the literature on overcapacity, though, is very good. And one of the very interesting arguments they make, this is an argument that's made by a couple other economists that has sort of disappeared from the literature is in argument about, okay, so there's steel production that's happening that doesn't need to happen. I think it's pretty fair to say that something is overcapacity if it's producing a bunch of steel that sits there and rots because no one can sell it,

which is a thing that happens with Chinese steel. And one of the most interesting feces that has really been abandoned, even though I think it is actually, to a decent extent, explanatory, of a lot of very, very weird stuff that happens in Chinese policy circles and a lot of just very baffling investment decisions is specifically something about local cadras and their performance incentives. So, okay, something that's very important to understand about the structure of the CCP is that Chinese government institutions are sort of run by these cadras, right? And so if you are, for example, I don't know, you, you are the mayor of a mid-sized city, right?

You get performance evaluations. And those sort of yearly performance evaluations, sometimes they're less frequent than that. But those performance evaluations rank you at sort of how good you're doing your job. And obviously, there's political maneuvering here too. But if you do a good job of hitting your targets, this is your path to advance upwards in the party and be moved from, you know, like sort of running a small, city to like being brought into cadre in larger cities and, you know, moving your way up the party, moving to national positions. These evaluations are extremely important.

You can also get sort of busted down if your evaluations suck. Again, there's also my politics here too, but these evaluations actually do matter. And one of the issues with these evaluations, and these are also policymaking implementation tools, right? You know, the central government can decide what kinds of policies they want to pursue, and then they can use these cadre evaluations to make people at the sort of local level who are usually semi-autonomous in ways that I think is not very well understood in the West. These cadre evaluations are ways to try to ensure that Chinese sort of local and provincial government policy kind of aligns with national party policy.

And the weighting on these examinations is such that it has very, very weird effects. And what I'm specifically talking about here is that GDP numbers are very, very important to these quadra evaluations. And it matters that it's specifically gross domestic product because GDP is a very, very weird number. And there's a lot of stuff you can do to sort of juice GDP numbers. that aren't really necessarily beneficial to an economy. So you can have a bunch of firms that are basically unprofitable

or doing something that's not particularly economically or socially useful, and that can still boost GDP numbers. And one of the things that happens with this is that you can boost GDP numbers by making a shit ton of steel that nobody actually really wants or uses. And because of the priority that's set on, on GDP numbers specifically, and there's also a whole bunch of these sort of weird financial games that you can play that's also played a major role in the way the Chinese housing bubble has played out, and the way that the government has been unwilling to sort of, you know,

and when I say the government here, I mean both the national governments and also sort of these lower level governments have been unwilling to sort of let a bunch of debt bubbles that they've accumulated pop, because those things prop up GDP numbers and the incentive on the local level is to keep these numbers up. This used to actually be one of the things that people would talk about when they talked about Chinese steel over capacity, but it's complicated.

You can't very, very easily explain this to, you know, like a right-wing Congress person and have them go, oh, yeah, right, this is unfair to the American market. And so it kind of has fallen out of favor and sort of like the explanation to steel over capacity you see in places like the New York Times. but I actually think this is one of the things that does to some extent cause Chinese steel over capacity.

Now, do you know what doesn't cause Chinese steel over capacity? That's right. It is the products and services that support this podcast. Here we go. Hey, I'm Kelpen, and on my new podcast, Here We Go again, we'll take today's trends and headlines and ask, why does history keep repeating itself? You may know me as the second hottest actor from the Harold and Kumar movies, but I'm also an author, a White House staffer, and as of like 15 seconds ago, a podcast host.

Along the way, I've made some friends who are experts in science, politics, and pop culture. And each week, one of them will be joining me to answer my burning questions. Like, are we heading towards another financial crash like in 08? Is non-monogamy back in style? And how come there's never a gate ready for your flight when it lands like two minutes early? We've got guests like Pete Buttigieg, Stacey Abrams, Lili Singh, and Bill Nye. When you start weaponizing outer space, things can potentially go really wrong. Look, the world can seem pretty scary right now, because it is.

But my goal here is for you to listen and feel a little better about the future. Listen and subscribe to here we go again with Cal Penn on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. All I know is what I've been told, and that to have truth is a whole lie. For almost a decade, the murder of an 18-year-old girl from a small town in Graves County, Kentucky,

went unsolved, until a local homemaker, a journalist, and a handful of girls, came forward with a story. I'm telling you, we know Quincy killed her. know. A story that law enforcement used to convict six people, and that got the citizen investigator on national TV. Through sheer persistence and nerve, this Kentucky housewife helped give justice to Jessica Curran. My name is Maggie Freeling. I'm a Pulitzer Prize-winning journalist, producer,

and I wouldn't be here if the truth were that easy to find. I did not know her and I did not kill her, or rape or burn, or any of that other. stuff that y'all said it. They literally made me say that I took a match and struck and threw it on her. They made me say that I poured gas on her. From Lava for Good, this is Graves County, a show about just how far our legal system will go in order to find someone to blame. America, y'all better work the hell up. Bad things happens to good people in small towns. Listen to Graves County. Listen to Graves County in the Bone Valley feed on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. And to binge the entire season ad-free, subscribe to Lava for Good Plus on Apple Podcasts.

Welcome to Decoding Women's Health. I'm Dr. Elizabeth Pointer, chair of Women's Health and Gynecology at the Atria Health Institute in New York City. On this show, I'll be talking to top researchers and top clinicians, asking them your burning questions and bringing that information about women's health and midlife directly to you. A hundred percent of women go through menopause. It can be such a struggle for our quality of life, but even if it's natural, why should we suffer through it? The types of symptoms that people talk about is forgetting everything.

I never used to forget things. They're concerned that, one, they have dementia. And the other one is, do I have ADHD? There is unprecedented promise with regard to cannabis and cannabinoids. To sleep better, to have less pain, to have better mood, and also to have better day-to-day life. Listen to Decoding Women's Health with Dr. Elizabeth Pointer on the IHeartRadio app, Apple Podcasts, or wherever you're listening now. What's up, everybody? This is Snacks from the Trapner's podcast, and we're bringing you the horror every week all October long. Kicking off this month, I'll be bringing you all my greatest fear in.

inducing horror games from Resident Evil to Silent Hill. Me and Tony Bringing Back Fire Team on Left for Dead 2. And we're just going to be going over some of the greats. Also in October, we'll be talking about our favorite horror and Halloween movie. And figure out why black people always got to die first. The Umbro Reliquary invites any and all fooling, brave enough, to peruse its many curiosities. But take heed, all sales are final. weekly horror side quest written and narrated by yours truly with a full episode read and a commentary special and we will cap it off with horror movie battle royale jason versus freddie michael myers versus the aided thing with the little tongue muster

october we're doing it halloween style listen to the trap nurse podcast from the black effect podcast network on the i heart radio app apple podcast or wherever you get your podcast explanations, because I actually think these are kind of important. And I want to talk about one other argument that's also not really used much, that used to be a lot more common, which is an argument that a Chinese economist makes that one of the reason that there's overcapacity in Chinese steel production is that upwards wealth distribution leads to lower levels of consumption and thus overcapacity. And so what this basically means, and this is something that I think is actually also a thing that's been a structural problem in the Chinese economies, that the Chinese economy is

extremely highly unequal. And wages, you know, like they have risen to some extent, but they're not rising anywhere near, you know, like everyone in the U.S. has seen that famous chart of productivity versus like labor gains, right? It's like wage gains versus productivity increases. Wages in China have gone up, they have absolutely not kept pace. with productivity growth and they also

absolutely like have not cut pace with the amount of the profit being produced that is going to a very, very small number of capital owners. And this actually creates a structural problem and this is, we're seeing a very similar structural problem to this in the US

where there is a lot of consumption that if that money wasn't just all going to a bunch of rich people, people would actually be spending it on things. And particularly in Chinese

context, the argument was that if there was a better distribution of wealth, people would buy more houses. And this would actually reduce over capacity because suddenly a bunch of the slack capacity would be being used to build houses, except people can't afford the houses. And this is a structural

problem that economists have sort of known about for decades and decades, which is that China has been for a very long time. The whole thing was that they were trying to transition into a consumption economy, which is to say they were trying to transition into an economy that was fueled by its own internal consumption. The U.S. is, to a large extent, sort of kind of works like this, where, you know, you want to increase the level of consumption, the amount of stuff that people in your country are buying, and this is a way to sort of like create a middle income country, right? And China has historically

not been able to do this, and they haven't been able to do this because they won't raise wages. But, you know, if they won't actually raise wages enough to increase people's consumption, consumption levels, then you're left for structural overcapacity because demand is being lowered because people don't have any fucking money. Now, this is another argument, again, that I think is also probably correct that is very much not talked about anymore because the argument that is used in sort of understanding what's going on with Chinese steel capacity is about the Chinese subsidization of state-owned enterprises at the expense of sort of private firms.

And the argument here basically is that the state is propping up a bunch of unprofitable enterprises and they're holding sectors of the economy that should be, you know, taken over by more efficient private firms, but they can't because they're being subsidized by the government. And this is sort of true, but this became a massive geopolitical argument because the argument from the American side, and when you hear anyone talking about steel capacity. Now, this is the argument that you hear, right, which is that China is flooding the world with cheap steel because there's a whole bunch of like Chinese state-owned industries or just like Chinese businesses are just getting money from the Chinese government to produce steel, and they're pumping

cheap steel to the rest of the world. And this is not really, I mean, like, kind of this is happening, but it's also not the reason why there's large-scale steel overcapacity. and, of course, the argument is that China isn't competing fairly in the market. Like, this is very silly. Markets have never worked without large-scale state, quote-unquote, interference. Like, American companies also get extremely high-level subsidization, et cetera, et cetera, see all of U.S. corn policy. But, you know, this is the political imperative that's behind a lot of the rhetoric coming out of steel producers

and out of the American rights about why there should be tariffs on steel. Now, there's a problem, though, which is that all of these arguments are very specific to China, right? The argument is that there is specifically steel over capacity in China because there's something structurally specifically wrong with the Chinese economy that makes it not a free market. And because of that, China is unfairly competing a global market, and this is why there's so much overcapacity of Chinese steel. This is wrong. There are individual parts of this

where, yeah, like there are things where there is excess capacity being produced by cadre evaluations and by, to some extent, like, SOE subsidization, however, comma, there's a problem. And the problem here

is that overcapacity and overcapacity in steel is not just a Chinese phenomenon. It is a global phenomenon. has been a global phenomenon for a long time, and it is largely a product of the fact that we do not live in a global economy that can actually support the amount of production capacity that exists in the world. This has been a problem really since the 70s and arguably even since the 60s, where as countries rebuilt from World War II and as some sort of developments in global

capital that we're going to be sort of like talking about soon happens that the product of all of this is that production has and this is the this is kind of the thing that the sort of fascist right kind of intuitively understands production has become zero sum right it's very difficult to increase production in one country without having it you know affect production in the countries there isn't enough demand in the market to sort of like fuel all of these things Here we go. Hey, I'm Cal Penn, and on my new podcast, Here We Go again, we'll take today's trends and headlines and ask,

why does history keep repeating itself? You may know me as the second hottest actor from the Harold and Kumar movies, but I'm also an author, a White House staffer, and as of like 15 seconds ago, a podcast host. Along the way, I've made some friends. who are experts in science, politics, and pop culture. And each week, one of them will be joining me to answer my burning questions. Like, are we heading towards another financial crash, like in 08?

Is non-monogamy back in style? And how come there's never a gate ready for your flight when it lands like two minutes early? We've got guests like Pete Buttigieg, Stacey Abrams, Lili Singh, and Bill Nye. When you start weaponizing outer space, things can potentially go really wrong. Look, the world can seem pretty scary right now, because it is. But my goal here is for you to listen and feel a little better about the future. Listen and subscribe to Here We Go Again with Cal Penn on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. All I know is what I've been told, and that's a half-truth is a whole lie.

For almost a decade, the murder of an 18-year-old girl from a son. small town in Graves County, Kentucky went unsolved until a local homemaker, a journalist, and a handful of girls came forward with a story. I'm telling you, we know Quincy Kilder, we know. A story that law enforcement used to convict six people, and that got the citizen investigator on national TV. Through sheer persistence and nerve, this Kentucky housewife helped give justice to Jessica occur. My name is Maggie Freeling. I'm a Pulitzer Prize-winning journalist, producer, and I wouldn't be

here if the truth were that easy to find. I did not know her and I did not kill her, or rape or burn, or any of that other stuff that y'all said it. They literally made me say that I took a match and struck and threw it on her. They made me say that I poured gas on her. From Lava for Good, this is Graves County, a show about just how far our legal system will go in order to find someone to blame. America, y'all better work the hell up. Bad things happens to good people in small towns. Listen to Graves County in the Bone Valley feed on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. And to binge the entire season ad free, subscribe to Lava for Good Plus on Apple Podcasts.

What's up, everybody? This is Snacks from the Trabner's podcast, and we're bringing you the horror every week all October long. Kicking off this month, I'll be bringing you all my greatest fear-inducing horror games from Resident Evil to Silent Hill, me and Tony bringing back fire team on Left for Dead 2. And we're just going to be going over some of the greats.

Also in October, we'll be talking about our favorite horror. and Halloween movies and figure out why black people always gotta die further. The umbral reliquary invites any and all fooling, brave enough, to peruse its many curiosities. But take heed. All sales are final. Weekly horror side quest written and narrated by yours truly.

With a full episode read and a commentary special. And we will cap it off with horror movie battle royale. Jason versus Freddie. Michael Myers versus the 80 thing with the little tongue must. October, we're doing it Halloween style. Listen to the Travener's podcast from the Black Effect Podcast Network on the IHard Radio app, Apple Podcasts, or wherever you get your broadcasts. In early 1988, federal agents raced to track down the gang they suspect of importing millions of dollars worth of heroin into New York from Asia. We had 30 agents ready to go with shotguns and rifles and you name it.

But what they find is not what they expected. Basically, your stay-at-home moms were picking up these large amounts of heroin. They go, is this your daughter? I said yes. They go, oh, you may not see her for like 25 years. Caught between a federal investigation and the violent gang who recruited them,

the women must decide who they're willing to protect and who they dare to betray. Once I saw the gun, I tried to take his hand and I saw the flash of light. Listen to the Chinatown Sting on the iHeartRadio app, Apple Podcasts, or anywhere you get your podcasts. So why is there not enough demand to fuel the amount of supply that would be necessary to make there not be overcapacity? The answer to this in sort of Marxian theory is that, as they sort of put it, overproduction and underconsumption are doubly constructed.

I'm going to read a quote from N-Notes Volume 2, and then we're going to explain a little bit what that means. The wage allocates workers to production, and at the same time allocates the product to workers. So what that means is that under-consumption and over-production are in effect the same thing, right? Because the way that we allocate workers to what thing they're going to do, and at the same time allocate products to those workers

is the wage, which is one thing. So overproduction and underconsumption are the same thing, right? And they're caused by the same structural elements of the wage relation. Now, this means that the Chinese capacity crisis is actually part of a larger crisis, right? You know, the thing about the double construction,

you know, of overcapacity and under consumption, right? the fact that they are really the two things that's unified in the fact that, like, your wage allocates, what kind of production you're doing and what you can consume. The fact that both those things combined are realized in the sort of secular crisis in what's called Marx's absolute general law of capitalist accumulation. So what the fuck is that? The short version is over time in capitalist economies, there's supposed to be an increase of what's called the organic composition of capital. Basically, the organic composition of capital is a way to measure how much in the

labor process is like fixed capital to variable capital. So it's like how much factory is there relative to the amount of worker there is. And Marx's thesis, which has generally been borne out, although we'll talk a little bit about that more later, is that this composition is going to increase. And as it increases, accumulation also needs to increase in order to maintain a employment levels. This is sort of accomplished by things like automation, which reduces the size of the labor force. And thus, to quote end notes again, as accumulation proceeds, a growing superabundance of goods lowers the rate of profit and heightens competition across lines, compelling all capitalists

to, as Mark said, economize on labor. So basically what this means is like as capital gets turned into more capital and larger amounts of capital. This is the accumulation process. As this continues, right, you get this massive sort of increasing the amount of goods that are being produced. Eventually, that lowers the rate of profit in a sector. And eventually what that does is, you know, in order to sort of economize on labor, capital increases the amount of automation, reduces the amount of people that they need

in the labor process. You know, this is what's generally known as automation and the sort of crisis of people getting kicked out of the jobs because of it. As this process is sort of generalized across sectoral lines, across different parts of the economy, the relative demand for labor decreases and workers are spit out of the wage relation, which is the fancy Marxist way to say they become structurally unemployed. And, you know, the thing that happens when you get kicked out of the capitalist wage relation is you get kicked into informal labor and slums, which, you know, decreases demand and increase overproduction at the same time overcapacity.

is skyrocketing, right? Because you have increasing numbers of people who have been spat out the formal economy, who no longer have access to regular wages. The wages they get in the informal economy are less than the ones they would get in the formal economy. And as we were saying, right, access to like the wage both determines production and consumption. So if you lose access to the wage, right, and there's still more stuff being produced because of automation levels, what you get is a massive skyrocketing double increase of overproduction and under consumption, right because there's just not enough money to fucking buy the stuff and the result of this is emiseration everything gets fucking worse this sort of used to be an academic argument it is no longer

an academic argument it is just the terrain on which economic policy unfolds now the emiseration thesis is this is you know as a sort of like general law of of capitalist accumulation is called has been argued about constantly there have been ways that has been avoided one of the biggest ways traditionally has been by capitalism sort of transforming goods into services. So, for example, like the operative example, if this is the transition in the U.S. from rail lines to cars, something that N.N.S. points out. So, you know, you get these new industries that are both labor and capital intensive by replacing train with car. You know, you can absorb huge populations of workers as well as incorporate the peasantry into

the industrial economy by sort of like converting these things into services. This has sort of been well, the economy has been increasingly converted into a service-based economy of various kinds. That's kind of what's happening now. And you can see this process that work in the Chinese economy back when it was, you know, really growing in the 90s and 2000s. But, you know, once the peasantry had been absorbed as sort of both a new market and a new labor force with lower cost of reproduction, because wages are cheaper for a bunch of structural reasons, the old tendencies of capital set in. And so what happens inside of China was what was happening everywhere else in the world, which is that as labor-saving technology begins to be implemented, and, you know, a bunch of

services refused to be turned into new goods to, like, bolster the ranks industrial working class, you know, you get what's happened in the U.S., which is this full transition to service economy shit that doesn't actually really grow. And, you know, if you look at Chinese growth rates, like they've been slowing for a decade, actually a little bit longer for a decade. Actually, a little bit longer than a decade. And so, you know, as China was integrated into the global economy, it, too, became caught in this cycle of industrial booms where, you know, you get an industrial boom where you have a country with favorable exchange rates to the U.S. dollar that inevitably sets off, you know, the economies on the bad end of the exchange rate to collapse as they're

forced to bear the way to global overcapacity. As I've mentioned, 100 billion times on this show, it is the one thing I will make sure every it could happen to hear, listener, will be able to explain the Plaza Accords and the reverse Plaza Accords. You know, but this is sort of what the reverse Plaza Accords and the Plaza Courts were about was the U.S. This is the last

time the U.S. tried to use its just sort of like pure political power and military might to be like eat shit, I'm going to force all of your countries to fuck with your currency so that our manufacturing economy will come back. And again, the U.S. did that

successfully and the Japanese economy collapsed because we need cap Japanese economy to do it. Right. And to some extent, Trump is attempting the farce as farce version of this with these steel tariffs, right? To some extent, these tariffs are his attempt to pull the Reagan maneuver of, okay, we can just, like, force other countries to lower their capacity and increase our capacity at their expense. The problem is that, again, this production is zero-sum, and if you do this, it will annihilate the rest of it. of the global economy.

And this is the sort of context behind all of the stuff that we've been seeing for the last, like, 30 years, which is that actual profit rates have been collapsing for ages. And right now we're in the middle of a just unbelievably, hideously, staggeringly massive bubble that is maintaining the sort of last, like, fake vestiges of economic growth, where billions and billions and billions of dollars have been sunk into all of this AI bullshit and it's, you know, like tech driven AI is a significant

specifically, specifically the AI stuff is a significant portion of total U.S. economic growth if you want to listen to why that's all going to go to shit, turn on effectively, literally any episode. Of course on Media's own

Ed Zitron's podcast, better offline and you will hear a lot about this. But, you know, this has been that tech has been sort of the escape strategy of the United States. Traditionally, it's going to implode, it's going to do tremendous damage to everyone. But in the remains of that,

and in this world in which profit rates are declining, and in this world in which increasing portions of the population are being spat out of the capitalist production cycle, in which increasing percentages of the world population are being kicked into an informal economy, and in this world of generalized,

overproduction under consumption. What's happening is that there's an enormous effort to get everyone to think that this is because of very specific tendencies of like the bad government over there. Right? That, you know, overcapacity in steel, oh, it's just

because the evil communist government in China is cheating at capitalism by giving their company's money. And so we're going to do tariffs on them instead of that. And again, like, it's easier for these academics to make this argument because there is kind of stuff going on, right? Because there is this sort of cadre evaluation stuff, because there is to some extent

state subsidization of steel production, they can present this boogeyman to sort of pin what is really a global overproduction and under-consumption crisis on to just, you know, it's just this government we don't like, and then you can sort of implement these ultra-nationalist tariff policies. It's a way of deflecting the blame from capitalization. on to another country and using nationalism to paper over the actual economic contradictions of capital. And if you want to escape that, it's not enough to sort of just get rid of Trump and go back to the previous free trade regime.

You have to actually structurally change the thing at the center of all of this, which is the wage relation, right? You have to fundamentally change the fact that this economy, the entire economy, is based on there being classes of people who make money from owning things and that there's an entire class of people whose labor is stolen every single day so that those other people can make money by owning things who do all of the actual work.

And that's what's actually fundamentally at stake here. It is this question of, are we going to continue to do tariff bullshit or are we going to take power from the people who caused all of this? from Trump, from Elon Musk, from all of the billionaires, from Thiel,

from all of the tech billionaires that funded them, from all of the Republican Party Koch Brethren networks, are we going to destroy these people completely by getting rid of the social relations of capital

that make this all possible? Or are we going to sit here and let them continue to produce AI videos of them shitting all over us while they take all of our money and commit an ethnic cleanse and continue to fund genocides abroad.

It Could Happen Here is a production of Cool Zone Media. For more podcasts from Cool Zone Media, visit our website, coolzonemedia.com, or check us out on the IHeart Radio app, Apple Podcasts, or wherever you listen to podcasts. You can now find sources for It Could Happen here listed directly in episode descriptions. Thanks for listening. Johnny Knoxville here. Check out Crimeless, Hillbilly Heist,

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