now from a tariff War as we discussed earli in the program to tax cuts for the rich is their method in Trump's Maga nomics our next guest thinks so and he's calling it his quote weapon of mass distraction NYU Professor entrepreneur and podcast host Scott Galloway joins har sasen to break down what Trump's heads spinning constantly shifting economic policies mean for the state of American finances Christian thanks Scott Galloway thanks for being back with us last time you and I spoke we were talking about your book a drift and at that time you said America
as a country isn't lost but rather a drift and unmowed and I wonder since that time has your assessment changed well you could argue that it's found Direction unfortunately I think the direction is more a direction around uh change towards a quarter of each party Dem rats are just as guilty of this as Republicans are in favor of an autocrat as long as that autocrat shares their views and I think that's sort of come to fruition here I think the the superseding of our checks and balances of different um branches of government such that one
political party that is in control can sort of bypass the traditional constitutional U measures or safeguards reflects that America has become if you will more open or accepting to the notion of an autocracy I think we are pretty much in a full kind of call it maybe most generously autocracy light and uh much of America voted for this do you think that say for example what's happening in the stock market is a reflection of people's dissatisfaction with this direction that you're talking about I mean I think the snps had one of its worst weeks ever
all the gains that we had since the election have practically been wiped out I wouldn't say it's dissatisfaction because that implies that they're upset about it the market is pretty unemotional and is focused on increasing earnings and uh people will buy stocks regardless sentiment sort of takes a backseat to financial considerations I think what's happening in the market is first off you have to acknowledge that even with these draw Downs the market is still substantially up uh from where it was just 6 months ago it has come back from pre-election the Trump bump has been
wiped out I think what you're seeing quite frankly is a couple things the market just may have gotten quite frankly overvalued but I think the thing that kind of triggered the selloff if you will is what appears to be irrational non-economic decisions around tariffs where we're basically ripping up these 80y yearlong alliances with trusted economic partners that engage in mutually beneficial trade and that these are not only uh a bad idea in the specific agreements were're tra we're repping up but America's losing a very important brand Association for economic relationships or geopolitical negotiations and that
is one of consistency there was an estimate by the uh Yale budget lab that these tariffs are going to cost average households somewhere between ,600 and $2,000 every year it's also estimated to reduce our GDP as much as $110 billion dollar a year you know and one of the uh lines of thinking that I hear from members of the administration is look if these short-term hits can get us better leverage to try to negotiate longer term prosperity for America this will have been worth it does that make sense well to be fair tariffs aren't all
bad sometimes you need tariffs as a hammer to restore symmetry to an asymmetric trade relationship uh Biden maintained the initial Trump tariffs I think some of Trump's initial instincts around the asymmetry of the trading relationship between China and the US were accurate uh what this is though is just plain non-economic I was a graduate student instructor in macro microeconomics in graduate school we used to talk about tariffs I imagine the same way that uh professors in medical school talk about leeches like can you believe they were stupid enough to actually think this would this would
work and the notion that we're putting on ourselves in a position to negotiate some big beautiful deal I don't think it's going to work because uh Trump Trump tore up the Iran deal and now appears to want it again the tariffs are off and on I just don't think we're being we're seen now as a reliable partner that can be counted on with the economic livelihood of your country think about Canada we're not even able to give Canada a good reason for why he's doing this the kind of the stated reason from the administration for
what is tariffs that will hurt our economy and dramatically hurt Canad the Canadian economy is that the unchecked the unchecked transfer a fenel across the Canadian border you could take the amount of fentanyl that's come across the US Canadian border and put it in a backpack estimates are that it's less than 1% and to alienate your closest allies think about Canada Ari it's it's the largest undefended border in the world what does that tell you about our relationship to this point with Canada they joined us in World War I they were in World War II
before us training Allied Pilots they were side by side with us in Kosovo in our fights against the Taliban amazing economic Prosperity we have NBA and NHL teams in America and in Canada respectively and I love that question Hari that was presented by a holocaust Survivor around evaluating who are your real friends and that is it comes down to one question for her would they hide me and that's a really puncturing kind of rattling question to evaluate your friends by but by that standard Canada is one of our best friends in the Iran hostage crisis
they hid American diplomats and under great personal risk made uh uh ensured their safe escape from Iran and they stayed behind and had they been caught there was a good chance they would have been hanged from from crane so Canada has hid us they are real friends and for us to recklessly irrationally and inexplicably try to hurt them in exchange for what might be some big beautiful deal it's it it is the the damage here to unwind and repair will take the better part of the 80 years it took to make these amazing prosperous relationships
that quite frankly the administration in my view is irrationally taken for granted so how does the world deal with this kind of uncertainty so the vix which measures volatility as evidenced by trading in options has spiked and the Atlanta fed has a a metric for trying to project what GD GDP growth might look like in the coming year in the last 45 days it's gone from a projected growth of GDP of 4% which is really robust growth to negative -2.8 the economy is Contracting faster than it has since the co lockdowns obviously the markets uh
the markets are chilled I think this Silver Lining here I always like to ask myself what could go right because over the medium and the long term the majority of the metrics in the world do get better and it's easy for someone like me to try and sound smarter than they are by always being negative so I think it's an important question to say what could go right and I think the Silver Lining here is that Europe is in fact becoming a union because they realize they can no longer count on the military economic umbrella
or the geopolitical consistency of America America spends about $800 billion NATO and all EU Nations spent about 430 on the military and quite frankly they have gotten I would call lazy and expectant around the military umbrella being provided by the US they now are convinced they can no longer count on the US to be pro-democracy and make what are rational decisions and honor this kind of post World War II order they realize they can no longer count on or expect the military umbrella of the US they will dramatically increase their spending on Military which I
think will have stimulative and spillover effects I think the Silver Lining here is that Europe is going to begin to command the space it occupies keep in mind the total GDP of European nations is 19 trillion the GDP of Russia is 2 trillion so there's no reason why Europe if it gets its act together shouldn't be able to push back and be a credible opposing threat to an economy that is again smaller than the size of Canada Russia you've been pointedly critical of Elon Musk in the past several months and really even a couple of
years but in light of the Department of government efficiency I think there is a consensus that people on both sides of the aisle are interested in making government function better making it it more responsive and efficient um but what have you seen over the past couple of months that give you pause on whether this is going to have longer term effects and perhaps unintended consequences well every Administration from uh Clinton Gore has had some sort of task force to try and root out uh uh inefficiency fraud and waste so far if doge is an audit
of the US government then the US government has been issued a clean bill of health because this wall of receipts is surprisingly scanned the first one said they were claimed they were saving $8 billion it ended up to be 8 million of spending that had already been spent and then numbers two three and four on the list of DOA receipts that have since been taken down were just blatantly false the Wall Street Journal reports that so far Doge has found 2.6 billion in cost savings you could Sixx the savings from Doge to date by cutting
off all subsidies to Tesla which has cost taxpayers $15 billion but I think it's more mendacious than that are I mean yeah we all like the idea of cutting waste but I believe it's a misdirect and that is while we're all kind of have our hair on fire and looking over here at DOA 2.6 billion the the indignance the emotional upset of firing good people doing good work or the just the general incompetence of laying off air traffic controllers we firing people over seeing our nuclear stockpile and then trying to hire them back I believe
for the most most part it's a strategic weapon of mass distraction to get you to look over here as the Trump Administration is planning to increase our deficit by $800 billion doll a year with tax cuts to the wealthy all of this is a misdirect it's it's sad it's unfortunate it's incompetent it's an these savings are elcer right but at the end of the day I think it's a purposeful distraction from the tax cuts they are trying to put forward at the expense of future Generations do you think that Elon is getting a net positive
benefit from this because on the one hand he has gained incredible proximity to power and in fact power for his $250 million contribution to the campaign on the other hand the value from Tesla shares have been evaporating because he seems to have alienated a huge chunk of the people that used to buy his cars I think the political calculus here was miscalculated ated on his part we were talking about Nike off Mike when Nike embraced Colin Kaepernick which was a political position they had done the math and that is 23ds of their revenue comes from
people outside of the US or people under the age of 30 none of whom thought the US had it right on race relations so they purposely tickled the sensors or cemented their kind of progressive ideology among a customer base that they knew would appreciate that musk has made exactly the wrong calculation and that is three4 of Republicans would never consider buying an EV anyway his his largest market is California and sales are down 11% in Europe sales are off 75% in Germany in between 20 and 30 and other big EU markets so essentially Tesla has
shed a third of its value in the last month it's given back all of its gain since since the Trump election what is really going to hurt his pocketbook is that it has now jumped the lab and is now starting to infect uh SpaceX specifically starlink who is seeing contracts being cancelled by people ranging from Canada to Poland is saying we can't count on you for something as important as Communications and Battlefield Communications technology so they're reconsidering their starlink uh contract so I would argue the political calculus here from Mr musk was wildly inaccurate and
he is seeing a lot of his wealth evaporate uh because the negative associations of musk have are starting to infect not only the Tesla brand but also the SpaceX brand so I think it was an irrational decision from a purely economic standpoint here we were at the inauguration and we saw lined up next to the president literally The Who's Who of technology and billionaires standing next to him and I wonder is this just business as usual or was it you know is this different than what the the carnegies or the Rockefellers might have done a
hundred years ago is it just the the Optics that are different now or is there something more structurally uh more destructive it's a fair question because I think a lot of people on the right would maybe fairly say look we may be more transparent and Brazen about it but it's nothing that lobbyists and lawyers the media haven't been doing for the left they've just done it more quietly and elegantly when the most powerful or wealthy Tech Executives in the world are all willing to be intimidated into donating to inaugural Campaign which they didn't do in
2020 despite publicly stating their politics more in line with Biden than Trump when they're willing to be parad around for the benefit of the Trump Administration you have what I'd call a domino of cowardice and that is they text my Pivot co-hosts that they hate themselves and and you know that they hate showing up in the inauguration and then they show up uh and then that leads gives Linda Yaro the CEO of X the confidence to demand that an ad agency advertise on their platform or they risk having their merger blocked by her buddy who
has proximity to the president what we don't want to acknowledge in America is that rights and democracy are now a function of how much money you have full stop uh the wealthy technocrats and the 0.1% feel as if and quite frankly it may be true that they are protected by the law but not bound by it whereas the rest of the 99% are bound by the law but not protected by I wonder getting back to those CEOs for a second I wonder if they now or will always have a shield that says Hey listen I'm
I'm just doing what's right for my shareholders this is my fiduciary responsibility so I give a million dollars to the campaign or to the inauguration you know what it could help our stock down the line or if I don't give the million dollars it could certainly hurt my stock down the line and that's as CEO that's who I'm supposed to uh you know be loyal to I think that's a fair argument Hari uh but what I would ask is they don't ever use the term stakeholders again remember all this BS over the last 10 years
where they started talking about stakeholders well all right the country democracy poor people people who aren't politically connected people who don't have stock options in apple the 99% that only own 10% of stocks are you supposed to be also be representing them are you supposed to have some Fidelity to the values the rule of law democracy checks and balances that help get you so rich in the first place because let me list all of the CEOs who have filled this leadership void and have said I am more concerned about the long-term health of America and
what it means for private and public companies and I'm I'm not going to engage in this sort of klepto this kleptocracy I'm not going to be an agent so here are some of the CEOs who have filled this leadership void okay list over at some point at some point these people many of whom talk about running for president many of whom claim to be great Americans many many of them constantly voice their gratitude for what is the um the best experiment and the best platform in the world for establishing Economic Security and rights at some
point you'd like to think they're going to show some Fidelity to the democracy and principles and rule of law and checks and balances that played a huge role in their wealth but instead they default to this quite frankly cold comfort of well I'm a fiduciary for shareholders let's be honest just kiss his ass give him a million bucks and stay out of the CR hairs yeah it's probably good in the short term the question is at what point does someone stand up and say okay I'm representing the bottom 99% I'm representing democracy and I'm representing
what America is supposed to stand for and paying it forward based on the incredible rule of law democracy Fair competition that got me here in the first place so I think the the the Domino of cowardice here in the private sector is not only shocking it's just very disappointing author and professor and podcast host of both propy and pivot Scott Galloway thanks so much for your time thank you har always good to see you [Music] [Music]
