The Right Side of History with Tyler Cowen

We knew the story of the international rules-based order was partially false, that the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically. And we knew that international law applied with varying rigor depending on the identity of the accused or the victim. This fiction was useful, and American hegemony in particular helped provide public goods open sea lanes, a stable financial system, collective security, and support for frameworks for resolving disputes. So we placed the sign in the window, we participated in the rituals, and we largely avoided calling out the gaps between rhetoric and reality. This bargain no longer works. Let me be direct: we are in the midst of a rupture It's not a transition.

It's Thursday, January 29th, 2026, and welcome back to Goodfellows, a Hoover Institution broadcast examining history, economics, and geopolitics. I'm Bill Whalen. I'm a distinguished policy fellow here at the Hoover Institution. I'll be your moderator today, moderating a conversation featuring three of my colleagues we jokingly refer to as the Goodfellows. And they are, of course, the historian Sir Niall Ferguson, economist John Cochran and former presidential national security advisor slash geostrategist slash hopeless optimist, Lieutenant General H.R. McMaster. Neil, John, and H.R., by the way, they're all Hoover Senior Fellows. Gentlemen, good to see you. We're going to, uh, do two topics today. Second part of our show, we're going to talk about America being on thin ice, and by ice I'm referring to Immigration Customs and Enforcement. The tragedy has occurred in Minnesota and the question of what is going on in America with immigration policy. But first, we're going to talk about a few isms. We're going to talk about globalism. We're going to talk We're gonna talk about socialism and tying a bow around those, returning to Goodfellows, is our friend Tyler Cowen. Tyler is the Holbert L. Harris Professor of Economics at George Mason University and also Faculty Director of that school's Mercatus Center. He co-writes a blog, it's called Marginal Revolution. You can find it at marginalrevolution.com. He hosts a podcast called Conversations with Tyler, and if that's not enough, he's also a columnist along with Neal for the Free Press. Tyler, welcome back to Goodfellows.

Happy to be here. Hello everyone.

So let's get right into it, Tyler. I want to talk about this idea of Trumpism meets globalism and who is triumphing. And let me read two passages that you and Neil have written recently. Let me start with you, Tyler. Quote, the big story from Davos— I'm referring to the World Economic Forum last week that Neil attended— the big story from Davos is that globalization is in swift retreat. That may well be that the insiders are saying to each other in speeches and exclusive private parties. From the outside world, outside the peaks of Switzerland, though, what I'm seeing is that globalization, all things considered, is likely accelerating. To which we have Sir Neil Ferguson writing in the pages of the Free Press, quote, I've never seen— he's referring to Donald Trump here— I've never seen, never before seen a single individual so completely dominate this vast bazaar of the powerful, the wealthy, the famous, and the self-important. So Tyler, tell me, who's winning this conversation, the globalists or Donald Trump?

I think of Donald Trump as being fairly globalist. He built a global business empire with hotels and real estate. He's deeply concerned with the rest of the world, whether we like all of his concerns or not. He keeps on lecturing Europe. He's obsessed with the US and China in some strange way ruling the rest of the world together. He just likes doing things. And the more frustrating it is for him to be stymied at home, the more he's looking to abroad, including Venezuela and possibly Iran on the horizon. So I think both Neil and I are correct. And they're not such different points of view.

I entirely agree. Our positions are perfectly compatible with one another, though the globalists who convene each year at Davos regard Trump as their sworn enemy. Uh, part of the point of Davos now is to get together and hate on Trump. And like somebody who enjoys playing the pantomime villain, Trump comes knowing that they're itching to boo and hiss, and he rather loves that. What they hate about him is, I suppose, tariffs, is his contempt for institutions like the Paris Climate Accord. They can't bear the fact that Trump wants to tear up what they call the liberal international order. A phrase that gets ritually incanted at such events. But as Tyler says, Trumpism, including the tariffs, including the withdrawal of the United States from international agreements, is global, not isolationist. Trumpism is just a different view of world order. But what's interesting to me is that if one looks at the economics of the world today, The tariffs, though they're much higher than most people foresaw ahead of Trump's reelection, haven't ended globalization. They've just caused a slight reconfiguration of the international trading networks. And that's happened with amazing speed. Uh, some of the goods that used to go to the United States via, say, Vietnam now have to make a couple of stops before they end up in the United States. There's wonderful work that you probably know, Tyler, by Hyun Song Shin of the Bank for International Settlements on the way the economy, the world economy really works, a network of interlocking balance sheets and supply chains. And what I'm fascinated by is how little that network is really disrupted by, even by the very high tariffs that Trump imposed last year and threatens to impose Again, so I think it's fascinating to see how the global economy powers ahead, uh, regardless of, of what Trump does. To me, the puzzling thing is why European leaders, and now the leader of Canada, take the bait every time. Uh, and I can't decide if it's naivety or whether they need to have Trump as a villain in order to legitimize their own rather weak governments. What do you think, Tyler?

In my view, they need to have Trump as a villain. So Mark Carney, who's a very smart fellow, delivers the speech. It makes him more popular at home, raises his prestige abroad. He doesn't actually say anything. We all know Canada cannot escape the embrace of the United States. It's the very fact that we're pre-committed to defending Canada no matter what that he can get away with saying such things, because the connection between the two countries will continue. You will not find, for instance, the Prime Minister of Estonia offering similar remarks because they're genuinely uncertain how much we care about them. Now, when it comes to free trade, I think Trump is one factor behind the EU having at least possibly a free trade deal with Mercosur, the European Parliament allowing that, and the EU and India having a free trade deal, which right now looks pretty small, but over time could become very important. So if you think the rest of the world needs to globalize more than the US does because we're a big economy and we have a lot of resources, there's some chance— I wouldn't bet on this, but some chance that the net impact of Trump is pro-free trade on a lot of countries other than our own. So I don't favor the tariffs at all. But, you know, there's always a second-order effect to any first-order policy change, and those are harder to think about. I'll just say keep on paying attention.

Let me chime in here. First, I hate the word globalist because it's either admiration or insult depending on what you mean. I'm a free trader, but that doesn't mean I'm for climate accords, the UN, the World Court, and one world government. But free trade, are we connected to the world? Some sense of, yeah, international order is good. With that off my chest, the Greenland thing was his classic negotiating tactic. He doesn't use the carrot, he uses the stick. He bullies people and then when it doesn't work, he backs off and then he waits for another chance. And that's now two news cycles old, but we have to have this show every day if we wanna keep up with the news cycle 'cause Greenland, we were all set to do Greenland and Greenland faded off the news cycle and we're done. I am, but that business has long-term damage to our relationships around the world. Trump managed to get the liberals reelected in Canada. We'll see what his effect on European politics is. And if there's trouble with China and we want to call up Europe and say, we need your help, let's see how Europe answers. So that's the question I want to ask for you guys. How much is this one man versus permanent shifts in the correlation of global events. We see Europe, at least in name, saying, well, we're going to do free trade with Latin America and India so long as French farmers continue to receive subsidies for another 100 years. These are managed mercantilism, they're not really free trade, but at least in principle, the rest of the world seems to be still committed to the basic ideas of trade. Canada wants to import electric cars from China, which will find a way. As Tyler always points out, substitution works a lot in economics, that the current tariffs didn't do that much. The Supreme Court is likely to say, "No, you can't use tariffs, at least in this bludgeon-like way to leverage international affairs." So, you know, how durable is this? Or will the forces that push us towards a liberal international order, open trade, open investment, you know, recover when it's over? I think that's a good question. And here I'm hopeful.

I think when it comes to Greenland in particular, the European elites did take the bait. They believed it all. They fell for the rhetoric. Not one of them raised his or her hand and said, well, securities prices aren't really budging. There's not much to this. And I think they were genuinely scared. And what I see happening on the opinion front is that the people who used to argue for some kind of US-European alliance or Atlantic strong relationship, they feel burned. And you see this in the Financial Times. They're turning against America all the more so because they feel they look like idiots. So now they have to make up for that ground by you know, going further, attacking Trump, attacking the United States, claiming the end of everything is upon us. And that's a negative, and I don't think it's going to disappear right away. And I think in particular Danish political leaders felt humiliated, and I don't see how we undo that anytime soon.

Yeah, as a negotiating strategy here, I'll channel your game theory. Humiliating your opponent is what bullies do. It is a negotiating strategy, and sometimes it works,, but sometimes it stiffens people's spine to do things that are even against their own interest. Denmark should sell Greenland to the US for, you know, Rubio said $600 billion, an astounding amount of money. But even if it were in their own interest, no, they won't do it. That's a negotiation. Sometimes flowers and chocolates work.

I want to bring HR into the conversation because of course the issue of Greenland, the broad debates that went on last week were as much about national security as they were about economics. Maybe they were more about security. And one of the things that I think is going on here is that Trump is really calling the Europeans' bluff. European leaders, including President Macron of France, have been talking about strategic autonomy for the better part of 10 years. It used to be a classic applause line at events like the World Economic Forum to say that Europe is an economic superpower, now it must become a true superpower But of course, they've never really done anything about it until now, under pressure from President Trump. Now they realize that they actually do have to spend money on defense, and they, they need to in fact stop talking about strategic autonomy and trying to achieve it because there's some chance that the Transatlantic Alliance is about to just vanish, or at least decay to the point that it It becomes a contingent commitment by the United States. And remember, Biden's election was supposed to change all that. The adults were gonna come back into the room, everything would be back to normal. And it turned out that Biden was actually worse for transatlantic relations than Trump one had been. So I, I think it is partly structural, John. I don't think it's just about Trump. If it had been just about Trump, then Biden would've been a lot better for Europe than, than he was. So they know that it's all up, but HR. I don't think Europe can get strategic autonomy because quite apart from anything else, I can't imagine Europe ever having its own complete nuclear deterrent. All there is at the moment is a little French thing, the Force de frappe, and a non-independent UK deterrent. So from a military point of view, HR, is it conceivable that the Europeans could ever achieve strategic autonomy or NATO without the US? Because I don't think it is.

I don't think it is either, Neil. And I'd like to get Tyler's perspective on this as well as yours. I mean, I, you know, first of all, I think it's good that we're kind of clarifying what does globalist mean. It doesn't mean soft-headed cosmopolitanism, you know, where everybody should be against that. But I think that actually we should have a reasoned internationalist approach to an America First agenda, you know, and I think that this is what President Trump is blowing, but I'll come back to that. To your question, Neil, hey, first of all, nuclear umbrella, you're exactly right. I mean, the United States is essential to nuclear deterrence and the ability to respond if necessary. But then also the whole infrastructure of continental defense in Europe is dependent on US capabilities, from transportation capabilities to communication capabilities to intelligence capabilities and just logistics overall, right? So that's very difficult to replace. It would be a huge economic burden to end. And you lose the synergies you have now with the US providing that foundation and other countries contributing at a much higher level now. But Tyler, what I'd like to, and plus I would just say, who's gonna lead if the US disengages from Europe? I mean, is everybody gonna defer to France? I mean, I don't think so. So I think that the US cannot be replaced in the alliance. Which then gets to why, you know, why the heck is President Trump oftentimes determined to be the antagonist in his own story? And, and what I'm talking about here is if Greenland was fundamentally about China and Russia, well, he gave China and Russia the best gift he could have given them by insulting, you know, our, our allies, by, by putting so much pressure on the transatlantic relationship. And then I think eroding the trust, right? The trust that is foundational to an effective alliance. An alliance, by the way, which is also important for dealing with Chinese economic aggression, for example. And so, Tyler, what is your view of this? I mean, I just think that Trump is consistent on a lot of things, but in this area, I mean, especially just his relationship with Europe, it seems like he's just determined, uh, to undermine his own agenda.

I mentally model Trump as being emotionally dysfunctional and having a need to assert dominance over others, whether they're in his cabinet or abroad. And he keeps on repeating that same pattern, and sometimes it works well, but often it backfires. And internationally, as of late, it's been backfiring, and I think he just can't help himself. He grew up as some particular kind of bully. He had the whole world at his feet. Women ran after him, and then he's been reelected. So from his point of view, it's all going remarkably well. A guy who probably never expected to be president. With respect to European defense spending, I don't doubt they will spend more. My biggest worry is simply whether Western European young men are willing to fight and die. And that seems to me like an obvious no. There is not a spirit of martial virtue. In Western Europe anywhere I can see. Poland, Finland, other places, yes, it's there. But that's a bigger problem than how they spend the money. Can they integrate the supply chains? Who leads the thing? Some of those you can get around because Russia itself does not have the world's largest economy. But when it comes to will your people support this, that's where I think they're truly stuck.

Speaking of which, Neil, how was your wake-up call speech received?

Well, I have the kind of peculiar role of mini pantomime villain in the kind of circles of writers, thinkers, and thought leaders. Nothing will change Putin's calculus more decisively than a meaningful increase in the pace of European rearmament. Speeches at Davos aren't going to do it, folks. No matter how passionate they are. Uh, you know, most journalists tend to lean liberal, and even those who are conservatives tend to have some allergy or other to Trump. And so if you say that Trump has done something right, uh, if you say, for example, his foreign policy is significantly superior to Joe Biden's. Even if it involves considerable risk-taking, then you are immediately an apologist for Trump. And, uh, you have to put up with denunciations of the sort that I was just reading before the show began. It's odd that one can't, you know, distinguish between, uh, the good things that an administration does and the bad things. One has to be against it 100% or implicitly for it 100%. But my approach has been to say, take the case of Ukraine. It's totally unhelpful for the Europeans to act as if there's some world in which Ukraine wins the war and drives the Russians out of the Donbas. That isn't a real world that I, as an historian, can recognize. As I said on Scott Galloway's Davos podcast, The choices are between a compromise peace or some ultimate Russian victory being ground out at very high human cost, because there's just a huge asymmetry in terms of resources between the two sides. And if you think a compromise peace is preferable to a Russian victory, which I certainly do, then you should want there to be a breakthrough, a fairly imminent breakthrough in the negotiations. And if you see signs that Steve Whitkopf and Jared Kushner are moving towards a breakthrough, that should be a good thing. But it's very hard for some people, uh, in today's debate to draw those distinctions and to, to judge the Trump administration by results rather than to, to be, I suppose, caught up in this tedious debate about whether or not Trump is, is the American Hitler, which I can't believe is still going on. 10 years since it began.

Can I chime in on the Davos question? First of all, there is a world in which Ukraine wins, and that's the world where Europe and the US realize, oh, this is our war too. The resources and ability is overwhelming. This war could be won in a week if NATO decided to chime in. But we've had that discussion before. What I wanna point to is another speech at Davos, which is Chancellor Merkel's speech, Democracies do not have subordinates.

They have allies, partners, and trusted friends.

Europe has a military question. It also has an economic question. Europe stopped growing in 2010, and a lot of it is due to self-inflicted wounds such as energy policy. And I was very interested that he stood up and said, no, what we have done, you know, decommissioning nuclear reactors in the name of climate, we stopped economic growth. So if Europe wants to prevail, yes, it needs military spending. Yes, it needs young men and willing to fight. It also needs some GDP, which it's going to be running out of very quickly. And so I do sense the spirit of reform in Europe bubbling up that Brussels has regulated us to death, that these energy policies have stopped industrialization and growth, and that we need to do something about it. And at least they're talking about that. I'm curious if Tyler has views on whether that's actually likely to happen or just we'll add 5 more commissions to the number of commissions that come out of Brussels to study plans for the potential future drafting of plans for the potential future implementation of discussion groups to talk about renewing growth.

I think some European deregulation will happen very slowly. I think Europe ultimately will allow AI, for instance, in part by just not consistently enforcing all the laws they have now, as they've done with GDPR. But it's also slow and tortuous. And as it relates to the war in Ukraine, it's on too long of a timeframe. I think the American right somewhat underrates Europe. The human capital, social capital, political capital there are still pretty fantastic. A large number of the world's 20 best cities, whatever you think they are, they're in Europe. Real estate prices in Europe have not collapsed. That tells you something. But, you know, I think the best-case scenario is they stay in slow growth and they adopt innovations from the US and they remain at 70% of our per capita income levels. But as we do better, they'll do better too. And that's what I think we're looking at. That is, in fact, okay, right? How many other places in the world would you— where would you rather be than Europe?

A museum with a very nice coffee shop is what you're saying. Although they're falling behind. It's not staying at 70%.

But yes, I just want to say something here. I mean, you know what bugs me? And I'd like Neil, Tyler Cowen, John Mearsheimer, maybe to comment, is missed opportunities, man. I mean, President Trump went to Davos, you know, at the top of his game.

Let me—

in terms of, you know, the— what he had done against Iran. What he had done against Maduro. You know, our economy is going strong. I mean, he had so many advantages. And then to go in there and say, hey, you wouldn't even have your countries if it wasn't for us. We saw this in World War II when Denmark fell to Germany after just 6 hours of fighting and was totally unable to defend either itself or Greenland. So the United States was then compelled. We did it. We felt an obligation to do it. To send our own forces to hold the Greenland Territory and hold it. We did at great cost and expense. They didn't have a chance of getting on it, and they tried. And to insult them, what the hell do you gain by that? And especially, you know, if you, if you incite enough hatred for, you know, for America and Donald Trump, hey, maybe Xi Jinping doesn't look that bad. And we're seeing that kind of dynamic. So, I mean, this is what bothers me, right, is the missed opportunities based on this, like, obsession, I think, with denigrating allies and partners, and I would say coddling our adversaries. I mean, why isn't there more pressure on Russia now? Why is he still pursuing this kind of entente with Xi Jinping, which he knows he's not going to get? It's going to be unrequited love for Xi Jinping. So, I mean, do you guys mind just commenting on that perspective?

I just want to pile on to Maria's comment in particular, saying they won't be there for us when Denmark in particular and everybody else said, yes, you've been attacked. We're going to send our young men and women to Afghanistan, and many of them died there. And we say, no, you weren't there for us.

Right.

But I think there was never an opportunity.

Per capita. And the Danes, they fought like hell in Helmand Province.

This is what Trump is though. He's an emotional bully who rejects others before they can reject him. And that's what he is. So it's like asking John Cochrane not to think like an economist. Good luck.

Okay.

Zelensky's speech at Davos was actually the critical one because it was Zelensky who said to the Europeans, you can't change Trump and don't try. And he also said correctly that the Europeans were all very good at telling the Ukrainians what kind of peace they should consider, but weren't really very good at providing the means whereby the Europeans can defend themselves. And this is the bottom line. The Europeans cannot supply the air defences that Ukraine needs, only the United States can. The Europeans talk about strategic autonomy, but AI and cloud computing have made them more reliant on the United States than they ever have been. And Mistral is not an answer to that question. So I think that what Trump did in his bullying way was to say to the Europeans, you all go and focus on Greenland. Let me set your hair on fire on that issue and allow us then to pursue policies not only with respect to Ukraine but also with respect to the Middle East that you would only interfere with. Because if you'd gone to Davos and talked about Iran, What would the Europeans have said? Oh, please de-escalate. Don't, don't for heaven's sake bomb Iran again. Or if you'd gone and talked to them about Ukraine, they would have said, oh, you must demand tougher things from Putin, which is what they did in November, which is why the whole peace initiative in November stalled. So I think the whole goal of the exercise was to get the Europeans out of the way of US national security strategy in the Middle East and Eastern Europe by giving them Greenland to fixate on. And it worked. Very well.

We have only 10 minutes left. I'd like to get Tyler's thoughts on New York City and the new era of Mayor Zohaan Mondani. Tyler, over my shoulder is a campaign poster from 1928. It simply says Herbert Hoover for President. 1928, Hoover runs for president. He wins under the mantra of quote, rugged individualism. And what was rugged individualism back in the day? Individualism and an alternative to European state socialism. Well, Tyler, let's fast forward to 2026, and here's New York City's new mayor, Zohan Mondani, giving an inaugural speech. And what does he say?

Quote, we will replace the frigidity of rugged individualism with the warmth of collectivism.

If our— so Tyler, tell me how the warmth of collectivism is going to play out.

I think the new vibe shift is toward populism. I think Mondani will prove a populist first and a socialist second. I still think that's very bad. I think he's noxious for public discourse. I think he will scare some number of wealthy Jews and taxpayers out of New York City. But New York has survived worse than that in the past. But it's a sign that our national politics is not converging back toward normality or liberalism or some due respect for elites anytime soon. So I'm against it. I don't like it, but I don't actually think it's the biggest problem we face. It's just a symptom of other issues.

And let me add the horseshoe here. A lot of Trump's speech at Davos was about how I'm going to stop institutional investors from buying houses. I'm going to cap prices on this, that, and the other thing. I'm going to hand out tax goodies, the no taxes on tips, the $6,000 just for being old. So populism in the sense of government handing out price controls and so forth is popular all around. And that's a fairly corrosive, problem.

And Trump likes Mamdani, right?

Are you affirming that you think President Trump is a fascist?

I've spoken about, uh, that's okay. You can just say yes.

Okay.

All right. Okay.

It's easier. It's easier than explaining it.

I don't mind.

He gives him a phone call about Iran. That's crazy, but not surprising.

He's not ideological.

Mamdani to him is a winner, right? Dominance again.

Okay. Tyler, you and, uh, and Coleman Hughes have both reflected on the new popularity of socialism. Why, why won't socialism go away?

Depends what you mean by socialism. I don't think real socialism is very popular today. The idea that you can whine about things and not have much of a constructive program in response, that's extraordinarily popular. And socialism is the word people have taken off the shelf. That would be my diagnosis in a nutshell.

Well, and demand that the government come in and do things the government's not capable of doing. Give me more money so I can afford a nice 2-bedroom apartment in Manhattan. Force the grocer to lower the price of eggs and and so forth. That's an interventionism that goes back a long way in many ideological guises.

Tyler, don't you find it slightly depressing that our ideological landscape so closely resembles that of a century ago and that people on the left can't come up with anything more original than democratic socialism and their counterparts on the far right have descended into antisemitism and essentially are rekindling what is left of the ashes of Nazism. I think this is a most depressing commentary on the total unoriginality of our time. Young people just can't come up with anything new politically. So back they go to the ideas of a century ago.

And nationalist crony capitalism on the right as well.

Mercantilism.

Mercantilism.

Still, there's a great stagnation in ideology, just as there is in Hollywood, right?

There's no stagnation in ideas. It's just the ones that dominate our public discourse. Us free marketers are like Cubs fans. We've had the right answer for 250 years. It's just, you know, wait till next year for someone to listen to us.

Hey, Joe, The Wall Street Journal has a phrase for these voters. It's called downwardly mobile elites. These are young people who are just not happy about their lot in life. As you are a resident optimist, how do we make those young people feel better?

Send them to, send them abroad to some of the places where I've served, and then maybe they'll, they'll have a deeper appreciation, you know, for rule of law, you know, the free market, um, you know, freedom of speech, you know, all, all the, all the great gifts we have in this country that, uh, that allow them, you know, really to, to be the authors of their own future. You know, what, what I would love to see it for among young people, and Tyler, I'd like to hear your thoughts on this, I'm gonna go visit Ian Rowe at Vertex Academy next week. And, and what do we do to restore a sense of agency among young people? You mentioned this, the, you know, the, the grousing about their lives with no really product, you know, productive idea about, about how, you know, how to improve things. How do you restore a sense of, of agency in young people?

I don't know how to get there, but I believe in teenage jobs by 16 and a half. And if possible, marrying in the first half of your 20s and having kids not too long after that, which would solve some of our other problems. But I would agree that's begging the question. But I think our mental health problems would be greatly alleviated if we did that. And artificial intelligence, for all of its virtues, it's going to make worse the problem of downwardly mobile elites, because the sort of family where the kid goes to Princeton and expects to be some kind of consulting or law partner and pull in $1.5 million a year. A lot of that's going away. And you tell those people, well, you're actually going to move to Houston and be an energy executive for $350K a year. They hate that. I'm not worried about them at all. I think that's great, in fact, because poor people will have all these free or near-free services through the AI. But that is going to be some social earthquake, and people are just starting to see that coming.

Tyler, do you think the AI shock will be bigger than the China shock?

No, the AI shock's gonna be like the word processor shock. It'll be great for people who wanna go off to consulting careers and investment bankers. What is the downwardly mobiles are the ones who went to NYU, got a grievance studies degree, did go abroad to go work for some nonprofit building houses somewhere that are gonna rot within the next year, came back and worked for some nonprofit in New York advocating for something or other, and then discover that, oh, that only pays $130,000 a year and I need a lot more to live like my parents did on the Upper West Side. You know, the useless college degrees and the people who don't really want productive jobs is where the core distinction is.

I'm not sure I agree with you, John. Erik Brynjolfsson, our colleague at Stanford, has a paper suggesting that AI is in fact going to impact people with computer science degrees first, and then it's going to work its way through finance, a subject dear to your heart. And the people who really will find their entry-level positions disappearing are the people Rather, as Tyler suggested, who thought that they were going to go from elite universities into elite jobs at tech companies, at banks, and at law firms. Tyler, what do you think?

For every 10 lawyers, there'll be one. So the AI already is doing a lot of the legal work. Law partners will cultivate clients, find new business, but whether it's programming or McKinsey-like consulting, or legal work or a lot of finance. I think those professions will have many fewer high-paid workers. This is all to the good. I understand full well comparative advantage and Ricardo in terms of trade. It's poorer people who will be much better off. Their healthcare will be cheaper and a lot of us will live to be age 97. And those displaced people, like I said, they're going to do fine. They're smart, hardworking people. They will get jobs at something well above the subsistence wage, but they are not automatically going to be masters of the universe. And I predict they will hate that.

But the demand for legal services will rise. You know, when ATMs went in, employment at banks went up.

It doesn't always happen, though.

That's what will happen.

We'll hire a lot more lawyers in government to write laws about the AIs. Those jobs will pay okay, but not great. And actual law firms will be super efficient. And you'll have one lawyer overseeing, you know, 20 or 30 AIs.

Well, I'll match your Erik Bjørnalsen with my Chad Jones. Tasks get automated. People don't necessarily get automated. They use tools in order to be more productive. And wages for everybody can go— not everybody, but wages for most people can go up.

Oh, I agree. Real wages will rise on average, but manufacturing employment's way down, right? It used to be 37%. Now it's 7 to 8%. So why can't the same thing happen in, say, law firms and consulting?

And real wages are up and unemployment is what, 4.2?

I agree real wages are up. I'm just saying these people will hate it.

As the weavers hated the Industrial Revolution.

Tyler, next question for you, and I'm sure appreciate your time today. We are about to have a midterm election in America, which means that we will soon be headed into a presidential election for 2028, the 100th anniversary of the Hoover election. Question, if Mandami decides to run for president, if AOC decides to run for president here in California, Ro Khanna, and they run under this banner of the warmth of collectivism, how far do you think they're going to get? Are they going to get very far in the process, or do you think they're playing with fire?

Well, Mandami can't run. I find that following elections too closely makes me stupider, so I don't do too much of it. My intuition is that Marco Rubio could beat AOC. And probably Gavin Newsom, but against Vance, it would be closer to a toss-up, though I guess I would still pick Vance over AOC. But I don't feel I know much about this, and I go look at the prediction markets, and I would trust them over me in any case.

A true economist.

Hey, Tyler Cowen, I appreciate being here today. A belated happy birthday, by the way. I understand you're going out for some delicious Persian food tonight and taking in a basketball game, so Thanks for joining us today, my friend. Thanks, Tyler.

See you all around. Thank you.

Thanks, Tyler.

Okay, gentlemen, we turn our attention back to the United States now and the tragedy in Minneapolis. Two shootings now involving ICE agents and protesters. For reasons I don't quite understand, trouble seems to find its way to Minnesota. This is also where the George Floyd shooting occurred a few years ago. Gentlemen, your thoughts on what's happened in Minnesota. John, why don't you kick it off?

Well, I think everybody here except for the immigrants is out looking for trouble. And when everybody's out looking for trouble, trouble happens. You know, ICE is surging into these cities and deliberately wants to have things that show up on the social media because they want to scare everybody else into leaving. They can't personally deport everyone. The local police are, by law, they actually are reluctant. They would like to help protect people and, you know, have order around here, but they're not allowed to. The local politicians, are of course, they like to create problems here. It distracts everybody from last news cycle, the massive welfare fraud in Minneapolis. Professional organizers and NGOs who are in here wanting to create stuff that shows up as horrors for their anti-Trump campaign. And some outraged citizens are in there as well. They're not less so much provocative. You get 5 rounds of provocateurs, everybody trying to cause, uh, cause problems and you get problems.

Neil, how does this appear from the other side of the ocean?

Well, immigration was one of the issues that won Donald Trump reelection. And, uh, it was a key issue, I think, in, in the 2024 campaign because the Democrats had so obviously gone down the road of of open borders and had no coherent story, uh, on the subject, whereas the electorate all over the country, not just in border states, could see with their own eyes that things were out of control. Uh, and so initially this was one of Trump's strongest cards, and it was still a strong card right up until January 7th, when Renee Goode was shot. And you could argue that, as John said, if there are people looking for trouble, you'll get trouble. But then for there to be a second protester shot on January 24th created a major crisis for the administration. President Trump knows it. Now, I think Stephen Miller's vision of a kind of shock and awe deportation policy was always open to question.

Right.

I questioned it on the ground that while people wanted an end to illegal immigration and deportation to return to levels that we haven't really seen, uh, over the previous 4 years, I don't think they had an appetite for shock and awe. They did not have an appetite for the kind of tactics that Immigration and Customs Enforcement have been using. And so I think a deliberate strategy of aggressiveness has backfired on the administration. I'm not naive about what has been happening in, uh, Minneapolis. Number one, it was targeted because I think the administration felt it had the perfect blue state fall guy in Tim Waltz. They had just exposed a $9 billion scam involving immigrant daycare centers and God knows what else. And they thought, this is great, we're going to go in hard here and we're really going to expose just, uh, what a hideous nexus exists between the Democratic Party and this immigration, uh, political economy. But it's blown up in their faces because, uh, of the shootings of, uh, these two protesters. And President Trump is having now to walk it back rapidly. If you look at the polling, last thing I'll say, there's been a very major shift. So voters who were down with a much tougher policy in immigration are now in a state of funk to the extent that, you know, two-thirds of people who've seen the videos of Alex Pretty's death say it was unjustified. 46% of voters in a recent YouGov poll say ICE should be abolished. So the whole thing has backfired, and this is going to be a very difficult thing for President Trump to fix, given that it was a key issue for him and it's now turned into a liability, and we've got midterms ahead.

HR, two questions for you. First of all, do you think any heads should roll? And secondly, do you think that what happened in Minneapolis merits a partial shutdown of the government, which could happen by the time this show goes live.

Yeah, I don't think it merits the partial shutdown of the government. I do think some people should be held responsible, but they're really kind of on both sides of this thing. You know, I, I mean, to just to highlight, uh, Neil's point, I agree with what both, uh, John and Neil said. You know, the only person who can stop Donald Trump most times, uh, most often is, is Donald Trump himself, right? I mean, it's again another, it's another example of him becoming the antagonist in his, in his own story. And And, uh, but I think if you go back to really the fundamental issue here, why the hell are there sanctuary cities to begin with? How, how is it okay, you know, for a municipality, a county, you know, to, to say, hey, we're not going to enforce the laws of the land here, you know? And, and so that lack of cooperation between law enforcement at the, you know, at the, at the municipal, state, and federal levels, that's a real problem, you know? And And then on top of that, you know, the inciting, uh, you know, of these, these, uh, these groups, you know, the, the governor and the, and the mayor telling people to get out there on cell phones. I asked my cousin who was a, he was a, a police officer in Philadelphia. I said, hey, what, what's your take on all this stuff? And he said he had two, I think, really important observations. He said there appears to be a deficiency in training. He said, you know, for whatever you think of, of these films, for the first shooting in particular, you know, he said you're taught to just never get in front of a car. You just don't get in front of a car, you know, and you always do try to, you know, try to de-escalate that situation when you have like a moving vehicle and so forth. But the other thing he said I think is really important. He said, you know, if you're a police officer and you're going to make an arrest, you have all these things running through your head like, hey, you know, is this person going to be armed? You know, you have a sense of of, you know, of anxiety, not really anxiety, but, you know, stress already. But then you have these crowds around you hassling you, blowing whistles, you know, phones in your face. I mean, this goes to John's point, you know, what the hell do you think is going to happen? And what my cousin said to me, he said, hey, you know, you're not in this. If you're in a crowd like that harassing law enforcement, you are not in a safe situation., you know, and, and it's, and, and the political leaders there ought to make, make that clear to people, you know, don't harass law enforcement. So I'm hoping that, you know, we hit bottom on this. And what you're gonna see is what you see Mr. Holman trying to do there now, which is to, to have conversations about, hey, how do we begin to cooperate again more effectively? But again, you know, this is at the root of this. A lot of this is the political polarization that we have. And our inability to work together on what should be a common agenda. You know, I mean, can we agree that we shouldn't have, you know, people who've committed crimes who are here illegally still in this country? And we shouldn't have, if they do go to jail, the situation where they get released out of prison, you know, instead of turned over to ICE and for to be deported. So anyway, it's heartbreaking to me, man. But again, it's another one of these sort of situations that's caused, I think, by the severe polarization.

Guys, I've said on the show before, there's something very Nixonian about President Trump, though they're very different individuals. Well, there's something very Kent State, 1970, about these events. And I think in some ways it is a similar situation in that Anti-Vietnam War protests were a way in which the left wanted to undermine the Nixon administration and pursued very aggressively their demonstrations with that end in view. And when the National Guard, and I think it was the National Guard in Ohio, opened fire on students, this was all precipitated by the incursion into Cambodia. The administration reacted rather in the same way that initially Stephen Miller reacted, which was essentially to say, well, you know, this is what happens when dissent, you know, is taken too far. I think Nixon's words were, this should remind us all once again that when dissent turns to violence, it invites tragedy.

But I do know that when you do have a situation of a crowd throwing rocks, And the National Guard is caused it—

called in that there is always the chance that it will escalate into the kind of a tragedy that happened at Kent State.

The problem, I think, for a Republican government is that it can very easily lose narrative dominance. We went from Minnesota is the center for immigrant scams to Minnesota is ground zero for Trump's fascists., and that all happened in a matter of days.

Why?

Because as in the '70s, the mainstream traditional media has a strong liberal leaning and it much prefers the narrative of Trump's fascist thugs to the narrative of Tim Waltz's, uh, Somali scammers. Uh, Nixon was driven crazy by this. Uh, but it's a reality as much today as it was, back in the '70s, that as soon as you get this sort of situation, the media will tend to side with the protesters and against law enforcement. And I think that's a really important point to communicate because to find out what you really need to know about these incidents, don't go to, you know, the channels on TV, don't go to the the traditional newspapers, you have to mess around in social media to get any sense of what these protests were like, the extent to which they've been organized, the extent to which they're designed to provoke ICE agents. All of this is as much as to say, we cannot simply allow the narrative to be framed in the way that I think it's being framed, There is, there is something really pathological going on in Minnesota, something very, very disturbing that is taking place. And it has involved for years the building up of really very large immigrant communities, making those communities in some measure dependent on the state, uh, on scams that are tolerated by the political elite. That's the reality of what has happened there. And what I find maddening is that because of these two tragic incidents, we're losing sight of that, that appalling multi-billion dollar scam. And we've been sent chasing, uh, back to the narrative of, of overreach by ICE and and political violence by Trump. It's very unfortunate because I think there really is a, as H.R. says, there is a crying need for a serious transformation of US immigration policy. Things ran amok in the Biden-Harris years, but at this point, Trump risks losing control of the narrative much as Nixon did.

Let me just chime in. Uh, HR is right, uh, cops in a situation like this are very scared. It's not the— the sanctuary cities is not so much about enforcing laws and as in the, um, immigration law, uh, it's they are not even allowed to provide the kind of protection that normally happens. The Minneapolis Police Union chief was saying, I would love to help here, but the sanctuary city thing says I can't go do crowd control. And, and ICE is not trained to do crowd control. The, this police in that city is the best people to do it. And one effect is therefore to create this kind of situation by ICE doing it. Another thing, it's actually not that large. It was a choice to go here. It's not really all criminals now. A large fraction are just people being swept up. The community is not— there's more immigrants and illegal immigrants in LA, but it's very political. The administration was doing this. Politically. Neil's exactly right though, and it's worse. They wanted a narrative, and for the administration to decide, we want to create something that goes on social media, and they're in a fight against this very professional protester class and the traditional media who is just dying for Trump fascist story. They wanted to dominate the narrative and they lost that. And in part, you know, going on and immediately, immediately saying, we don't need to have an investigation, we know exactly who was at fault here, then immediately nobody trusts any investigation that comes out. So, so that, that was all a disaster on their point of view. The, the scams are just the tip of the iceberg of the rot in, in the welfare state, which I wish were back on the agenda and, and, uh, is now off for the next week. I think this will blow We'll be talking about something else in a week. But two last things. You mentioned funding. I looked it up. ICE is $79 billion, Border Patrol is another $79 billion. This is immense amounts of money are going there. I have no idea where it's all going. And what America wants is amnesty as we did in the 1980s. People who've been here 20 years and are not causing trouble and are working and paying taxes should get to stay. Swallow hard. That's what America wants. And finally fix the problem so we have a sensible immigration system that has actual rules, not just come in and set one foot here and you could stay forever with social services and not total exclusion. That's what America wants. That would pass in an instant if Congress could get its act together. I hope someday we'll get there.

And that's the big problem, John, if Congress could get its act together. So let's pick up this topic at a later date, gentlemen. Good conversation. Let's move on to The lightning round.

Lightning round.

All right. Item number 1, Iran's government is defending its crackdown. And meanwhile, President Trump's announced that what he calls a, quote, beautiful armada. This is the carrier battle group featuring the Abraham Lincoln has arrived in the region. Let's engage in a little rank punditry. Would you 3 gentlemen care to tell me what's going to happen next?

Yeah, I'll just say, I think it's above an 80% chance that there will be additional strikes on Iran. Those strikes will probably, you know, be at the encouragement of and maybe collaborating with, working together with the Israelis. But it'll strike while you, while you can still strike with a great deal of impunity, whether air defense systems are down against other missiles programs, trying to reconstitute their missile programs. And I think what they'll also ask is, okay, if they conduct these strikes, maybe against regime leadership, some of the security apparatus, how would Iran respond? And those strikes will probably also include strikes against the assets that Iran would use in response, like the IRGC Navy, for example. So I think the chances are high. There's a huge force going in that direction, not only the Carrier Strike Group, but also squadrons of F-15 Strike Eagles, you know, which are very effective in that role.

I agree with H.R. I think it's highly likely that this will happen. I'll add just a couple of points. One, We mustn't lose sight of the fact that the Iranian regime slaughtered upwards of 30,000 of its own citizens in the space of a couple of days. It is very hard, very hard indeed to find examples in history of a regime killing that many people of its own citizens that fast. This is up there with Stalin, Hitler, Mao. It's a truly abhorrent regime. We should all earnestly wish for Khamenei to be removed from power. The second point I would make is Trump administration is not into regime change the way George W. Bush's administration was. It's into regime alteration. We've already seen that in Venezuela. The alteration there was not that the Maduro regime was completely, uh, overthrown. He was removed, jailed, uh, and his, uh, number two was told You can run this show, but you report to us from now on, not to Beijing or Havana. I think it's conceivable that the administration would like to achieve something similar in Iran. Get rid of Khamenei and take Iran out of the authoritarian axis camp by striking a deal, presumably with some IRGC thug who's given the choice between death or cooperation. Much harder to do than Venezuela. Again, consequential in terms of global oil markets if one looks further ahead. But I think that's what's in play in this, this term regime alteration, I think is worth pondering because I think it draws an important distinction with regime change, which would be a much more ambitious project to try to change Iran's political system in the direction of, of Western democracy or the restoration of the old regime. Of the Pallavis.

Do you want to?

I don't know what's going to happen, but I do see the great question which Niall has raised, which is when the regime falls, is there chaos and civil war after? Do we encourage— Now, we've done this many times. We've encouraged little coups here and there in other countries to have a change in regime, but then our guy is in charge. That hasn't always worked out that well either. What I know for sure is not going to happen is when the extent of the massive amount of killing in cold blood of its citizens is— when people start paying attention, I do not think there's going to be protests on college campuses about how terrible this is.

Okay, our second item, this has to do with China. Let's keep this one short because our next Goodfellas is going to feature our colleague Frank Decoder. So it's going to be a very China-centric conversation. But in news from China, the Chinese President Xi Jinping has fired his top general supposedly for passing along nuclear secrets to America. How do you guys read this?

I don't believe he passed nuclear secrets to America. I think that's fake news. I don't believe that there was some coup brewing against Xi Jinping. I think that's also fake news. I think what's been going on now for some years is that Xi Jinping has realized the senior echelons of the People's Liberation Army are not remotely ready for the kind of confrontation that he envisions with the United States over Taiwan. And he's doing a kind of systemic purge. We're at least at a dozen, maybe more than a dozen senior military heads that have rolled. The only interesting thing about this is that it involves somebody who'd previously been thought to be close to him losing his position. But that's how I read this. It's been going on for a while, and it tells you that Xi Jinping has a problem. He does not have confidence in the leadership of the PLA. And if he doesn't, then it's hard to see how you get a showdown with the United States. Where the president clearly has a great deal of confidence in the senior echelons of military leadership now that he's shaken them up.

John, what say you?

Well, from a distance, it looks like Taiwan's safe for another week. But this is the question I have really for— is this about the military was not supporting Xi Jinping and his quest for greater power Or was it because they are a little reluctant to be aggressive about Taiwan and he'll just replace them with slightly more aggressive people who want to? So is it a Stalin purge or is it— I don't know. You'll have the historical analogy of purging to get someone who's more aggressive in power.

Well, H.R., let me throw another parallel at you. Spring of 1938, Adolf Hitler abolishes his entire war ministry. He sacks, I think, 16 generals. Makes himself commander-in-chief. Is it a stretch to think that maybe Xi is going down this road himself?

Yeah, I think this is— I think as Neil pointed out, you know, you have to place this in context of the other 25 or so who he's purged out of the PLA. I think it communicates a severe lack of confidence and maybe uncovering, you know, the kind of corruption that you had and still have throughout the whole Chinese Communist Party. And, um, and I think this is just one of many, many compounding problems that Xi Jinping has at, at the moment. Uh, severe economic issues. Uh, the model I think has kind of run outta runway. The model of, you know, overcapacity, overproduction, dumping goods on the international market. Those markets are starting to respond, you know, with, uh, uh, with, you know, with, with, uh, quotas and, and tariffs and so forth to protect themselves. And the consumer economy is not going anywhere. He's got the real estate crisis, the debt crisis. So I think this is not going to be a good year for Xi Jinping and the CCP.

So leaving aside the dumping goods, you read what's going on in there in part as a genuine, we could call it anti-corruption. So what you're saying is in the PLA, like in the Russian army, generals make themselves very rich with various schemes. And of course, becoming very rich in China means you accumulate political power. You're also a general, so a general accumulating economic and political power is a threat to Xi Jinping. You read it in part as, as that mechanism as well.

Absolutely. And as Niall said, to get rid of this guy in particular, he's 74 years old. He's one of the few people who had combat experience against the Vietnamese, and his father and Xi Jinping's father fought together and were— and so they're both part of the kind of princely class. So it was a significant event, but in broader context, I think it sort of reveals or indicates the rot at the top of the PLA.

All right. One final item to get to. These days, gentlemen, it seems we keep hearing the phrase being on the right side of history. For example, the Harvard Crimson trying to get students to turn out for Justice for Palestine marches said, do so because to do so is to be on the right side of history. So a question for the two and a half historians on this show. Does history actually have sides? John, why don't you go first? Does history have sides?

Well, I made it to a half. I'm delighted.

Okay, three quarters. No, no, no.

I don't think Neil and H.R. will even give me that much.

It's osmosis. Five years of this drawing, you're halfway there. But are there sides to history?

Yes. I'm going to go with yes and then be profoundly discouraged. You set me up for the guys who know something about this to bat it down. Yes, there's a right side of history, which is freedom, individual freedom, prosperity, a decent society, and it's a long struggle, but that's certainly, I hope, the right side. It's not necessarily the future side, but that's what we aspire to.

Yeah, H.R. Lincoln agonized with this during the Civil War, the question of whether or not God was on the Union side.

Yeah, well, I think it's important to ask those questions, to think about how your decisions will be regarded in retrospect many years hence. And I think what we miss a lot of times these days is that kind of long-term perspective. It'd be good to have a lot of our leaders thinking longer term, I think. And so I do think there is a right side of history. Sometimes that moment of clarity is pretty profound. You know, I'm thinking that Neil, you know, Churchill versus Chamberlain, for example, and their perspectives. In the interwar period.

Sir Neil, you get the last word.

No, there isn't a right side of history. There are winners and losers in history. It's quite hard to predict who the winners will be though. And so each of us has to make decisions about the political or economic future under considerable uncertainty. Chamberlain didn't think he was doing the wrong thing in 1938, '39. He thought he was doing the right thing, by playing for time and furiously, albeit belatedly, rearming. Many people thought that Churchill was a reckless warmonger, and they didn't stop thinking that even through 1940. It really took years before it became clear that Churchill was the savior of his nation. People would love to believe that there was an arc of history that kind of bends towards whatever they prefer, but I'm afraid there really isn't. I quoted the Melian Dialogue in my commentary on Davos, the famous passage in the history of the Peloponnesian War by Thucydides, in which the Athenians explained to the Melians why they may think they have justice on their side, but in the real world, the strong do what they wish and the weak do what they must. I'm afraid history is just replete with examples of this. So that's the, that's the reality. There are winners and losers in history, and you can't know ex ante who the winner's going to be. That's why when you make political judgments, they're highly conjectural. And I, I'm constantly struck by the amazing self-confidence people have in the statements that they make about politics, the utter certainty they have that Trump is a catastrophe., which in fact it's impossible to have. We can't really know how the Trump presidency's going to turn out. Uh, he might be tremendously lucky. Our enemies might collapse just as they did in the late 1980s, or he might just fall victim to the 6-year itch that every president seems to experience in the second year of his second term. But the great thing about history is we don't know ex ante. We just don't know. We only know after the fact who won and who lost. And I wish people could just— But Neil, don't you want the good guys to win though?

I think you should want the good guys to win.

Well, of course, but history doesn't care about who the good guys are. That's the key thing you need to bear in mind. You can pick your winners. You can pick your side. You can say, as John said, I'm on the side of freedom, and so am I. But don't have any illusions. History doesn't care about your allegiance. Do you think history was on the side of right when 20 or 30,000 people were massacred in Iran? I said that counterrevolution would fail and it's failed in a very bloody way. That's historical reality. People need to adjust to that and abandon the notion that there's some arc that bends towards whatever it is they prefer. There is not.

I thought we were talking more about morality here. I would say that just to pick up on your point. I mean, I think the right side of history in this connection would be to be against the Iranian regime. And if you go back to Bill's question, you know, and what we discussed before, why the hell aren't there anybody, aren't there any students protesting on US college campuses about the mass murder of 30,000 innocent Iranians?

And I think that— Unless Trump successfully does alter that regime. I will be very impressed if any of his relentless critics give him any credit for that.

I just want to— there's a right outcome and not— it's not everything is contingent. All cultures are equally morally worthy.

That's not what I said.

I know.

History frequently lets the bad guys win.

I completely agree with you. And I'm just saying what you said is not what I said, that there's any tendency for history to always go to the good. No, there's a good that we hope for, but that is not predictive of who's going to win or who's going to make the right moves.

Yep.

I think we should discuss Christopher Lash maybe in our next episode of Goodfellows.

And let's leave it with the wise words of the great English philosopher Monty Python, who famously said, always look on the bright side of life. Great conversation, gentlemen. We'll see you back here in a couple weeks. As I mentioned, our guest will be our colleague Frank Decoder talking about various things related related to China. On behalf of the good fellows, Sir Neil Ferguson, John Cochran, Lieutenant General H.R. McMaster, all of us here at the Hoover Institution, hope you enjoyed the show. Till next time, take care. Thanks again for watching.

Always look on the bright side of life. Worst things happen at sea, you know.

Everybody ready? Ready.

Gentlemen, here we go.

My hair. Okay, I'm using that.