Robert Lighthizer
speaker
237 appearances
1 recordings
1 series
first heard Mar 2025
last heard Mar 2025
Robert Lighthizer’s voice in public audio — every appearance, attributed to the second.
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So that's the fundamental question, Tucker, and thank you for having me on. It's a pleasure to be here. I've been a fan for a long time. So I think you have to start with the proposition, has the system failed? And to me, it's an emphatic yes. I think of it in sort of two ways. One, if you think of the... The way trade is supposed to work, you're supposed to export in order to import.
And then you get the benefit of trade. You get actually, you do what you do best, I do what I do best, or I do what you do less best. You export, we import, and we get the benefit. We both have higher standards of living. That's not really what it's evolved to.
It's evolved to now where you have a few countries, the United States being the biggest, that have an open capital system and an open trading system. And other countries have an industrial policy that is designed not to increase the standard of living of their citizens, but to gain wealth.
So what they're trying to do is get wealth in order to get assets in the United States, in order to get technology, in order to get all these kind of things that make you wealthy. So I think of the kind of failure points as being, one, because this system doesn't work, we have this giant transfer of wealth from the United States overseas, and that is in the form of trade deficits. And
The way the system is supposed to work, no one should have large trade deficits for long periods of time. Things can happen. You can do it. You could have trade deficits with one country, surplus with another. But the notion of a country having hundreds of billions of dollars of trade deficits every year is not how it's supposed to work. We now are to the point where our trade deficits –
They calculate them at about $700 or $800 billion. If you did it the way you or I would do in a sensible way, you'd probably be at a trillion or a trillion and a quarter dollars. So that's a transfer of wealth from Americans overseas in return for current consumption. And it has nothing to do with economics. It's entirely the result of industrial policy of other people and our being defenseless.
So you ask yourself – What does that mean over a period of time? Why should I worry about that? There's a data point called the international investment position of a country. And that is how much for us all Americans own throughout the entire world versus how much everyone else owns here. That number is a negative $23.5 trillion.
And if you said what was it 20 years ago, it was probably a negative $3 trillion. So we have transferred about $20 trillion worth of our national wealth and I would say the future income of that wealth. overseas in return for current consumption.
No. So it's how much Americans own overseas.
All over the world. Versus how much everybody else in the world owns here. And it's a real calculation. It's not something I did, right? It's a real statistic. It's been around forever. And what would that include that they own here? So, well, I mean – so they own – $23.5 trillion worth of stuff. But if you said, what is it mostly? It's probably mostly debt. A lot of it's debt.
A lot of it is equity in our companies, real estate. Those are the principal things that they own. Those are the big assets. Debt is a big one, but also ownership and equity, a lot of it portfolio assets. Now, some of it is foreign direct investment where a company actually comes in and buys a piece of land and creates jobs. But most of it isn't that. Most of it is just they own U.S. equities.
If you think about the United States for most of our history, particularly since the Second World War, we Americans were thought rich because we owned more overseas than people owned in America. That's what makes you rich. Now we are poor to the extent of $23.5 trillion. Now, this point is an interesting one.
In 2003, Warren Buffett did an article on this point, and he was worried about the trade deficit growth. because it was leading to a negative net international investment position of Americans. And it was basically transferring – well, it's the same thing I am. When he was worried about in 2003 that the number was a negative – $2.3 trillion.
So since he sort of raised the red flag on this and said, we've got to get back to balanced trade, the situation has gotten geometrically worse. So that's the first condemnation of the current system. And we can talk at great length about that if you like. The second is this system has really slowed economic growth in the United States. So let me give you a point here.
If you think from the 1960 to 1980, And then 1980 to 2000 and 2000 to the present, think in those three increments. From 1960 to 1980, we had 14 years of plus 3% GDP growth, all right, reasonable GDP growth. From 1980 to 2000, again, we had 14 years of plus GDP growth. Since 2000 to now, we have had three years. And one of those was COVID, which doesn't really count.
So the last time we had plus 3% GDP growth was 18 or 19 years ago. And that coincides with this period of uber, some would say hyper-globalization, hyper-free trade that came on largely in the 1990s. So we've seen the transfer of wealth overseas. We're getting poorer. We have seen American economic growth. We've also seen a deterioration of our technology, of our technological lead.
And there's a number of ways to think about this.
Well, but the demographics is an interesting point, and I agree with what Vice President Maas talked about the other day about how one of the things about immigration is it does get you dependent on low wages, and when you depend on low wages, it tends to stifle innovation. So I agree with that. But I'm making a little different point. If you think when you lose manufacturing –
and you lose manufacturing jobs, you also, it slows down your innovation. There was this notion that, well, we'll innovate and others will manufacture, but it doesn't work that way. Most of the innovation is near the point of manufacturing. So what are my data points to suggest that we are falling behind? All right, first is we invented the personal computer.
Now we make almost none and none without foreign parts. We invented the semiconductor. We make now 8% of the global amount. We used to dominate it. We can say the same thing about rare earths. We didn't invent them, but we used to dominate that.
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