it seemed to be best understood look forward to going in. what is physics physics is nothing but the harmony you can create on vibrating strings but it's chemistry chemistry is the melodies the melodies you can play on strings what is the universe the universe is a symphony of strings. welcome

to front running 2020 with a max keiser and stacy herbert as we look ahead to the 2020 lecture looking at all the policies and. today we have to take a deep dive in to china and china is it forcing us into a sputnik moment now of course donald trump ran in 2016 on make america great again and part of that is now a clash with china joining us to discuss this issue is dan collins and marshall our back now according to the i.m.f. using purchasing power parity china is already 25 percent larger economy than the united states and cons of course you live there for 20 years what did you see here you're in brooklyn as you can hear around us we're across the river from manhattan and you're seeing a construction boom here by u.s. standards but put this into context of our competitor nation as trump calls that's what's going on there component here china has

a distribution economically of course and sort of we're right the economy in brooklyn where we're at is going to be different than little rock arkansas trying to do they passed us on a p.p.p. basis on the g.d.p. back in 2016 so it's been a few years already the way i like to look at it too if you just step back and look at it from an economic standpoint they make their shoes and they make our shoes they make their t.v.'s and they make our t.v.'s they make their car parts and they make our car parts so i think their economy the way we estimate it is that is their economy is absolutely you know massive you. go any city in china they basically have new airports new roads new buildings new schools so there's been a massive economic boom that probably is going to be difficult to keep up and you know what i personally believe china's g.d.p. the last few years is much much lower than the official so looking at some of these technologies like 5 j what way they are leaps and bounds ahead right so and to get it can take on the sputnik moment you know we had the cold war 3 saul going on with

the soviet union that same to get the nasa program going which gave us a lot of new technologies and there was a huge boost to our economy. should we look at this in the similar way and say look they are clearly out of us while way 500 they are ahead of us. they are also way ahead of us and ai artificial intelligence should we should approach this you think it's absolutely there's a lot of areas in the economy where china has caught up or surpassed us you know the mobile payments markets 50 times the size of the u.s. we're over here still writing checks our banking system is not innovated. 5 g. we've kind of recently woken up the last couple years and go wow we don't even have a company that can make 5 g. equipment hallways the 800 pound gorilla 5 g. they've been putting hundreds of billions of dollars behind this company they have 800000 engineers $50000.00 engineers or foreigners they've hired the best talent in that space to produce a 5 g. equipment we're so far behind the game's over you can't catch up on 5 g. at this point with hallway and as geo political superpower that we are in the

united states and where a competitor to china we're seeing with 5 g. because the u.s. doesn't even how one single manufacturer of this telecoms acquit meant we see germany we see brazil likely to do deals with huawei despite the u.s. saying no what do you think of this well they certainly are putting pressure on on the europeans know what to do 5 g. and indeed also the same question is confronting india right. modi is also being pressurized not to adopt well ways by the standard so the question is if you want to use the sputnik analogy the russians were ahead of us when they launched a man into space before we did and the us mobilized its considerable national resources and ultimately caught up and did so the russians i would say that it's not impossible that the same thing could happen but of course it would mean invoking things like national industrial policy which is something we haven't

lights in some 1970 s. how much of this of course is to do with the fact that when you ship all your manufacturing overseas when you ship it to china it was always the theory was that they're just going to do the the low value added jobs though t.v.'s menial labor and they'll never do innovation and come up with the great ideas we're going to innovate here but of course innovation happens on the factory floor and how and why did we send our factories over there what role to bill clinton do with basically fighting to have china be part of the world trade organization in 2000 he argued in front of congress in march of 2000 he said by joining the w cio china is not simply agreeing to import more of our products it is agreeing to import one of democracy's most cherished values economic freedom of course this is the sort of lie we push on ourselves when we invade a country that we're going to go to liberate the women and here it was like we're going to liberate their economy it was the the china fantasy the idea that somehow

if they start to embrace capitalist forms of economic development their ultimate they going to evolve into a liberal democracy and that's turned out to be a complete delusion and fantasy in fact you can argue that even the idea that trade liberalization would ultimately work in our favor it has and there's been a number of studies suggesting that you know our manufacturing sector has been devastated by the manufacturing as a percentage of g.d.p. is at its lowest. point in 72 years for this idea that we retain the software but we all share the manufacturing that's going to be great for both sides win when it's been a win win for china and it's been a lose lose for the us right i'm like i have a quote from biden here one of the candidates of course who say quote china is going to eat our lunch come on man you know he has been doing particularly well in the polls and i think part of the reason for that is because he still uses a playbook that's about 20 years out of date politically and economically of course

he was part of a government bill clinton that the great democrats shipped our jobs overseas and it is interesting that we've come full circle that robert light hisor who was almost the lone voice in the neo liberal american economic and political system back in the late ninety's he said in a piece in the wall street journal the new york times he warned that if it made it to the w.t.f. can tell us china would become a dominant trading nation virtually no manufacturing job in the us will be safe he was right today he's now the u.s. trade negotiator against china when you're reading the chinese press what how are they looking at trump how are they looking at robert like hisor in particular and their trade position against china so trump was kind of an x. factor they didn't know how to deal with trump i mean trump is not acting like a normal politician they know how to deal with the biden family they give they give his son a $1500000000.00 so that's you know how you can deal with some politicians trump is

just is acting is all a negotiation he realizes back to the point of the manufacturing base you can't continue to innovate when you don't make anything all the innovations happen on the manufacturing floor and we had this illusion and a lot of it comes from academia these economists that you don't need to make anything manufacturing is going away the reality is we've just had the greatest manufacturing boom in history the world it just occurred in china not the united states and we got rid of all our jobs you can't meet have a country of 330000000 people and not be able to make anything for. yourself realizes that and this is all part of the strategic kind of realignment is going to have to happen and to be fair i think there there's been a number of economists now that say in retrospect that that whole model was wrong even paul krugman has dared to admit that he might have overestimated the or underestimated the impact of. allowing china to go into the w t o and this idea that free trade would somehow be great for both sides and i'm

personally a bit regarding light i think he's the best thing that's happened to the us economy and the government he's probably the most qualified guy in the the cabinet granted that setting that's not sitting exactly a high bar but he's an exceptionally talented trade negotiator and he's the 1st gone i that we've had in that position who not only is the dominant voice he superceded treasury which was basically happy to offshore those jobs so long as you know the capital markets were happy but he's been doing this for over 40 years he's been doing this since the reagan years so the democrats aren't discussing this issue in particular actually during their primaries but will it become a huge issue against them in the race against certainly biden is the nominee will because you know he as you pointed out earlier he biden embodies the the the so-called washington consensus but there is there are signs that some of the other candidates are embracing a different approach notably elizabeth warren and she came out with a paper about economic patriotism and reviving the manufacturing so she seems to

be hearing a bit to that playbook and i think that's a rather hopeful sign as far as the democrats are concerned well aside from the economic advantages or disadvantages and shifting jobs overseas it does appear china is making a pretty aggressive move militarily and just looking at some of the chance coming out of there they've perfected the rail gun technology that they can now put on a naval vessel you know i've been following the rail gun technology for a number of years now this is the whole lot. magnetic projectile e. fired into has a range of a missile what you can do with a rail gun is you can knock a satellite out of the sky which is. way out aggressive they can start knocking competitor satellites out of the sky for one thing number 2 the u.s. can build 2 submarines per year. it is retiring 3 per year meanwhile china is able to manufacture more submarines per year so there's a military advantage there as well as militaristically is there or should that be

a something you know i would say that you've got to consider the base from which it starts i mean we still spend on defense u.s. spends on defense more than the next 10 countries combined so we spend amounts amount more money now we don't spend a particularly efficiently if you look at some of the boondoggle we have out there and the political engineering that comes down but i think we still have a qualitative edge the question is whether you want to continue to surrender that qualitative edge which you will do if you perpetuate this offshoring manufacturing particularly to china but of course china and and the republican administration and the trump he's he's met them head on in terms of trade the previous administration under obama said we're doing the asia pivot and we're going to confront them militarily the point max is making about that the fact that we can only build 2 submarines a year even with new funds for the military because you know why because we rely on china for many of them are right you know that's all part of the manufacturing base

you have to get back all these technologies are interconnected castings for jeans electronics embedded you know systems these are all if you can make the cars you can make the systems in the plants then you can use it for the defense industry and you get rid of all that in the pentagon has come up with papers on this guys we have mostly one supplier for each type of our systems and these these defensive players have become completely dependent on federal government money and completely inefficient all right well we're going to take a break come back talk a lot more about china on front. running 2020. 1 else seemed wrong. just don't all.

get to shape our. culture. and indeed it was betrayal. when so many find themselves worlds apart. to look for common ground. but if she warned you and i do the dishes at the bazemore those jeans nudist beach and you see me we need to you. guys and about that some of them when you guys e.t.s. . in the news i mean that so that infants involved. a lot of you will see sawing as it fights about to cut the both sides. doesn't it alludes to me as if. the.

cabinet 5 days doing this is. an english lady a thing people who simply do something new tonight including. you know world of big partners. a lot and conspiracy it's time to wait to dig deeper to hit the stories that mainstream media refuses to tell more than ever we need to be smarter we need to stop slamming the door. and shouting past each other it's time for critical thinking it's time to fight for the middle for the truth the time is now for watching closely watching the hawks. geysers financial survival guide stacey let's learn us out fill out let's say i'm

not so i get in here please. stop the fight. thank you for. destroying that's true. lavery. welcome back to front running 2020 with max and stacy we're talking about this. moment between the u.s. and china well the u.s. catch up can the u.s. even catch up stacy without some kind of industrial policy exactly in order to compete on that sort of scale we need an industrial policy i would think because of course the apollo program which we introduced under j.f.k. to compete with russia it cost $600000000000.00 in current terms but we have the

manufacturing capacity at that time do we need an industrial policy an order to even rise to this challenge that china presents to us well in the world yes and we used to do the industrial policy very well until the reagan came into office in the 1980 s. and said that government is the source of the problem rather than part of the solution but there's been a number of goal of the works by people like marianne and i was you who pointed out for example that the i phone is a good example which was derived and stood on the shoulders of a considerable amount of government already and the idea that these things just magically appear through the magic of the free market is just a fantasy and given how financial lives are economies you can't rely on the free market alone to get us anywhere near to the right kind of policy to catch this is one of the things in the political season i don't understand because a lot of flag waving and

a lot of usa usa from the. poloi in the audience but then when asked about economic policy they hate the us it's like the usa can't do anything the government stinks it's all about private corporations that's why we should throw out everything and the government can never accomplish anything they're very negative toward their own country duplicity there and they don't understand that as you point out without the us government there would be no i phone there would be no. that there being no war when in world war 2 there would be no man on the lower right right so they don't seem to be a disconnect and if you look at things we fund we fund the wrong things right what do we publicly fund sports stadiums china funds chip factories so we're trying to figure out what happened to 5 g. they just rolled out their 60 center sixty's going to be 10 x. 0 or 5 g. you know you look at electric vehicles right they pour hundreds of billions of dollars behind even battery maker who is now becoming the number one in the world control the the space they have 4 percent of the penetration influx of us already which is twice the u.s. and they're going to be 50 percent within

a couple years they really know each charge and stations all over the country so they have a plan they have a policy it's you know to dominate the century integrated circuits i mentioned the chip funds you know usa we still make $25.00 in the world semiconductors we're going down to 5 percent because we live in a world of finance capitalism and we're getting played by china who's really plain state capitalism and we have done this before i mean in the 1980 s. there was a concern that the semiconductor chip market was going to be dominated by the japanese and the koreans and we set up something called samma type which was the private sector consortium with the government and effectively the u.s. was able to leapfrog and move to the next for what form of semiconductor technology was a very very successful project and it was profitable but somehow we've decided that's not a good model to follow anymore i would i would argue that that's exactly the kind of model that you can follow and you can use the military as well you don't have to pick winners and losers you can just how the military is saying you know we want

a vehicle with these kind of specifications if you can build it for us we will guarantee you a market of eggs and that's the way you can actually support private industry in that regard quantum computing another example levon $1000000000.00 in a quantum computing center we needed just under a $1000000000.00 for quantum computing that's going to be the next you know the next big thing so yeah absolutely look at every technology. we need to have some type of plan around for the end to the absence of an industrial policy in america is quite apparent during this time of a trade war and has applied all these tariffs to chinese. and we've also had the tax cuts a trillion dollars of tax cuts where does everything go into share buybacks and yeah well that's it that's just it i mean 1st of all the tax reform was a joke because it was basically a means for the companies to use the result in cash flow to do so there are

stock prices because c.e.o. compensation is basically predicated on what the stock price of the company does as opposed to the underlying operations which is why i disaster like boeing even though the company getting back to the china and apollo able to get exactly the point a point is that you you have to direct these things in the right way and and the problem with trump is that you know he's got a handle on the the problem in the sense that he said he recognizes there is a problem but he's using the 19th century solution protectionism tariffs as a means of dealing with the problem in fact i would argue that instead of trying to dismantle china's elaborate system of state support the u.s. should be doing more to try to replicate it and copy it as they did for example under alexander hamilton when they the big competitor was the united kingdom so i would agree and disagree on some of those points i think the tax cuts were good on the fortune 500 standpoint absolutely they're not they weren't paying the 30

percent corporate tax rate anyway they're all offshore everything in us has become warehouse and distribution and you reckon if your profits offshore small and medium size businesses that's actually important to get the tax rate to some type of competitive level from 30 percent down to 21 percent now we match sweden for instance in the corporate tax rate so it's not we have the highest corporate tax rates in the world next to north korea that had to come down so i think part want to trump strategy. the strategy is you've got to keep the tariffs on because you're going to drive the manufacturing back here you've got our it has are going to drive it back here not to vietnam or cambodia but it was a nice thing so a lot of processing technology to vietnam has gone to vietnam to close these types of things keep in mind it doesn't have the population or the manufacturing base to absorb all the chinese i mean but you have lived in china for 20 years you did the china money report when the chinese government meets in the party me and they do a 5 year plan a 10 year plan what sort of policies like what are they looking at what are they are they telling you know many families in michigan they're quickly to build this

stuff yeah they do i've met with i don't know how many chinese government officials and they're all impressive most some are engineers and if you look at the poll every put it comes from an engineering or science background they spend decades within the c.c.p. system you know start noting the provinces learn how to build economies learn how to support social systems and buy at the end of the end of the decades of a career when you know when they're in their sixty's then they only get up to the top we have politicians whose last job was the bartender. so that's where we're getting schooled they have but i can see is a fantastic leader she's charismatic she's articulate she comes up with good ideas they if i were leaders our older people that you say are great they're the ones that have failed us in the boomer generation has totally failed generation we have a generation of milan eels and generations e who are have their waitresses simply because the previous generation sent our manufacturing jobs to china how do you answer that the whole model is wrong you

can't keep you know the argument is you've got offshore manufacturing because you've got to compete against the you know the sweatshop labor in asia and therefore you pay your workers accordingly and that's the soft option and ultimately it's a race to the bottom and in fact there's another school thought either there was a prominent political economist seymour mehlman in the 1960 s. through to the 1980 s. who pointed out that if you didn't offshore your labor and but labor was a constant you know rising costs that forced you to invest and move up the technological and gold for the higher boat value added type type of products and that for example is what's happened in japan and germany you know they clearly believe in the importance of an industrial ecosystem and i think we have to get back to that sort of thinking as opposed to saying well we're going to all short all to low cost jurisdictions because ultimately that's just not going to get you to a position where you can compete in a viable way with china can us get off the decks to short termism yes and pay

$500.00 about what company it is they go to the cash desk and they are going to financialization and they typically manipulate. well you don't want to look beyond the next quarter part of that is the problem the introduction of the f.c.c. rule 10 b. which reagan introduced in the early 1980 s. before that share buybacks were considered a form of state let us know the regulation across the board outlet it already airs what they're going to say. don't banning the glass steagall. getting a list right you have to read you have to deep financial eyes the economy but one of the ways in which you do that is by eliminating the incentives to. share prices and that has to be a necessary 1st step ok now we are of course in a trade war are there is that emerges sort of cold war with china 1st of all can maybe this a cold war do for american manufacturing and innovation what the cold war the last

cold war dead but also this notion of china holding so many u.s. treasuries is that really an issue or if they does that give them any power over us and anyway you know i know what that's that's just a bogus you know the so-called nuclear option i mean the reality is if the chinese want to personally they'd be cutting their nose to spite their face to sell their huge stock of treasury and in the 2nd instance the reality is the federal reserve simply debits it from the savings account into the so-called checking account the reserve account and boom the money is shifted back and they can do whatever they want but they seem to be doing an end run around that by buying gold along with part of it but they certainly don't have the i just refuse to believe that they play this for suckers on this whole you know with that they can build on board treasury and that we have this they have this nuclear option the thing about nuclear options is when you start to use the nukes you know everything gets blown to pieces but i don't actually believe it's a real problem and i want to move on to the fact that if we're in a cold war of course you need propaganda and who owns hollywood is it the u.s.

or is it because they're that's the biggest market yeah i mean you know the 2nd largest theater chain is cheney's own use they own a lot of the studios known specially minority ownership sell them 1020 percent some higher there is a lot of pushback now on that that you know the lot of the censorship is actually moved from over there to over here because of this financial ownership and a lot of revisionism right so he said over this i don't think we're going to suddenly it's. the ending is different now but. looking desperate and they are censoring and editing we don't need the chinese to help us with self-censorship in the way when you have a high degree of corporate concentration as we do in the us right now and in media it will in circumscribed the range of views that you see but if we're going to take on china in a race in this cold war era we need better propaganda like we had world war 2 hollywood was a star mantilla coming up with great propaganda films and if our propagandists are

going to be working for the chinese is going to be. there is the problem i mean there's a certain degree of hypocrisy i mean google probably trumpets the fact for example that they won't work with the us plan to go on but they are perfectly happy to help china with that with artificial intelligence which of course is being about as a factor heading into more contentious i mean i'm not a favor in favor of cold cold wars in principle but one of the nice things one of the good things about cold wars or even haunt wars is that they do engender a broader set of patriotism and they they also do tend to override the launch computer or free trade and globalization you can start thinking about. activities that are consistent with with with broader public purpose in your own country and the problem when you have you know the irony is that when you have a very very peaceful in environment and no external threat is that you know the the billionaire class and the able to ask like a bunch of sociopathic monsters and there's no there's no constraint because

there's no external threat so that's the one thing you hope that if we do have a cold war 2.0 that somehow there will be a renewed sense of embracing country to some broader public purpose ok flash round well this this but that china america moment they resolved peacefully or more warlike then hopefully it's not too late to disengage from a cold war we also the issues of the 2 cities trap right it's the rising power versus the declining power we need to take a step back we need to reach industrialized here we get a focus. engage peacefully around the world hopefully that happens and it doesn't get out of control martial cold war one did not lead to a global conflict with the union so i see no reason why the embrace of cold war 2 even if it does happen will invariably lead to a military conflict with china there will be competition but it certainly is not negative for the us if they do exactly. right well that's going to do it for this edition out front running 2020 obviously the future is nothing but sunshine and

chinese lollipops well stay tuned for our next episode will continue to dig deep into the issues and policies leading up to election and tell them. what politicians do. they put themselves on the line to get accepted or rejected. so when you want to be president and you. want to be. the 2 going to be press this is what the 43 in the morning and people are. interested always in the waters of.

the iraqi lawmakers pulse a resolution calling for the removal of foreign troops from the country including the u.s. led coalition. that fall was america's assassination of iran's most. powerful general and an strike on baghdad international airport on friday hundreds of thousands of lined the streets as the body of general some soul in miami is returning. also in the stories that shape the week wiki leaks founder julian. assange in a u.k. prison seeing is being lined with sedatives and subjected to 23 hours a day of solitary confinement maybe allegations to a friend in a christmas.