Last month, I was invited to The Reagan National Economic Forum. Why I get invited to events like this is a bit of a mystery, but I was glad to attend and looked forward to hearing about the state of our economy, our public markets, and the defense industrial space from a number of notables. In fact, it occurred to me that if I was interested in hearing from these people, perhaps you might be, too? So, I asked the organizers if I could bring a small camera crew with me and record a few episodes of the podcast right there at the Reagan Library. They said sure. Then I asked a few of the attendees if they’d like to sit for a chat, and everyone I asked said they’d be delighted, including the Secretary of the Treasury, Scott Bessent.
I knew I wanted to talk to Scott a few days earlier, when I saw him running a press conference from the White House. The way he handled the reporters made me laugh out loud. (Why are they always shouting? How does he decide who to call on? Who can be counted on to ask the most reliably foolish questions?) And, then again the next morning, when he was back on the TV, gently asking one of his interlocutors in a Congressional hearing how they’d become so “profoundly uninformed about market fundamentals.” And finally, at the Economic Forum itself, when he delivered one of the best speeches I’ve ever heard from a sitting cabinet member. It was called, While America Slept, and I wish it were published on the front page of every newspaper still in production.
The entire speech is here, https://bit.ly/4vAhuEX, but in short, Bessent argued for something Washington has spent decades avoiding: a serious American industrial policy that starts with a simple acknowledgement that some things matter too much to be left entirely to quarterly earnings, short-term cost-cutting or the lowest foreign bidder.
Every paragraph is a truth bomb.
“For four decades we worshipped efficiency. Production chased the lowest cost on earth. Inventories shrank to nothing. The price tag on the shelf became the only scorecard that counted. We mistook comfort for strength. We treated efficiency as a substitute for resilience.”
And this one..
“A country cannot outsource its industrial commons, ignore strategic concentration, and expect to remain secure, for manufacturing is more than output on a balance sheet. It is a reservoir of practical capability: engineers and welders, tool-and-die makers and logistics networks, plant managers and workers who know how to solve problems on the factory floor. When that ecosystem is strong, a country can adapt quickly. When it is hollowed out, adaptation becomes slower, more costly, and less certain.”
There are so many examples of this, but shipbuilding really makes the point. In 2023, Chinese shipyards turned out 972 oceangoing commercial ships. The US built seven. The Office of Naval Intelligence puts China’s shipbuilding capacity at roughly 200 times our own, and the rare earth situation is even worse.
According to the International Energy Agency, China refines over 90 percent of the world’s supply. We’re talking about nearly all the heavy elements that make guided missiles fly, fighter jets soar, and the magnets inside almost every single electric motor actually spin. Why did we just hand that over? Well, because refining rocks is a dirty job, and we figured it was easier to let somebody else do the heavy lifting for less money.
Reasonable people can disagree on the impact of tariffs, and the endless compromises baked into countless trade deals that force our manufacturers to compete on an un-level playing field. But the decision to depend on China – a direct rival – for the very backbone of our own national defense is flat out nuts. Surge capacity isn’t something we can just conjure up overnight. Strong supplier networks, specialized machine tools, and—most importantly—the skilled tradespeople who know how to use them take generations to build.
Our whole conversation is here. https://bit.ly/TWIHI494ScottBessent Hope you like it. I’ve got a few more in the can from this same event, and they’re all better than average.
PS Not that it needs disclosing, but you should know that I’m up to my neck with a new initiative to reinvigorate the skilled trades called BuildFreedom.US, sponsored by the DoW. This is the same campaign I lobbied Congress for 15 years ago, and I’m happy to see it finally come to fruition. You’ll find thousands of trade jobs in the industrial base highlighted on the website, along with lots of scholarship money from mikeroweWORKS, (including a $10 million donation from Build Freedom. Also, I’m currently involved with an American mineral company that’s determined to claw back a measure of our “metal independence” from China. Along with rare earths, (which aren’t really rare,) we’ll be collecting a few million tons of polymetallic nodules from the bottom of the ocean – billiard sized rocks packed with critical minerals like nickel, copper, cobalt, and manganese. More on both, later.
PPS Lots and LOTS of feedback from my conversation with JD Vance last week, including (grave) concerns from several listeners who fear I’m entering the world of politics, and troubled by occasional appearance of government officials on the podcast. The Secretary’s appearance will no doubt exacerbate those concerns. Well, fear not. I have no plans to take the podcast in a different direction. The guests will continue to be individuals that I find interesting, or relevant to things that I’m engaged in. Some will almost certainly do or say things you don’t agree with. I can live with that, and hope you can, too.
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