Sharp Tech with Ben Thompson - America and the Trade Status Quo, Tariffs and What May Come Next, A Chance to Build in Tech and Beyond

Episode Date: November 22, 2024

Talking through the evolution of the modern trade landscape, the implications of tariffs under a new U.S. administration, and Ben’s article on Monday, A Chance to Build. Topics include: the realities that are prompting change, China’s growth in hardware and software, TSMC and Trump, the future for Waymo, and more.

Hello and welcome back to another episode of Sharp Tech. I'm Andrew Sharp and on the other line, Ben Thompson. Ben, how you doing? I don't know. I don't know, Andrew. I don't know how I'm doing. I literally just walked off a plane, 30 minutes from plane to hotel room. So I could record this podcast.

But you know what? I was just getting up to grab something while we were starting to record. I left my headphones on, knocked my coffee off my desk. Mm-hmm. Sounds like a bad sign. I mean, it definitely, it literally sounded like a bad sign because it all happened off screen and there was an expletive involved on your hand. Hey, this is a family friendly podcast. Family friendly, absolutely.

The coffee flew off the desk and landed directly upside down without the top coming off. And so only a small amount spilled out. I mean, that's a good sign. We got to push forward. We got to make it happen. Absolutely. a good omen for the remainder of the podcast, as Ben shakes off the cobwebs after a 13-hour flight. Here we are.

It's great to be here. And we're going to be talking through Monday's Stratere article, a chance to build, which was all about the implications of potential tariffs for both U.S. tech companies and the world in general. I have 10 questions for you, Ben. Question number one. There has been a lot of talk about tariffs and tech over. the past several weeks. Was there any aspect of that conversation that prompted you to write this article now? Is there something that you think people are getting wrong as they model what tariffs might look like? Well, I actually had pushed back on that. I don't think there's been that much talk

in tech about tariffs and sort of the implications. And I think that's, I think it's interesting for a few reasons. I mean, I think just in general, you know, globalization, which, you know, was also what this article was about is very much a tech story. I mean, there's a tech enablement story, which is things like containers or the 747 or international communications, all of which made this new world order sort of possible. And there's also, I think, an underappreciated aspect to which tech drove globalization. Like I opened up with the story of Fairchild semiconductors or a predecessor to Intel, like very early within a number of years, realizing, We cannot do test and assembly economically.

Like the way chips used to be made, you know, you would actually manufacture the chip itself, but then to attach it to the substrate, you actually had people with microscopes like attaching wires, like one by one. And it's interesting because you always talk about chips in this story that, oh, this is, you know, or I do anyway, this led to software. What did the venture capital industry? Because you designed a chip once, it's a lot of work.

you set up the manufacturing process, but then it's like a zero marginal cost product. And that's the case today where stuff is very highly automated. One of the reasons that like TSM can be persuaded to open fabs in America is because there's not that much labor involved in the actual process today. But back then, that wasn't the case. And so very early, Chip, you know, the first one Fairchild and Somervic Director went to Hong Kong. Texas Instruments went to Taiwan. and then Fairchild extended into Singapore.

And there's a bit where tech's been sort of cheating from the very beginning and building up this worldwide global network primarily centered in Asia to make the economics of tech possible. And, you know, that has long-running sort of implications, the biggest of which is it's hard to tell the honest story of tech without including Asia. And people, some people got grumpy. I kept referring to Asia. Like, oh, there's lots. Asia's very large. Lots of different countries.

Number one, yes, I know. I live there. familiar with it. But it is complicated because some of it is a China story. Some of it is just sort of an Asia story generally. But this is a sort of a big deal for tech, both historically and also sort of going forward. That's all number one.

Number two is the name of the article. a chance to build is obviously a reference to Mark Andreessen's. It's time to build. The article he wrote sort of a couple years ago, exhorting folks to like, we can't do anything in America. Honestly, it was a phenomenal article.

I remember early days of COVID and thinking to myself, yeah, it has been a really long time since America was actually building things. Right. And, well, and, you know, there is,

you know, people are talking about like a vibe shift or whatever. And this is, this has been happening in tech, even before the election. Like there's just been a lot of energy in things like particularly down in the Los Angeles area, you know,

surrounding SpaceX. You have a lot of SpaceX folks that are now spinning out and starting their own things. There's a lot of national security companies. Like Androl is obviously a headline example. But there's a bunch of sort of national defense oriented military startups that are coming up. We've talked about it on this podcast. You know, you've referenced that, you know, the talks I've had

with Gregory Allen about these sorts of areas. Like these, this is something that has been happening. And there's just, I think, I think it's a good thing that's happening. But this is sort of a, look, let's take a sober look. Like, there's a lot of challenges that are going to be entailed in this. And I do think changes need to be made. And I hope folks will push through and make stuff happen. But it's, you know, it's going to be a hard road. And I think from a trajectory perspective, like I just try to say what's going on in the context of hoping folks push beyond that and then sort of do more. And there was actually a tie-in to sort of coincidentally,

the interview I did this week with Bern Hobart, where he wrote this new book called Boom. And what was so interesting about this book, it was like about bubbles. And before I read the book, I assumed it was going to be like an extension of Carloa Perez's technological revolutions where she sort of made the economic case for the positive outcome. come of certain bubbles is all this sort of build out, right? And what was interesting about his book is it wasn't really sort of like a technocratic treaties like I expected. It was like a call to action.

It like very explicitly invoked almost like the religious metaphysical aspect of bubbles and why that's important. And to me it's a very good sort of compliment to there's going to like it's going to be a tough thing to do, but I think it's a necessary thing. and just sort of I wanted to lay out the lay of the land. And that's sort of the context. The Trump election, the fact that tariffs are coming, we don't know what they're going to look like. This is all context for this.

But also there's an aspect of the last few months of this sort of general vibe shift and people wanting to do it. And that's what I was sort of hoping to tap into. Yeah. It's funny. I have not read Bern Hobart's book, but that sort of spiritual sense, that's what I took from Andresen's essay. three or four years ago. It's like this spirit seems to have been absent from American life over the last several decades, and I would like it to come back. Number two on my list here of questions. Can you explain to people what was agreed upon in Bretton Woods, New Hampshire in 1944?

It's an aspect of U.S. foreign policy and just the structure of the entire world that I wasn't familiar with until reading about it a couple years ago. So can you give people, a cliff notes of what the world used to look like. Yeah, I mean, I want to tread carefully because I'm not an economic historian necessarily, but I do think just the by and large, after World War I, you had this economic chaos where you had these countries that were destroyed by the war. You had other countries that were not. And you had, you know, an attempt to start, trade disputes, yeah, you attempt to restart the world's

economy. Everyone's like depreciating their currency to make their, their competitive. And just there there's a real strong sense that we don't want to make the same mistakes after World War II. And particularly amongst the U.S. I think the U.S., and this is sort of my read on this situation. I'm not sure, I'm sure I can find some historian to agree with me, but my view of history of the end stages of World War II was a lot of U.S. foreign policy was predicated on Europe, sick of this, we've had to bail you out twice, it's not going to happen again. And there were a lot of things that happened, I think, that was the goal. That was the focus is we're not going to have war, particularly war in Europe ever again. And you do, as sort of a testament, you see vestiges of

this in foreign policy today. Part of this was like the EU, for example, very much a creation, an American creation. Obviously, there were Europeans that pushed for it and wanted it, but the U.S. absolutely was facilitating it and pushing for it, in part because this idea that economic union is going to make it, particularly between France and Germany, is going to ensure that they won't go to war in the future. Particularly, and it started, like, the European Union came,

whatever, the European, I can't remember what it was called, with like a steel arrangement, where they basically work together to produce steel. steel is really important for war and if France and Germany are dependent on each other to make steel it's going to be very hard for France and Germany to go to war right? And so there's just this general

there's a lot of decisions that went to this and Bretton Woods was absolutely part of this and basically the agreement was at that time almost everyone was like out of gold and the US had a ton of it in part because the US made everyone particularly the UK pay for all their stuff

Now, this is a whole complicated, controversial area to what extent that the UK have to pay and the USSR did not have to pay and what drove those decisions and things on those lines. But the net result was the U.S. basically had all the world's gold and you were just asking for the same sort of chaos after World War I. So the U.S. basically imposed this order, which is everyone's currencies is going to be fixed to the U.S. and the U.S. is backed by gold. And so by extension, everyone else is backed by the U.S. gold, like via the U.S. dollar. And this was, and it worked. It worked in the sense of maintaining stability. It worked in the U.S. sort of opening up their consumer market to particularly European and Japanese sort of producers. Right.

So one of the, you know, who had this huge cost advantage, right? They had, because they had nothing. So they had cheap labor. They obviously had the longstanding sort of capabilities that was all destroyed in the war, but they had the ability to sort of make stuff. And it really worked. Like all the, you know, the extent to which traditionally our closest allies, particularly from a military perspective, ended up being West Germany and Japan, is actually pretty amazing. Yeah, absolutely. So a lot of this stuff deserves a lot of critique.

And in 2024, there's a lot of things to. criticize, but it's really important to have the context of why these decisions were made, why they were, and sort of how they worked out. And so under this system, basically the U.S., this was the establishment of the U.S. dollar as reserve currency. People point to that as when Bretton Woods fell apart, but actually, no, it actually started before because that's when all the currencies were linked to the U.S. dollar, and the U.S. dollar was nominally backed by gold.

So when Brett Woods fell apart in 1971, One, what fell apart was the linking to gold. But it was already established that the U.S. dollar is sort of the, that's the trading currency of the world. And what that enabled was you had the situation where countries made stuff. They sold it to the U.S. market. Again, the U.S. not destroyed by war, huge and growing population, you know, very wealthy, even back then, would buy all your sort of stuff. So then these countries have all these extra dollars. And in like a normal, like classical economics thing, what would happen is the U.S. would sort of depreciate.

The currency would depreciate because you have this misbalance of this sort of account misbalance. But that wasn't allowed. Bretton Woods didn't allow the U.S. currency to depreciate relative to these other countries. So they had all these dollars that were really valuable. And you had dollars more valuable than they should be that they converted just to, U.S. treasuries. And so the U.S. got all the, and so the U.S. could start running deficits. And

this, you got into a state, now technically the limitation of running deficits was you had to have gold to back it up. Right. And so the U.S. gets in the 60s. We're paying for the Vietnam War. You have the huge expansion under Lyndon Johnson of like sort of the social welfare

bits, Medicaid, and all the pieces that came with that. And the problem is that this story that the US dollars backed by gold stopped sort of being credible because there was just so many dollars out in the world and they're multiplying.

And so basically the abandon of Breton was abandoning the gold peg. And that triggered things like inflation. That triggered things like currencies could start moving against each other more. There was a depreciation that happened to an extent. But this overall system persisted. You had established this general trading system that was mediated in dollars. You had this cycle going on. And you had this bit where to

keep the whole thing working, you needed security. I was going to say, that's the key component. Everybody was willing to participate. We'll take care of the security, right? I mean, this kind of ties into like the criticism of NATO. Like, on a, on a narrow objective level, yeah, it's nuts the US pays basically all of NATO and now these countries pay anything. You forget that the U.S. was very, okay with that for a long time because they didn't want these European countries militarizing and fighting with each other. And so there's a bit, we

will pay for the security. But by the way, we're not really paying for security all over the world. You're paying for the security. We're paying for the security with debt. The debt is which is the dollars that you have acquired by manufacturing stuff and selling it into our market. And so

it's this sort of like circular bit and so again, it worked. I was going to say, There is room for criticism with the structure that emerged, but at the same time, there has been a time of relative peace over the last 70, 75 years that is borderline on precedent. It's been the most peaceful. In world history. Yeah, it's important to keep in mind. Like, like, it did work.

Right. Well. The problem. Sorry, am I jumping? No. Sorry, I'm about to go to question three. The question three. In terms of where we are now, you wrote on Monday, the big loser.

in the post-World War II reconfiguration I described above was the American worker. Yes, we have all of those service jobs, but what we have much less of are traditional manufacturing jobs. What happened to chips in the 1960s happened to manufacturing of all kinds over the ensuing decades. And then downstream from that comment, you mentioned a conversation between Steve Jobs and President Obama in 2010, where jobs told Obama that Apple, needs 30,000 engineers to manufacture products in America. So to put this in tech terms, how does Apple's manufacturing experience relate to where we are today?

So the problem is U.S. manufacturing was just fundamentally non-competitive. Like just purely from a wage perspective? Yeah, from a wage perspective. And again, we think about in terms of China today, it wasn't competitive with the Germans. It wasn't competitive with the Japanese. Now, they got richer and then nominally became more competitive, but then you just had it moving on to sort of other countries. And, you know, the problem is that so you have this cycle going on of the U.S. basically printing dollars, particularly post Bretton Woods, like once it was completely unlinked from gold.

And there's these charts you see of this massive growth in the U.S. in employment in areas like government jobs, in areas like health care. and sort of the service sector broadly. Those are two really big categories. And it's like a direct replacement for all these manufacturing jobs. So you had this money being printed and cycled in the economy. So it's not like people were getting poorer.

In fact, the U.S. consumer is as rich as ever. The U.S. consumer still powers the world. And by the way, those social programs help with this. People aren't afraid to spend because there is a fallback. Like if you lose all your money, there is Medicaid. If you get old and save anything, there is Social Security. Now, I'm not saying that's like an amazing life per se,

but it does exist in a way that it does not exist in a place like China. Like in a lot of these places that are, they're criticized for the consumer market not spending sufficiently and saving too much. Part of that is a lack of a social safety net. So people say, oh, China needs to institute a better social safety net. It's like, well, number one, is that going to be credible? But then number two, it just ties into this system. the U.S. has leaned, and it's not the way people think about things. It is a certain, I don't want to say communist, but more, the U.S. is more socialist

in this aspect than is appreciated. It's kind of like how the NFL is the socialist sports league. And it does make for a better product because any team can win. And the Kansas City Chiefs or the Green Bay Packers can be not just as big, but some of the biggest franchises in the sport, despite being in small towns. Versus we talked last time about the NBA, the Lakers. are just, they have the most fans, they have the biggest RSN deal,

they have all these advantages that it's just a hard thing to sort of deal with. This is an aspect of the U.S. because of the socialization of the safety net in the context of this market and the charge that was given to the Federal Reserve in particular

of maintaining full employment. And so you have this sort of system going on that just doesn't make the manufacturing viable. And it does, into these other jobs and you're buying cheap stuff from places that have lower labor advantages. The problem is those places with lower labor advantages like a China. You start manufacturing in China in like, you know, the 80s. And they're really bad at it, but they're cheap. But the problem is that a lot of this like comparative advantage analysis is kind of static in time. And there's a

bit where you move down a learning curve. Yeah. Like you lose the learning curve. And China has gotten better and better at manufacturing. And today, the Chinese worker is not cheap. They don't have really a labor advantage. Not cheap and more skilled than American workers if you're trying to manufacture iPhones in 2024. Exactly. So you build up this capability.

You have this density of manufacturing. You have this ability. Again, it starts with doing stuff like connecting little wires on chips. But you develop skilled workforces. You develop engineers. why do those develop? Because there's jobs, because that's the opportunity

sort of in your economy. And so the reason I brought up that conversation with Steve Jobs and President Obama is it's so striking to me how I think jobs is a little self-serving. And honestly, Obama comes across is pretty naive in not understanding

why are there no engineers. And this idea that, oh, if we could just train up some engineers, Apple's going to move their manufacturing back is completely backwards. If there were jobs, if there were opportunities to do that, the engineers would materialize.

And the reality is there isn't because the manufacturing of an iPhone and those production engineer jobs that jobs was talking about, those are downstream. The iPhone is starts production in 2007. That is downstream of two, and a half decades worth

of developing expertise and capability in China and not developing that expertise and capability in the U.S. And again, the other thing about an iPhone is it is very labor intensive. Like the final bits are taking all the pieces and putting them together. And actually for a long time, for the first half of the iPhone trajectory, China captured a very small part of the value of an iPhone. So number one, Apple captured the most. They do all the design. They get the profit margin, all those sorts of things.

And by the way, this is an important factor. economically speaking, this is worked out very well for the U.S. Okay? We make the most money from all this sort of stuff. That's the advantage of being on top. We being American companies or American consumers that are able to purchase iPhones at a reasonable price. The American economy generally. The American companies make the most money. The American consumer gets stuff way cheaper than they might have otherwise.

It's just all a win-win for America. The other big winners are in the early iPhone where all these. other Western economies where I think I've talked about this before but China because they had China was actually because China came up in a free trade world relatively speaking they're also kind of warped in their economy

and they the comparative advantage for them was cheap labor and so all of their expertise has been in these sorts of areas even once the labor got expensive they developed so much capability so much density they do so many different pieces it's all right next to each other You can go to Shenzhen, and in like 100 square miles,

there's basically every manufacturer of anything you could possibly need to make anything you would want to. It's incredible. And so they developed all this. But meanwhile, you had manufacturers in Germany, for example. You had manufacturers in the Netherlands, or you had manufacturers in Japan or South Korea or Taiwan, who were not competitive on a labor advantage. So they focused more on capital-intensive sorts of things. Yeah, and IP.

So you have things like jet turbine blades. China still struggles to make stuff like that, right? Chips. China struggles to make stuff like that. This is all capital intensive, IP intensive, tacit knowledge, sort of intensive capabilities that these other countries focused on because they couldn't compete on the labor stuff.

In China was actually quite an open economy during this time. And every marginal factory owner opening a new factory, am I going to buy a bunch of capital equipment and do high-end stuff? No, I'm going to figure out what I can do with a bunch of workers and plugging into this sort of network. And so for the iPhone, you actually ended up that the U.S. captured the most. Taiwan captured a fair bit because of the chip. You had, there's a, there's a, I wrote once about the relative market cap of this company called Larkin Precision

that made like lenses for the iPhone compared to Foxconn, which manufactured the phone. And everyone knows about five. Oxcon, they employ like millions of people in China. There's like a million people that make iPhones. And they weren't worth that much more. It was actually very comparable to Lark and Precision, which just made lenses. It's a tiny little company in Taiwan because the differentiation IP drove that. The challenge is, and that China is presenting, particularly in the last few years,

China's share of the iPhone's gone up a lot of the value because they are moving up the chain in terms of the capabilities of doing the components. of the iPhone. Right. I mean, China, to its credit throughout this multi-decade evolution, China has learned to move up the chain in terms of what they're producing. They've learned from some of the Western companies that have been manufacturing there and they're indigenizing various aspects of these industries and can now produce them itself. Yeah, well, the other thing that that is underrated, I think, is the great firewall. So what are the ways where the U.S. continue to dominate is they moved up into software.

And so if you have a high-cost labor force, but that cost is going into R&D, and like you don't need, like, yes, you have operational workers that are maintaining the server so Google and Facebook can run. But by and large, the way the cost works is all the cost of the labor goes into developing the product. And then the product is sort of served to everyone.

This is the whole zero marginal cost aspect that I talk about. This is a great place for the U.S. to play because the labor costs don't hurt them that much. And the relative richness and the ability to pay more is, here, for manufacturing stuff, it's paying less that is an advantage. In the U.S., when it comes to software and the leverageability of software, paying more is the advantage. And so the U.S. doesn't just sort of have this that slots into this new economic system.

It's a magnet. Anyone that wants to make money, you know, particularly if you're in tech, get to the U.S. And there's other discussions about sort of dynamism and entrepreneurship and things along those lines. But if you're just a really solid computer engineer, where would you want to work? Of course you want to go work in the U.S. You're just going to make way more money sort of doing it. And so the internet comes along. And the internet, there's no tariffs.

There's no borders. It's just the Internet. It's a completely different thing. And the U.S. just completely dominates the Internet. The U.S. dominates the Internet to a far greater extent than any country has dominated anything. And we've talked a lot about that with one exception, which is China. And the reason is China, for political reasons, wanted to keep U.S. tech companies out of China. They didn't want the free flow of information.

So they built this great firewall, which was mocked endlessly, by the way. You know, like Bill Clinton talking about, oh, you're trying to nail jail to a wall. Good luck with that. Jokes on you, Bill. I mean, all this stuff, all this stuff started under Clinton. And then the Bush and Obama administration, it was just a continuous threat. There was no real revisiting any of this thinking, frankly, until Trump. And so that's just sort of one category there.

And China builds this great firewall. And the economic implications of that were actually pretty profound. And I would make the case the Great Firewall is one of the single best arguments against free trade orthodoxy. China has benefited tremendously economically. Set aside all the political angles. The Great Firewall is one of the single most important things China did for their long-term economic outcomes. And the reason is by building the Great Firewall, they created a market independent of U.S. tech companies.

And so they developed their own tech giants. And you develop tech giants. There's lots of capabilities you get around. net. And they had a market opportunity for quality engineers and quality building sort of things. And so now where that's starting to pay off is you have like, say, Chinese electric vehicles. And the way that China, the electric vehicles are built are different. They're like platforms. They're closer to computers. And then software goes on top. You can be a Xiaomi and you can contract with an auto manufacturer. You make the design. You do all the software, all the tech.

another company builds it. Huawei does the same thing. They have three different companies they work with because they have three different lines of autos. And so it's actually... It's a crucial distinction from traditional cars, which America has dominated. America and Germany and Japan

have dominated for 100 years because there are 150 components that go into making a car or whatever the actual number is. No, there's like 30,000. Okay. Bad estimate by me. But the point is, there are lots of components that go into making a car. Just multiple orders of magnitude wrong.

That's amazing. Well, it's more like learning how to make chips, making like traditional auto manufacturing, whereas the EVs are simpler and China has been able to excel, frankly, without any of the world noticing. This sort of emerged out of nowhere a couple years ago, and they are now a powerhouse. And it would have been harder to do that. with traditional cars. Well, the big thing, though, is, is in the long run, the sort of profitable trade for tech

was Asia made the hardware, we make the software, and there's more margin in software, and that's where the differentiation is driven. The tech is commoditized, and you saw this happen with computers. Like, computers used to be made in the U.S., and then they sort of, and that they're not made to the U.S. anymore. They are, you know, and you see this, you saw this happen to lots of, lots of industries where they would hand off the OEM to an Asian manufacturer. The Asian manufacturer would ladder up into being an ODM where they would design the whole thing

and then the other entities sort of slapping their logo on it and doing the selling and marketing. In hard goods, this has been a disaster for a lot of these companies. They're now completely beholden to their Asian suppliers. They're losing pricing power and they're losing sort of and they're susceptible to competition. where, you know, their supplier could start selling their own thing and where are they going to do? Because, like, they're sort of stuck. I mean, that's literally happening with a lot of Chinese companies in a lot of different industries right now. Like, I mean, there were technology transfers that were part of it.

There's IP theft. Okay. But set aside the technology thing. It's really bad if you don't have technology because then it's just, it's just the whatever it is, like the hard good. When you get to technology, the U.S. maintained its position because, the software was highly differentiated and it was like a network effects and all the things that we talk about with

software. The problem is that when it comes something like cars, China because of the gray firewall developed massive software expertise. Now they can ladder up not just to an ODM but all the way to the full product where it's a hardware product with differentiated software on it

that can go out into the world. So they have the whole stack. And the challenge in this whole trade is it's easier to go up the stack than it is to go down. And the U.S. by and large has really kind of, again, we got into this system for a good reason. The reasons for which we got into this system succeeded. But the reality is we're now 50 years behind a different eight ball. We were worried about one eight ball. Now there's another eight ball. And the U.S., you think about the possibilities in the worst case scenario, say a war with China.

And yes, there's a bit where if we have to, like, we didn't have all the manufacturing capability we needed before World War II. World War II in particular is an interesting one because the U.S. didn't know how to make any planes or ships or any of this sort of stuff. And so people point to that, say, look, we wrapped up then and we can do it again. The U.S. didn't know how to make cars. I was going to say, who was the biggest maker of airplanes? We had a lot of manufacturing at that point.

We just repurposed it. No, Ford became a plane maker. Right? Like, like, like, and so the concern, what is probably underappreciated is this whole chain, this whole learning curve of expertise. And this gets into just the, the broader overall challenge, which is it's not economically rational to change it, right? Like the, the, it works very well the way it is until it doesn't. in which case here everyone's just kind of screwed. Well, yeah, I mean, I had a question on here.

Would any of this be worth considering, if not for the threat of war with China and Xi Jinping? Is there a quick answer there? Well, no, there's not a quick answer in some respects because it just starts to stray far beyond sort of tech. Yeah. I think the question and this gets at sort of our general sort of political moment, is this sort of, you know, Yes, we've constructed a world where everyone is actually super rich and everyone's also very unhappy. And, you know, is this the sort of economy that are we missing something when we just measure GDP per person, particularly in the context of inflation and things along those lines? Is there something to, this sounds so cliche, like the dignity of work or actually making things in all those sorts of pieces?

I was going to say, yeah, no, the national spirit. the national identity. I mean, you talked about the system, the Bretton Woods structure being a win for America, a win for American consumers, American companies. Globalization was obviously a win for China, a win for a lot of workers in China. I mean, the collective wealth has skyrocketed over the last 40 years. By the same token, it is a unmitigated loss for American workers, you know, and like the narrative here was all rooted in language about democracy and freedom and unifying the world. Just to be steel manned this and they'll say actually people are making more money than ever, which to an extent is true. And yet something seems to be missing, right?

The interesting thing about this system that I think people miss, people like, well, globalization is going on forever. For hundreds of years, trade's always been a thing. The way it used to work or like the Industrial Revolution sort of colonial sort of era was countries would go out and they would get raw materials. they'd bring them back to the home country to manufacture them, value add, and then they would sell them to the whole world, right? And so, but the key thing is, was going out, getting the raw stuff, bringing it in, value adding at home, and then sort of selling outwards.

What's marked the last 50 years of globalization has actually been the opposite. It's been the moving out of the value ad. And what stays home is like the design and the marketing. And it's just been this entire. sort of virtualization of the economy. And part of this, by the way, one of the big shifts, particularly since Brentwoods would away and the gold standard would away, is the U.S. financial sector's massive growth as a portion of the economy as measured by GDP.

And it makes sense. What we just described is this massive sort of financial arrangement where these dollars are just moving around in a cycle. They're sort of pushed out into the U.S. economy via all these programs and these jobs. and then they use it to buy stuff that goes to these other countries and they buy our debt and then funds our military. Like the U.S., it's all financialization and software. Like that is really the U.S.

And all that stuff sits on top. And so we collect all the benefits. But it's a great system until software. That's part of the problem is like these policies amount to an upward transfer of wealth in America and had people known that that's what it was going to look like 40 years. ago, they would have been massively unpopular. And again, it was sort of laundered with language about unifying the world and democratizing all sorts of countries. It's going to help China liberalize. That hasn't worked. And that's why it's controversial today. So as we look at what's

possible now, Trump has proposed 60% tariffs on products from China. He's also floated a 15 to 20% tariff on all imported goods. And these proposals are understandably controversial. They come with some clear potential downsides. But I can tell you in this article, we're equally intrigued by the upside here. So what are the opportunities for people who want to build? What's the chance to build as we look ahead? Well, I don't know how I feel about this.

The reality is the likely case scenario. I mean, this, this, oh, wait, there's people on one side of the tariff discussion that are really annoying because they view the world as completely static and it never changes. They're like, oh, this price is going to be passed through consumers. You're going to pay more. And it's like, yes, that's true, but the world is dynamic and stuff will change. Economies are pretty adaptive also, yeah. Yeah, well, like, where, is there a distinguished, is there China specific tariffs or a general tariff? The China specific tariff, all it's going to do is just drive manufacturing to places like Thailand.

in Vietnam, which, by the way, has been happening to a massive scale ever since sort of the Trump tariff started six, seven years ago. Chinese companies themselves are doing that. They're redirecting like solar panels to Vietnam and selling that way. Well, yeah. So there is an aspect of sort of cheating the system where it is moving stuff elsewhere, relabeling it and then importing it. But there's been real genuine shifts in like factories to an extent, which by the way is sort

of reestablished China's labor advantage to a certain extent. work is much cheaper than it used to be because a lot of factories have actually left. And work's getting much more expensive in places like Vietnam and Thailand. And I just like on the ground in Taiwan, I talk to people and there's a lot of this happening for sure. And China's share of imports to the U.S. has gone down quite a bit in sort of the last six, seven years, where places like Vietnam and Thailand and stuff like that has gone up. So a tariff on sort of one country will impact that one country, but it's not going to change this fundamental dynamic. and bring it all onshore, yeah.

A blanket tariff is very different. A blanket tariff does attack the core of the system itself. And it will, if persisted with, fundamentally restructure aspects of the economy. The problem is this will be very painful. Like, we're talking about 50, or no, we're talking about 70 to 80 years of the way this system has been developed. to undo that will be tremendously painful. It will take years. Is there going to be sort of the political will to make that happen?

Not so sure about that, right? So are we just going to get some of the pain and sort of, you know, the benefit? Well, let me drill down. When you say pain, are you envisioning higher prices for, let's say, tech hardware or tech software in turn? Yeah, stuff will be more expensive. And the capability of making this is not in the U.S. And even if there was, it's still much more expensive. And so you're like the, again, if you're just putting tariffs on China, it's going to be somewhat blunted for the U.S. consumer because stuff will just move around.

If you're doing a blanket tariff on the world, that will actually be more likely to drive more manufacturing the U.S., but it will take longer and it's still going to be sort of pretty expensive. And by the way, I'm not sure what the employment benefits are going to be. One reason why this is a moment in time to do this is the increase in automation. and the fact that it's like we're talking about with chips. Chips are just super highly automated, including testing and assembly. And so it's much more viable to make chips in the U.S. now than it was the whole process of making chips

than it was sort of 40, 50 years ago. Even Intel, which still always made chips in the U.S., they do all their assembly in like Malaysia, right? Because that's like downstream from all this because it didn't make economic sense to sort of do it here. And so this would take a really long time. at the same time, there is this desire. We need to build stuff.

And there is this need for whether it be national security. And there is this idea of software-defined sort of manufacturing. Where if you have a company like Waymo that's building this amazing software and capability, they need the cars to do this. And those cars should be modular. You should assume the software exists. You should be able to have sleeper cars or two-person cars or vans or whatever. And like, like, I feel like there's,

there is a new opportunity to make new things. That is obviously the Chinese one to seize in many respects. But the chance to build is, look, we'll see how this works out. But if you ever wanted to go for it, maybe you feel inspired right now because of the spirit. Something's going to happen with tariffs. Like, this is the chance. Like, I don't know if it's going to work. I don't know if any of this will work without a war.

right like the war resets every like it well and that's why i included the question about china and she it's like is it worth pursuing any of this if not for national security risks and then the national security risks precisely are that we don't have the ability to produce uh in a number of critical industries that americans have come to rely on and if supply chains around the world are cut off America is going to really, really suffer in the course of any sort of prolonged global conflict. That's why the impulse to bring manufacturing and incentivized manufacturing to come on shore makes sense to me. The idea, and I thought your article was enlightening for me because I hadn't fully grasped

how automated some of the onshore manufacturing would be. So the idea that we're suddenly going to be like China was in 2007 and 2008 and hiring 700,000 factory workers with 30,000 engineers to oversee those factories, like that seems like more of a fantasy that's unlikely to actually be a reality at any point over the next 10 or 20 years. There's a big fly in the ointment here, which is China's much further down the road and sort of automating all this sort of stuff than we are. Because that's part of the learning curve, right? Like, like, you know, there was a, there's a story about when Elon Musk, it was building sort of the, I think it was the three, Tesla three, to make it all work. It had to be highly automated. But it was a disaster because they overly automated it at the beginning.

And he came back. It's like, one of the big lessons learned was, no, we have to start out figuring out how to make the car. And then you automate it sort of over time. Can you just jump straight to automation? Not so clear. That's possible. And the other sort of pushback, and I'm pushing back on myself and pushing back on you, is, well, we need to do this for national security reasons. Or maybe we need to not do it for national security reasons, because as long as we are emmeshed, maybe the system still works.

The goal of the system was to stop war because companies were economically enmeshed. And that's the biggest reason to think there wouldn't be one. Maybe. The problem is, this was the argument people made in like 1910. Right. The reason there will not be war is because Europe is too economically enmeshed. And that didn't turn out too well. And look, you wrote in your article, Americans typically make the mistake of viewing the United States as the only agent of change in the world. And that would be my response to that particular talking point is I mean, she has been pretty clear about his intentions to eventually take Taiwan. He literally told that to President Biden a year ago. And like China has been in the myth. of an enormous military buildout. So that's why I feel crazy when other people say the tariffs are crazy.

Like, clearly, this is worth exploring and worth exploring the best ways to bring manufacturing onshore. But speaking of Taiwan, that was another question I had on the list here. Trump has said we should put tariffs on chips from Taiwan and that the Chips Act was a mistake. He was roundly mocked for that suggestion. But what do you think of it? I mean, is Trump crazy? Well, there's a broader thing about, you know, complain about Taiwan stealing our chips and, you know, Taiwan acting like the mafia and holding us up.

I think these stealing chips things not fair. The U.S. voluntarily pushed that out. U.S. companies did. And that's kind of on us. Taiwan using it as a lever to hold us up. Trump's right. I mean, like, you go back to when Taiwan opened up to bring in. in Texas Instruments back in the day, this was part of their thinking is we need to get plugged

into U.S. supply chains so that the U.S. feels compelled to defend us relative to China. You fast forward to today, absolutely Taiwan's entire defense strategy is by and large predicated on we have TSMC and the U.S. has to defend us. Like the, I'm sorry, I live in Taiwan. I don't see the commitment and the approach to weird investment in our own defense. So there's no internal urgency. It be a porcupine. Not that I perceive.

And there's a lot of sense that, you know. And so Trump, you know, there's some things Trump says that are really rude and also totally correct. And I think there's an aspect of, yeah, Taiwan sees itself as economically indispensable to the U.S. And they are correct. and they also see that as a reason the U.S. will defend them and that is correct

and they probably don't invest enough in having a culture and a military and buying the right sort of weapons and the discipline to defend themselves and I think that's also correct and this is all a big problem it's a big problem for everyone and and

the reality is the U.S. does have this dependency on this place that China has its sights on for reasons outside of economics. This is the big orthogonal problem. If China just wanted Taiwan because they also want chips, there's a deal to be cut. China wants Taiwan independent of chips. That makes it a little more complicated because we're negotiating on different planes here. And so when it comes to the Chips Act, I mean, what Trump, I think got right about the

tariff idea is that taps into demand. You need to change the demand structure. Intel's problem is no one wants to buy chips from them because they, They can just buy it from TSM. And the challenge, when you're, when you're, a chip is expensive, but it's a small portion of the overall cost of an item. It's like, you know, you take like an Nvidia system that goes for hundreds of thousands of dollars or millions of dollars.

Like, I think it's like a $3 million for like a whole rack system or something like that. The actual like graphic or the card chip to whatever is like $30,000, $35,000. The actual chip in there, yeah, TSM charges a lot for that. But it's not relatively speaking. you know, it's in the thousands of dollars sort of order or whatever it might be. And you're not going to risk the whole system not working because you're on like an untested new manufacturer process XYZ when you could just go to TSM is sitting right there. You're confident they're going to build it correctly and sort of do it the right way.

And so this is number one, like anyone that wants to go with Intel, they have this calculation in their head, which is even if Intel is cheaper or slightly faster, is that worth, risking our entire product to go there. And this applies, you know, so Trump's right, you have to address demand. The problem is if a TSM chip was 10% more expensive or 20% more expensive, would that change people's choices? Not sure. I'm kind of skeptical.

I also don't like the Chips Act. I don't like just giving money. What I wanted is guaranteed purchases based on certain, so you will buy chips from Intel if they do X, Y, Z. You will buy chips from TSM if they do X, XYZ. But it's in the same broad category as what Trump is talking about in terms of putting tariffs on it. Because it's about demand. The key here is demand instead of the Chips Act just gives money to the supply side.

And it gives money, you know. And the problem is it has all this strings attached, but the strings aren't relevant to like the issue. And so you have the problem, this perverse outcome of the Chips Act, where companies are promised money, but it takes them forever to get it because they have to qualify all these sorts of. of things that has nothing to do with the actual issue at play. And the actual issue at play is like, can you actually make these and build a market and you get the money regardless? So I don't know. The Chips Act is the spirit is right. You do, to undo 50, 60 years, you do need, I think some aspect of industrial policy. You do need the government doing things that are uneconomical, relatively speaking, if you want to change structure. I don't think the implementation,

was the best it could be. Was TSM the beneficiary of Taiwan industrial policies in terms of getting off the ground and becoming this powerhouse? Yeah. So Taiwan was it was, the government was an investor in them early on. Phillips is also another one. Phillips is actually influence is very underrated.

ASML is a spinout from Phillips. Phillips was a major investor. And I think licensed the initial technology that TSM used to them. A very underrated company, actually. They've had their fingers in a lot of stuff. But the big thing, the Taiwan currency is... Interesting. I don't think it trades at a fair value.

Let's put it that way. And you do have a very weird economy in Taiwan living there. Anything produced in Taiwan is shockingly cheap. Wages are super low. All imports are massively expensive. That's because the currency is too low. And that is a huge advantage for TSMC. They get paid in dollars and they pay their employees in NT.

And so, and this is kind of the, this is the, a bit of the Taiwan holdup, which is they're always flirting with being identified as a currency manipulator. And when it gets down to it, they get let off the hook, sort of beginning and again, because of this China sort of aspect, now because of this chip aspect. And, and yeah, so I think Trump is directionally, I think more right than he got credit for with this. overall discussion. To the extent that he's saying, look, the market needs to be involved. No, to the extent he's saying like Taiwan is playing us a little bit like a fiddle here. But again, but this is the same thing. The same thing with NATO.

It's the same thing with a lot of this trade stuff. That's why it's important to go back to the 1940s, the 1950s and say, yes, all that is true, but it all happened for a good reason. It happened. And that reason was successful. The goal was to tie the world together. And the goal was to, maybe not explicitly, but if you thought through it, that the U.S. manufacturing was going to be sacrificed for the goal of sort of world peace.

And that has by and large, that by and large, again, for 70, 80 years held up. Right. Bretton Woods emerged after World War II or near the end of World War II. And now, unfortunately, World War III is not impossible. So two final questions. We're not going to make it through the 10 questions here, but I did want to read two emails. Liberty, a couple weeks ago,

responded to our Trump and Tech episode by saying, I really like the idea of special economic zones in the U.S. where it's much easier to build stuff. I hope you keep talking about this concept and help inject it into the zeitgeist. So in the spirit of a chance to build, that was my favorite part of the Trump and Tech episode also.

Can you expound? on what you'd like to see and why something like a special economic zone would be necessary in the U.S. Yeah, I mean, again, I'm pretty far afield of like how this would actually work out. But what I would sort of envision is just sort of areas. And again, I think figure out the balance of federalism and what rights states have versus the federal government is going to be maybe there's some states can opt into this or whatever it might be. Again, I think Congress probably have to authorize it. But I'm a little skeptical of all the Doge stuff and the reforming the federal government, all these sorts of things. It's all so complex and gazillion lawsuits are going to happen.

And yes, there's been these Supreme Court rulings that theoretically make a lot of this regulation not constitutional, but you have to prosecute it one by one. And there's a rule of law aspect. There's lots of companies and industries that have built. up around this. And maybe this can be taken care of. I'm skeptical to be taken care of quickly and without a lot of pain and sort of a lot of waste, just waste of effort and energy. I think we just need to build our way out. We need to skyrocket. We have these new technologies coming online that we can leverage hopefully to do sort of amazing new things. And you can solve

the debt by paying it off and like, you know, trimming what you're spending. But, like, personally, I give people this advice, like, you're not going to save your way to being rich. You're going to be rich by making money. Making more money. You can, however, you can make twice as much money if you are creative with the way you structure your tax profile. So that's always one other approach. Well, that speaks to the, that does speak to the regular issue. Like, there should not be such a burgeoning industry in managing taxes.

burgeoning. It's already massive. What am I talking about? So what I want is this concept where you can basically have areas that you can just cut through all the regulatory red tape. And ideally there's a way, again, I don't know how this would work constitutionally or whatever, where you can also preempt all the local regulations. And it's like, yeah, and there's a very streamlined, straightforward, you just have to, you know, do these couple of things and then you can sort of build whatever you want. And ideally there's a federalism positive bit this, where these zones do so well and grow so much and become so rich than other areas that didn't opt into it or weren't a part of it,

realize, holy cow, we're sort of missing out. You know, I think you do have federalist aspects that still exist in America. We talked about in the context of self-driving cars. It's great that different localities have different laws and you can sort of see what works and what doesn't. This is a huge strength of America. But the federalist aspect has been diminished

because of the massive growth in the federal government and federal regulations. So at a minimum, if we can have a place where there's no federal regulations, the federal regulations are dramatically diminished or hugely streamlined so that, okay, that's not the barrier. The only barrier is local stuff.

And then you can have actual competition between states to see who actually can build these high growth sort of areas. But you have to get the, that's one of the challenges, the issues with just federal regulation in general is it levels the playing field. But leveling the playing field can be really destructive

in terms of experimentation and finding out what's possible and sort of new sorts of things. And so this is a similar thing, like the spirit of Doge is something I'm absolutely in favor with. I'm not sure the parts of it that are focused on reducing regulation also great. But I really would like to see this ability to have distinct areas with different regulatory regimes,

both because I think that's going to be the fastest, most efficient way to get growth, because it'll be easier to do, but also to have this competitive aspect where you see, holy cow, that's doing really well. We're not doing really well. We need to match that. I think that is something that's an additional aspect to, this that I think would be very beneficial.

Yes, well, two thoughts. One, I have no idea. My working assumption is that this doge aspect of the second Trump administration seems to be or could be a superficial sort of title for Musk and Vivek. And I don't know exactly how real any of it's going to be and what a difference any of it will make. Right. But also...

I'm happy with Ewan building rockets and building electric cars and... He's doing enough. Absolutely. I would say he's doing enough. It occurs to me, though, hearing you lay that out, and particularly the state to state differences, Texas is a good example of a special-ish economic zone relative to a state like California. Yeah. I mean, the killer example is, do you know where the most solar is, the most renewable energy? I was going to bring up the solar. Yeah, exactly. It's getting built out in a state that isn't known for solar energy. but it has fewer regulations and that sometimes is enough. Yep. No, absolutely.

It has its own power grid which has, again, has pluses and minuses, but it has like you can do this crazy arbitration stuff with solar and batteries and that sort of thing. And it's stuff happens. Like, like, a bias, we need a bias towards stuff happening. And, you know, this is, I think, a good point

that Bern-Hobart made our interview. like the weakness of the sort of technocratic structural approach, which again, strategy slots right in with, right? I'm all about sort of looking at the structural things and how stuff flows and all that. There is a tangibility to this is what we're going to do

and we're going to go do it. And you can see the thing that was done. And to the extent there's a spirit of doing stuff, that is, again, that's what we're, what I'm optimistic about more than anything. I mentioned this in the interview with Byrne, but that whole European innovation report, the droguey report, or drogy report, was kind of depressing because on one hand, it identified a lot of issues and it was good to identify those issues. But immediately, what do we do about it? We need industrial policy. We need subsidies. It's like

the government has to solve this issue. And this is maybe what this is distinguishing cultural trait that drives maybe our European listeners of the wall that makes me a true blue red-blooded American is no I need government out of the way I need people inspired to do stuff

and there's a this is the part that hopefully is being reignited and that we need to not lose is the feeling that you can just go do stuff this is the beauty of the internet

and the worry with the rise of big tech companies and the controlling of information and distribution is do we still have that you could just go do stuff, right? In the 23, I could just go start a newsletter. I could just do it. And no one could stop me. And today, when it's hard to share links, can anyone go do that?

It's kind of a bummer, right? You can, but it's just way much more difficult. And we need more areas where you could just go do stuff. And ideally, those areas are in the physical world because we've just fallen so far behind and we're so deficient. And it's just really not a good place to be. And I say this is someone whose life is totally virtual and online. This is the critique of Adreson. It's like, yeah, Mark, how much money are you investing into hardware companies?

It's just like, yeah, fair point. Well, and you ask, you ask chat GPT to generate an image based on your life and what it knows about you. and it generated, I don't even think it generated a human. It was like a really great look at what it imagined you to be. It was like this ethereal being with like equations. Yeah, I mean, people can go to your Twitter. I saw that you tweeted that out.

So check it out if you're curious. Well, I mean, it also it's like it's like a soulless person with like a computer in some could be any city in the world. Yeah, some generic apartment building. Anytime I talk about like globalization or the internet, like I'm just, It's the biggest hypocrite ever because I am like peak 2024 globalist virtual.

We just talked about it. I walked off a plane 30 minutes ago. I'm recording with you halfway around the world. I know. You're on theme for today's podcast. I love it. Transcontinental Ben. Yeah, but but I think it's more transcontinental is like over the continent.

Right. Oh. Trans Pacific or trans ocean. I don't know. I just know that cars have 30,000 components and not 150 components. So I've got that going for me. Well, one thing about the car thing is, like, Musk builds hard has built hardware companies,

which is, you know, no one's done. Like, it's just, and they built them in the U.S. Tesla's super integrated. Like, like, one reason they got to work is they, they just did a bunch of the components itself. They go to the supply chain. This is what it is. It's not cheap enough.

It's not quote up. Whatever. We'll just do it ourselves. And that's, by the way, they basically created the category. And we've talked about this. When you're early into a category, you do the, it's much more highly integrated. And that's definitely the case with Tesla. But down the road, things become modular and specialized.

You're doing sort of XYZ. That's the natural role from the world as organized today is China. If someone wants to build something, to me, it's the modular manufacturing company. What is the, and this is where I brought up Waymo before. Tesla is going now to. this sort of this world of autonomy and in that vision they're doing it all and it makes sense for them that that is sort of the aspiration but there's another vision where you have uber doing the handling and way more providing the software and other companies doing the sort of depots and someone

has to make the cars and they should be highly modular because it's all all sort of software to find and that modularity should be extendable to sort of lots of things like who's going to make the modular manufacturing company. The modular manufacturing today is basically China. Can someone build that in America? Again, I don't know. I don't know. But if you're ever going to do it,

I guess now's the time to try. Well, and if we're talking about the future of EVs and China, as far as all that's concerned, the Biden administration, I should note, has already imposed a 100% tariff on EVs made in China. And the Commerce Department has proposed a rule to ban all Chinese software in automobiles, and that ban would take effect in, I believe, 27, all of which is a nice segue to the final note here. Anonymous writes, hey guys, I have on good authority that Google and

Waymo had a deal with the Biden-Harris administration, where they would buy a ton of China EVs without tariffs after Harris was elected. It's hard to say how invested Google was with Harris, but Trump's election is a big blow for Waymo. So I include this at the end without any comment on the veracity of the claim there, except to say that the Biden administration has included carveouts in the past for various other green technologies, solar energy components being one example. But Waymo came up in your article on Monday. So do you have any quick thoughts on the way out on Waymo and how that company fits into the future here? I mean, the tariffs on Chinese cars. I mean, the tariffs on Chinese cars was a massive load of Waybo. Like that was their, you know, and again, it's the, it's the natural,

to my point, the natural fit for what they're doing. Their Gen 6 car was Wazeker made by Gile and it was a transport, it was a car built for transportation. It wasn't built to be a car. Now they're pivoting to, you know, working with Hyundai and it's again another adaptation of a passenger car. It's just, it's just not as ideal. And to ramp up into this dedicated car, with hardware built in, which would dramatically reduce their costs, but they're not at scale yet. The scaling bit's going to be difficult if they could ride along on the Chinese EV train, and they could already be tapped into an ecosystem that's at scale and is building sorts of things. That would help them a lot.

And they're not going to be allowed to do that. And I don't know about this report. It certainly, I think, does make some sense. But just from a analyzing market's perspective, the fact that they're losing access to Chinese EV manufacturers is a blow to Waymo and their ability to scale. You know, it's just going to take it longer. It exemplifies the point that you made in the article where there will be some pain for American companies, but there are also possibilities for American tech companies and the American economy writ broadly. Part of the problem, though, and this is the Biden-Harr sort of thing. like why did they elinate musk in the first place?

It was basically because they just to as a stop to auto worker unions. Like Tesla is not unionized and that really bothers the U.S. automaker unions. And like, I mean, the U.S. automakers are they going to, they're stuck in a certain paradigm, which is they're integrated sort of the brand and the actual assembly. You know, you contrast that to, again, like the show. me example where that's been separated. Xiaomi integrates the technology and the brand and then they get the sort of the car from someone else.

These other companies, they build the car and have the brand and then they just sort of like slap some software on. It's just a these are computers on wheels. They're different paradigms. Yep. And is it wise to be beholden to them for political reasons? But is it wise to be beholden them for manufacturing reasons?

Like are these even, can we even actually deliver a Waymo future without a fresh start? Like can any existing automaker actually fill that void is an open question? Well, in a Waymo future that is partly reliant on a hostile foreign power is not viable, frankly. Having a bunch of Chinese made cars with cameras and stuff on American roads. The U.S. government has already spoken on that issue. So bad news for Waymo. But good news for the audience.

We are coming back next week. A lot of really fun mailbag questions have come in for the Thanksgiving mailbag. Yes, Thanksgiving, not very tech-heavy. Yeah, it's not going to be purely non-tech. We've gotten a lot of non-tech questions. So we're not going to be able to hit all of the non-tech questions. But it'll be about half and half, and it'll be a good time. I'm already excited for it.

But Ben, for now, you have earned. a nap. You made it through an hour plus after a 13 hour flight. You didn't spill the coffee. It was a good omen. And enjoy yourself this weekend and we will come back next week. Sounds good. Talk to you later.