How the U.S. Election Will Affect the Economy

Episode Summary

Executive Summary: The episode examines what is truly at stake in the U.S. election for the economy, arguing that the biggest shifts are not headline manufacturing gains but the broader policy regime: dollar dominance, Wall Street finance, fiscal expansion, big tech/AI, and energy abundance. It then pivots to North Korea’s dispatch of troops to Russia, emphasizing the unusual militarization, logistics, and battlefield risks of that move.

Main Topics: U.S. election and economic stakes (Priority: 5/5): The hosts frame the election as less about short-term job numbers and more about whether the U.S. continues or alters its broader economic trajectory, especially around fiscal policy, trade, and redistribution. What defines the modern U.S. economy (Priority: 5/5): Toos argues the core structure of the American economy is shaped by the dollar’s reserve-currency role, unusually large deficits, big tech/AI, and America’s transformation into a major fossil-fuel producer. Bidenomics as a policy and cultural break (Priority: 4/5): The conversation treats Bidenomics as a real shift in policy framing away from Wall Street globalization toward industrial policy, labor, and national security, even if the underlying economy has not fundamentally changed. Trump’s economic agenda and tariffs (Priority: 5/5): The hosts assess Trump’s platform as a potentially regressive mix of tax cuts, deregulation, and especially tariffs, which could raise prices, intensify inequality, and provoke trade retaliation. Debt, deficits, and a new economic epoch (Priority: 4/5): Toos argues the most unusual feature of the current era is the U.S. debt-to-GDP trajectory, with deficits and debt rising at historically exceptional levels despite full employment. North Korea’s military and support for Russia (Priority: 5/5): The second half explores North Korea’s highly militarized state, its logistics for supplying Russia, and the severe risks its troops face in Ukraine’s drone-heavy battlefield. Modern warfare and battlefield adaptation (Priority: 4/5): The discussion highlights how Ukraine has become a uniquely dangerous modern battlefield dominated by drones and artillery, making North Korea’s troop deployment either a training opportunity or a likely catastrophe.

Key Arguments: The apparent manufacturing revival is politically useful but economically minor relative to the overall U.S. labor market and macro structure. The enduring foundations of the U.S. economy are dollar centrality, Wall Street finance, historically large fiscal deficits, tech/AI, and fossil-fuel dominance. Bidenomics represents a meaningful break in policy language and coalition-building: more attention to production, labor, industrial policy, and national security. A Trump return would likely deepen redistribution toward the wealthy through tax cuts, deregulation, and regressive tariffs, while also risking trade conflict. Tariffs would act like an indirect tax on consumers, especially hurting lower-income households that spend more of their income on goods. The largest truly unusual macro feature of the current U.S. era is not an election outcome but the unprecedented and continuing rise in debt and deficits during full employment. North Korea’s deployment to Russia reflects a heavily militarized, poor, and isolated state that can still field a dangerous artillery-heavy force. The Ukraine war’s drone-driven battlefield is so novel that outside militaries are learning from it in real time, but poorly prepared North Korean troops could be slaughtered quickly. The North Korean troops may initially be used for training and learning rather than immediate front-line combat, suggesting Russia and North Korea may be seeking battlefield experience rather than instant impact.

Data Points: Manufacturing jobs added since Jan. 2021: 775,000 - Used to support claims of a Biden-era manufacturing revival Projected annual manufacturing jobs created by Biden-era legislation: 336,000 per year until 2035 - Estimated combined effect of the Inflation Reduction Act, infrastructure law, and CHIPS Act U.S. employed workers: 162 million - Toos notes this to show manufacturing is only a small part of the overall labor market U.S. manufacturing employment: 12.7 million - Illustrates manufacturing’s limited share of total employment Share of employment in manufacturing: roughly 8–9% - Context for why manufacturing policy is not the center of the economy Share of global currency reserves held in U.S. dollars: 58.4% - Used as evidence of the dollar’s reserve-currency dominance U.S. budget deficit at full employment: between 6% and 7% of GDP - Presented as historically anomalous and central to the current macro regime North Korean active military personnel: 1.3% of population; 1.36 million active personnel - Shows extreme militarization of North Korean society North Korean military reserves: 560,000 - Adds to the scale of North Korea’s force structure North Korean defense budget: $4 billion - Estimated military spending, described as around a quarter of GDP North Korean conscription age: 17 - All North Korean men are drafted beginning at this age Length of North Korean military service: 8 to 10 years - Shows how much of adult life is spent under military service Minimum North Korean conscript height: 4'10" (148 cm) - Used as an indicator of severe malnutrition and poverty Minimum North Korean conscript weight: 95 pounds (43 kg) - Another indicator of the population’s nutritional hardship North Korean troops sent to Russia: 10,000 - The number of troops reportedly deployed to support Russia in the Ukraine war North Korean-Russian border: 10 miles wide - Described as North Korea’s tiny land border with Russia, enabling movement of troops and equipment North Korean containers sent to Russia: about 13,000 containers - Reportedly filled with missiles, rockets, and artillery rounds

Pivotal Quotes: "Biden economics is at the level of policy, right? So it's policy talk, above all, as well." — Adam Tooze: On how to understand Bidenomics as a framing device, not a wholesale transformation of the economy "If you actually simply have to define what was radically unusual about the history of America's economy and economic policy now... you'd have to say it was the curve of debt to GDP." — Adam Tooze: On what makes the current U.S. economic era historically distinctive "This is a thoroughly inconsistent policy package." — Adam Tooze: On the combination of tariffs, tax cuts, deficits, and trade tensions in Trump’s agenda

Implications: The episode suggests elections may change policy style and distribution, but the deepest shift is a new U.S. macro era defined by debt, reserve-currency privilege, and industrial/national-security policy. For North Korea, the war offers both danger and learning.