If There’s No Fear of Inflation, Why is GOP Against More Stimulus? – Rana Foroohar and Mark Blyth

If there were a real fear of inflation, there wouldn’t be such an appetite for long term government debt at what amounts to a negative interest rate. Rana Foroohar and Mark Blyth on theAnalysis.news with Paul Jay.

Transcript

Paul Jay

Hi, I’m Paul Jay. Welcome to theAnalysis.news podcast. Please don’t forget there’s a donate button at the top of the webpage.

Why does Wall Street seem to have little to no concern about the deficit after years of being concerned about not much else, at least in terms of rhetoric? And if that’s true, why are the Republicans pushing back on the size of the Biden plan? Is there a split in opinion in financial sectors or amongst other sections of the elites when it comes to the size of the deficit? Is the Biden plan enough? Covid is still rampaging throughout the country, and there’s no evidence yet that the vaccine will work or will work soon enough to prevent thousands more cases and deaths.

Some epidemiologists are saying there needs to be a national shutdown for a couple of months to get things under control. If that’s true, does the Biden plan need to pay companies to pay workers to stay home, as well as extending and increasing unemployment payments? And why is Biden so concerned about bipartisanship when there’s never been a moment where the GOP is so disgraced, except, of course, after the Bush-Cheney regime or government and they didn’t want to crush them then either.

Now joining us are Rana Foroohar, who’s a business columnist and associate editor at the Financial Times. She’s also CNN’s global economic analyst. Her books include Makers and Takers: The Rise of Finance and the Fall of American Business and Don’t Be Evil: How Big Tech Betrayed Its Founding Principles. And Mark Blythe, he’s a political economist at Brown University. And again, I keep saying this every time I introduce Mark because I just enjoy saying it. He researches the causes of stability and change in the economy and he says “why people continue to believe stupid economic ideas despite buckets of evidence to the contrary.” Thanks so much for joining us.

Rana Foroohar

Thanks for having me.

Mark Blyth

Pleasure.

Paul Jay

So Rana don’t you go first? What is with the financial sector and other top levels of economic elites? They certainly the preponderance of them seem to be for the Biden plan. You hear people interviewed on Bloomberg and other places where the business press cover stories and they’re all saying they’re not very worried about the deficit. So, one, why aren’t they worried about it? But if that’s true, why are the Republicans making so much noise that the Biden plans too big?

Rana Foroohar

OK, so there’s a lot in there. Let me break it down. The short-term answer about the deficit is, you know, people do care, but they don’t care right away. I would say most people on the street are ultimately concerned about the size of the deficit. But in the short term, particularly this year, all they care about is fiscal stimulus. And that’s why the markets are still up. You know, business people recognized really even before the election that they’d gotten, several months before the election, that they’d gotten everything that they’d get out of Trump, and that from here on out, he was just collateral damage.

I mean, they had their tax breaks. Now, he said he was going to screw up their trade. He was going to do funky things with China to their supply chain. So they were already starting to turn and realize, OK, if we can get a Biden administration in the midst of a pandemic, you’re going to get in addition to easing monetary policy, you’re going to get a dump of fiscal stimulus. Those are probably going to be pretty well-coordinated because Janet Yellen is smart and the administration is actually appointing people that have, certainly compared to the Trump administration, relative levels of expertise.

So there was a kind of a sense that this is a good thing in a really terrible time for companies. Now longer term and we’ve talked about this, I think a couple of times on the show, there’s sort of two bets in the financial market. And one bet is that deficits will matter a lot and they’ll matter a lot, in part because there’s a new regime, China’s rising, Europe and the euro will become a more viable alternative, not as a reserve currency replacing the dollar, but just as an additional currency in the world.

And that the U.S. has just been riding on financial growth for too many decades and that there’s no real Main Street growth picture to be had. And so at that point, if you imagine all those things sort of colliding in the next few years, then you start to worry about deficits because you worry about trust and faith in the U.S. government. You worry about the ability of the government to continue paying for its debts at a time when foreign creditors are going elsewhere.

There’s tons of leverage in the financial system. But, you know, as always, Wall Street wants the next quarter of growth. The markets will not crash on that reality. And then there’s another bet that, you know what, maybe things will be OK. Maybe the Biden administration will actually figure out how to do a moonshot around clean-tech. We’ll get some real growth in the economy and things will be OK and we’ll grow our way out of the deficit, I would say that’s the minority view on the street, though.

Paul Jay

Mark, what’s in it for the Republicans to be obstructing this other than some kind of very narrow political reasons? Their own base are going to get bigger checks if this thing goes through and you would think the Democrats are going to be able to run in two years saying, well, these are the guys who stopped you from getting bigger checks and or, the elites that the Republicans answer to, which aren’t all that different than who the Democrats answer to, if they want this big stimulus. So what’s driving the Republicans to have this kind of opposition to such a big plan? I wouldn’t even say such a big plan to this plan.

Mark Blyth

Well, the simple fact that it’s got a Democratic label on it is a good place to start. I mean, essentially, from 1996 onwards, opposition on stonewalling has been the only thing that Republicans will do with Democratic proposals. We’ve been living through almost 25 years of this. So why would we expect a change? Secondly, under Trump, that kind of reached a zenith with the claims about the election and the basic undermining of the institutions of governance of the United States itself, because what they showed that all they care about is power. I mean, just purely hanging on to power.

If you think about the actions of Hawley and Cruz and the rest of these folks, what they basically said is we are willing to go along with something that we know is complete nonsense in the hope that we can hold on to power. So arguing about deficits is just a footnote on the wider agenda of power for the sake of power. Why do they do this? Because they know that existentially Republicanism has run its course. As Rana just said, there’s only so much you can give to business before they’ve got everything, which is pretty much where we are now. There’s nothing more to give.

We need huge amounts of infrastructure repair. We need huge amounts of social investment in the economy and elsewhere. And this is anathema to everything the Republicans have stood for and delivered on for the past 30 years, which is simply more money for me and to hell with the rest of you. So they’re not going to turn this around. The way you see this was in the attempt of Hawley and others to actually brand, if you will, the GOP as the new working-class party, because the Democrats strategy in the election was essentially urban, suburban, educated, coastal elite, everything except the working-class.

They didn’t actually include the American working class coalition. They built a box around them. And in a sense, they now have nowhere to go. And the GOP, in a sense, could open up to them. But to do that, they would actually have to care about working-class concerns. They would actually have to care about those issues. And that’s why I think there’s a kind of an existential struggle in the Republican Party that’s emerging, not between Trump and the mainstream, but between what is a kind of post-give it all to the elites Republican Party do and who exactly is their constituency?

Rana Foroohar

I completely agree with that. And I think it actually brings up something I’m quite worried about, which is the fine line that the Biden administration has to walk right now in executing even part of their Build Back Better, Reward Work Not Wealth strategy, without creating such a bumpy ride from here to there that the Republicans can say, well, look, look what Joe Biden did. Now the markets have crashed. And now that, I mean, because if you think about what we’re trying to do, if we pull way back, this administration is trying to shift the American economy structurally from being an economy that is based on debt and asset price bubbles to one that is based on income and wage growth. And that’s a laudable goal. But it’s also like turning the Titanic.

And it’s funny, I wrote a column a couple of weeks ago and I said, you might actually know when the markets crash that things are getting better in the U.S. economy because certain things that have to be done. Raising taxes on companies, the labor share rising, some of the push for union labor that’s coming with the Defense Production Act. All of that is going to dampen profits. It’s going to frighten investors and the hot money is going to run.

And because of the way our markets are structured with the amount of passive investing, then that’s going to create a stampede effect. I mean, I just wonder. I would love to be a fly on the wall as they think about and talk about what is going to happen in the summer, because it’s going to get very, very tricky, particularly if vaccine rollout goes well. You’ve got a lot of inventory that needs to be built back up.

You could get a quick inflation spike. So there are all these risks. None of this means that what they’re doing is the wrong thing, but it will give the Hawleys of the world a reason to say, look, Biden is blowing it. It just creates this kind of opportunity that I think the Democrats have to be very thoughtful about.

Mark Blyth

The amazing thing about what you’re saying. And again, I agree with them, but I’ll take a different spin on it, is that it is perfectly reasonable to expect that, you’re going to get a build back kind of inflationary boost. Right? Fine. And that’d probably be a good thing because it would mean that if prices went up, then wages go up. We used to call that growth rather than just calling it inflation right.

But the weird thing is there’s $18 trillion in negative yield and long-term government debt in the world today. Right. The existence of this is a bit like the existence of dark matter. It’s what binds the universe together. And if it exists, it means that all those other stories about hyperinflation, they simply can’t be true.

Rana Foroohar

I love that. I’m stealing that. By the way, I’m stealing dark matter.

Mark Blyth

Go for it. I used to describe it, that was a different, when I was labor market slap?

Paul Jay

For people that don’t get this connection, which to some extent includes me. Explain why if that $18 trillion is out there, the inflation is unlikely. Why?

Mark Blyth

Because what it means is investors are willing to buy government debt at a loss. And if they’re willing to buy government debt at a loss simply because they want to purchase security, because they’re uncertain about the future, then by definition they cannot be expecting an inflation. Because if they were, they would insist on a higher interest rate, not a negative one. So the very fact that we have this world out there where we have interest rates which are on the floor and are going to go nowhere for at least a decade, put that one in the book, I will bet the house on it.

Right. Literally bet the house on it, because that will be the interest rate on the mortgage. But nonetheless right, this is the world that we’re in. And what we’re doing with the deficit games is fascinating because we’re pulling out this playbook from the 1970s where it’s like, oh, well, look, if workers got one cent more, we’ll all be Zimbabwe. And you’re like, where the f*** are you getting this from? All right. So a lot of this is just economic nonsense which is being peddled for political ends.

Paul Jay

Well, if there’s really no fear of inflation and I assume the elites, the financial and other corporate elites, understand that as well as Mark does, I guess, or if not, they’ll listen to Mark and then they’ll understand it. Then is part of the Republican opposition to this plan, especially plans that include extending unemployment benefits, certainly, if there is a necessary lockdown and, if you look at Europe, they’re going back into national lockdowns, I’m in Toronto right now. We’re in a lockdown.

I mean, the schools are closed. If there is a national lockdown, there’s going to be an enormous push for more than just extending unemployment. And just a thousand or two thousand bucks, you’re going to need regular income, which means you take this Canadian and European model and you pay, you subsidize companies to keep the wages going for people that have to stay home.

But when I listen to Lindsey Graham and some of the other Republicans their real disagreement with all this is not inflation. It’s that workers are going to get used to getting this money, especially if the money is more than what they usually make. It’s about the disciplining of the working class that they’ve been able to do for the last, what, 30, 40 years of crushing American workers expectations. They don’t want that to shift. And it seems to me they’re actually willing to risk a worse pandemic then relax their thumbs down on the wages of workers.

Rana Foroohar

You know, it’s funny. I almost wish they were that strategically smart. I fear that it’s more what Mark says and it’s just me, me, me, mine, and my political power. If they were thinking, Paul, like you just suggested.

Paul Jay

Well, I’m quoting Lindsey Graham here because he pretty well articulated what I just said.

Yeah, well, I guess that shows that they have a better grasp on the sort of big political economy picture than I would have given them credit for. I think, you know, Lindsey Graham is right to be concerned about this, because what will happen too if you start to actually see power shifting from capital to labor, that, of course, then is going to bring to light almost immediately other structural problems in the U.S. economy, like health care, for example.

I mean, one of the reasons, one of the many reasons that worker wages have been so flat is that health care costs are growing at three times the average inflation rate. I mean that and we have the screwed-up system in America where this is a company cost. So all this money goes into my CIGNA plan, which is, you know, the amount of shadow work that I’m doing just calling them, because every single time I file a claim, there’s like a month lag and then they lose it, and that’s part of the business model, and I know that because I had a friend at BCG who advises these companies. You know, it’s nuts. And it’s all part of this incredibly unproductive system. And I really do think, I’m going to be optimistic for a minute, I do think that the Biden administration gets this. I think that they get it at a really fundamental level, that all the levers have to be pushed at the same time.

Whether that is politically going to be possible at an incredibly delicate market moment is another question.

Mark Blyth

There’s a question of how delicate the market moment is, though. Essentially the Fed has come out and said, we’ve got your back. Right. So even if everyone sort of begins to lose it, don’t worry, Uncle Fed will be there to put a floor under prices. So in a sense, you’ve got an insurance policy riding into this one.

Paul Jay

I was thinking they should change what’s on the dollar and get rid of In God We Trust and put In the Fed We Trust because they have no doubt their assets will be defended.

Mark Blyth

I was just going to say, in terms of the sort of the rationality of capitalists as a class, I mean, I’ve never understood, despite living here for 30 years the fact that the American health care system exists as it does, because every other capitalist country has figured if we fund this from central taxation, we can reduce all the costs of all businesses by a third. Reciprocally their profits will go up just by you taking on that responsibility. Why is it this is the one country where it was like, no, I will make myself poorer by taking on more costs?

Because thats the American way. That’s insane. Why would you do that? Everybody else does it through central taxation and or a combination of central taxation and private insurance. I mean, again, there are so many open doors for the Biden administration to push through. And if the responses, but we’ll cause a market panic. Well, given the fact that it’s all kind of like inflated bullshit money that’s been given away by Uncle Fed anyway, maybe we should have a correction if I lose 20 percent of my retirement portfolio over a two year period, but I get public health care for the country. I’m up. That’s given. That works.

Rana Foroohar

I mean, of course, and we all know that this has to happen. We all know this is a good thing. I mean, you know, I thought it was such a good thing that I’ll be frank and say I took my money out of the market a couple of years ago. So I missed this rally, you know, because I just didn’t think that this whole mirage was going to last this long. I thought for sure that the correction was going to come a while back.

But, you know, it’s funny. I just got back from, I was in South Carolina and doing my usual lazy journalist trick of interviewing the cab drivers to find out what they’re talking about. And I had an interesting conversation with a guy there that just the reason I worry so much about a market correction at the beginning of the Biden administration is that for a lot of people, they really not thinking about that big shift that needs to happen. They’re just thinking about, oh, my god, I mean we’re so asset bubble based, if my 401k goes down at all, then the Biden administration has screwed up. And that thinking, that very shallow thinking is, and the political ramifications of it, are what I am worried about, particularly in advance of the midterm.

Paul Jay

Well, Mark, how might this affect Biden’s decision whether to use budget reconciliation, which is a process by now most people that watch theAnalysis, know what it means, because everyone’s talking about, but at any rate, and the intricacies of it all, I don’t understand, but I know it means they won’t need the filibuster proof majority, 51 percent will pass a budget if they use this budget reconciliation. And I don’t see how they’re possibly going to get a package through that’s big enough and effective enough without it.

Mark Blyth

Yeah, I agree, I mean, I think that’s exactly the kind of structural position that they find themselves in, but we do have a kind of poisoned chalice problem, right? If you come in saying you want to heal America, that you were lied to. I’m not the one doing the lying that we are better together, that we can do better than this. And then you come out and just say, you know what, screw you guys.

Then you’re just as bad as the other side. Right. And that gives the Republicans every reason they want to come after you again. Now, if you don’t do that, they’re going to block your budget. So you’re damned if you do and you’re damned if you don’t. I think that’s been true of every Democratic president that I’ve ever lived under. I think from Clinton onwards, that’s basically been the game. So this is just another iteration of the game.

Paul Jay

I watch Fox a lot.

Mark Blyth

You can tell you’re an angry white guy.

Paul Jay

Yeah, really. Because honestly, I know everything that CNN and NBC are going to say and it gets boring. At least there’s the occasional surprise on Fox. Yeah, although not too many. But they were going on and on about how Biden may want the Democrats to lose Georgia because it will then give them an excuse not to have to go where the progressives in the Democratic Party would like him to go. And even this obstructionism of the Republicans. I think, and who am I? I never got elected to anything. So that doesn’t mean I know anything about electoral politics. But I would think a significant number of people that vote Republican if over the next two, four years people’s lives actually got better that would go a long way to overcoming prejudices and whatever.

And they could live with budget reconciliation, which nobody really knows or understands because they’re going to say, oh, shit, you know, I got an actual paycheck while we were closed down instead of a lump sum payment that was gone in a month or three weeks or something. Rana?

Rana Foroohar

 Yeah, no, for sure. I mean, that is the hope. And in a funny way, I mean, the pandemic may be as much as it’s a terrible tragedy, it may also be the gift that keeps on giving. We got Trump out and it could provide a backdrop for Biden to start doing things like, for example, the invocation of the Defense Production Act. On the one hand, that’s about managing the immediate crisis.

But on the other hand, that’s the beginnings of let’s think about an economy based on resiliency as opposed to efficiency. There are any number of other kinds of levers that he can pull. He can through the SCC, which is now, of course, run by Gary Gensler, who’s very much a reform-minded regulator. He could end share buybacks. I mean, they were considered market manipulation from before the early 1980s. That could go away.

That could become a lever to put pressure on some of the monopoly powers in Silicon Valley. You know there’s lots of things, just as Trump governed by executive order, I mean, there’s so many things that Biden can do unilaterally. So I think that you could see the pandemic being this moment where all these levers get pushed and then you really do get a sense of, oh, wow, OK, yeah, there is a way to be more secure.

There is a way to rethink our health care system. There is a way to actually guarantee people’s jobs and create a social safety net. I think that that would be the best case scenario for sure.

Paul Jay

Let me go back to this. Watching Fox. Most of the commentators loved Biden’s inauguration speech. They loved all this unity, unity stuff. And I think precisely because, Mark, what you said is when you lay out unity as your main card, then how do you then go and force legislation through the Senate? And so they realize that what Biden was really doing was handing a certain amount of power back to the Republicans at one of their most dire moments where they should be in complete disarray.

And, for example, the progressives in the Democratic Party are saying these one-time payments aren’t enough. You’ve got to give regular weekly checks until the economy comes back in one form or another.

You know, maybe you get, what, two weeks of rent, one month of rent, and then you’re broke again. But instead of going there and even more transformative reform, everything’s pitched around this bipartisanship. And Biden and his allies can always say, oh, we could never get that through the Senate.

Mark Blyth

No. So let’s think about some of the models, that constraint us here. And I don’t mean sort of the fancy formal ones. I mean the informal ones in our heads. Most people do not understand that governments are not like households. Most people do not spend their time thinking about the difference between money and high-powered money, bank reserves, and all the rest of the stuff that makes government’s ability to finance itself qualitatively different from households, we’ve definitely love the household analogy.

We’ve got to tighten our belts, don’t spend too much, all this other stuff. If you put through Biden’s proposals and add it to the CARES package, the United States in 2020 and 2021, it’ll spend more than it spent in the entire New Deal period, inflation-adjusted. And that’s without then saying everybody gets a paycheck until this is over. Now, I happen to think that as the dominant reserve currency and the Euro will never miss an opportunity to miss an opportunity, and you’d be mindful to put your money in China because you might get arrested and never get it back.

We actually have quite a lot of room to do this. I think it really could be done. But you’ve got to deal with the folk models in people’s heads. And the vast majority of Americans do not think that running up extra 15 trillion dollars in debt just because there’s a virus that’s taking out one in a hundred people is a good idea. And if you do that when it comes to the midterms, you’re going to pay an awful electoral price even if it is the right thing to do.

Paul Jay

Yeah, I mean, the epidemiologists, including some that are on Biden’s transition committee, they’re essentially saying two months. So it isn’t as staggering as it might be.

Mark Blyth

They don’t know.

Paul Jay

I agree, they don’t know.

Mark Blyth

The thing about this pandemic is it shows. You know, my favorite line about science and scientific knowledge is a comedian called Dara Ó Briain who says, you know what science doesn’t know everything because if it did then it would stop. Right. And it’s a very profound insight if you think about it. And when you’re dealing with something new and novel like a Coronavirus pandemic, which throws up a new virus, and is it deadly or, you’re just constantly walking through a fog and you’re changing your mind because you’ve got new information, which then if you’re a politician, you get slammed on because you get called inconsistent. Again, you can’t win right.

So the notion that we know it’s going to be two months is the stupidest, deadliest thing to say, because it might be six, in which case, you now, look like an idiot. And what you promised you would need to do for two months you need to do for six months, your credibility is shot. And as we see right across the world, irrespective of. This is happening in Denmark, for Christ sake, they have a group of rioters out there called the Men In Black.

This is the best welfare state and best-governed country in the world. And you’ve got people who are like, I am done with this lockdown bullshit. Right? So you’re losing public trust all over the world. And we’re operating at this level of, and the answer is we should run up 15 trillion dollars in debt. I’m not sure that’s the right answer. I’m not sure that’s even the problem that we face. I think we face a chronic problem of public confidence and a chronic problem, the ability to actually do what it says on the tin, which isn’t just a money problem.

Paul Jay

Yeah, but the lockdown, like I was just reading an article in The Lancet and there are others. The thing about the lockdown, it’s not going to stop the pandemic. One hopes eventually the vaccine will. What it does do is that allows more people to live because there’s room in the hospitals. And that’s what’s happening is when the hospitals are overwhelmed, people can’t get treated and then a lot more people die. So, yeah, and of course, who knows if it’s two months or not.

I mean, there’s been lockdowns and they start opening up and then they have lockdown again. And maybe that’s what we’ve got to live with. But let me go. Well, let me ask Rona if she agrees, at least if you forget how people feel about all this. And I’m not saying you can. But the United States has a large capacity for this kind of subsidized financing. If there was the will.

Rana Foroohar

It does. But I’m going to say that I think at some point it can’t just be checks being cut that you have to start linking those checks to the more structural changes that have to happen. Otherwise, you get past the pandemic and you’re kind of at the same place you were before where you still have, I think, a fundamentally fragile financial system with all this dark matter, that is debt and leverage, holding everything together kind of invisibly.

But at some point, there’s a reaction and the whole thing blows up. We have to change that. And, you know, there are some ways to do that. And the pandemic presents, I think, opportunities around rethinking innovation, rethinking supply chains. I am a little bit bummed out just to get into foreign policy for a minute about this new European trade deal with China, because I think the last time we were together, we talked a little bit about, you know, was there going to be more transatlantic alliance under the Biden administration?

Could there be a way that the U.S. and Europe could come together and, you know, really kind of create some common ground around things like climate standards, you know, the digital taxation, regulating the 21st century economy. That’s going to get tougher now that Europe is essentially, you know, Mark’s clearly right. Europe never misses an opportunity to miss an opportunity. I mean, they’re just not walking the walk when it comes to democratic values. You know.

Mark Blyth

The new guy who’s going to be the contender for Merkel’s job is mercantilism personified, you know, he wrote a 10-point note on what is important for German business going forward. And he mentioned climate once. He meant the investment climate. So long as they are able to sell BMWs and Volkswagens to China they don’t give a damn. Strategic autonomy means the ability to sell stuff to China and not have the Americans give a crap about it. That’s really what it mean.

Rana Foroohar

Wow, that’s amazing. Yeah. Well, I mean, and if I can just brag about Germany for a minute, I mean, the Germans are they’re shameless. They’re totally shameless. They’re like the China of Europe. I mean, it’s incredible. It really does feel like it.

Paul Jay

But you’re not suggesting the United States isn’t just a shameless.

Rana Foroohar

No, I mean, we’re definitely shameless, but I think Germany doesn’t get called out for that enough. Like I have a secret Swabian housewife inside me, like I do like that kind of like prudence and like everybody’s working together and no one’s running up debt. I kind of like that. I’m from the Midwest immigrant kid. What can I say? But no, the Germans are, they have driven this deal. They’re making it very difficult to come together, the U.S. and the EU on things like antitrust. I mean, this is going to actually, I think, make it harder to to fight big tech, to fight monopoly power.

Mark Blyth

Let’s not even mention keeping Putin in power by doing Nord Stream 2. You know, let’s throw that one in the mix as well. So what we’ll do is we will bankroll the Russians, we’ll placate the Chinese, and we’ll hope the Americans won’t get onto us. Yeah,  go Europe.

Paul Jay

And the Americans will do the same more or less after a lot of rhetoric.

Mark Blyth

We don’t even have to do that. Look, here’s the difference. The bottom line is we have the global reserve asset so we can do whatever we want. Even companies in Germany and China, bank in dollars. They don’t use the dollars, they have to turn them into another asset. They usually buy our debt, which is one of the reasons interest rates are through the floor. We can just rinse and repeat because nobody else is stepping up to the plate.

We are what we are. We can be the biggest in the world. The point is that other states and agglomerations that could step up and do different things that have a really good line in doing the right thing are actually full of it. They don’t do any of it at all. Their hypocrisy is even worse.

Paul Jay

Why, because they pretend to care about human rights more.

Mark Blyth

Yeah pretend to care about it, and it’s pure pretense.

Paul Jay

All right well, as long as we throw Canada in there too.

Mark Blyth

Absolutely.

Paul Jay

For hypocrisy.

Mark Blyth

On climate change, second to none. I mean, really apart, like getting bent out of shape about canceling a pipeline. I mean, come on.

Excuse me on everything. Canada is the most self-righteous B.S. We because I’m a dual citizen. But now I’ll put my Canadian hat on. We have been able to ride the empire’s gravy train for decades. Let the United States do all the dirty work we get to look like we’re the peacekeepers, except we’re a major arms producer and seller and part of all the wars that come our way. Anyways enough trashing Canada. I want to get into something else.

Mark Blyth

Go one then.

Paul Jay

Although I’m happy to trash Canada just about any time.

Rana Foroohar

I think you have decent healthcare. OK, go.

Paul Jay

I was actually pleased by a couple of things because I’m firmly of the opinion and I can’t imagine how anyone is going to disagree with this. Whatever you think of China’s domestic situation, if there isn’t cooperation between China and the United States on climate climate, we’re fucked. Right. Excuse the language. And I was actually kind of pleased when Jake Sullivan was interviewed by I guess it was. Was it Fareed Zakaria? No.

Rana Foroohar

I don’t know, but yeah.

Paul Jay

And then during the hearing of Avril Haines, they were both asked pointedly, is China a competitor or an adversary? And both said very clearly, Jake, even the clearest, who’s the new national security adviser? That it’s a competitor, a global competitor. He wouldn’t use the word adversary. Haynes said, well, when it comes to intelligence matters, it’s an adversary. But the President has framed this, that China is a global competitor, and then mentioned the need for collaboration on climate. I thought that was positive because in the election campaign, Biden’s rhetoric on China, he was trying to outflank Trump in terms of his anti-China rhetoric. And if there isn’t this kind of collaboration on climate stuff, it ain’t going to be good.

Rana Foroohar

No, that’s true. I mean, the Biden administration’s China position is going to be really fascinating. There were recently some appointments from CNAS the DC think tank that’s done a lot of work about economic competition between U.S. and China. There were a bunch of appointments to Defense, to Treasury, to the Fed. So I get the sense they’re trying to kind of do a 360 connecting of the dots, which they would be the first administration really to do that in thinking about China. You know, the Defense Department in the U.S. has an official paper saying China is our biggest single national security threat in the coming generation. So that’s an official position. But economically, trade policy, financial regulation has always been made as though those two things were happening completely separately. So like it or not, whatever the policies are, I think connecting the dots is really smart. And I think that this administration will definitely do that.

Paul Jay

Mark?

Mark Blyth

I’m not sure I have anything to add, really. Yes.

Paul Jay

All right. A final final question. I brought in Canada, so at least we had one country that wasn’t the United States in our conversation. Now, let me bring in one more country. Mark, is Scotland serious about getting out of the United Kingdom and they’re talking about having some kind of new federal set-up because they better accept that Scotland is on its way? What’s your take on where that’s at?

Mark Blyth

So I think I’m going to talk about this tomorrow, actually. And it’s funny that there’s a weird thing about British politics, that every time there’s a kind of national crisis that usually happens in the Conservative Party and then they usually do insane things that screw up the country. So if you go back to 1926 and the decision to go back on the gold standard when the economy was worth half of what it was before the war, which led to a hemorrhaging of gold, the collapse of the economy, the rise in unemployment, the beginnings of the Great Depression, they did that because the totemic value of, we’ll go back on gold, everything will be fine, right.

Restore the past. Right. Then when they got their asses kicked in Suez it was all well then we’ll join Europe and then we’ll be a big country there. And then it was we’ll leave Europe and then we’ll be a big country again. And now, the Scots have basically said we’ve had enough of this, we’re off, because this is ridiculous. The Conservative Party hasn’t won a majority in the national election in Scotland since 1951. So that’s how long it is since Scotland actually had a government that it voted for.

When you look at the opinion polls, over 70 percent of people under 35 are voting for independence consistently. There’s a cohort effect right across the whole age distribution and the young people. This is happening it’s simple as that. And then there’s a feeling that if you look at GVA, the underlying component of GDP growth – Gross Value-Added – the only part of Britain that grows is London in the southeast. And Brexit has just a very nice slow puncture into that.

So that model is going to basically deflate itself over the next decade. So if you’re Scottish, the question is, yeah, you’ve got a little bit more in public expenditure now to cover your implicit deficit on your budget, but you’re not in control of your own destiny and the whole country effectively is on kind of, if you think about Britain’s like the world’s largest crappiest UBI experiment, because the only place that generates money is London.

And they just give out to these regional administrations. And that’s what everybody else lives off of. And that’s a kind of pathetic existence. And I think that basically Scotland, even the northern regions of England, are beginning to look at this and just say, what is this thing? So, you know, Britain’s been trying to restore itself to greatness since 1926 and failing every single time. And this is just the latest iteration of that failure. And this time it may actually lead to the breakup of Britain.

Paul Jay

I think it’s three four hundred years ago or so that if you were born in Scotland you had automatic citizenship in France and vice versa.

Mark Blyth

Yeah I believe that’s true.

Paul Jay

So there’s lots and lots of history there where the Scots would be happy to get rid of.

Mark Blyth

Well, then you have to get into this weird thing that in order to join the EU, you would need to have your own currency. So you need to go out of the pound to get your own currency. Once you’ve established your own currency you then have to meet all those lunatic criteria, about debts and deficits that nobody is doing anymore. So maybe you get a waiver or not. And then you could join the EU as a very small open economy, that has a very low export-dependency ratio, which basically means that you won’t have any autonomy at all in your budget or your fiscal policy. So that would be independence. Nobody’s independent. It’s all nonsense. Rana you’ll love this one, 90 percent of all central bank moves are reactions to Fed moves. So who exactly has got monetary policy independence out here? Nobody, the whole thing’s a joke, right.

Rana Foroohar

Mark, you’re pulling up the curtain. Don’t tell.

Mark Blyth

 Yeah, I know exactly, look behind the screen. Right. Yeah. So, you know, we talk a good game on independence, but honestly, in the twenty first century, what does that actually mean.

Paul Jay

All right. On that note, we’ll end it for today. Thanks very much for joining us. And thank you for joining us on theAnalysis.news podcast. Please don’t forget there’s a donate button at the top of the web page.