Noah Smith: Trump 2.0's Impact on Asia + The New Tech Right
Jan 21, 2025
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Noah Smith, an economist and columnist known for his insightful takes on the Japanese economy, joins the conversation during his visit to Taiwan. He discusses the ambitions of Silicon Valley’s pro-Trump faction and the potential for nuclear armament in Asia. The talk touches on China's economic woes and demographic challenges, questioning their true impact. Smith also proposes innovative solutions for Taiwan's economic development and highlights cultural nuances, like bubble tea, that make Taiwan unique.
The podcast discusses Taiwan's need to enhance its defense through arms manufacturing and tech advancements, rather than pursuing a nuclear option.
Noah Smith highlights the evolving dynamics within Trump's political coalition, particularly the influence and limitations of Silicon Valley's tech leaders.
The conversation underscores the parallels between China’s real estate issues and Japan’s past economic crises, stressing the necessity for managing national debt effectively.
Deep dives
Taiwan's Strategic Defense and Nuclear Arms
The discussion emphasizes that Taiwan would have benefited greatly from developing its own nuclear weapons during the Cold War, as it would have provided a robust deterrent against Chinese aggression. However, the current situation indicates that it is too late for Taiwan to pursue a nuclear option. Instead, experts suggest that Taiwan should focus on strengthening its defensive capabilities and possibly manufacturing arms, particularly in the context of becoming a leader in drone and battery technology. This strategic move not only enhances Taiwan's defense but also aligns with the electrical and technological advancements that are crucial for countering threats from China.
The Influence of Donald Trump's Coalition
Trump's political coalition has seen a transformation with the integration of tech industry leaders, notably Elon Musk, who are seen as influential yet not omnipotent within the coalition. The conversation casts doubt on the absolute power of this tech faction, especially considering their potential conflicts with traditional Trump policies, such as tariffs. It is posited that the tech right will primarily advocate for pro-business policies, particularly in climate-related areas, while also facing challenges from Democrats who resist deregulation. The overarching sentiment suggests a belief in the necessity for deregulation to facilitate economic growth, alongside concerns regarding the potential adverse effects of deregulating financial sectors.
China's Economic Challenges and Real Estate Crisis
The podcast draws parallels between China's current real estate turmoil and Japan's economic bubble burst in the 1990s, highlighting issues of excessive borrowing and the consequences of speculative investment. It notes that China's economic future hinges on effectively managing its internal debt situation while acknowledging the nation's reliance on extending and pretending rather than accepting upfront losses. This reluctance to address underlying financial problems may hinder China's economic recovery, leading to a protracted stagnation reminiscent of Japan's past. Through understanding these dynamics, the conversation sheds light on the deflationary pressures exacerbating the current crisis.
Geopolitical Power Dynamics and China-Taiwan Relations
A key point of discussion centers on the geopolitical implications of Taiwan's potential nuclear armament and the broader regional security environment. It is asserted that while countries like Japan and South Korea should pursue their own nuclear capabilities to ensure stability against China, Taiwan faces a unique predicament due to its current political strategies. The conversation reflects on the paradox of Taiwan's security, suggesting that without nuclear capabilities, Taiwan might lean towards unconventional diplomatic alliances, possibly even with Russia, as a means to deter aggression from China. This stance illuminates the complexities of Taiwan's position as it navigates its identity between independence and regional pressures.
The Future of Economic Development in East Asia
Economic strategies focusing on arms production and technology are positioned as vital for Taiwan's future prosperity, particularly given the electric vehicle and battery markets' significance. The emphasis is placed on leveraging Taiwan's manufacturing strengths to support its defense sector while fostering economic independence from mainland China. Moreover, the discussion connects Taiwan's potential development trajectory with broader economic trends in the East Asian region, particularly in response to China's growing economic challenges. Ultimately, the conversation calls for a reevaluation of Taiwan’s economic strategies to incorporate a dual focus on defense and technological advancement.
Our guest today is economist Noah Smith, who made time for an in-person interview during his recent trip to Taiwan. He runs the Noahpinion substack and is the author of an upcoming book on the revival of the Japanese economy.
We discuss…
The goals of Silicon Valley's pro-Trump constituency, from deregulation, to tariffs, to China policy,
Whether Elon is standing up for Taiwan behind closed doors,
Whether Taiwan, Japan, South Korea, and Poland need their own nuclear weapons,
How Taiwan could bargain for independence with China’s leaders post-Xi,
National health insurance as a potential solution to China’s aggregate demand problem,
A Georgist perspective on China’s real estate problem,
Why China’s demographic issues are overstated,
Recommendations for Taiwan’s economic development.
To hear more of Noah's musings, check out Econ 102, a podcast by Turpentine.
Outtro music: Wifey by Dizzy Dizzo 蔡詩芸 (Youtube Link)
