This Instability May Be Worth It. Here's Why.
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What is the impact of Trump's tariff policy on the global economy?
From New York Times Opinion, I'm Ross Douthat, and this is Interesting Times. Just in time for the debut of this show, almost as if he planned it that way, Donald Trump has taken a sledgehammer to the global economy, as his new tariff regime yields crashing stock markets, rising global uncertainty, and widespread fears of a recession. So to try and understand where this radical policy came from and where it might be taking us, our 401ks, our unemployment rate, I'm joined by Oren Kass, who's the founder of American Compass, a populist conservative think tank that has for a while now been arguing for tariffs and for some kind of dramatic change in America's relationship to global trade. So, Oren Kass, welcome to Interesting Times.
Thank you. It is indeed a pleasure to be living in interesting times. I hope it is. So, a podcast, like everything, is a moment in time. And the moment in time in which you and I are speaking is Monday morning. The markets are open and down so far for the third day since Donald Trump announced the great liberation of America from the foreign yoke. And this podcast, therefore, may not cover events that transpire between now and Thursday morning when it's released, but we're going to try and have a fairly high-level discussion about the condition of the U.S. economy, where the tariff debate centers in, before we get into the Trump tariffs themselves, so that hopefully the conversation will still be of use, even in a future in which the audience knows more about how all this plays out than we do. So that's the plan. And I want to start with a big picture question.
When Donald Trump was reelected and entered office, a lot of people thought he had gotten very lucky, that he had inherited an economy that was in really good shape, with low unemployment, with inflation finally coming down after the Biden era, with a high stock market, and with a sense of big technological breakthroughs potentially on the horizon. So, Oren, to begin with, what's wrong with that narrative from your perspective? What is wrong with the American economy in the year 2025 that could make anyone interested in any kind of radical or dramatic restructuring? Well, I think you described where we were in the business cycle quite well, but I think it's really important to distinguish the business cycle from the long run sort of secular trajectory of the economy. I've used the metaphor of bumps on a downward slope.
And I say, you know, if you're sledding down the hill, you can even go over a really big bump and go soaring through the air and, you know, scream, wee! And then you do still land even further down afterward. And I think what we've really seen in the U.S. economy for going on 50 years now is exactly that dynamic. Obviously not in terms of, you know, overall GDP or economists' favorite measures of wealth and material living standards. But when we're looking at the actual well-being and flourishing of the typical working family, their ability to achieve middle-class security, the sort of various social measures that I think are fairly tied to economic opportunity and outcomes, we've seen real decay.
And I think that helps to explain why somebody like Donald Trump has become as successful politically as he has. And it's a problem that has been decades in the making and is going to take a long time to turn around and recover from. But I think it would be a terrible mistake every time we're at the top of a business cycle to say, well, unemployment is below 4%, therefore the problem is solved, where unemployment has been there at the top of every business cycle throughout this period. And that hasn't changed the picture of the broader challenges that we have. So let's be a little more specific about those broader challenges, because as you mentioned, U.S. GDP has continued going up throughout this period. And in fact, so has, to some extent, middle class incomes, not just middle income, but working class incomes. They went up in Trump's presidency. They went up in Biden's presidency, even though then inflation ate into them.
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