WRFH/Radio Free Hillsdale 101.7 FM - The WRFH Interview: Brian Shia

Episode Date: December 16, 2024

Brian Shia, president of the Classical Liberal Organization and Center for Commerce and Freedom Fellow at Hillsdsale College, talks with WRFH.

My name is Matthew Marnick. You probably know me from doing a speakkeeping show on 101.7 Radio Free Hillsdale. Today, however, is going to be a bit different. Today I'm joined with Brian Shia, who is an F.A. Harper Fellow and a Center for Commerce and Freedom Fellow. And is currently the president of Praxis and the classical liberal organization on Hillsdale's campus. Today, we're going to talk about the current state of the economy and what it means for the United States with. Donald Trump's recent election. All right, Brian, there's been a lot of changes in recent history just with the election, everything. I know on Hillsdale's campus, a lot of people are getting really excited because they think Trump's going to change the game.

I think that he's going to vastly change the economic conditions right now in the United States. Do you think that's going to be the case? Or do you think there's going to be little to no impact? Yeah. Thank you, Mathik, for inviting me on to this show. I'm excited to be here. I think that the latter is probably going to be more likely. I think Trump getting elected is, of course, a step in the right direction.

I think it's a good thing. But I'm just not exactly sure that massive changes will be made. But in terms of the kind of policies, I think Trump has a lot going for him. I think that a lot of the policies that Biden has been pushing. and Kamala was, you know, trying to push is likely negative towards the American economy. But I think Trump's policies on a whole are a step in the right direction and probably are better than Kamala's. But there are certainly things about them that, you know, I'm not sold on. What are some of those things that you just currently aren't sold on right now?

Yeah, so like he's talking a lot about, you know, tariffs and, you know, facing the national revenue on on tariff income. I'm not sure that's going to work. What, I know, he's also toyed with the idea of getting rid of the federal income tax. Do you think that's even a possibility and going fully on tariffs or do you think that's kind of just a pipe dream? No, I don't think it's possible at all. I think in terms of tariff revenue, it's really insignificant. I mean, I'm not sure of the status right now, but I think I heard someone say that you would need to increase tariff revenue by a thousandfold to sustain the current expenditure under government. So I just don't think it's feasible for trying to replace the federal income tax with cash.

I don't think it's feasible at them. Yeah, what do you think when it comes to tariffs, how much that impacts our day-to-day lives? I know at least for me who does a lot of work within the Rubik's Cube industry, I've already heard things from certain retailers that are in the United States. They buy a lot of their cubes from Chinese manufacturers.

And, you know, how much of an impact will it have in terms of just raising the price of goods when a lot of these American companies have to put price of the tariffs on, you know, the final price of their goods. Like, how much is that going to impact us as everyday Americans, do you think? Yeah, I think it's going to be a pretty big impact. I mean, I don't think Trump is going to go ahead with all the tariffs he's proposing, especially not with Canada and Mexico.

But I think about tariffs is that the domestic consumer suffers a lot from these tariffs, you know. And a lot of these taxes are on everyday goods and that can really hurt people. We're talking about inflation here and how prices are rising. Things are becoming less affordable and a real tariff would really hurt that. It would just make everything more expensive. And because everything is more expensive, we're just going to have all prices rise in general. And that's just trying to push inflation even higher.

and the Fed has fought pretty hard to keep the inflation rate down. And I think an increase in tariffs is going to kind of reverse that process and could be, you know, tough for the everyday person, right? Yeah. When it comes to like the total control of the United States economy, do you think a lot of it is with the president's power itself or do you think the Federal Reserve has more power over the United States economy? That's an interesting question.

So the Fed is a separate entity from the U.S. government, at least ostensibly, right? Its powers are to adjust the federal reserve rate, which is basically a way of manipulating the interest rate. And it also has the ability to enlargey money supply by injecting money into the money supply through various through various means. And on the other hand, the federal government can adjust things like, you know, the tax rate. It can adjust things like cariffs. It can, it also is in charge of expenditure and all that stuff, you know, redistribution. So, on a day-to-day level, it's really hard to judge which entity has more influence on the entire economy as a whole because, you know, an economy does.

um to a large part is based on the interest rate right like people make decisions on how much things they buy on what they invest in based on the interest rate um and based on how much money there is an amount of supply based on the inflation rate and things like that but on the other hand the u.s government can control a lot more things like how much tax they collect how they collected what tariffs you put on stuff so but the thing is the fed is separate and and ostensibly is not politically influenced. So its goal is to maintain a low rate of inflation, economic growth, a stable economy.

So we tend to not seem really extreme actions from the Fed outside of big crises, like, for example, the Great Recession, right? On the other hand, if Trump wants to put hair some stuff, we could see some pretty big changes in the economy that might not be in the best interest of the American economy, but might be forming a basis of, for example, his political goals or maybe his foreign policy goals. Yeah, when it, you talked about how the Federal Reserve has control over the interest rates and, you know, they kind of have two main goals.

You touched on one of them being that it's to keep inflation low and to keep also unemployment, um, low for the most part too. You didn't talk about that, but that's also one of the goals of the Federal Reserve. With that in mind, how much has the inflation of the past couple of years in the United States that a lot of the Trump supporters complain about and a large reason why Trump got elected was because of the inflation of the past couple years that was blamed on Joe Biden? If it's really the Federal Reserve's job to maintain that inflation rate, how much much is it to actually blame Biden for it versus the federal reserve?

The causes of inflation fall on both shoulders, both the shoulders of President Biden and perhaps even President Trump in his previous term and also on the shoulders of the Federal Reserve. And it's hard to judge how much either sort of sorts of influence inflation. But I'll first talk about the presidencies of Trump and Biden. So we all know President Trump started a trade war in 2018 with most importantly China, but also with countries like the UK. You've placed tariffs on a lot of goods coming in from these countries, and we know that tariffs do increase prices.

The argument is that it protects domestic jobs, but in the process, you do raise prices. That is just what happens. And of course, Biden has had pretty significant policy. in retaliation to COVID, right? He's had to give people cash, get people money. He's started a lot of welfare programs, things like that. So obviously some, you know, share of the inflation falls on his shareholders. But the thing with the Fed is that they have been pretty loose with their monetary policy for basically one and a half decades.

Ever since the recession, they've been printing large amounts. of money, not printing, but they do it through something that's called quantitative easing, which is basically give a ton of money to financial entities like banks, and hopefully it trickles down through the system, right? But the thing is, like, they started doing it at a time where they kind of needed that money to be bailed out, but then because of the political power and influence, they haven't been able to really stop giving them money to a point where they're giving them so much money that that's causing inflation. So, yeah, like the answer isn't really clear.

Obviously, both kind of have an impact on inflation, right? The U.S. government has had some pretty interesting policies that I personally think likely led to inflation, inflationary effects, and so did the Federal Reserve. And you see the Federal Reserve's interest rate hikes through the past couple of years as a result of their attempt to combat inflation that they, you know, they might have cost themselves or might have been caused by, for example, certain policies of presidents. But, yeah, I don't think it's a clear answer at all. Yeah, when it comes to all the given United States economic situation where inflation might be a bit high, prices are a little bit higher than people would like. What would you do if you were Donald Trump coming into the presidency today? Would you go through a, you know, a little bit of a tariff war. Would you go through, you know, maybe freeing up some

markets and deregulating? What would kind of be your goal if you had the power of the presidency and the ability to change the economy? Yeah. I'm not quite sure what I would do. But, you know, that's up to President Trump to determine. But yeah, I mean, he's had a few plans he wanted to do. I mean, I think you've probably heard of Project 2025. That's a plan to sort of enable the government to fire some of its employees, right? And we all know that the national debt is looming large. And a large part of that is because of how many government agencies and workers there are. And, you know, I'm up the opinion that a lot of these organizations, these bureaucracies are quite inefficient.

And I think it's a good way to reduce the national debt if you're able to cut some of these employees that might not be so efficient. And some of these agencies that might not be effective. I think I personally start there. I might also try to push forward some sort of tax reform to make it easier for people to pay taxes, maybe reduce it. tax for a little bit because that, and I can do that from the leeway that Project 2025 gives me. I would honestly try to get other countries to reduce tariffs on us. You know, I think it would be a good idea if there could be more free trade. I know that's perhaps a controversial take, but that is what Trump is trying to do.

He's pushing these tariffs in hope that other countries will kind of drop tariffs, right? He's saying, if you don't drop terrorists, we're going to place this massive tariff on you, which will be bad for you guys, right? He's in the past, and I think a G7 conference that proposed this, and, you know, the world leaders are, you know, skeptical of this, and it's understandably so because they have all these interests, you know, working against it. They have to answer to their farmers, their labor unions, and so on and so forth. So it's a very complicated issue, and I don't think I'm nearly knowledgeable enough to deal with all this stuff.

But I would promote deregulation. I promote lower tax rates. I need your collection taxes. I promote lower tariffs and more free trade because free trade really can help us lower prices. And contrary to popular belief, it does not take jobs away, but also add jobs, right? So I think that's a massive factor. And I think sort of economically coupling with China in the past few years has been a massive driver of inflation in the United States. Yeah.

I'm with Brian Shia on 101.7 Radio Free Hillsdale. Brian, something that you mentioned was getting rid of. of a lot of the inefficiencies in the government right now. And something that Trump has kind of flirted with is the Doge, the Department of Government Efficiency, and having Elon Musk be the head of it, there's talks of, you know, what of my favorite, you know, economic voices, Ron Paul also helping out with that?

Do you think getting another government agency to then cut other government agencies is a good idea? Do you think that's a bad idea? What's your thoughts on that? I think it's an interesting idea for sure. You know, I definitely support the notion that we have to cut some of these government agencies. I mean, I remember seeing an interview with Milton Friedman, and I think it was an interview at the Hoover Institute at Stanford, and this interviewer asked him, well, he gave him a whole list of government agencies, and he asked him, cut or, he asked him, cut, or, keep, right? And basically all of them, Friedman was like, cut, right? If you could have the power to do that.

The only ones he released that to keep were, I think, the Department of Defense, maybe the Department of the Interior. So, you know, and Milton Friedman is obviously a renowned economist. And I think that's your answer there. But the thing with making a new government agency to cut other government agencies is that you create a job for this bureaucracy, this new agency doge. And what happens when they run out of agencies to cut? Do you think that they'll just really give up their jobs and cease to exist? I'm skeptical of that, right? Because bureaucracies, their role is really to find a way to justify their bureaucracy. he's staying alive over other bureaucracies.

And especially if, you know, with Elon Musk at the helm, like he is, I just think there are potentially conflicts of interest there. He runs several companies. He owns stock in a lot of companies. And you wonder if he might, for example, perform any of these reforms in a way that might benefit himself and his friends. So this is just like a few rough ideas. have, but yeah, I think it's an interesting idea, but it could have some pitfalls.

Yeah. When you think of the United States government as it is, you know, you talk about how there's a lot of, you know, different inefficiencies. What do you think is the most inefficient part of it right now that Trump should attack, you know, the very first day of office? I don't think I have the data to really point out what the most efficient agency is. But certainly I've heard voices say that, for example, the EFTA is an agency that should be removed. I've heard people say that Department of Agriculture perhaps or

labor are pretty bad but I'm not that familiar with U.S. government agencies so I can't really answer that. And one of the things that is kind of interesting is you see a lot of people who praise Trump as a very free market guy yet a lot of times

he is advocating obviously for these tariffs and and things like things of that nature um what do you think you have to say to just republican voters out there who kind of held trump as a free market person whereas um you know he might advocate for stuff that isn't so free market trying policies don't part your clear seem um completely free market right um i mean he has in the past started trade wars and um place you know extensive tariffs on even like allied nations like the UK. And we have data that suggests that those tariffs were not a positive thing for America and as workers. So I just want people to remember that tariffs

are really not what they're advertised as. They protect domestic jobs, sure, but at a very high price. So I have an example here, and it's from the 1980s sugar tariffs. And I think, And I think the estimation from the government is that there was $1 billion in benefits from that. So as in, you know, we had the U.S. sugar producers increase their business revenues by a billion. But it was overall cost of $2 billion. So that's a net cost of $1 billion on net on the policy. And if you consider how many jobs are, the sugar industry, I think it's about 2000 back then. And so if you do the math, it's like $500,000 per job.

And I'm not sure if a sugar job is worth $500,000, right? And so, yes, we want to protect U.S. jobs at what cost is, you know, $500,000 too much for a job. And I'm inclined to believe that it is. And we've seen the same thing with the U.S. steel tariffs on the U.K., and it has had the same effect, right? And we've even heard American businessmen say that de Cariff has impacted them in a negative way because now steel is more expensive and it's harder for them to produce other things. So, you know, tariffs aren't, you know, by economic standards isn't exactly a good solution to some of the problems that, you know, the American people face. And I just want people to know that tariffs aren't exactly the best policy out there for what's. they really want. Yeah. Thank you so much, Brian, for coming on 101.7 Hillsdale to talk

economics with me. This has been Matthew Marnick, and have a great day.