Geopolitical Forecaster Warns Europe Remilitarization Could Backfire on US Strategy

Jacob Shapiro [00:00:00] But I'm actually, I was just in the middle of writing my weekly wrap up for, for my little free newsletter. So I'll tell you exactly what I have on my mind right now. My big, my big topic for the week actually has been the sea change in relations between the United States and Europe that we've seen this week. So it started with Pete Hegseth, the Defense secretary, basically telling a group of NATO leaders that the United States, it's not prioritizing security in Europe anymore, that we've got bigger fish to fry with migration and quote unquote communist China. They love to call it communist China. I wonder if they call us Democratic United States. I

Vance Crowe [00:00:37] Don't know what called bureaucratic United States.

Jacob Shapiro [00:00:39] I don't know. And then you had a couple hours later, president Trump came out on social media and said, I had a great call with Vladimir Putin. Didn't tell the Europeans about it first, didn't tell the Ukrainians about it. Said that they were gonna start negotiations immediately and maybe hang out a bit in Saudi Arabia. The Russian side, by the way, much more coy. They said they had a good call, but did not confirm any meetings or any agreements that were reached or things like that. But that was a big change. And then JD Vance this morning, castigating the Munich Security Conference telling them that Europe's biggest threats were from censorship and European authoritarianism, not from Russia and from China. And really pissed off the German defense minister. I don't know if you saw this, the German defense minister, minister, like put his English remarks aside and just started speaking in German about how angry he was about the things that that Vance had said. And we can get into whether you agree with these things or not, but I do think it, it is a big change in how the United States is dealing with Europe. And it was sort of foreshadowed by, you know, Trump's threats on with tariffs against the European Union, what, a week or two ago. But I, I also think it's, it's pushing, it's pushing Europe away from the United States, and it's a fundamentally different way of thinking about the transatlantic partnership in, in ways that we haven't thought about it since the end of World War ii. And I guess the one cautionary tale I, I would have at the policy level is be careful what you wish for. If what you want is a self-reliant, more militarized, more armed Europe, we saw that movie, it wasn't really so great. And, you know, some of the comments from Friedrich Merz, who's gonna be the presumptive German chancellor in his interview with the Economist this week, I don't know, I I I can start to hear like, like Germany rising and the, the, an independent foreign policy and German Germany rising and how they're gonna push back.

Jacob Shapiro [00:02:22] So that, for me was the biggest issue of the week. But we've got the steel and aluminum tariffs. We could talk about, we could talk about that hot inflation print in the United States. I thought Trump and Modi's meeting was interesting. And then some of the things China's doing in the background are interesting. And we've also got bird flu. So I mean, you, you, you sort of go down the list, like there's plenty of stuff we could talk about, whatever you want.

Vance Crowe [00:02:41] So you and I got to meet at a, at an event by armed services up in northern Wisconsin, northwestern Wisconsin. And I got a chance to hear you speak, but the reason that I thought that you were such an interesting person I don't normally bring on geo forecasters is because you're one of the rare people that is in that economist, futurist world that actually has skin in the game, right? Like you are most of your time you spend working for, is it money managers? Is that how you would describe it? What do you do with the information that you are putting together in a newsletter and who reads your newsletter?

Jacob Shapiro [00:03:17] Yeah, so I'm, I'm the director of research at the Bespoke group and the bespoke, the bespoke group is basically trying to change the way that people think about wealth. And this is one of the reasons I loved your presentation not to do this mutual self-congratulatory patting on the back, because we talk all the time about how wealth is not just dollars and cents, it's about meaning. It's about what do you want future generations to inherit? What ideas do you want to be passed down? What are those values and priorities that we talk about? When you started talking, I thought, oh, here's another thing about succession. And no, you were actually talking very specifically in your own world about how you help the communication of ideas across generations. So all of that is to say, yeah, like basically I'm a director of research for a company where we are managing portfolios and also matters for ultra high net worth families, families that have have a hundred million dollars and plus that they, they need to work with us on. And some of those are, you know, young entrepreneurs who have had great success. Some are older folks who maybe have inherited things or made the right bet at Bitcoin at the right amount of time. And we do everything from, you know, planning the structures that you need around where to own and how to own things, whether that's to pass wealth down or protect from taxes or whatever your sort of, whatever your imperative is there. And then what assets you should actually own and then how you're thinking about the future. So think of me as the international research guy for a firm that is trying to manage generational wealth that has been built up by these people and how we pass that wealth down across generations, which is to say, I'm not one of these guys who, when I'm going up there speaking, I'm not selling my next book. I'm not asking you to buy my newsletter doesn't have a price. Maybe it will one day if it gets big enough. Like that's the stuff I put out there for free.

Jacob Shapiro [00:04:49] The podcast that I put out is free. If I'm wrong about inflation, it's gonna be wrong in the portfolios that I manage. It's gonna be wrong in my own pocketbook. And it's, it's actually really refreshing because the, the network of Geo Pol geopolitical commentators and futurists, it's actually pretty small. Most of us either worked at the Eurasia Group or Stratfor back in the day I worked at Stratfor, and all of us kind of know each other and came up together and were trained together. And I really don't know of many others who have skin in the game in that particular way. And for me, like I, I only started working in this part of the world in the last five years. Like the first 10 plus years of my career was just in the sort of straight geopolitical analysis, selling research or selling subscriptions. And I really like working in investing because there's an objective feedback mechanism you can argue about whether you got a forecast right or a political development, right? You can weasel word it or I said maybe or blah. The market tells me whether I'm right or not. At the end of the day, either the trade worked or the trade didn't work and it has a nice way of filtering out all of the political noise and Id and all the ideology and telling me, okay, like this take was correct, this analysis was correct. So yeah, I, I appreciate you you seeing that. 'cause I do think it is one of the differentiators for me.

Vance Crowe [00:06:01] So you mentioned two names, I think people have heard, but like they don't really mean anything. Eurasia group Stratford. What, what is this? Like who are these people? Are they a part of the deep state of bureau bureaucracy? Are they, you know, similar to ICS or McKinsey? What is this? Alright, I'm gonna break in here for just a moment. It's not every day you ask somebody if they were a part of the deep state, but Jacob Shapiro is gonna have some pretty interesting answers. I met Jacob at an event put on by a RM services, which was in upstate Wisconsin. And there I was a part of a group of people giving a speech to a group of farmers that want to know, hey, what's coming in the future? So they had a commodities trader, they had me talking about passing down what you've built over a long time and they had Jacob there talking about the economy and what could happen in politics. Now normally when I see somebody talking about the future, I bristle at it. It's not something I particularly like. Whether you're predicting where economic markets are gonna go or where the political world is going or the weather. If you truly knew the answer to any of those questions, you wouldn't have to go give speeches about it. You could just go out into the betting markets, whether that's just betting on commodities or you could straight up just go to these new sites like Khi and start betting on what political outcomes could be. So what I really liked about Jacob was the fact that he works for a group of money managers and he's willing to go out and say publicly what he thinks is going on and some of the outcomes that he thinks could happen.

Vance Crowe [00:07:34] And the reason I like this is that it's skin in the game. If his investors hear it and then find out six months later that he was way off, now they can say, well is this a good place to put my money? So I have really enjoyed talking with Jacob and I invited him on and actually this is our second conversation. The first conversation I had, I was so intrigued, I don't think I hit all the buttons the right way so it didn't record. And so we had to do this a second time. But the second interview, the one you're listening to right now has entirely new information in completely different subjects because of how well versed Jacob is. So we'll get back to that in just a second. But first I wanted to talk about Legacy Interviews. Longtime listeners know that Legacy Interviews is a service that I offer where I sit down and record your loved ones telling their life stories so that future generations can know their family history. After we either sit down here in the studio or do an online interview, my editing team will cut it together, it will make it sound and look beautiful and your family members' memories will be captured forever. Just this week I received an email from somebody that had hired Legacy Interviews but a little too late. The email was actually an obituary of the man we were supposed to interview and it really hit me hard. We have been trying to make these schedule as quickly as we can. We have a backlog of about two months, but when it came time to do this interview, we'd waited too long to start and he was in not a good condition to be able to record his life stories.

Vance Crowe [00:09:06] And a couple of weeks later he passed away. So I bring this up, not to be morbid, but because it's really important. If you've been thinking about recording one of your family members, don't wait. There is nothing that's gonna get better about their stories with time. And in fact, just getting it done will provide peace of mind both for you and for them and give future generations something that is immeasurably valuable. These things happen and it's something sad, but we can make something good come from it if I can just prompt you to act. And I don't even mean by hiring Legacy Interviews. We have a great service and if we can help you out, you can find us at Legacy Interviews dot com. But we will also be willing to help you record your interviews. There are millions and millions of stories out there that need to be recorded. And if you want to do it by yourself and you feel like you won't put it off or procrastinate, you can call me up and we'll talk about the types of questions to ask, what you can do to make sure you're getting good audio and how you can just set it up the right way. I think this is deeply important and this week's email was just a reminder that time is not on our side for this. Alright, let's get back to the conversation with Jacob Shapiro,

Jacob Shapiro [00:10:20] The Deep State. Yeah, so think so. The Eurasia Group and Stratfor are, were basically two consulting groups that were founded in the mid to late 1990s that said that the sort of optimism of the nineties, the end of the Cold War, the FIA's end of history, that we were all just gonna have free trade with each other and hold hands and sing Kumbaya. That that wasn't actually going to be the future. That geopolitics and zero sum relations between countries would probably reassert itself at some times. And if you looked underneath, the surface was already beginning to, so these were companies that wanted to take insights from political science and from political analysis and offer them to businesses or to investors to work those into their models. And it was a particularly lonely place to be in the late 1990s. There was, they're the two groups because nobody thought that way in the 1990s, everybody thought the US had won the Cold War, everything was fine. This is pre nine 11 too, so there's not even that level of it. And so, you know, Ian Bremmer started Erasure Group. He worked primarily at the beginning with energy companies and he was on Wall Street. George Friedman founded Stratfor. Stratfor was started as the Center for Geopolitical Studies at LSU actually, and then became this consulting organization that was working with, you know, everything from foreign oil companies to selling subscription research to the individual consumer. And, and so they were really the two big shops that were in town. So if, if you're a big geopolitical nerd, like you know those names, I, I don't know who said this, I always, I always say it and I, I wish I could give credit to the person who said it.

Jacob Shapiro [00:11:52] Ian Bremmer is sort of the marvel of geopolitics and George was the DC comics one is kind of funny and a little more optimistic. And you can see that in the way that Ian comments on things now. Whereas George was much more, no, like this, this stuff is actually zero sum when you get beneath all of all of the flowery language in general. And it's a, it's a space that has just blown up. In the last, really since Russia invaded Ukraine for most of the first 10, 15 years of my career, there were niche industries or niche types of departments that would want this kind of analysis. But geopolitics has entered the zeitgeist and now everybody in their mom fancies themselves a geopolitical analyst. And it's funny to me because like I said, those of us who have actually spent time thinking about this and developing these methods, like it's basically a discipline, it's a way of thinking about the world and how nations interact with each other. Whereas, you know, you have some groups out there, whether they're large investment groups or companies who, who they start a geopolitical risk center in their own company and really they just go and get former generals and say, oh, this is our geopolitical risk advisor. And they, they just say, oh, we can talk to the general, so now we have geopolitical risk. It's ac it's actually a much different way of trying to approach the world and anticipating what's gonna be next. And I always say, and this also differentiates me from some, some of my other brethren in this sense, it's just one tool in the toolkit. So if you don't put geopolitics in conversation with economics and cultural issues and history and you know, sometimes military affairs and military technology, like you're gonna miss things. And I think one of the big mistakes of the big forecasters is they take this one thing geopolitics and then they try and make all these predictions based on it.

Jacob Shapiro [00:13:27] Like no, like it's one tool in the toolkit and I'm only as good as like the other people that i I interact with on that sort of multidisciplinary basis. But yes, I, I'm going off on a tangent there. Stratfor and Eurasia group were basically the two companies that were ahead of their time in anticipating the world as we see it today. In the late 1990s. Those two groups were basically betting, yes, this kind of world is going to come back and both companies and governments are going to need this type of analysis for when that world comes.

Vance Crowe [00:13:54] So when I was studying international relations at the graduate level, I didn't know where I was gonna go, but I remember that when we were studying this stuff, they always said the thing that makes an international relations scholar different from a guy that reads a lot of newspapers is that the scholar has a, a concept for what, what actually drives the world. So you have like the realist that says it's all power. And, and at the end of the day, you know, money equals power and power is genuinely like the ability to make people do what you want them to do because you either have an army or you have some kind of trade, then you have the liberalist perspective, which would encompass like, well there's all these institutions and we can use these and soft power has a much larger role in deciding how things are going. And then there's a bunch of other breakouts. Do you view the world in this same way or is this another field that you operate maybe differently from?

Jacob Shapiro [00:14:49] Yeah, so I'll, I'll talk, this was one of the best things that George did at Stratfor, and I can only speak for the Stratfor part of this equation 'cause I never worked at Eurasia and I've only met Ian Bremmer once or twice. But George was trying to, he was trying to fuse the best of two worlds in Stratfor, it started in academia like it was the Center for Geopolitical studies. Everybody knows George from his bestselling book the next hundred years. When he submitted it to the publisher, the name of the book was The History of the 21st Century. Like George is a recovering academic, but so George was trying to fuse exactly what you're talking about, rigorous international relations scholarship with the best practices of intelligence agencies. So he thought it wasn't enough that you were just good at IR theory because you might spend seven years on a dissertation about the, you know, economic impacts of underwater basket weaving in Senegal. That's not actually VA valuable to a business or an investor that's trying to make a decision right now. And, you know, academics and I, I don't say this to throw shade at them, it's just that to their own detriment, they want everything to be perfect and perfectly researched and they want to build models that take years and things like that. Whereas people who are in the actual world need information very quickly. And that's why I was actually, you know, I, I did some IR theory in college myself, but what I learned at Stratford was how to look at the world through an intelligence perspective, which was how to read a bunch of open source information, find the stuff that is really important, sift out the garbage and then say, okay, I have two days to find an answer to this question. And even if it's not perfectly researched with 30 footnotes, I need to get this information to this particular person because the earlier this actor has this information, the more money they can make or the more strategic decision they can make in general.

Jacob Shapiro [00:16:27] So my discipline is trying to combine those models that you're talking about but not be, not let those models be a straight jacket. Be willing to say, you know what, here's something that just happened today that makes my model make no sense. I'm gonna throw out the model, I'm gonna completely start from scratch and I'm gonna challenge myself to get at least those first thoughts to my client in two days. Not worried that it's not well researched enough, more worried that the fact that, oh, I have something here that doesn't make sense. So trying to fuse those two things together and that was to Stratfor his own detriment. George did an interview with Baron's in the mid two thousands where they called Stratfor the private CIA and that put Stratfor on the deep state list to the, to the point where anonymous hacked Stratfor. While I was there, they sent all of our emails and personal information to WikiLeaks. I had to change my phone number and a couple other things 'cause I was getting really weird phone calls and emails. It was, it was sort of a strange time when really it was just a bunch of nerds who were doing this research for either individual sub, you know, subscribers to our publication or to some companies that were interested in this kind of consulting work.

Vance Crowe [00:17:33] You know, when I think about doing, you know, putting your predictions on down on paper that other people are gonna evaluate and say, Hey, how should this change my portfolio? One of the things that would keep me outta that game, not least of which is I don't know how good my predictions are, I don't think they're any better than anybody else's, is that I end up having like polarity about things, right? I hear about what Trump is doing or JD Vance telling the Germans like, Hey, you let all of our your industrial base go and now what can you produce? And I find myself cheering in that way, right? My emotions are are brought into that because I'm like, that seems like it is my team or it seems like that's in my interest. And in some ways you would say, yeah, you wanna get that out because you wanna have an objective cold view on this thing. But on the other hand, there's gotta be something about intuition and about being on the right side of history. That's valuable too. What's your take on, like, how much, how much should you let that like emotional spirit animal inside of you guide your, your judgment? It can't be zero.

Jacob Shapiro [00:18:39] That's such a difficult question. So, so let me give you a sort of an Android like response and then I'll give you the human response. The Android response is that one of the things that has changed for me since I left Stratfor in that world is that I don't make predictions anymore. And I actually found that clients don't actually like predictions because what they actually want is they want you to give them a continuum of what's possible. They want you to give them defined scenarios and then things to look at so they can say, oh this, we're going in this direction with this scenario. Also, by the way, if you do that, then if something happens that's completely outside of what you've imagined, you can say, oh wow, we really need to stop and go back to square one. Like COVID was a type of moment like that where it was on nobody's continuum

Vance Crowe [00:19:18] And

Jacob Shapiro [00:19:19] It was like, oh whoa, like what, what are these weird reports out of China about some disease that is running rampant? And you know, like that was a moment where you could sort of stop and and reconsider your things. So from that point of view where you're not, where you don't have personal skin in that, did I make the call? Yes or no? Rather, did I anticipate all of the possibilities? Like I, I would much rather with my client, like I want to be right a hundred percent of the time, but I consider my responsibility to my clients to be that we are not surprised and that if something does surprising does happen, you hear about it from me first. You don't hear about it from the front page of the Wall Street Journal. I'm the first one that's telling you, hey, something weird is going on here. It doesn't fit with what we thought about before. I'm gonna get you some initial thoughts on this really quickly. The second side of what you're talking about is just the human condition. And that's, it's particular to every analyst. One of my good friends, Marko Papic, who was with me at Stratfor and is also in this world, he, he will literally tell you that he bathes himself in indifference. That he has no emotion, that he doesn't care that he's completely cold and ruthless when he's doing analysis. That doesn't work for me. I actually go the complete opposite direction. I find that I'm highly emotional about all of these things and that I have personal views about all of these things. And the way that I try and approach objectivity is I say at the outset, okay, here's all my emotions. Here's all the things I think blah, blah, blah, blah, blah. Okay, I got it out. What are we trying to understand here? What's the question? What are the scenarios go from here? And that way I also, the act of doing that, not only does that signal to the person who's listening to me, you know what my biases are, it tells me what my biases are.

Jacob Shapiro [00:20:52] And so then I can say, oh, I see that I have this emotional position on this particular thing. I better make sure my research on that issue is 500 times better than it normally is because I do have an emotional pull that is trying to pull me in a different direction. Some people can hide themselves off and compartmentalize themselves. Some people like I can't, I can't do it sort of that neatly. So I just have to get it all out and then extricate it. And then there are people who are in between. The one thing I will say is anybody who, and I, this is my personal experience with this, but anybody who tells you they are a hundred percent objective is full of nonsense. Like it's just not true. Like nobody is a hundred percent.

Vance Crowe [00:21:28] Well, and I I strongly feel like it wouldn't be helpful. Like what in your life are you? Like all of my intuition is completely thrown out of the, the, the woodwork. Like I, I believe that so much of what happens in our minds isn't actually able to be captured in words. It's in symbols, it's in colors, it's in how you feel. And that's what's gotta be so hard because as you develop an expertise in any one of these areas, there's gonna be concepts that you understand that the ability to, to articulate them in words is, would be impossible. So to claim objectivity seems to be like, I mean you could, but then I think you'd actually be saying, claiming that you're cutting off a whole symbolic part of the way humans understand things.

Jacob Shapiro [00:22:12] Well. And remember all geopolitics, economics, history, all of these things are disciplines that are trying to understand human beings. And human beings are emotional. They are not rational. You can have all the data in the world and still get the human being wrong. And this goes back to why I think the fusion of international relations models and intelligence is so powerful. Like let's think about Russia's invasion of Ukraine in the long term. Geopolitics tells me that Russia will lose that conflict. They cannot win their demographics suck their history of military invasions like this is not particularly good. Their de you know, China's rising Europe can push back against them like they're probably gonna get into a quagmire. And I could think that on the five, 10 year time horizon, and I think that will be proven correct, I think that we will see this invasion of Ukraine as one of the death nails for whatever this current iteration of Russia is. By the way, this was true in the early 19 hundreds when Russia picked a fight with Japan and got its butt kicked, it took about 12 years for the Russian revolution to start to start after they lost that war. So these things can happen, you know, on a decade sort of time horizon. And that's what IR and geopolitics is really good at talking about. But if you wanted to understand like that's, that's what the analysis tells me. And it's one of the reasons I thought that Russia was not going to invade Ukraine. 'cause it, it was self-evident to me based on the data. Ah, there's no way that that put like he's smarter than this. He knows that he, this is not gonna be good for him in the long run. And this was actually a mistake of mine. I didn't do the emotional analysis of the man who was actually calling the shots and I wasn't listening to his speeches and I wasn't putting myself in his shoes. I didn't have the intelligence about what he was actually thinking about on a day-to-day basis, which is to say he decided to invade anyway.

Jacob Shapiro [00:23:48] And there if you wanted to get that call right, you needed to combine the analytical models with deep emotional intelligence about what is this person, this individual going to do. And that's sort of the hardest part of doing all this because you, the the, the shorter your time horizon, the more all of these wonderful analytic models don't matter. It matters. Well who is the person who's calling the shot and what are they thinking? What do they think is right? Not what do you think is right based on your expert reading of the data. And so in that sense, you need to understand what a person's emotions are and what a national psyche looks like. It's one of the reasons when people ask me, you know, what books can I read to understand geopolitics better? I'm like, well, okay, you can read Hans Morgenthau and you can read Joseph Nye and all these other guys, but if you really wanna understand politics, read books that tell you something about the human condition, read all the king's men or read Shakespeare or read books that tell you about, you know, how people in power make these sorts of decisions because that will empower you then to understand them in a way that is much more powerful than, ooh, like I got a master's degree, I can do a regression square analysis on the, you know, econometrics of so-and-so exports.

Vance Crowe [00:24:53] So then this means you are at its core a liberalist in the not, not in terms of like you're, you know, you're open to communism or something, but like a liberalist in the terms of you believe the individual sitting in the seat matters. Like if it's Putin, one decision will be made if it's, you know, Gorbachev or some other, you know, analog in the current day, who the person is, is actually gonna make a difference. It's not just this is the way of the world, the, the Russia versus the United States. It's all the way down to Trump and Putin.

Jacob Shapiro [00:25:24] Absolutely. I I think individuals are constrained and I think over longer time horizons things will revert to a mean that is maybe not tied to the individual. But again, like I'm in the investing space, so I don't always have the luxury of making a 10 year forecast in the book that I'm trying to publish. Like sometimes it's like, hey, you have a position for six months, so what's the position over six months? And that's a very different question than what is gonna happen to Russia or the United States over a st over a 10 year time horizon. I feel much more sure about where the US is headed 10 years from now than I am about what's gonna happen tomorrow in the White House. 'cause I'm not having breakfast with Donald Trump. I don't know anyone who knows him personally. I find him a difficult person to analyze from an emotional perspective because he's so sort of divorced from my feelings about norms and things like that. So I absolutely think there is a role for the individual if you wanna really, you know, sort of square me. Philip Tetlock wrote a great book called Super Forecasters. I dunno if you've read any Oh,

Vance Crowe [00:26:20] Philip Tetlock before.

Jacob Shapiro [00:26:21] Oh yeah. I mean, I'm a fox. I've been a fox from the very beginning. And the funny thing about me is that I worked for hedgehogs for most of my life. So for your listeners, Philip Tetlock creates this sort of binary between who are the actual good political forecasters out there because he finds that most forecasters, they're not any more accurate than a drunk chimpanzee throwing darts

Vance Crowe [00:26:41] At the wall.

Jacob Shapiro [00:26:43] But he says there is one thing that seems to give some level of accuracy, and that's whether a person is either quote unquote a fox or a hedgehog. And he takes this from an essay that Isaiah Berlin wrote in the early 1990s. The Hedgehog knows one big thing and just applies that thing over and over and over again. The fox is somebody who will change his mind or who will use different disciplines or different ideas. And the thing that is ironic that he found was that hedgehogs dominate media attention because they can just say the thing really simply and that lends itself better to radio or TV or podcast than the guy who goes, well maybe it's this and maybe it's that, and I was wrong about this before, but it's gonna be this thing too. And so I have to inhabit this strange world where I give you irrational confidence in my take so that you can understand what the heck I'm talking about, but also communicate to you the humility of, but like, there's all this other stuff on the side that I don't particularly agree. So yes, I, I don't know if you, you can put that I guess as a liberal in terms of where I fall in the IR policy spectrum, but more than anything I, I identify as someone who doesn't identify with any particular discipline. Like I will use whatever discipline in front of me, helps me understand what's going on in the world. And by the way, sometimes that can be not a communist discipline, but certainly a Marxist discipline. Sometimes materialism is a powerful way of understanding what's going on in the world, thinking about the world from say a class-based perspective rather than an ethnic based perspective or a nationality based perspective. Is it right every time? No, but maybe it is sometimes and it can create some really interesting insights if you're not afraid of the ideas.

Jacob Shapiro [00:28:15] It's not like you're gonna, you know, use a little Marxism and oh my God, I've become a communist overnight. Like there, there's value in all analytical models, I think.

Vance Crowe [00:28:23] So let's go in and start exploring some of the things that are going on in the world. I, I saw just last night after Trump had talked about his good conversation with Putin, they both said, we're gonna visit each other's countries. This to me, in a world where, where Putin, you know, when he's seen in front of all of his advisors, there's an entire table length between him and other people. Like very suspicious of potential. At least my perception of that is he's being like, doesn't want to get assassinated very careful about who he lets around him. And now, you know, they may go stand in front of the Grand Canyon and get a photo together. Was this on your continuum of things you thought could happen when Trump came into office that we might have presidents visiting each other's countries?

Jacob Shapiro [00:29:08] Yeah, Trump said that Putin did not say that Putin's Peskov his, I dunno what you call him, his secretary, his press guy. He said afterwards they had a good conversation. They talked about the need to visit each other, but said it was way too early to talk about details and the most telling thing. You know, Trump had all of these, oh, we're gonna meet in Saudi Arabia, we're gonna do this, we're gonna visit our countries. Peskov really said look like the previous administration, I'm gonna basically quote him now, said that everything should be possible to, everything should be done to continue the war. And this administration is telling us everything should be done to stop the war. We are open to that. And if that means meeting together, like we are willing to talk about it. And we've seen this with Trump, like he has one version of a conversation and the other foreign leader has another version. Think about the Mexico tariff back and forth, for example, right? Trump wanted some tangible things done to not enforce the tariffs on Mexico immediately. And so he comes out and claims victory 'cause oh, Mexico's deploying 10,000 troops to the border, yada, yada yada. The Mexican version also said, oh, and by the way, in that conversation we also agreed that American arms exports into Mexico are part of the problem. And President Trump promised to do something about that not there. In the Trump version, that's also not particularly strange. This has happened, like this happens in all administrations, like reading, you can have a whole career just reading the differences between a White House readout of a conversation and a Chinese Communist party readout of the exact same conversation and figure out well, who's saying what and what did they actually agree to? Things like that. But yes, it was absolutely on the continuum. One of the first things, or not, one of the first things, one of the things that Trump showed us in his first term was that he doesn't care very much for long choreograph diplomatic dances.

Vance Crowe [00:30:45] Just,

Jacob Shapiro [00:30:45] Just look what he did with Kim Jong-un. He was like, f this, I want to talk to the guy, let's talk to Kim Jong-un. And everybody was like, oh God, you can't do that. We have to do the lower level stuff and the higher level stuff. And he's like, no, I, I just wanna talk to him. And there are pros and cons to both of it, but it absolutely makes sense that he would want to talk directly to Vladimir Putin. The thing that was surprising to me was he didn't tell Ukraine and Europe about it ahead of time. And he did this in the context, as I said, of a week where he was also hammering on Europe in a couple different ways. Now, I absolutely thought that he was gonna take a tougher approach towards Europe, but if this week, if he continues on this trajectory with Europe, we're talking about a real rupture in US European relations. Whereas I thought he was more about, oh, I'm gonna threaten and I'm gonna do tariffs, but ultimately I'm on Europe's side here and ultimately I want to deal with the Europeans. I don't want to enable Vladimir Putin's goals in Ukraine at the expense of some of these European allies and some of these NATO allies. So the, the direct conversation and as that continues, that's not gonna be surprising at all, but working sort of directly with Russia on a solution to the, the Russia, Ukraine war, even as your defense secretary and your vice president are out there telling the Europeans, we're not gonna deploy a single American troop to help here. This is on you. Like that was a little outside of what I expected.

Vance Crowe [00:32:00] Oh man, I'm here for it though. I'm, I'm absolutely loving, you know, telling Europe, like, get back in the game if you want our help, you guys have to contribute. I, I spent two years at the World Bank and it made it very clear to me that the Europeans are definitely willing to not just coast, not just not contribute, but also then get in charge somehow of vast amounts of money and vast resources. And, and to me that from the u us perspective, like, hey, you've got these people that are making decisions. You know, I just read that, that Germany is giving the Ukraine AI supported drones. Who knows what that even means, but like this is only embroiling this conflict more and more and more than what I think the US wants. So to me, like scolding Europe is fantastic, and this is what I mean by, I don't know how predictive I'll be because I'm, I'm cheering on one of the teams.

Jacob Shapiro [00:32:58] Well, but I, I think you're, you're giving voice to a real view, not just in the United States but in Europe itself. So I mentioned JD Vance's speech at the Munich Security Conference and most German politicians panned it, including the defense minister, the head of a FD, which is the far right wing party

Vance Crowe [00:33:14] In Germany,

Jacob Shapiro [00:33:15] Said quote, that was an excellent speech end quote. So like, it's not like, it's not like you're alone there, like you have people rooting for that inside of Europe. The, the way I would not push back, but I would just add a little context there, which is to say this was by design like the United States decided after World War II to help rebuild Europe in the context of winning the Cold War. And it didn't want Germany to be militarized. Germany doesn't have a big military because we saw what they did with a big military the last time they had one. So we said, Hey, why don't you just focus on making cars and you know, being nice to your neighbors and we will handle the security thing and we'll we will profit from this, you will sell us these cars at a cheaper price than we could manufacture them in the United States. Yes, maybe we'll lose some automaker jobs and things like that. But in the grand scheme of US foreign policy and balancing against the Soviet Union and containment and things like that, that's a good deal. So it's by design and I, you know, my, I, my family or at least one half of my family fled Europe pre World War II or even after World War II as a result of the things that were going on. So I hear the United States lecturing Germany to say, Hey, 2% of GDP on military spending's not enough. You need to get to 5%. Okay? Suddenly the tectonic knights are marching in the forest, the pans are divisions. I can like hear them revving up like, careful what you wish for. You really wanna militarize Germany. You think a militarized Germany that you've just yelled at and lectured at and done all these things about is going to do what you want it to. Whether that's how they're gonna deal with quote unquote communist China or how they're gonna deal with Russia, which is not your friend, which is your enemy that wants to see the decline of American power on the global stage.

Jacob Shapiro [00:34:51] Like I agree that there are ways to reset this, especially because a lot of the policies we're talking about were made for the Cold War and Soviet Union's been gone for 30 plus years. So these policies need an update and maybe the, the economics of all these deals need to be reconsidered, but we're throwing the baby out with the bathwater. When you, when you send JD Vance up there and say the biggest threat to Europe is censor censorship, not China or Russia. Okay? Like you're basically just telling Germany to elect someone who's gonna look out for Germany and who is not gonna think about Germany in the context of a UN a US alliance network that defends all of these preferential trade agreements and all the goodies that we've gotten since the end of World War ii.

Vance Crowe [00:35:28] Well I would, I think, and I don't actually know the answer to this, I think the perspective of people like me is that we are being taken advantage of vis-a-vis. That's why Trump is saying all these tariffs need to come on and, and that this is a protectionism that needs to occur because these guys have been, didn't follow up on what they said. I don't actually know the reality of that if I'm being honest, I don't, I don't have any concept for what the trade imbalances are and are we getting a better deal? Are they, what's your sense of it? Alright, I'm gonna break in a second time here to talk about this amazing experiment that we've been doing with you listeners a couple of weeks ago. I came on here and said, if you will get a lightning wallet and send me a receive address, I'll send you 500 Satoshis A Satoshi is the smallest unit of a Bitcoin. And so 500 Satoshi's at today's current valuation is about 50 cents. Someday it'll probably be worth a lot more than that, but today it's worth about 50 cents. I have had so many people send me receive addresses, it's gone totally bananas. So I think we're at somewhere around 35 to 40 listeners have done this. Now through this we get practice. There's a lot going on with Bitcoin and there's things that even I don't know. So I've heard feedback about different wallets and different situations that you can download an app and what is the best one, and I've arrived at the show sponsor river river.com will allow you to download an app where you can buy and sell Bitcoin.

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Jacob Shapiro [00:38:18] That again goes to questions of fairness, which we can't really like every single person listening to that. This is gonna have to define whether they think it's fair or not for themselves. Trump really likes to hammer on this 2% of GDP military spending thing because it's supposed to be a, a NATO requirement. All of NATO's members are supposed to spend 2% or more of GDP on their military, on their defense. I think, I forget what the exact number is for Germany. They've been sub 2% basically forever. I think they're at 1.7 now. They, they announced that maybe they were gonna try and boost it up. So that's one way yes, that they are not following through on their commitments, but is that really what he's talking about, like a 300 basis point under on a, on a percent of GDP military spending thing? Like that's not what it's about. It's about this idea of the trade deficit and that the United States has been hollowed out by globalization and all the jobs that were lost and things like that. And I would just say, you know, this puts you on whether you agree with free trade or not, like free trade drives down the cost of different things for the consumer and allows the consumer to buy things at prices they wouldn't otherwise probably be able to buy them. At the flip side of that is that it creates inequality, it wipes out entire industries in different countries. And if you don't have government support for those industries or retraining programs to help all of the steel workers or the auto workers or the furniture makers who now no longer can compete with China or Germany or whatever your country is, then you get a really loud minority that feels left behind and pushes back and says, well, I don't care that I can buy an iPhone for $500.

Jacob Shapiro [00:39:49] I don't have a job. I you took the job away from me with your policy. So I I I think you can make the argument either way. I think the United States wholeheartedly signed up for globalization and for 30 years made the trade off that said, okay, like this is what we want to do. We think this is what's best for you, US policy and for the majority of American consumers. What has happened really since I think 2014 is when I would date it, but we could argue exactly about when it starts, is you're getting this large group inside of the United States that is saying, Hey, you forgot about us. You left us behind. Y'all are enjoying all these fancy nice things. Whereas inside the United States, like our incomes are declining on a relative basis like disease and healthcare, all these things are getting worse. Which is why, why I would go back by the way to say I think class is an interesting way to think about the problems in the United States, perhaps much more so than ethnicity or some of these other things. But we don't talk about that in the migration crisis or, or other places. So yeah, you, you, you can make the argument either way, I, the trade off was we got cheaper goods. I think there's absolutely an argument to be made for, hey, we need better resilience or we need to make some of these things in the United States. The one thing I will say is if that's your policy, cool tariffs by themselves are not going to do that. These industries have been hollowed out and left for dead for decades. The Chinese dominate in a lot of these areas. We have forgotten how to do a lot of these things. So you better be willing to offer us government support for these industries at the very early stages because if you just slap tariffs and think, oh, we're gonna flip the switch and the United States is gonna go back to making things, no way.

Jacob Shapiro [00:41:24] We've lost a generation of human capital and knowledge about how to do those things. And that to me seems to be the weakest link in how the Trump administration is thinking about this. They think tariffs and boom, American production, I I, okay, tariffs, where's the in, where's the plan in the middle? Where's the plan that gets you to the point where you're actually competing? 'cause most of those people aren't in the factory anymore.

Vance Crowe [00:41:44] Well, one of the big challenges of competing and being able to get those factories up and running is to have as much energy as cheap as possible. What do you understand about the Trump energy policy? Do you believe that we will see the orders of magnitude more electricity generation than we had in the past?

Jacob Shapiro [00:42:02] This is the big saving grace for the United States, which is ironic. If you'd been talking to any geopolitical forecaster or futurist, whatever in the 1990s, the first conversation would've been oil, oil, oil, oil. Where are we getting LNG from? We we're not producing enough energy in this country to meet consumption. We import from the Middle East. Like that's one of the reasons we were in Iraq and Afghanistan, all these other places that changed as a result of the shale revolution. We are now arguably the dominant oil superpower in the world today. Like Russia and Saudi Arabia might wanna have a conversation about it, but we're in the conversation like we're in the top three and we can move global markets. Last year, I dunno if you know, this was, was the cheapest year in recorded history for American consumers of natural gas. That might be surprising to your listeners because you know, we've been dealing with inflation higher prices. I doubt we will see natural gas prices as cheap as they have been last year in the United States for many years to come. Because one of the things that the Trump administration is talking about is drill, baby drill and export, baby export. I dunno if you saw in the, in the Modi Trump meeting earlier this week, one of the things that they said they agreed to was that the United States should become the top exporter of oil to India rather than Russia. Which that's, that makes sense from a foreign policy basis, but if what you want is cheap energy at home, sending those exports abroad is only gonna raise prices for the American consumer. So all of which is to say, look, the United States has a tremendous advantage when it comes to energy. There are very few countries in the world and our big competitors like China and Europe are not, they're not there. They're not ones who have that kind of energy security.

Jacob Shapiro [00:43:33] We have plenty of energy. It's secure and it's relatively cheap. That I think balances against our deficiencies, which are, like I said, a loss of human capital and knowledge and a bureaucracy that has a choke hold on A lot of the actual movement of dollars and construction projects and permits and things like that. Say what you want about China. When China wants to build a factory or build a nuclear reactor, they build it. If there's a town in the spot where they want to build it, they move the town. If anybody complains, they have a gulag that they can send you to or you can spend a a couple of years to reflect on your willingness to push back. You don't do

Vance Crowe [00:44:07] That. I mean, I I would push back on that like, 'cause you see those pictures of a freeway that'll go around a person's house or you know, the giant skyscrapers in the one guy that held out in the us We have imminent domain. We just, we just grab it. That's what's going on with carbon pipelines throughout, you know, South Dakota and Iowa, China, like we were told they were gulags, but are they as limited in freedom as, as kind of the, the, the way that it's portrayed?

Jacob Shapiro [00:44:35] Sure. If, if they've gone around that just means that the cost benefit analysis, it, it wasn't worth it for them to do it. But think about the three Gorges dam. Like just look at what they had to move to put the three Gorges dam where it was because it literally couldn't be anywhere else. Like if you eminent domain something in the United States at the level that the Chinese just take land for, you'd never hear the end of it. So I mean, that is a measure in the United States and maybe we'll get more eminent domain in the future as the United States goes down this route. But yeah, I mean China's truly authoritarian from that perspective. If the government wants the land, it will take the land. If the government wants to roll out 5G, it'll roll out 5G China's really, really good at those sort of large scale infrastructure projects where they don't have to worry about the individual person or the individual family if they don't want to.

Vance Crowe [00:45:20] So other big news is that Doge went through, rolled through U-S-A-I-D and all of a sudden the money is dried up. There are a lot of people saying a bunch of the color revolutions that have happened throughout Europe that every time a conservative government might start to pop up or some kind of movement, then there is a color revolution that comes in and wipes 'em out. And now you've that that the US gave up some amount of power that they had in, in being able to control who's in charge, but it also might lead to more populist movements that would probably like the a FD be supportive of, of, you know, somebody like Trump or what JD Vance's wagon, his finger at Germany. What do you think is USA i's knocking out going to gonna limit how many color revolutions we see?

Jacob Shapiro [00:46:08] That's an interesting question. And color revolutions. I mean that's, that's sort of how the Russians describe us efforts here. And I'm, and, and it's not wrong. I mean us U-S-A-I-D maybe has been a, a soft part of that, but you're, I think that's conflating things like, and this goes back to some of the institutions we're talking about in the context of the Cold War. The United States really didn't, didn't offer foreign aid before the Truman Administration or before World War ii in general, like we were, we were, we had enough problems at home. We were sort of focused on ourselves after World War I and especially after World War ii. Foreign Aid becomes an explicit US strategy towards stopping the Soviet Union. That's where the term the third world comes from. There's the first world, the second world, and then the third world is up for grabs. And if you can help empower and enrich the third world and give them access to money and freedom, they'll side with the United States. They won't side with the Soviet Union. Us a ID is created in 1961. It puts together a hodgepodge of different agencies that were dispensing this aid in the late 1940s and early 1950s. And JFK says, okay, we need one place for this. U-S-A-I-D is gonna place, is gonna be the place that does it. I'm honestly confused at why the Department of Government Efficiency is going after U-S-A-I-D and, and i, I don't really have a dog in this fight, but like for instance, a good friend of mine is a guy named Louis Luck, who wrote a great book, I think it was called Duck and Cover from Timbuk two to something or other. If, if you look, you look on Amazon, just for Lewis Luck, you'll find it former US, A ID director for places like Haiti and Afghanistan. Good old southern boy from from the Carolinas, I believe.

Jacob Shapiro [00:47:40] And you know, w would would went on my podcast a couple of years ago and just talked before U-S-A-I-D was, was controversial about the things that he did in his career and how they were helpful or maybe how they weren't helpful. Some of the challenges that he came to in general. And I do think in general, I mean, we were talking about IR policy, like Joseph Nye is the guy who coined the concept of soft power. U-S-A-I-D does something interesting in which it, it absolutely, like the United States government wants to use that aid to lock in different relationships with different countries and farmers should care particularly about this because food aid is one of one of the key pillars that the United States uses for this. So there's definitely groups, whether it's state or CIA or defense that want to use US capacity to do these things. But usaid, they're the administrators who are the ones who go and do it. Like they're not the ones who are setting policy. So if you want to use us, not U-S-A-I-D, but to use USA to a foreign country in order to make China less attractive to them, the agency that does that is U-S-A-I-D. They don't set the policy themselves. And I think by, by with the Department of Government, fic government efficiency going after them, it feels to me like they've broken something they don't quite understand. They went after the administrators, not the people who were actually settling the policy. They didn't go after the budget. Like they went after the people who enact what they are told to enact.

Vance Crowe [00:48:57] I'm again here, I'm here for all of this. When I was in Kenya and I was living in that world, the U-S-A-I-D people treated living abroad in their kind of diplomatic capacity or, you know, aid building as though they were yeah, lords of, of the country. I I, I found the, the you, if you went to say like an ambassador's house or a diplomat's house, there'd be all these U-S-A-I-D people there. And they, you know, compared to the US lowly Peace Corps volunteers, we were actually doing work and we saw them not as doers, but as incredible bureaucrats that held the power to turn on or off local despots, you know, to be able to funnel money to, to certain groups. And I had, I i, I strongly disliked U-S-A-I-D, but had no sense that they were doing some of the funding that you see at least being highlighted by Doge, you know, their, their funding. You know, just all the things that people have popped outta there. So to me, seeing U-S-A-I-D get popped was awesome. I loved it. I I'm like, but again, I keep saying like, I feel like I have a team I'm rooting for here and they're doing things that I, in my wildest dreams never imagined possible.

Jacob Shapiro [00:50:16] Well, it sounds, it sounds like your tribe in this fight is the Peace Corps another Kennedy program that was also part of the Cold War. So there's a, there's a really serious conversation to be had here about all of these different organizations that were created for a different US foreign policy for a completely different world. And whether they are still relevant, whether they've gone off the rails for every Lewis Luck, like my friend, maybe you have some Heart of darkness style guy in Kenya who's drank the Kool-Aid and is lording over the like, I don't know, like I'm sure you'd have USAID people who'd be like, well get that guy out of there. Like we, we don't want that. Like that's not the mission or ethos of the group that we're talking about. So show us, show us Vance where they are. We'll, we'll take 'em out ourselves

Vance Crowe [00:50:51] That Oh, you are way too nice. No, this is, this is all of, but I, I, I actually would say, I think you're exactly right. I have no idea whether that was a valuable thing in the sixties, but I think the Peace Corps even has probably outlived its in its current structure, it is not worth the return and is actually a, a, it's a funnel for the CIA is what it is.

Jacob Shapiro [00:51:14] I dunno if I'd go that far, but bureaucracies are like Frankenstein. They have a mind of their own. So if you don't turn off Frankenstein or if you don't reprogram Frankenstein every once in a while, he's just gonna go around breaking stuff.

Vance Crowe [00:51:26] And that's what happened with these

Jacob Shapiro [00:51:27] Bureaucracies. They were created for a certain point in time. They had a really successful period where young people who were ideologically motivated were aligned with US government policy. They knew what they needed to do, they knew what they believed in, they had resources to do it. Those were probably the best years for organizations like that. That world is gone. And has anybody gone back and thought about, okay, well JFK set these up, should we redefine that? Should we reset their budgets? Should we like, think about national service from a completely different point of view? That's the conversation I wish was happening. Like in this space. Instead we're getting, you know, the Department of Government efficiency just going through and saying, eh, like this is terrible. And you know, the, the one that everybody's talking about, you know, the projects, there was the $50 million worth of condoms that went to Gaza and people thought that was the Gaza Strip. It turned out it wasn't the Gaza Strip, it was the Gaza Province of eia. Was it? No, I'm sorry Mozambique. And it was part of an anti HIV anti AIDS thing, which it's very different if you're talking about USAID sending 50 millions dollars worth of condoms to the Gaza Strip versus oh, they're sending $50 million worth of condoms to help combat the spread of HIV and AIDS in Sub-Saharan Africa. And you had Elon Musk in the Oval Office, even when confronted with that information going, oh, it seems like a lot of money for, for condoms. Like, I don't know about that. Like, isn't that kind of funny? That's not funny, bro. Like stay in your lane. Like this is global health. You think it's not important for the United States to stop and halt the spread of diseases. Like maybe you disagree with that. Maybe we can have a conversation about a policy perspective about whether that's a useful

Vance Crowe [00:52:57] Use of American taxes as so the condom demonstrations in Africa. Yes. I think we should stop this. I think it is, it it like you're making a very serious not only moral decision, but like population wise. And I don't actually think it is fighting HIV and AIDS in the way that people thought that it was like I I but I I agree with you that what the, what the real benefit is here is now we finally got into a place where we're having a national conversation. This was not on the radar. Nobody was talking about this. And this is how the people in Mozambique and India and wherever else view us how are, what is it that we're doing to help? And I think in a lot of places we were holding their head under the water being like, I'm helping here drink as much water as you can when the reality was we were impacting their culture so deeply that maybe they didn't want that and maybe it wasn't actually good for us long-term interests. Yeah.

Jacob Shapiro [00:53:51] And all I'm saying is I hope we have the conversation. 'cause what's happening now is not the conversation. What's happening now is ridicule. And I, I always like, I always sit up in my chair when somebody dismisses when they're challenged by just, eh, that's a joke. Like that's somebody who actually doesn't stand on firm ground. Because if you really believe what you're talking about, that's a chance to educate. That's a chance to say, no, we're gonna refocus these priorities. That's the, the language of Marco Rubio has been much more, Hey, this thing was broken, we need to do some other things here. Maybe we hive out some things that put it under USDA, like, but it went off course, blah blah blah, blah, blah. And and the other part of this is, you know, department gov. Like I don't know who, who anointed Elon Musk to do the things that he's doing. Does he have legal authority for the things that he's doing already? A judge has thrown out some of the suspension on foreign aid. Like the way that it's happening seems a little willy-nilly. And that's important not because of my personal opinions, it's because some of these things are contracts. These are like contracts that we have in place with other governments or other companies or people who are on the ground. And if you're gonna end the contract, okay, but do it via the rule of law. Like we're a country of contracts. The constitution treats contracts as sacred. The founders would be rolling over in their graves to know that Elon Musk thinks he can run around ending contracts by himself and feeling personally affronted because a judge or a court has the audacity to challenge that he shouldn't be able to do it. Like maybe somebody should give him the federalist papers. So, and, and I'm just saying that from an institutional resilience perspective in the United States, because you can say that you want, and I think there's a good argument to be made that there are all these US political institutions that desperately need reform and you need to cut red tape, all these other sorts of things.

Jacob Shapiro [00:55:24] You, you can't break them, you can't do it illegally. You can't ignore the courts in this context. Like the founders meant for this process to be a little bit convoluted so that one person couldn't take control of everything. One of the ways that we warded off authoritarianism for hundreds of years was we made it really, really difficult for one person or one branch of government to just do whatever it wanted. And some of that is starting to like weaken a little bit at the seams that I, if, if you're, I mean if you're in China and, and thinking about, you know, the future long-term viability of the United States, I guarantee you that the Chinese communist cadres are just like cool, keep going. The United States like keep on unraveling like the institutions that have served you well, this is what we thought was gonna happen.

Vance Crowe [00:56:06] I am totally with you that we do not want to break the systems of checks and balances because, you know, whatever happens over the next four years, you know, we presumably will be living in this country for many, many more decades. And we want a system that has resilience and doesn't, you know, fly. And the more that you give centralized power to any one person, it means that pendulum can swing way higher, way faster and and wreck out a whole bunch of things. That said, having worked in international organizations like the World Bank and corporate America, you know, bureaucracies are almost impossible to get anything to change. Like you, you have to go all the way down to the studs and even then it may be all the way down to the foundation in order to be able to get it out because there is so much power hidden inside of a bureaucratic state. And that's both in corporations and in government and in in iOS that you, you need to do something pretty dramatic. I don't know, like you gotta have this trade off here between not wanting to break things for the future, but also knowing that you gotta do something pretty dramatic. I'm with you there.

Jacob Shapiro [00:57:17] I don't disagree with that.

Vance Crowe [00:57:18] Well let's go on to Canada. There was a lot of listeners to this podcast that a week ago they were, you know, chanting fu during the national anthem and they were absolutely enraged about the, the tariffs and all of that that was being threatened. Now they got a 30 day reprieve when we come back, I think it's now about 21 days from now, what's gonna happen with these tariffs? You think?

Jacob Shapiro [00:57:44] Well I, I'm, I'm on a ledge here a little bit with my analysis. I I've, I've picked my head up and, and and made a call and I guess I'm gonna stick to it. It seems to me that some of Trump's antipathy towards Canada is, has nothing to do with Canada and has everything to do with Justin Trudeau. I think he doesn't like Trudeau. I think he assessed correctly that Trudeau was on his last legs and that he could help shove Trudeau out stage left and that he could welcome a Canadian leader who would work more with him and work better with him. I think also, you know, the first, the first Trump administration oversaw the renegotiation of U-S-M-C-A. That was a bad deal for the United States because the Trump administration didn't really know what it was doing at that time. You needed lots of different appointees and all of the different negotiating tables and committees and things like that to push the entire agreement forward. I think you've already seen the second Trump administration, they noted their failures the first time around in all of these different areas. They're much more focused now and much better. So I think Trump wants to take the U-S-M-C-A and fix the things that he left on the table the first time around and then put that Trump,

Vance Crowe [00:58:47] Right. And what was that? I don't have any sense for that. What, what, what did they do wrong there?

Jacob Shapiro [00:58:50] It's not about what they did wrong. It's just that, and this goes back to government appointments in general where the Trump administration had a difficult time staffing the government in part because of democratic recalcitrant in part 'cause they just didn't have experts in the places that they needed them. But, so U-S-M-C-A was a massive renegotiation on lots of different tiny issues and you needed experts in the room on every single subcommittee that was devoting these, was debating these things. So there were areas around, you know, I'd have to go out and probably put your listeners to, to bed to talk about them. But there were certain negotiations around like what incentives Mexico and Canada was gonna get versus the United States that didn't go well for the United States. And if you want the simplest reading of that, just look at how Mexican and Canadian imports and exports from the United States changed after the US MCA versus the United States. Like it was not, the deal on paper did not actually help the United States in its trade relationships with Mexico and Canada. It actually just made it worse if what you want is to reduce the trade deficit and want these countries to buy more than what they're buying from you. So in that very narrow sense, like it was better for Mexico and Canada. So I think what the Trump administration wants is to say, no, no, no, no, we want Mexico and Canada to buy more from the United States and right now we're buying more from you as a result of the renegotiation. So what things, what knobs do we need to turn here in order to get that push through? So I think Canada's there as well. And, and so yeah, and you asked about Trump's relationship with Canada General. So, sorry, I'm, I'm stumbling there for a second 'cause it's a long day in my, this is my second cup of coffee.

Vance Crowe [01:00:21] Oh, I've just been wildly whipping you around the world, you know, you know, going from Mozambique to the Ukraine to now Canada.

Jacob Shapiro [01:00:28] No, and and, and normally I'm, I'm good and I'm still good. So nonsense there. But the other thing I, I've said, and I was gonna tell you where I've, where I've poked my head out here is I think Trump is bluffing about Canada and Mexico and I think he's bluffing about Canada and Mexico because we need Canada and Mexico. You cannot pick a trade war with China and the European Union if you're not gonna close ranks in Northern America and really tighten up those supply chains and prevent the Chinese from, you know, getting things into the United States via Mexico or Canada. Or if you're not gonna secure all these borders, you're not gonna get control over whether it's cartels or fentanyl or anything else. So I think this is all part of a broader renegotiation of these different issues rather than what it is with China, which is a fundamental reorganization of the relationship where this is a strategic enemy. We cannot import from them. We have these issue like these industries that we wanna protect from them. I don't think that's really true of, of what Trump's administration is thinking about with Canada. So

Vance Crowe [01:01:22] I, and so the 51st state stuff that's all just bluster and there's, there's no chance that that'll happen.

Jacob Shapiro [01:01:28] I think there's, I mean no chance like sure in 50 years maybe we could get to a point where parts of Canada or Canada, like it's not hard to imagine that there would be parts of Canada that want to join the United States 50 years from now. Like we can create scenarios like that. But in the next 20, no, like that's not on my like spectrum of possibility. And this is one of the things Trump is so good at. He is so good at finding the thing that pisses people off so much that they stop talking about what they were talking about before and they just talk about his crazy comments and then he can hijack the whole thing and move the goalpost and say great, let's talk about this. Which is what's really important to me. He did it with Gaza, he did it with the Canada Mexico tariffs. He's doing it with the European Union this week of the one country. To me that seems immune to this right now is China. Like look at how China has responded to Trump in the early innings here. You know, Claudia Sheinbaum or Justin Trudeau press conferences, retaliation tar dollar for dollar tariffs, you can't talk about us this way. All this moral indignation. The Chinese responded by saying, okay, reciprocal tariffs on us, LNG and a couple other things which they don't import a lot of. We'd like a meeting with Trump in the next week or two and otherwise we continue on. By the way, we've got a new foreign investment plan to try and optimize foreign investment in the country continually on like very quiet, very sober, like not buying into it. So I think the Trump thing specifically with Canada as part of this renegotiation, if you, for your Canadian listeners, you shouldn't feel good about this like this. Like I don't think you're a national security threat. I think this is a little much, but I do think it's part of a, a grand renegotiation. I don't think that he's serious about Canada as a national security threat and I don't think he's serious about that.

Jacob Shapiro [01:03:02] 'cause I give him more credit than most of the media gives him credit for. I think he's smarter than that. Like you can't do that to Canada and meet some of the goals that you're talking about meeting from a general foreign policy perspective.

Vance Crowe [01:03:13] Well I would assert that whether he meant to do this or whether it's just a function of like, hey, he started breaking things and didn't know what he was doing. I don't know. I mean maybe he's playing 3D chess, it's hard to know. I don't think so, but maybe, but I read a very interesting tweet and then saw the Canadians respond to this of a guy saying, right now Canada has to find a way to increase the standard of living of their constituents, you know, the domestic population in order that they don't lose the, the left doesn't lose the prime minister position. Right? But you know, Trudeau looks like he's totally on the rocks and it looks like it's gonna be Pierre Poilievre, but there's all sorts of like, when will that election occur? It may be this spring or it may not be for another year. Like they have all these like ways to do it. Well one of the things this guy was saying on this tweet was Trudeau has decided to end inter provincial tariffs. So now what used to be a way to, to make it so some pro provinces were able to get more out of their trade was they had tariffs on 'em. They had certain kinds of taxes. The the west is playing all these gasoline taxes. And when they now have said we're gonna get rid of those tariffs, places like Quebec that are really propped up by these interprovincial tariffs are now going to have really serious problems. If you start tearing away at the supply managed, you know, milk and egg situation, all of a sudden their farmers are not profitable. And now Quebec starts their secessionist movement.

Vance Crowe [01:04:44] When if they secede, then how do the maritime stay together Now the western provinces see like, hey, we've been patiently sitting out here, you know, thinking in the wild rows will lead us towards, you know, our own secessionist movement. Any chance you see this move having been kicked off? Now there's political things afoot that you just can't predict where it's gonna go out. Or no, Canada's more stable than that.

Jacob Shapiro [01:05:07] Well this seems to be bipartisan in Canada. 'cause I, I saw one of Poilievre's ads was about like, hey, Canada has a great market that it can have as an alternative to the United States and that market is Canada. And that's, that's the language that most countries are engaging in. India is talking that way. The European union's talking that way. The United States is talking that way. Even China is talking, is talking that way. So it may, if, if what you have as a southern neighbor who is a little more unstable and is asking for more things in that relationship and no longer needs to import the biggest thing they've imported from you for years, which is oil because they found a bunch of oil themselves, then yeah, maybe you need to think about the ways that you're gonna improve your own economy, the way that your economy interacts with itself and also decrease your dependence on the United States. So, but that's the, the ironic thing there is that's not what Trump necessarily wants, right? Like in some ways what Trump should want from Canada is that it gets more interdependent on the United States. That it is so beholden on the United States that it does get absorbed into the United States as a 51st state. If by pushing on Canada you're pushing Canada to do tough things that they wouldn't have done otherwise. You're not gonna create a Canada that is friendly to the United States or more friendly to the United States. You're gonna create a Canada that can maybe be friendlier with other countries, countries that are not necessarily thinking about things in terms of value to the United States. Now that's a long road to hoe, like the Canadian economy is completely pointed to the south, like they made their bet. So that's gonna entail a lot of pain and like a couple campaign ads and a couple, you know, moves around the edges is not gonna do it.

Jacob Shapiro [01:06:38] And I think Trump knows that. I think he knows that with Canada and to a lesser extent, but still to a great extent with Mexico, he's holding all the leverage and so he wants to make sure that he gets what he wants out of those relationships. And then once he's feels secure about that, maybe he goes after the European Union, maybe he goes after China a little bit because he feels like he has his own backyard under control. I I, that's what I think is happening here.

Vance Crowe [01:06:59] Well, I don't personally want to make Canada the 51st state. I want Canada to be Canada, but I really do think that the West has a very strong case that they are the western Canada, the, the Saskatchewan and Alberta being just held over a barrel by the east and and being forced to send so much money and so many resources that way. That to me, I find they're here Again, I, I find myself cheering for a team and that team is like, yeah, separate, you know, break away, do what you gotta do to, you know, make your future bright because these other people are just gonna keep taking from you. So I find myself again, cheering for somebody,

Jacob Shapiro [01:07:39] This is democracy. So if enough of them want to vote for that and empower leaders who wanna do that, great. Go pursue it. Like you go, you don't get to do that in authoritarian regime. So if there's a real political groundswell for that in Canada, I wouldn't begrudge anyone that in the same way that if the Scottish wanna become independent or the catalans wanna become independent, great like, like figure it out. Like I, I have no, I have no skin in the game from that perspective. So yeah, I, I guess you can have a rooting interest there. I don't have any rooting interest, but I generally, my rooting interest is on the side of people being able to express their own personal and national sovereignty. So if somebody wants to do that, and if enough people agree with them, like, God bless that sounds good to me. The United States is an example of a country that doesn't like that the United States is born of saying no states cannot secede from the union. Once you're in, you're, you're in for life. So that's an interesting little wrinkle in our history if it gets to where you're talking about with Canada, how Canada will interpret that. But I think we're a long way from that and, and these are issues that Canadians need to decide for themselves and I'm sure that they would rather decide them for themselves rather than listening to Donald Trump tell them what they should or shouldn't do or what country they should or shouldn't join.

Vance Crowe [01:08:45] Yeah, you definitely had your finger on the pulse of Canadians being more upset at the US than I did when we spoke about this before. I I, I didn't predict that, that that I saw. So, alright, now Trump and Elon Musk have a very interesting way of driving what people are paying attention to, right? They are now able to be like, this is, these are the big issues. As a strategist, as somebody that's looking out into the world. What is something that you are paying attention to that you think most people are not even aware is going on?

Jacob Shapiro [01:09:17] Well, I've, I've been telling, and this has nothing really to do with Trump, although it, it does after the events of this week a little bit, for me, the most important thing we know is gonna happen in Q1. So maybe other unexpected things happen, but German elections are like the biggest signal I think that we're gonna get this quarter. 'cause they're gonna tell us about how Europe is reacting to Trump, how Germany is reacting to Trump, what the future of European policy towards Ukraine looks like, what future European union policy looks like. Friedrich Merz, who is the presumptive winner, he did an, an interview with the economist this week. He talked about cutting social benefits. He talked about getting rid of the debt break. He talked about embracing nuclear. He talked about, you know, absolutely building up the German military. Like if you get that kind of sea change in German politics, I think that would, that would be really important. And then the second thing is just to, is to think about China on its own terms and not to think about China in terms of how the media is portraying it. China is a country of a billion plus people. It's incredibly complex. It's going through an economic crisis that makes 2008 look pedestrian by comparison. It's nominally a communist country. Communist countries are supposed to be equal countries economically. This is a vastly unequal country. I think the reason Xi Jinping has assembled a bunch of authoritarian power to himself is because he has to somehow redistribute wealth from the coast to the interior without both upsetting, like offsetting a peasant revolution and also having the wealthy cadres come for his head. And ironically, you know, China's playing the role in the global system that the United States played in the early 19 hundreds. They are the up and comer. They are the ones who make things. They're the ones who export things in general, their size just by virtue of their size.

Jacob Shapiro [01:10:51] They're changing global markets and they're the ones that are saying, no, no, no, we like global globalization, we like free trade, we want more foreign an investment in China 'cause we wanna steal your, you know, intellectual property and we need all that foreign currency too. Like we want it please, like, can we please uphold some level of the, of the international system and then all the things they're doing underneath the surface to, to try and do that. And I think the United States in particular has gotten bad about understanding China. 'cause it's just, oh bad China pure competitor. One of the only things Democrats and Republicans seem to be able to talk about is, oh, China is a threat. Maybe it is a threat, maybe it isn't a threat, but let's like actually look at what they're doing. 'cause I, the worst possible scenario Vance would be that your and my children in their lifetimes, they have to live in the United States where we're at war with China. Like that would be a really, really bad place to be. And I would love to avoid that. So

Vance Crowe [01:11:39] Yeah, I mean it, one thing Trump did in his first administration was keep us outta outta wars. And I really hope, no matter how everybody feels about it, like our whole country's better if we're not fighting. And it would be very good to see that continue.

Jacob Shapiro [01:11:53] Well, it's his attempt that was not for lack of trying. We came very, very close to war with North Korea, very close. He tried to overthrow the Maduro regime in Venezuela. It just didn't go very well. It was like a Bay of Pigs light version. So you're right that he didn't throw us into any more wars, but he was on the edges like doing some of these things. And it was not, it was not Donald Trump who took the United States out of Afghanistan, which is something multiple presidents had promised beforehand. It was Joe Biden. Now Joe Biden did it in such a way that it caused a ton of, you know, destruction and it wasn't handled correctly and blah, blah, blah, blah, blah. But it was Joe Biden who took us out of Afghanistan to focus on, on China and some of these other things was not the first Trump administration. So I, I wouldn't be so sanguine that he's afraid of war in that sense. When, when you saw me in Wisconsin, actually I think I was still talking about Trump as an isolationist. One of the things that has changed for me so far this year is he doesn't look like an isolationist to me at all anymore. He looks like an imperialist. So he's throwing his weight around with the Panama Canal. He's explicitly trying to get things from other countries and threatening them with tariffs or military force if he doesn't get what he wants. That's not the profile of a country that's not gonna get into fights or wars. But we'll see. Like, let's see what he does with Iran. Let's see what he does with North Korea once he's been in the office for a while and inflation starts to creep up and he needs a distraction.

Vance Crowe [01:13:14] Well, Jacob Shapiro, you are truly my worthy adversary. Somebody that I really respect and I disagree with, but I really enjoy chatting with you. I'm sure my audience benefits tremendously from having a, a very different perspective that's grounded in the way that yours is. If people wanted to hear more about your perspectives, where where should they go?

Jacob Shapiro [01:13:35] Well, first I'm not convinced that we disagree on things, but I'm a natural born contrarian. So like you, you, you give me something and I'm automatically gonna take the opposite, the

Vance Crowe [01:13:43] Opposite viewpoint

Jacob Shapiro [01:13:44] By the way, which is something which makes me actually somewhat sympathetic to Trump. I read McMaster's book on Trump recently, McMaster, the NSA advisor from the first term. And he talked about how, how decision making processes would happen during the Trump administration. And he talked about how Trump was a reflexive contrarian. If the experts told him something, he would just say the opposite because, you know, he didn't trust what the experts were telling him and he wanted to learn it for himself. So in that limited way, like I actually relate to Donald Trump on a deep level. Anyway, you can just find me at Jacob Shapiro dot com, all of all the links to the bespoke group and the other places that I'm doing things, whether it's the podcast or things like that are there.

Vance Crowe [01:14:17] Yeah, tell people about the podcast 'cause it's it's great. It's worth a listen.

Jacob Shapiro [01:14:21] I appreciate it. And so it's, it's just the Jacob Shapiro podcast. We've got, you know, weekly chats with my business partner Rob Laity over at Bespoke and, and some other endeavors and, you know, interesting people like I, the episode that we put out today was with somebody who's in the US for an aid space. And I didn't necessarily agree with everything that she said, but boy did she give like a different perspective than is available out there. So it's, it's about trying to bring perspectives on these things that challenge the way that people think about things. So I'm, I'm glad it's useful to you. I've, I've been enjoying your podcast personally as well. I'm happy to be on it. So.

Vance Crowe [01:14:57] Well man, thank you so much for, for coming on and you will be back again, I'm sure.

Jacob Shapiro [01:15:02] I hope so. I hope I didn't scare you away.