Jacob Shapiro: Hello listeners.
Welcome to another episode of Geopolitical Cousins.
Uh, Marco and I are both on the road, but we made some time in the evening on
Tuesday, October 14th to talk to you.
Uh, before we were dealing with our respective responsibilities.
We talk about, uh, the Gen Z protests, uh, some interesting curve balls
in there, but of course, US China relations, trade, everything else.
We hope you enjoy the episode.
If you wanna do us a favor, please share this podcast with everybody that you
know, like that's all you have to do.
Spread it far and wide.
Cheers and see you up.
All right, listeners, cousins, back at it.
Uh, I cut Marco off 'cause he was starting to make basketball jokes.
Marco, I'm in, I'm in Milwaukee.
You are in, you are in Phoenix.
Uh, what does that have to do with basketball?
Marko Papic: Well, I was just saying that, uh, both cities have something
in common, which is that they're going nowhere when it comes to the NBA.
So,
Jacob Shapiro: uh, Phoenix.
Phoenix, probably not.
It's really, you know, it's amazing how fast Phoenix fell from Grace and how
different the narrative would be if they had beat Giannis in that finals and CP
three had gotten his finals, and yeah, quite a, quite a sliding doors moment.
Um, yeah,
Marko Papic: also, um, Deandre Aton, I mean, that was his
last, uh, relevant season.
But look, we can't lead with basketball.
We're gonna lose a lot of our, uh, uh, listeners.
We obviously have to leave that for the end.
I do have some questions for you at the end, though, for you and our
listeners on the basketball front, but
Jacob Shapiro: I know that, well, I mean, uh, obviously we have to lead with Ryan
Russillo breaking up with Bill Simmons officially and moving to Barstool Sports.
Right.
That that's what you're implying.
Marko Papic: Yeah, I, that was actually, uh, very surprising, you know, um, but I
guess, uh, you know, that's, that's what happens when you don't give people equity.
Good people leave when you don't give them enough or you know, at all, any equity.
So, I don't know, you sent me, or you posted the, the video of Ryan
Illa basically saying why, and it was very clear that he emphasized,
you know, that uh, it was all about partner, being a partner.
He wants to be partner at this stage in his career.
Jacob Shapiro: Number one for somebody who's been on the radio and podcast
and TV for as long as he was, he was so painfully awkward in that video,
which is one of the reasons I like him.
'cause he's, he just like sucks at these things.
He also deed to use the words at this stage in my career, uh,
which I don't know, like how many people has he probably criticized
as well from that point of view.
But I'm, I'm gonna make this, this vow to you in front of all the listeners.
Marco, I will never leave you for.
For David Portnoy.
Now, Mr. Portnoy, if you're listening and you want to bring both of us to the
Barstool Geopolitics network, like we are both gonna talk, but you will not.
Well, first of all, you'll not divide my loyalties,
Marko Papic: but the reason I'm not Bill Simmons is because we're equal partners.
Jacob Shapiro: Yes.
That's in this
Marko Papic: endeavor.
Right.
So that is the difference.
I mean, um, and that's, and by the way, that's, I think what's very
important for anyone starting a business, you cannot keep people who
are critical to the business or who are clearly a, like a generational talent
without sharing equity with them.
That's just like, yeah, they're gonna leave.
You know what I mean?
And it's a free market baby.
Once you reach a certain level of, um, excellence, you know, like, and Ryan
SLO is excellent, and so he bounced.
Jacob Shapiro: And he bounced.
All right.
Well, um, also just, just the last bit of, uh, foreplay before we get into it.
I, um, sure it, it takes, I, I don't drink a whole lot these days, mostly because
I'm, you know, I've got, was up with the 10 month old all night last night.
Like, it's just, it's just a lot.
But I will say when I'm in Wisconsin, I cannot help but,
but drink some of the spotted cow here, only available in Wisconsin.
It's a delicious beer.
They drink more per capita in Wisconsin than anywhere else in the United States.
I felt like I should join in.
So I'm having a beer with you this evening too, mark.
Marko Papic: That's awesome.
I'm, I'm actually on coffee 'cause I've been on client calls since 5:00 AM.
Uh, also couple of things since we are partners, don't do
that again unless they pay us.
Can we just make sure
Jacob Shapiro: I've been adding them to come on the
podcast for some time, but Yes.
Okay.
Fine.
Marko Papic: At second.
At second of all, I love you, but you sometimes say things
that are completely illogical.
You drink because you have a 10 month old.
That's why you would drink.
Jacob Shapiro: Oh, I see.
What, you see what I mean?
You're saying?
Well, yeah, but that if you're using alcohol as a crutch to deal with, you
know, your feelings of stress, parent,
Marko Papic: yes.
Like, yes.
Go on.
You're gonna lose everyone listening to this podcast.
Let's just move on.
Let's just move on,
Jacob Shapiro: Marco.
I lost them a long time ago.
Remember, I'm, I'm the elitist here in the conversation.
My job is not to make these people happy.
That's, uh, fair enough.
Anyway, okay.
But the thing that probably everybody wants to talk about,
I'll try and set us up here while Marco, so we've got fireworks in
the US China trade relationship.
We've got some other things we want to get to in the episode today,
but we should talk about them.
Um, it began, well it depends what, where, where you think it begins.
Sort of depends because there was this ruling, uh, last week, um, the
sort of fi for the, the Department of Commerce, um, had this new 50%
rule that entities that are owned 50% by a foreign government or some.
Entity that is on an entity list that would trigger a bunch of,
uh, different export controls.
That at least is what people are pointed to as the reason for China reacting pretty
disproportionately and announcing a bunch of export controls on rare earth elements.
Um, this is the part in the conversation where we have to remind listeners
that rare earth elements are not rare.
They are just incredibly costly and pollutive to mine effectively, and
China doesn't care about any of that.
They got rid of all the regulations and they have become the real center,
um, of a lot of these different, of mining and processing and refining a
lot of these different rare earths.
A lot of these are minerals and resources whose names I can't even pronounce, but
I know that they're incredibly important, um, in semiconductors, um, in electricity
management devices like capacitors.
I mean, there's all sorts of things that they're absolutely mission critical for,
and which China controls massive amounts of the supply chain for, um, and China.
It's not.
It's not necessarily banning the exports of lots of these different minerals.
What it's doing though, is it's gonna make Chinese companies and Chinese
exporters, um, have to apply for approval to continue exporting in the future.
I thought one of the interesting things too is it's not just, you
know, the heavy rare earth elements and the li uh, the graphite and
the, and all that other stuff.
They're also, they also put at least, you know, quote unquote restrictions,
um, on any technologies that lead to the assembly, maintenance,
repair, and upgrading of production line for rare earth mining.
So I think they're, they're.
They're looking there and saying, okay, these other countries
in the world want to do this.
They want to take some of this processing and refining back.
We're not gonna let you do that either.
'cause we have cornered the market on this and we're the ones that have
all the technology and the refining, processing and capacity as well.
Um, there's also, and this is just in the last couple of days, like
everybody's focusing on the rare earth.
Um, but I dunno if you saw this, Marco.
There's also a return to these tit for tat port fees that ocean shipping firms
are gonna be charging on each other.
This was something that both the United States and China announced
earlier in the year when President Trump was talking about 240% tariffs.
They were supposed to kick in later.
Were they gonna get kicked in at all?
It appears that they're being kicked in.
Um, now both China and the United States tried to, to tried to assuage
investors and say, eh, like it's not gonna be that big of a deal.
But China also said it has started to collect charges on us owned,
operated, built or flagged vessels.
And the United States has similar restrictions in
place at its different ports.
I talk to different folks in the shipping industry.
They don't even really know what the rules are at this point and
how they're gonna be enforced.
Um, China also added some, um, some subsidiaries of a South Korean ship
building company, um, on its sanctions list for engaging with the United
States, which is an interesting thing.
Um, and before I turn it over to you to, to let you.
Uh, give us a take on this.
I did just want to quote the President of the United States.
Um, by the way, Scott Besson said that President Trump and Xi Jinping will still
meet in a couple of weeks, and that he thinks these things can be deescalated.
So, um, that, that to me probably says short-term deal, but we
won't step on the punchline.
But here is, here's what the president of the United States had to say, uh, when
he was asked about Beijing pursuing these new curbs on rare earth element exports.
Quote, we have the ultimate export.
We have import and we have export.
We import from China, massive amounts, and, you know, maybe
we'll have to stop doing that.
But I don't know exactly what it is.
Neither do you.
Neither does anybody.
End quote.
I also loved the next line in the Bloomberg article that had this
quote, it was unclear what exports the president was referring to.
Marco, what is going on in the US China relationship?
Marko Papic: Oh, man.
Uh, well, first of all, uh, one of the, one of the reasons that I love
that you set up our conversations is that you do such a thorough
job of explaining what happened.
Jacob Shapiro: Hmm.
Marko Papic: Because I, I would say No, seriously, and I, and I'm just, just
saying that because, um, most of the media kind of missed that October 2nd
semiconductor round of export control.
So the United States of America has tried to close the loophole basically.
Um, the US does not want entities in China that are aligned in some
way, shape, or form, pretty loosely.
I would say the Donald Trump administration was very
narrow in its definition of.
What Chinese entities are aligned with the military and the Communist party.
They needed to see direct ownership link.
The Biden administration broadened the connection massively, too, massively, I
would say, because, you know, if you sell toilet paper to the Chinese, like people's
liberation army, you are effectively like part of the military industrial complex.
So that's, that's Joe Biden, uh, and, and, uh, um, and his administration's fault.
But what bi, what Trump has done is he ha he's continued the Joe Biden
line and then he's closed the loophole where whereas many of these Chinese
companies would create a subsidiary, they would create another company,
own a piece of it, and then have that subsidiary just buy the chips.
And so, uh, on October 2nd, the Trump administration tried to close that
loophole with what's called a 50% rule.
You know, um, if various list.
Entities of the Chinese government that Chinese government has some
sort of relationship with is they control effectively over 50%.
You're not supposed to do these trips.
You're not, you know.
Um, so the first foray this time around was again, launched by the us.
Uh, your, your assessment is correct that, that October 2nd was important,
but then you also said that China reacted disproportionately, and
I would actually argue that it reacted extremely proportionately.
Jacob Shapiro: Hmm.
Marko Papic: So, as the Chinese, uh, I think it was commerce ministry or
someone like that, their, their statement on Saturday after the Friday, uh,
tweet for President Trump that he was going to put sanctions at a hundred
percent, their statements went along.
Something like, look, you know, and this was not carried by a lot
of the Western press because it doesn't fit the neat narrative that
the Chinese are losing their cool.
But the Chinese commerce ministry came out and said, look.
These are export controls, they're not export bans and all legitimate
businesses have nothing to worry about.
It was almost verbatim.
Something like that.
Yeah.
In other words, like, hey look, I mean the US is imposing export controls
where they want to go purchase order by purchase order and approve each one.
Well, we want to have that sort of les over your heads too.
We're not saying that you are not gonna get the rare earth from China and
everyone listening to this, just to be clear, none of this is about banning.
Like America will still sell semiconductors, but it has
to go to companies in China that are allowed to buy it.
And China simply saying, we're not banning rare earths.
But similarly we're going to say to Lockheed Martin, like,
Hey, dual use technology.
You are building missiles that one day might kill Chinese.
We're not gonna sell you rare earths, but we'll sell it to Nvidia.
You know?
Um, and so I think that that's an important point.
I think this is extremely proportionate.
As is the shipping fees that you also mentioned.
China's saying to the US we're just gonna do tit for tat.
So, um, I think that that's something to understand.
I don't think there is a real shift in Chinese thinking here.
I think that they're just finally starting to say to America,
like, look, we are gonna start restricting access to rare earths.
If you restrict access to semiconductors, um, on tariffs on
tariffs, we're not gonna follow you.
We're not gonna keep ratcheting tariffs.
And they actually said that after April, they, they came out and said it's
nonsense to keep increasing tariffs.
They made a joke like Beijing made a joke about this.
Like, this is, yeah,
Jacob Shapiro: it was really, it was good.
It was, it was, uh, because it was so affected, it, it really hit, well, I,
I can try to find the exact language, but it was when Trump did 240% tariffs
and they were, they did something like.
Okay.
Like, this doesn't mean anything after 120%, so we're just gonna stop at 120%.
Like whatever,
Marko Papic: 1000000000%.
No.
So, uh, the, so I, I, I, I basically think, look, the Chinese are saying like,
you do something on October 2nd, we do something on October 8th, and then Friday
rolls along and Donald Trump reacts, loses his school and he's like, this is nuts.
And then 24 hours later he's like, ha, psych, I was just kidding.
Everything is gonna be fine.
So what happened here?
I'll tell you what I think happened, Jacob.
I think there's two tracks in American, uh, foreign policy right now.
There's a sort of a bureaucratic inertia, and if you think about how bureaucracy
works, just like a lever, just like a toggle, and the toggle is like from
one to 10, one being like, let's be nice to China, 10 being, you know, time
to fuel up the nukes in nuke China.
And so obviously since 2017, Donald Trump himself moved the toggle from one to six.
And then interestingly, Joe Biden moved it from six to eight.
Mm-hmm.
You know, and so that's just the default setting of the bureaucracy.
And that bureaucracy continues to initiate Section 3 0 1 investigations in China,
uh, which take months to get done.
There's a, there's a bureaucratic and technocratic process
in these investigations.
There's serious people who get paid good money, who are well educated,
who are working on all these, oh, you know, we need to close the loophole
because of these subsidiaries.
Let's do that.
And that's, that's one layer of the cake.
And then there's the icing, which is very orange and very,
very like profoundly awesome.
And that's Donald Trump.
And he does not have any, I think, awareness of what his own bureaucracy
is doing on those other layers.
And so when China retaliates against something that, you know, the
United States of America did, like his administration did, he's like,
whoa, Xi Jinping made a mistake, but well, no, he's just reacting
to what your government is doing.
And then he realizes it, and then he calms down 24 hours later, he
probably has a snicker bar, right?
Like the famous Snicker commercial.
And he says, oh, okay, I see what happened here.
And as of course, Donald Trump said a couple of months ago, or maybe even
a couple of weeks ago, look, American chip companies will sell chips to China.
They want to sell chips to China.
He wants them to sell chips to China so they can continue to have a monopoly.
And so I think that where this is headed is Donald Trump who wants to deal with
China and understands that there are downsides to some of these export controls
in a genuine way, not in sort of a silly, Donald Trump just wants to make a deal
way, but there's actual downside to.
Effectively helping China develop its own chip industry.
You know, that's what America is doing.
Jacob Shapiro: Mm-hmm.
Marko Papic: I think that what you're gonna see is Donald Trump is gonna
win over that lower layer where he's just gonna tell the bureaucracy, like,
look, let's find a compromise here.
And so, yes, I do think there's gonna be a deal.
And, and it's not just, uh, Scott Best and Jameson Greer came out also with
very sort of conciliatory comments.
Like, oh, no, no, no, no, no, no, we're gonna, we're gonna
sit down with the Chinese.
And I would say that this is where the TikTok deal is also important, because
speaking to people with contexts in China itself, what I've been told from
my onshore context is that the TikTok deal actually allowed a creation of, you
know, it wasn't that relevant as a deal.
Like nobody's really like sitting here like wondering where TikTok is going.
But what it did is it created C news and connectivity at very top.
And so there's finally.
Channels of communication, whereas there weren't really in April when
President Trump just went on a tariff tirade after the, after the TikTok
deal was settled, even though the deal itself was not that important.
The mechanism to get the deal done means that people in power in both China and us
have a way to text each other, have a way to call each other, have a way to be like,
yo, why are you restricting rare earths?
Well, because you guys just a week earlier restricted semiconductors.
No, we didn't.
Yeah, you did.
What about this?
Oh no, no, that's just standard stuff we're doing.
'cause you guys arrivals, well, well, you know, now we're gonna respond.
And then you have that conversation and it's not just two megaphones
shouting into the ether.
So, um, I think that's the background of this story.
And I, I don't think we're gonna end up with a hundred percent
tariffs on, on toys for Christmas.
Jacob Shapiro: No.
And, and if we do, I mean things are gonna be terrible there.
There's a couple things to say in there.
You're right that the Biden administration was much tougher and much more, much
more surgical on Beijing, and you might remember the Biden administration,
one of their last gasp acts was the semiconductor restriction plan.
It was basically, some countries have no restrictions, some
have some level of restriction.
Then there's the, the ultimate level of restriction and China
was gonna be on that list.
The Trump administration threw that plan out months ago now, saying
we, we are gonna have something that we're gonna put in its place.
We still don't know what that thing is in its place.
And in the meantime, we've had, for example, Nvidia.
Uh, lobby again, some of the restrictions that it was dealing with and then
the Trump administration saying that it was gonna take a cut of exports
going to China, which is also an interesting, um, sort of part of this.
There's also like, I don't know if this is still true, but when China first started
making noise about this and they've been doing this for years, like these export
controls and some of these different elements and mineral resources, yes, it is
that they want to be able to control this with the west and control the processing.
But China, again, I'll just remind our listeners, is a country of
a billion people and the Chinese government doesn't always know
what its own companies are doing.
So part of the process of getting Chinese companies to apply for approval to export
these things, yes, it was to create a lever with the west, but it was also
for the Chinese government to figure out what the fuck they had going on.
'cause they didn't even know what kind of levers they were pulling.
I think they, they have a better sense of those levers now.
Yes.
But I wouldn't be surprised if there's like a little bit of that in there.
There's also, and, and, oh yeah, go ahead.
Before.
No, no, no, no.
Please, please.
Finish, finish, finish.
Well, the, the last thing I just wanna say is, you know, I, I, I
talked to a guy who's, who's in the rare earth refining processing space
and who was trying, um, to basically bring that to the United States.
And I was asking him, well, I, I texted him today and I was like, you
must be having an interesting week.
And he said, yeah, I am having an interesting week.
And I asked him, is it anything more than talk?
And his answer was basically like, not really.
Like people are freaking out.
They're saying lots of things in public, but the shift from, hey, this is a
problem to no, we're actually going to spend the money to have CapEx to refine
and process these things and countries that are, that are the United States
are friendly to the United States.
Like I don't think we're exactly there there yet.
And he expects some kind of short term deal as well.
All and all of which is to say, and I think you and I have both been on this
from different angles from the very beginning, which is Trump's instinct,
I think is to make a deal with China.
Much to the chagrin of Peter Navarro and the other China Hawks
that he has in his administration.
And people like Jameson Greer and Scott Besson are cool with that.
And I think if Trump, if it was up to Trump, like he would announce some deal
and there would be a grand US China bargain and everything would be fine.
The flip side of that is that some of the things that his government
is doing and some of the things that he says right, is the exact
opposite, which is full decoupling.
Like there's not gonna be any future in the US China relationship.
These are geopolitical rivals.
And I don't even think Trump, like there's no consistency with him.
And I think the Chinese have at least realized that.
And so they have to punch the bully in the mouth when the bully comes at
them with something like the 50% rule.
But they also ultimately have economic problems of their own.
And if they can have a short-term deal whose provisions they won't live up
to, like, so for, for any investors or folks who have companies, you should
behave as if there is no deal because I'll, I'll put my neck out there and
say in five years it doesn't matter, like the US and China are decoupling.
Like it doesn't matter if we have some kind of short-term deal
or whatever else is happening.
But anyway, just.
Go from there.
Marko Papic: Cool.
Okay, so we have some disagreements.
Great.
Which is good.
So first of all, I think, uh, the onshore narrative in China, like if you were
to spend some time reading op-eds in Mandarin in China, which I don't, but
I'm told what they are is effectively there's no urgency for anything.
There is no urgency to even punch the bully in the mouth,
although I agree with you.
They did.
They, they finally kind of did something, but there's no urgency.
And that's why the comments on Saturday were so conciliatory.
They were like, Hey guys, this isn't export bans.
We're not banning export of rare Earth.
Relax.
The issue is they do want a deal.
And the reason is that the onshore commentary, if you were reading like
the equivalent of a New York Times op-ed in China, the consensus in China is
the United States of America is gonna collapse into a black hole of Civil War
demographic decline, racial tensions, and.
Complete collapse.
Yeah.
Late stage
Jacob Shapiro: capitalism.
The, the Marxists were, were right.
Marko Papic: Yeah.
So what's the rush?
There's no rush.
You know, like, let's make a deal with Trump.
And I think that everyone in China completely understands something
that I was saying on this podcast, like a year, like when we started
and before that on your podcast, Trump will make a deal with China.
I said this in February of 2024.
Like I've consistently, like Trump is not a national security hawk.
You don't put Tulsi Gabbard as the head of your, you know, um, national security
if you are a national security hawk.
He's not.
He is mercantilist.
And I actually think where we disagree a little bit is I actually think that his
approach is the more optimal approach.
In a multipolar world, it doesn't pay to decouple.
And I think the big risk for the US is that by restricting export of American
technology, often a couple of generations late, you will incentivize China to
become very good at its own technology.
Alternative technologies that you have no pre you have no input into.
But anyways, what I wanna like really emphasize here is that I think that
the Chinese are perfectly fine.
They understand that this is a limited window where maybe they
have somebody who's a little bit different from what's coming.
You know, whether it's JD Vance or a OC, I can see a world in which whoever inherits
the presidency after President Trump is much tougher on China and, and adopt
the Jake Sullivan Joe Biden approach.
Uh, but they're cool with that because they just don't really think they're in
a rush, uh, because America's collapsing.
And that narrative of American collapse is almost like a
really good thing for the world.
It means that China's not gonna do something stupid.
Um, and if I was advising President Xi, I would say that that narrative
is, you know, while very pleasing to read, I'm sure in those New York Times
equivalent op-eds in China, you're kind of reading what's very pleasing to you.
You know, it's sort of like a liberal reading, a guardian oped, you know?
Jacob Shapiro: Uh, yeah, I, well, I mean, I'm not reading that version of,
of the commentary in Chinese, but my, my, my sense is more that it's in the
same way that the, that any average student in the United States is taught
that the United States is a beacon of liberalism and individual rights.
And the United States stands up for these things like China.
Like, you know, Xi Jinping himself was educated in a Marxist framework,
and he thinks of the world through a, a Marxist point of view.
So, I, I, I don't know that they're thinking that it's gonna be civil
war and carnage in the streets.
My interpretation of.
Intelligentsia in China has always just been more, yeah.
Like this is late stage capitalism.
Okay.
Like Marx was a little bit later than he should have been, but like,
eventually this system is going to, is not going to work in the long term.
And meanwhile, like we have socialism with Chinese characteristics and, and
everything, it, it seems a little more.
So I think it's
Marko Papic: going, I think it's more than that.
I think now it's about technological, uh, yeah.
Superiority of China.
I, I think there's, there's, and, and I think like, you know, deployment of, look,
I mean, if you grew up in an authoritarian state when you see, uh, you know, the
military deployed to cities, like, you know what that means in a Chinese context.
But there's another thing I wanna disagree with you on.
Well, this wasn't really a disagreement, this was just an
intro to the real disagreement.
And my real disagreement is I think that decoupling is impossible.
You know, and let me, and let me explain why I say that.
Um, the one, our, our, our actual example of decoupling.
In a modern industrial world and equals one, our sample size is
one, and that's the Cold War.
And I really, really, really want to emphasize how a historical and
idiosyncratic and pat dependent the Cold War was in 1945.
I know I've said this before on our podcast, but I just wanna emphasize
in 1945, the world was destroyed.
Like it was destroyed.
You know, it looked like Gaza.
It did it, it, it, it looked better
Jacob Shapiro: than Gaza.
Marko Papic: Large swats of the developed worlds, yes, looked worse than gossip.
Jacob Shapiro: No.
Well, n well, no, because not like even Germany didn't look
that bad because like, oh my God,
Marko Papic: okay, we don't have to get into commentary of what Gaza looks like.
I retract that.
Jacob Shapiro: I win, I win.
You get that?
See that you do,
Marko Papic: you win.
Look, the point is that, um, the world was completely destroyed.
Like, you know, let me, let me, let me emphasize the destruction.
There were tens of millions of refugees starving in Western Europe, not like
in eastern Germany, like I'm talking like the western side of Europe.
Like in Belgium.
People were starving to that in freaking Brussels.
Japan had two nuclear bombs dropped on it, and multiple cities completely firebombed
into like even worse destruction level.
Like if you got hit with a nuke, you were lucky.
You know, you escaped the firebombing.
China would have, and China
Jacob Shapiro: went straight to Civil War.
They were like, oh, world War Two's over.
I would go that like, let's, let's get to it.
Marko Papic: They had another four years of civil war.
India was a colony of a tired, weakened empire.
And then you have, of course, Soviet Union, which is just a complete mess.
I mean, they, they eked out that win by the skin of their teeth.
Only really the United States of America and some parts of Soviet
Union still have an industrial plant.
And so what I'm getting at is that when the Cold War starts, you have large
parts of the planet are tabula rasa completely, completely erased, which
is a fancy way of saying blank plate.
And so you can craft a material reality.
An industrial world that truly is decoupled.
'cause you're starting with large swaths of the planet completely
unintegrated or destroyed.
And so if the Soviets want to have their technological zone
that's clearly decoupled from the us, they can and vice versa.
Now notice that that's how Cold War started.
That was the starting conditions of the Cold War World War I.
However, and World War II started in a completely different world.
They actually started in a globalized world.
So my favorite historian, Margaret McMillan, you know, she wrote all
these books about First World War.
She really talks about this in a great way.
Like when World War I starts, there are literally.
Munitions companies that are like building sea mines that are like
30% owned by a German conglomerate.
Yeah.
And 40% owned by British.
So the board meets when the war starts and the board is like high fiving
the Germans and the Brits are high fiving, holy shit, we're going to war.
Jacob Shapiro: Well, yeah.
The, the, the munitions ones were the, the British insurance companies that
were ensuring German ships were not high fiving and they were looking at
themselves and being, what the hell?
But you know what I mean?
Marko Papic: What there's a German guy and the British guy saying
like, yo, we're gonna make money.
I'll see you in six months.
You know, I'm sorry about what's gonna happen.
It's gonna be fine.
We'll back by Christmas.
Everything is good.
The point is that the world was so, so integrated in 1914.
And don't you make the mistake, and I don't mean you Jacob, but don't you make
the mistake to your listener to think that the World War I somehow crept up on us.
That's what everybody always says.
Oh, but they didn't.
No, they knew.
They knew from mid 1890s.
Everybody knew that Germany and Austria would go to war with France, Russia, and
the UK in some combination shape or form.
Everybody knew everybody was looking forward to it and yet they couldn't
disentangle this technological reality.
And now that's a world where I actually think I can see
maybe an argument being made.
Yeah.
But technology back then was difficult to entangle.
What are you talking about?
Our levers, our tools, our components were huge widgets and you know,
giant things they rotate to.
Today, it's so much more difficult to disentangle when the components are
like rare earth you don't even know how to pronounce and neither do I.
Lemme be very clear.
And so I would say that the problem for the world today is that we had 25 years.
If not 35 years of genuine peace and prosperity in a unipolar global
system that America designed, they became deeply intertwined.
And so full decoupling is probably never going to happen.
However, however, I do believe that there will be the technological decoupling in
certain ways, but that's nothing to fear.
I mean, I grew up in communist Yugoslavia, Jacob, you grew up in, you know, a
pillar of liberty and freedom in America.
Jacob Shapiro: Yeah.
Marko Papic: And if you were to send, if a 12-year-old Jacob was going to send,
you know, a 14-year-old Marco, a a, a tape of Atlanta hawks with Dominique,
you know, having their day in the sun, if you were gonna send that to me, I,
Jacob Shapiro: well hold, I, I, I have to date myself.
I unfortunately just missed the Dominique era.
My, I came of age during the Mookie Blaylock, Steve Smith.
Uh, oh, listen, I
Marko Papic: love that team.
Mookie Blaylock was, was, was one of my favorite players by the way.
Curiously looked almost exactly like Michael Jordan.
Almost like they were brothers.
Jacob Shapiro: Yeah.
Like a min, like a little mini me.
Mm-hmm.
Marko Papic: Like a le But anyway, so like if you were to
send me a VHS tape, guess what?
It wouldn't work.
And poor Marco trapped in Communist Yugoslavia would've not been able to
play that VHS tape because I was in a different technological system than you.
Similarly, when cell phones started, when I moved from
Europe to pursue my undergraduate degree in Canada, guess what?
My cell phone didn't work.
I had to get a Trib band.
It's okay.
There will be some technological decoupling.
And I see a lot of, I hear a lot of investment banks and commentators talking
about how that will cause the world to go on two different No, it won't.
All it will do is it will lead to entrepreneurs building systems
that can read both technological, um, both, both technological, uh.
Pillars, which is exactly what happened with phones.
You know, Nokia came up with a tri ban phone that did work in
both Japan and North America.
And Europe.
And yes, there were VHS players.
There were literally, they could flip between Pal Secum and NTSC.
Like, yeah, that's how old I am.
I know that stuff.
So the point is, somebody's gonna figure this out, just like we
had in early desktop computers.
You know, you are on the MAC system, I'm on the Microsoft system.
Eventually, yes, you could read the files from one system to another,
and now we're seamlessly integrated.
So I think that we are overstating the decoupling massively.
I don't think the decoupling is really what we should be thinking about.
I think if World War II starts Jacob, it's gonna start with both countries
being very deeply integrated, and I think Donald Trump, to his
credit, has figured that out.
I think he has figured out that it's very difficult to completely decouple, and that
not only is it difficult, it's stupid.
It means that American companies cannot make money off of China, the
second largest economy in the world, which is objectively a mistake.
Jacob Shapiro: I love how, how optimistic, um, you were in that.
Um, that was really like, uh, I like it.
I, I, you're right.
I, I do, I do disagree with you.
I'm gonna quote the guy who's figured this out.
Again, quote, we have the ultimate export.
We have import and we have export.
We import from China, massive amounts.
And, you know, maybe we'll have to stop doing that, but I
don't know exactly what it is.
Neither do you.
Neither does anybody.
This is not a guy who knows what he's talking about.
Marco, you're giving him way.
Way too much credit that he's something, his gut,
Marko Papic: I think his gut is in the right place, man.
You know, and the fact, listen, if that quote, he
Jacob Shapiro: has a wonderful sense of where power is and when it comes to trade,
the United States has certain levers that it is far and away better than China on.
Okay?
But a lot of them, it's China.
I, I say this a lot in my presentations right now.
I, I put up a picture of William McKinley and I ask audiences,
do you know who this guy is?
And literally, like, 1% of audiences know who it is.
And I say, this is William McKinley.
He literally referred to himself as a quote unquote tariff man.
And Donald Trump loves to talk about him all the time.
And he imposed tariffs across the board.
And when he imposed tariffs across the board, which.
Good for the US economy in that pre-World war I world that you're talking about.
By the way, I hope you don't turn into the Norman angle of, of
globalization, like the great illusion.
Yeah.
That because like you're, you're That's right.
You're flirting with it a little bit.
Um, when, when William McKinley did that, the United States was making
something like 30% of the manufactured products that were in the world.
And the Brits had another 20% Right.
The Chinese and the Japanese weren't doing any of that.
The Japanese were just starting to rev up.
The Chinese were a morass.
India was getting dominated, um, you know, by a couple thousand
British soldiers and everything else.
You flip that to today.
China wins, China wins on ships, it wins on, you know, active
pharmaceutical ingredients.
I guess we're not gonna have Tylenol in this country anymore.
But if you did want Tylenol for, you're a kid with an ear infection,
like probably the API is coming either from India or China.
Agricultural, machinery, fertile.
Like you start going down the list of things the United States is,
but doesn't that prove my point?
But doesn't that prove my point?
It does, it does.
It does prove your point today.
And I think they are deeply interconnected and I think any person
who wants to fight a trade war with China and then is the one who is
responsible for what happens afterwards.
Like maybe, you know, president Trump, the first administration was a little bit more
muscular and he loves to go after China on the campaign, Trump, but when he's the
one sitting in the White House and he's looking at the inflation numbers and he's
looking at all the things that cannot be manufactured in the United States.
All the things, by the way that he pushed to be manufactured in the United States
during his first term, in which we are no closer to manufacturing in the United
States than we were in the first term.
I think you're
Marko Papic: just, but you, you are over indexing on my
point that Trump has a good.
What you should be overindexing is that you just laid the case for why
there's no way we're gonna decouple.
And it's not Donald Trump.
Who's confused?
It's Joe Biden who was confused and Jake
Jacob Shapiro: Sullivan.
Yeah, I mean that's Joe Biden's confused.
That's a low Yes.
Joe Biden was, was was confused and is confused.
Well wait,
Marko Papic: well, lemme just explain what I mean by the, the statement.
Like, like I'm not trying to make a domestic political point.
I'm just saying that Donald Trump, I never took him seriously when he did
impose the tariffs at 800% in China, I think that Donald Donald Trump was
always gonna make a deal with China.
He went on the campaign trail saying he was cool with BYD building ca uh,
factories in Ohio because it's smart, it's fixed asset investment that America
can nationalize in case of a war.
Mm-hmm.
Of course you should let China build BYD factories.
And Donald Trump had the balls to say that in front of a crowd full
of potential manufacturing blue collar laborers who are not gonna
work in there because of automation.
But this isn't, this isn't about whether Donald Trump is right or not.
I just never took him seriously when he's aggressive on China, because I take
him seriously that he wants to make this deal because of everything you just said.
And you laid out a plethora of evidence why it's really difficult to decouple,
and that's what we should be focusing on.
Jacob Shapiro: Well, and and I think you were exactly right earlier, by
the way, when you said that gov, president Trump doesn't always
know what his bureaucracy is doing.
And by the way, that's true of any executive like
bureaucracies are machines, right?
And they're frankensteins, they have lifes of their own.
And a good executive has to come in and reign them back in
because like, that's what, that's what happens with bureaucracies.
Um, but that said, the.
I would say most of the bureaucracy is aligned against President Trump.
And Yes, public, yes, public opinion is aligned against President Trump.
And, and the interesting thing about Trump is he rode what you're talking
like, I, I agree with you that that's what he wants to do, but also part of
the reason he got elected the first time was because he talked about China.
In a way that was way more serious than anybody else did.
So he is got the Santi China thing.
And the other thing, and I'll, I'll let you cook in a second.
I just wanna say, I think we actually do agree, and I laid out that case.
The only thing I wanna say back to you is I completely agree with you that it
is irrational and asinine and crazy to, for the United States to try and decouple
from China, it would be disastrous.
That does not mean it won't happen.
Well let, it's totally irrational.
It does not make any sense.
But this is where geopolitics falls off the rails because sometimes actors
do irrational things for reasons that are hard for rational cousins to divine
Marko Papic: well, so, so first of all, I I, I definitely took offense
to the Norman Angle reference, you know, for, you know, it's deep cop
look at, that's a very deep cut.
Just to be, just to repeat my point.
My view is that when World War III starts, it may very well start, and
that's what Norman Engel was wrong about.
Right.
He thought that the level of interconnectedness would prevent the war.
I'm not saying that we are in a world where, I'm just saying like World War
War III will start maybe 10 years from now, we will remain connected with China.
Jacob Shapiro: Mm-hmm.
Marko Papic: And I believe that because of the 50 years of Cold War, most
human beings listening to this podcast want to light themselves on fire.
Their brains blow up.
They cannot process mentally.
What I, the words that are coming out of my mouth and the words that
are coming out of my mouth is what empirics and game theory proves,
which is that in a multipolar world, order enemies trade with one another.
Sorry, end of sentence.
That's it.
So yeah, war can still happen, but it will happen at a very high level
of economic integration 'cause it's just so difficult to disentangle.
Namely 'cause your own allies steal market share from you by trading with the enemy.
That's the whole point.
Like it's difficult.
And that's what Trump tried to do.
And quite frankly, he's given up because the rest of the world is like, no,
sorry, we're gonna trade with China now.
Yeah.
You know, like Europe is imposing tariffs in China, but they're gonna
make a deal separate from the US Now there's a BYD factory coming into Spain.
And what did they ask?
They asked for IP boom.
Yeah,
Jacob Shapiro: that that's true.
But, but one thing I forgot to do in my intro was, did you see that thing
that the Dutch did with this company?
Yes.
Yeah.
Okay.
Called Xperia, where they're basically seizing a Chinese semiconductor.
Oh, we all know.
Marko Papic: We all know why the Dutch are doing that.
Why?
You know what I'm gonna say?
I know what the Dutch are doing.
That the Dutch are doing that so that they can shower themselves with money
selling A SML machines to China.
Jacob Shapiro: Yeah.
Right.
Which the United States does not want them to do.
To your point,
Marko Papic: but, but they've done it.
Even with Jake Solid and Joe Biden.
Nobody cares in, let's say, why should they listen?
Listen, at some level, it's very simple.
And I've said this before on this podcast, France, in Netherlands, they're
gonna tell America, listen, bro, world War II starts, we're dying with you
in the trenches against the Chinese.
But until that moment, you know Emma Manuel has to sell them air buses
and I gotta sell them A SML machines.
Why?
'cause we need the money to develop cruise.
Miss sells with which to help you fight the Chinese.
Are you gonna give us that money?
Are you going to buy air buses instead of Boeings so that France has enough money
to become a, to remain a viable ally?
No.
Jd,
Jacob Shapiro: JD Vance wants them to use that money to turn around and
buy American, uh, defense product.
Well,
Marko Papic: and that's, you know, and this is where this
all kind of breaks apart.
But, but one thing I wanna say is that, uh, one last thing I wanna
disagree with you on, and I know we gotta pivot to X, but this is great.
This is, this is a good discussion.
The last thing I wanna say is, like you said, bureaucracy
is against Trump and China.
You're 150%, right?
So, uh, the national intelligence defense community, all of course against China,
I mean, they know what butters their bread and it, it ain't world peace buddy.
Jacob Shapiro: Nope.
Marko Papic: So, so bureaucracy and yes, I think there's a lot of vested
interest against, um, the narrative that it's impossible to decouple.
But I do disagree with you on the people.
And I have a chart that maybe we can put in the show notes.
But it shows something fascinating, Jacob.
It's one of the most fascinating charts.
It's an ipso poll done with, I think the Chicago Council, and it
shows that in 2016, about 30% of Americans, 30% Republicans, 40% of
Democrats agreed with a statement that trade leads to jobs in America.
Hmm.
So your point is correct.
In 2016, voters wanted a trade war with China because they
felt that the trade was unfair.
And President Trump beat Hillary Clinton as a result of it.
I really believe that.
And he delivered it.
He satiated the demand that the American public had in 2016.
But since then, you know what the current level is, Republican sup,
Republican support is at about 65%.
Democratic is 75%, and I would say that it's thanks to Donald Trump.
Donald Trump delivered what the median voter wanted in 2016.
What he and his administration seems to be unaware of.
Is that they should be patting themselves on the back for what they delivered in
2017 and 18 instead of tripling down on policy that nobody in this country wants.
And I have, I have so much data, I have a cornucopia of charts, Jacob,
that proves my points, tariffs and trade are the least important political
issue in the United States of America.
You know, behind like abortion.
Nobody cares about this stuff.
And he's completely over indexing on it, not knowing that what
he should be doing is claiming victory for delivering fair trade.
Because clearly American voters are now far more, they've doubled
their support for globalization.
That's, that's surprising.
No,
Jacob Shapiro: it, it is a little surprising, but it also, if you
pull the data on what Americans.
Perceptions of China were in 2016 and 2017, and I haven't looked at the,
the data in the last year or two.
I doubt it's changed that much.
But in 20 16, 20 17 old people hated China 'cause it was communist China,
part of the Cold War, everything else.
But young Chinese people, generally speaking, were
interested in and liked Americans.
And the same was true and over the course of the first Trump administration and the
Biden administration, um, that changed where both youths on both sides now
distrust each other at the same level that the old guys from the Cold War do.
So I, I think you're right that you can point to data that shows
that, um, about globalization.
But I think you can also point to data that the average median voter
in the United States is animated by a deep set fear of China.
And then if you like, give them policies and they have to fight between the,
like their supportive globalization or whatever else, um, or even their like,
you know, cheap products at the Dollar General versus let's stick it to China.
Like for some, the fear thing will pop up and for some the other thing will pop up.
And I think the fear will, I think for vast
Marko Papic: majority, I'll, I'll just make a call right now.
I think for the vast majority it will be economics over foreign policy.
'cause foreign policy is, again, completely and utterly
irrelevant to most Americans.
I mean, sorry, I'm not saying that out my ass.
I'm, I'm, I'm, again relying on pulse.
So yes, I think, I think what you are revealing is exactly evidence, again, for
my view, which is that eventually when World War III starts because young people
hate each other, fine, you're right.
It will do so at a very high level of economic integration.
Yeah.
Because nobody, like, you're right.
Like clearly, clearly, clearly sentiment towards China has soured, but that
sentiment towards China as an enemy, as a, as a rival economic sentiment
toward, towards globalization is extremely high and nobody wants tariffs.
So.
The way I square those two views together is that, yeah, like I think Americans
have become much more anti-Chinese, but no, they don't want to pay more for
their Christmas toys as a result of it.
And by the way, they're right, the wisdom, and I know this
is where we always disagree.
In this particular case, I would say the median voter is right.
The median voter understands that buying a toy from China does not fuel the Chinese
Communist Party in its military machine.
Oh yeah, it does, does not, you know, I
Jacob Shapiro: agree here, like who started World War I, to your point,
the munitions guys, it wasn't, you know, the people in the upper level
of government wasn't these like people on the street who just want the cheap
toys, like Yeah, I'm, I'm with you.
Marko Papic: But anyways, I think, I think it's interesting.
Uh, ultimately I think we're getting a deal.
I don't think a war is starting like tomorrow.
I also don't think this deal is a grand bargain.
I think we both agree with that.
Uh, when Trump meets, which he in, in, you know, South Korea for this Apex
summit, uh, I think you should just expect a truce that does not last beyond.
Probably the Trump administration.
I think we're both in, in agreement in that.
Do you think world worth three's inevitable?
No, absolutely not.
Absolutely not.
And I think we need a, a, a because, you know, I think, I think we're
gonna stay in a multipolar world order for the next 50 years.
Uh, maybe 20 years, maybe something in between.
And I think that the biggest geopolitical story of the next 50 years, uh, or 20
years is not gonna be China, US tensions.
I think it's gonna be dissolution of Russia.
And the process by which it's rotting carcass is pulled sunder across
Eurasia by various other powers.
You know?
So I think that what's gonna be very interesting is that us may
be in a very good position, but for the, all the different reasons
than a lot of people think.
I think that, uh, the weakness of Russia, I mean, you know, like if
the Ottoman Empire was the Eastern question and the Sikh man of Europe.
Dominated European and global geopolitics for a hundred years.
It was really the weakness of Ottoman Empire.
Can you imagine what the weakness of a country, the size of Russia.
Will mean for geopolitics, but I think we should spend a whole podcast just on that.
I know, I know.
There's other things we wanna talk about.
Well, no, I don't.
World War ii, well, I shouldn't call
Jacob Shapiro: you, I shouldn't call you Norman Eng. I should call you.
Uh, you're a kinder now.
The the heartland is, is being torn asunder by, by all these different forces.
By the way, while we were talking, uh, the, the person who I'm meeting
tomorrow for my av check, for my event, he texted me and said, Hey, by the way,
uh, Dodge, I'm in Milwaukee, Dodgers and brewers are playing tonight, and
the Dodgers are staying at the hotel.
So if you see any Dodgers, that's what's going on.
So I might, oh wow.
I might see some Dodgers in the hotel and if I see Freddy Freeman or if I find
out what room he is gonna be in, I'm gonna prank his room because he should
have never left the Atlanta Braves.
And I'm really, really butt hurt that he decided to go to
Los Angeles for the dollars.
That was not very nice.
Freddy, I had literally just bought your jersey after you won us the World Series.
I'm really Freddy, dude.
Marko Papic: Everybody goes to Los Angeles for the dollars.
I did too.
Like, come on.
Yeah, give him a break.
That's what you do.
Jacob Shapiro: And I went to New Orleans.
Okay.
So, uh, let's talk about Gen Z. I'm not gonna be able to set you up quite as well
as I, I could set you up, um, for China.
But, um, you know, we talked, I think in our last episode or episode before
you, we've had protests in Morocco.
We've had protests in Indonesia.
We've had a government change in Nepal.
Um, in the last two weeks, add two more, basically coups to the list.
So last week we add Peru to the list.
Uh, president Dina Boar, uh, was taken out by Congress.
Peru is, no, I don't know if you can exactly call it a coup.
There were some Gen Z protests two to three weeks ago, uh, which
was, do you know what, what drove the protests in Peru, Marco?
I did not until I, until I started researching this.
But do you know why the, the youth were so upset, um, in Peru
and why they hit the streets?
I don't think so.
No.
There, there was a reform being proposed that would've forced self-employed workers
to contribute to pension funds, um, and Peru, at least according to the OECD,
aside from the fact that like the young kids don't want to be contributing to
pension funds, um, they have the fifth highest proportion of young people in
the world who neither study nor work.
And there's even an acronym for this.
They're called neats, not in education, employment, or training.
Yep.
I know that.
I guess they're just not, yes.
I didn't know that.
There's 1.5 million of them in Peru.
So you had all these protests a couple of weeks ago.
Um, and Congress basically removed the Peruvian president, um, Peru,
not a stranger to these things.
There was, was it 22 or 23?
I forget, a couple years ago.
Like Peru literally went through three presidents.
Yep.
In the span of a month.
It was incredible.
Uh, Peru also like lots of different rare Earths and copper and all sorts
of other things that Chinese are building up port infrastructure there.
Like it's a, it's an important one.
And then this week, I mean, nobody really cares about this, but.
Uh, Madagascar had a proper military coup.
Uh, they had weeks of Gen Z protests around the country.
Um, and then, um, you know, the president was basically
toppled, I guess earlier today.
I mean, he's fled the country.
The military has taken over.
There's a special committee, everything else that goes
along, um, with a military coup.
Um, so that's at least, uh, you know, the, the two things that have happened
in the last two weeks, but you said you wanted to cook on, on Gen Z. So I'll
step aside and let you cook for a second.
Marko Papic: No.
Well, I think you, you also wanted to last, last podcast,
and actually it was prescient.
Your, your spidey sense is sense this, and then we got another country where,
where you pro protests did this.
So, first, first thing I wanna say is that this all really started in
2019, and me and my, uh, good, uh, Colombian friend Santiago, who I,
who I often cook and, and talk about.
I remember we were looking at what was happening in 20 19, 20 18, 20 19.
You had Hong Kong protests, which were deeply violent.
Mm-hmm.
Jacob Shapiro: Yeah.
Marko Papic: And then we had Chile.
Remember Chile, where the protests were actually launched because the, uh, transit
fees went up by like quarter of a cent.
Yeah, yeah, yeah.
Bus fees,
Jacob Shapiro: yeah,
Marko Papic: yeah, bus fee.
Uh, so, and um, and what was interesting to me about those protests
is that they were quite expansive.
2018 was, I think Hong Kong 2019 was Chile.
Hong Kong protests were some of the most violent student protests I've ever seen.
Like the kids were attacking police with hammers.
And I think that one of the reasons that we in the West have not really realized
how violent the Hong Kong protests were is because we had a very deep, that was
the turn, that was the anti-China turn.
The narrative about what was going on in Hong Kong was deeply, deeply anti-Chinese.
And there was this view that the Hong Kong police was cracking down a protests
like first and foremost, foremost, you can go back and look at this.
Two people died in those protests.
One fell off a parking garage.
I think the other one died of a heart attack.
Please fact, check me on that.
Okay.
And the Hong Kong police was being assaulted by students who were
wearing body armor and wielding like, you know, machine tools.
If you attack a bunch of ice officers in like Chicago wearing body armor and
a hammer, you're getting shot to death.
And so it was very funny to me as somebody who lived in countries where
there's actual protests, all these western commentators talking about
how, you know, Chinese Allied Hong Kong police was cracking down on students.
I was like, guys, if you had the same protest in the US, there'll
be like a thousand students dead.
You're gonna be kidding me.
So why do I bring this up?
I bring this up because the Chile example of launching countrywide protests
because of a small increase, shows you that Gen Z has a very short fuse.
Remember when like Spanish millennials.
Camped in Madrid because youth unemployment was like 80%.
So millennials, we clearly don't have a short fuse.
We put up with a lot.
Gen Z has a short fuse, number one and two is much more violent.
And that I don't need Madagascar in Nepal to teach me that.
Hong Kong taught me that, like kids in Hong Kong.
And so why do I mention this?
I mentioned this because I think the two generations are just much more different.
You know, I think that, uh, millennials kind of came of age, entered the
labor force in a lot of the world after the great financial crisis.
There was a lot of insecurity.
There was a lot of sense.
So like, oh, you better shut up and enjoy that internship.
That doesn't pay you anything.
You're lucky, you know, like, and, and most of us did that.
And part of the reason also is that most millennials also grew up in the
middle of this globalized American hegemony world where like, you know, if
you just worked hard enough, you were going to do better than your parents.
I mean, that was the narrative that still worked.
We were the generation that realized that that's not necessarily true.
Gen Z is coming behind us and saying like, you guys are suckers and you are weak.
And we played a whole lot of Fortnite, buddy.
You know?
Yeah.
Jacob Shapiro: So we're gonna
Marko Papic: put on, and we
Jacob Shapiro: haven't read books, so we don't know what happens when we protest.
Uh, is this your way to get it back at me for calling you Norman Eng? You're gonna
make me try and stick up for Gen Z here.
I think you're being a little bit, uh, no, I be pro
Marko Papic: Gen Z. No, no.
Wait a minute.
I'm not being anti Gen Z. I'm just saying like, look, they have a
Jacob Shapiro: ways, you said they had, you said they had a very short fuse.
And I might already, which
Marko Papic: for for good reason.
For good reason though, I would say, I would say.
That a lot of us have been waiting for generational war.
The reason it didn't happen is because millennials are basically suckers.
That's what I'm saying.
As a generation, they are suck and Gen Z is not, you know, also when I say
the short fuse, like yeah, I mean they have a short fuse because they're gonna
stand up and fight for their stuff.
And now a lot of critics are gonna say, and I, I, I actually, it's funny
Jacob, it's amazing that you wanted to talk about this topic last week.
'cause I've been talking about it to clients all week.
You totally nailed it.
And I just finished a great conversation with a client just before this call
and they said to me, but aren't you afraid that Gen Z's anti-democratic?
You know, because there's all these surveys that say that they're
anti-democratic and like, look, I'm actually not that concerned about that.
They see that democracy doesn't really work in many, many ways,
and they see that it's, it can be corrupted, it can be paid for.
I mean, look, I mean, Donald Trump won on this platform as well.
Like democracy is not working for you.
Like you need to vote for someone who's anti-establishment.
It doesn't mean that Gen Z is going to replace democracy
with fascism or communism.
It doesn't mean that at all.
It just means that there are certain things in our democracy and democracy
in Madagascar, certainly in democracy in Hong Kong or Chile, and certainly
in my home country where I was born in Serbia, where its students have been
protesting for like 18 months as well, even before all these other protests.
I think Gen Z is connected.
They see what the rest of the world looks like.
They see what countries without corruption look like, and they, they just, you
know, they're kind of, A lot of these regimes are victims of their own success.
They haven't delivered aside from.
Maybe economic growth.
They haven't delivered on governance of quality of life.
And that, and Gen Z, just unlike millennials, unlike millennials,
gen Z, are not gonna put up tents and occupy anything.
They're gonna burn it.
And I respect them for that.
Jacob Shapiro: Man, there is so much to break apart there.
Um, I, I, okay.
I don't think millennials are suckers.
I think millennials came of age in an era, to your point of optimism and
believed that if they did the work, they would be rewarded for the work.
And some of us woke up in 2001 on September 11th, and some of us woke
up in 2008 with the financial crisis.
And then COVID really like drove it home.
Uh, that this was like, not, like you were not gonna be guaranteed something that
was better than your parents' generations.
And I think, I think millennials have had to cope with that because
they grew up with this idea about the world and the world that they're
inheriting is actually very different.
And the people that taught them that world are these boomers who won't step
aside and keep on doing all these things.
The world that, you know, we talked about this last time, I think you're
right, that like Gen Z grew up in a world that was fundamentally not
optimistic, um, in a world where all of this was native to them.
Um, and, and where like this is all just sort of, I, I don't know,
like maybe in the same way that millennials are better with technology
because we grow up with computers, even if they were shitty computers
with Ms Dos and things like that.
Like we at least know how computers work.
Like we understand the basics.
So if you give us a new cell phone, like, okay, like it'll take us a
couple hours, but we'll figure it out.
Whereas a Boomer, like once you take away a Boomer's phone, like it's
gonna take them months if they're ever gonna actually learn like
the new phone architecture again.
Maybe Multipolarity is something that the Gen Zs learn.
I, I don't know.
But um.
I think one thing, I, I had a, I had a, um, a loss or a, a graduate student from
Nepal on my podcast a couple weeks ago.
And I was asking her, and she, she participated in the Gen Z protest
in Nepal, and I was asking her perspective and why she participated.
And one of the things that she alluded to was, look, because we're
also interconnected, we see what's going on in other countries, we
see that in other countries, things work and people have nice things.
So like, you know, we already know like that we're not gonna have
better than our parents' generations.
We saw what happened to the millennials, them believing that nonsense.
And we also see that people in at least other countries, like things are better
over there, so why can't we have those things and we're gonna go out and protest.
And there is a part of this also where, I dunno if you've seen those stats
about, um, you know, gen Z and reading and like their knowledge of like history
or anything that came before them.
It's, it's just they're reading at shockingly low rates.
So maybe they, maybe they lack a requisite level of fear about what it means to go
and burn something in the streets, but.
I don't know.
I'm, let's, let's, I'm grasping at straws there.
Marko Papic: No, no.
Let's pause on those two because, um, you know, that was
one of the things I also said.
It was this knowledge of the rest of the world that I think is very important.
I think social media brings the rest of the world to you, and I think that
that's very, very important because then you ask exactly those questions
like, well, why isn't this better?
Yeah.
And I also think that, um, you know, it just, it's travel has become cheap
as well, and I think a lot of younger people have also managed to travel.
And, and I know for a fact, like if you are from Serbia and
you're in your twenties, you've probably traveled to Europe.
It's not that expensive to do that.
You have a phone and you can go to Croatia, which is next door.
You can like drive to it.
They basically speak the same language and you're like, well, this
place is better run than this place.
Like, why?
What's the difference?
Oh, okay.
Yeah.
They, they, they at least made an effort to clean up their governance
to get into the EU as an example.
You know, and I think that, um, a lot of these regimes are
also victims of their success.
I mean, in Serbia's case, I made this point before, I think in many
ways, um, you know, IC and the people in power have managed to
stabilize geopolitics of Serbia.
It's actually one of the best performing economies in Europe.
Um, but the problem with that is that you've got, you've delivered
jobs to the young people.
You've let them travel.
They all got enough money for an iPhone.
But you can't then have governance of the 1980s or seventies.
You know, you can't just have these patron, you just gotta clean that up.
I mean, that's just like, you've created a problem for yourself, but actually
delivering stability, um, and also by delivering, um, economic growth.
So I do think that that interconnectedness, I think
is an, is an important issue.
Although I would say that millennials were also similarly interconnected.
I mean, we were, even in our youth, we were able to see what's
going on in the rest of the world.
And again, that goes and speaks to the Occupy Wall Street
movement, which started in Spain.
Like that whole Occupy movement began in southern Europe.
Spain spread to other countries, ended up in us.
And again, just to clarify, the difference between millennials and
Gen Z. Gen Z are willing to take it to the streets in a much more
aggressive way than millennials were.
And I think partly the reason is that if you are in your early twenties
and you talk to someone in their early forties, you would say, what
did your peaceful protest get you?
What did Occupy Wall Street actually do?
You know?
And um, and, and then the final thing I would just say is like,
are they really ahistorical?
Do they not know the danger of this, or are they just young people?
Jacob Shapiro: Yeah, that's fair.
You know, because it's fair.
I, I always actually shy away from generational arguments
'cause I fundamentally think everybody's actually just the same.
And all of these different tribes that we're putting ourselves into Yeah.
Are just like, it's false.
Marko Papic: 1968, listen, 1968 was an explosion of social movement in the world.
Read it up, you know, folks out there, it was global with like, it was in
America, it was about anti-Vietnam in France, it was about the state
of education system, system and, uh, the rigidity of social norms.
There was a sexual revolution going on.
There was an anti-war revolution going on.
There was an economic revolution going on.
And the baby boomers had their moment in 18 where they blew up the world.
Right.
And they were, in many ways, these were quite violent protests.
I mean, Charlotte de Gold like fled France to an army base in Germany where
he was just hiding for like two days.
The Prime Minister of France didn't know where he was.
Jacob Shapiro: Yeah.
Marko Papic: So this is what happened in 1968.
This was, this was the height of this baby boomer protest too.
And I think it's unfair for a bunch of baby boomers now to say that Gen Z is
undemocratic and they haven't read a book.
It's like, bro, you were having sex and doing drugs at 18 and then try to
burn down the world and then sold out and you know, you know, like reverse.
Well no, that,
Jacob Shapiro: and that's a good point.
So what was the geopolitical impact of 1968 and what do
you think the geopolitical impact of this in 2025 will be?
Or will this just be like a paragraph in, in history books such as they
are 20 years from now and you know, amidst all of the different us,
China, blah, blah, blah, blah, blah.
There were these protests in these different countries all around
the world demanding like lower bus fairs or whatever, demanding.
Marko Papic: So, you know what I think, I think I'm going to make,
when you were asking that question, I thought that was an unfair question.
You know?
Uh.
But I think there was, uh, geopolitical relevance in particular.
If you think about the 1970s, there was, um, there was like a Deante in
the 1970s, in part because all of these protests and made these countries
and societies very inward looking.
Jacob Shapiro: Mm-hmm.
Marko Papic: You know, and you had to deal with the unruly baby boomers effectively.
Uh, so I think that one of the things that, you know, we're all fixated
on Russia versus West China versus us, and we're, we're thinking that
this is gonna dominate next 10 years.
Domestic politics could dominate the next 10 years.
On the other hand, what I would also say about, uh.
1968, it did lead to the seventies, which were yes, very domestically
oriented decade, but very suboptimal from an economic perspective.
So one of the ways that you dealt with those protests is that you just, uh,
use Ian policies to satiate the public.
Jacob Shapiro: Hmm.
Marko Papic: Uh, so that could be also something that happens this time around.
Although I think in a weird way, I, I don't think Gen Z is
necessarily asking for that.
You know, think in some cases no, because
Jacob Shapiro: they're all buying Bitcoin as, as I'm starting to join them.
Marko Papic: They're all buying Bitcoin.
But I also think that they, um, understand that one of the reasons
they don't have access is because of the patronage networks of the past.
You know?
And also we did just go through a inflationary cycle
in the West in 2020, uh, two.
So I'm not sure we're gonna repeat that.
I, I'm not sure, but, but I'm open to it.
All I'm saying is that the 1968 protests.
Force the world to be a little bit more inward looking for
the next decade at least.
Jacob Shapiro: Do you, are you willing to, do you think that that'll be the case
as a result of the 2025 Gen Z protest?
Or have they, have they not even congealed enough for you
to, to put your neck out on?
Look,
Marko Papic: look, Jacob, I mean, right now our examples are Serbia,
Madagascar, Nepal, Indonesia, Peru.
Okay.
Fair.
Uh, Hong Kong, Chile.
Okay.
In 20 18, 19
Jacob Shapiro: May, maybe some Turkey, like Turkey has kind
of popped its head up and then Erdogan's gotten it under control.
Marko Papic: I think we would need to see it happen in, in,
you know, big developed markets.
Um, but, you know, one, one thing that I would say is that
you don't need to use violence.
You know, sometimes what happens is just political evolution and, and one of the
interesting conversations I just had with a client, they were asking me about
what's going on in France and Japan.
Mm-hmm.
And I would say that partly millennials and Gen Z, let's move away from protests.
But I think millennials and Gen Z, you know, they're just incapable of really
connecting with some of these political parties that have been left over.
Uh, you know, and, uh, there's this idea, there's this idea that, um,
voters vote for their economic interest.
We know that's not the case, right?
So what's the matter with Kansas?
Great book.
Um, if you wanna, it's, it's very liberal critique of
conservative politics of Kansas.
So if you're conservative, you're not gonna like it.
Um, I think it's a well, uh, research book by a journalist, uh, Thomas Frank, who
basically argues that people in Kansas vote against their economic interests.
Mm-hmm.
And then, um, the book that kind of answers what is why people do
that is Alexander Schussler, who's a political scientist who wrote the
book, A Logic of Expressive Choice.
And that book is a far, far more complicated book to go through,
but it's actually very good.
Anyone who wants to kind of think about politics should read it.
In that book, Schuler makes a very controversial argument that goes against
decades of rational choice theory and says that nobody votes because
of some sort of a rational reason.
Mm-hmm.
Mathematically, mathematically, you have a higher probability of
being hit by a bus on your way to the polls than impacting the vote.
So why do you vote?
That's the puzzle to him.
Why do we even do it?
Why do we even take the time out of our day to go vote?
And his argument is that you vote for the same reason you choose
Pepsi over Coke or Coke over Pepsi.
It's because it says something about you.
And he uses really interesting data and, uh, you know, analogies
to the marketing industry.
For example, Pepsi tried for years, for decades to use the taste test
as a reason to get people to, to, to drink Pepsi over Coca-Cola.
They would do these commercials, I think back in the seventies.
I'm not even sure when, but like long time ago, they would say like, no, not
10 people agreed that Pepsi tastes better than Coke, you know, in a blind test.
And then once they decided to just do some silhouette of a person dancing to
hip hop and call it the Pepsi generation.
Dare Sales went up, well St
Jacob Shapiro: started, started with the King of Pop, Michael Jackson.
Michael Jackson was the first one that got doing that.
And that was also probably why he needed his first nose job
'cause he broke his nose on set.
I fair listeners used to be a Michael Jackson impersonator, so
I know this history very well.
I'm just, I mean, dude dropping bombs there, you know,
Marko Papic: that's that.
We need to out unpack that.
We need a whole podcast for that.
And what was the other one was?
Uh, equestrian.
Jacob Shapiro: Oh, equestrian Vault.
Yes.
I was also an accomplished equestrian vaulter.
I'm just, I you all need to watch Marco's brain just literally
spontaneously combusted.
Well, it's not spontaneous.
I, it's 'cause I caused it, but
Marko Papic: No, it's, it is just why you're in a Renaissance man and you
have effectively Joe Johnson's game.
Jacob Shapiro: Oh, that's very nice.
That's very nice.
Marko Papic: I mean, this is like, uh, so look what I'm getting at is that, to go
back on track, but we will unpack this.
We, we will not let you, we, this won't die.
We will pick this up.
Next podcast.
I just want to end land the plane on this.
The point is, once Pepsi started saying that you do something when
you drink a Coke or you, you do, you, you are saying to the world,
I'm member of this new generation.
When I drink a Pepsi, Coke is for boomers or whatever.
That's when their sales went up.
Similarly, the reason that Donald Trump does well is 'cause yes, he's
authentic, but he also understands branding and he hits his own brand.
And I think one of the things that Gen Z and millennials just don't understand is
the brand, like Christian Democratic Union and a social Democratic party of Germany.
Holy crap, those are old ass brands.
The Democratic Party and the Republican Party
Jacob Shapiro: are old ass brands.
Very old brands.
There's a reason Donald Trump was able to co-opt the Republicans and turn it
into the Trump party and why a majority of Americans identify as independents,
not as Republicans or Democrats,
Marko Papic: Japan, LDP.
Mm-hmm.
Oh my God.
It's one of the longest, uh, running parties in Asia.
Like a lot of these are just brands that you know, like
nobody gets enthusiastic about.
And so I would say that while we have spent a lot of time today
talking about Gen Z protests.
I do think that we need to be on the lookout for emergence of new
brands and we shouldn't fear them.
There is this really, really built into, especially in finance, that's like,
oh, god forbid a new party takes over.
Listen guys, material constraints will force them to do.
Probably what's the right thing to do, but new brands are
not necessarily a bad thing.
Fort Seit is kind of an old brand that was taken over by Georgia Maloney, and
by the way, the brand is kind of fascist.
Jacob Shapiro: Let's leave it aside.
That's not kind of like, it's the OG.
It's the original is that
Marko Papic: Yes.
But the thing is, it's like this resurrection of old brands and
bringing them back up and, and brushing them up for the new
generation, I think is gonna happen.
And we should not panic when the CNNs of the world, the guardians of the
world, the Fox news of the world, say anti-establishment party wins
election in insert major economy.
You know?
No, it is just that People got sick of these old brands and somebody
else came in and Manu Macron effectively did this in France, which
by the way was a two party state.
Whatever you wanna say, they have a very sim, similar electoral system.
Anybody who thinks that first pass the post in the United States of America will
prevent the emergence of a third party, should look at what happened in the United
Kingdom with the Brexit party, what's happening in the United Kingdom today
with a complete collapse of the Tories and what happened in France with the
emergence of this third party in France.
The rebels.
The rebels were centrist.
Now he did appeal to a lot of older people, which is kind of weird,
but let's leave that as a side.
Of course, he's the member of the establishment.
He preserves their prerogatives.
That makes sense.
All I'm saying is that we should not necessarily fear the
emergence of these new brands.
I think it's healthy and it's the only way to ultimately get buy-in.
Democratically, at the end of the day, who gives a fuck Pepsi or Coke?
It gives you caffeine in a sugar rush.
And don't be fooled by these new anti-establishment politicians.
'cause in many ways they'll just do the same things but
appeal to the younger people.
And that's how democracy kind of works.
It works in in those, you know, like in a way in which new generations
get a voice and without changing the place in a dramatic fashion,
that obviously would introduce political volatility and violence.
Jacob Shapiro: I, I agree with most of that and we'll, we'll close out 'cause
we're, we're running up on time, which is that here's another theory, half half in
jest about why Gen Z is, is doing protests and it connects with something else.
Earlier today, the United States hit another, um, Venezuelan
ship, killed six Venezuelan drug traffickers in the Caribbean.
Um, and Marco, maybe we should posit that what's going on is that this is what
happens when you have an excess of cocaine in the global international trade system.
Uh, cocaine production rose 53%, uh, from 22 to 23, 20 4% the year before that.
Um, I'm gonna quote here, a US official who was anonymous, anonymously,
quote in New York Times, quote, we're seeing production at levels
that Pablo Escobar dreamed about.
You go to Coca Field and it's like standing in a cornfield
in Iowa, you can't see the end.
And there are tons of interest articles here about Colombian towns and villages
that are literally dying, uh, because the, the cartels are not showing up anymore
because they have too much cocaine.
They're literally just throwing cocaine everywhere they possibly can because the
price has gone from something like $20 a bushel to $7 a bushel, which maybe some
of our American farmers can believe it.
So maybe there's just too much cocaine out there, Marco, I don't know.
So you're saying that the targeting of these, uh, boats reflects
Marko Papic: that.
Jacob Shapiro: Well, the targeting of the boats, I think reflects the fact
that they have too much cocaine, and the cocaine is so much cheaper, so they're
willing to risk, like the Caribbean route was not their main route for the past
couple of years, or even decades, right?
It was overland through Mexico.
So now they're like, fuck it, we have all this cocaine.
We just need to get cocaine to our markets in Europe and Asia.
Um, which is where the markets are actually growing the most.
Like there is some growth in North America, but it seems like, you
know, uh, Southeast Asia, east Asia, like Europe, that's where
you're getting most of the cocaine.
Um, consumption growth.
We just need to get cocaine to those markets and it's so cheap that whatever,
if they blow up a couple cargoes in the middle of the Caribbean, that's fine.
Like the United States isn't gonna be able to blow all of it up.
So let's just send as much cocaine as we possibly can out there.
That's, that's my working theory.
Marko Papic: Well, look, uh, I'm gonna close on a positive note here.
Yeah.
Uh, you just said the European consumption of cocaine is going up, right?
Yes.
Jacob Shapiro: Is it not?
I thought it was.
I
Marko Papic: mean, I mean, there you go.
Everybody thinks Europe is just a museum full of old people that has no future.
I mean, not according to that stat.
At least they're doing lines.
You know, like maybe that will invigorate the continent.
Jacob Shapiro: Well, I love this.
I, I just double checked myself.
Uh, yes.
Cocaine conception has been an upward train.
An extensive study of waste water across 128 European cities in 26
countries reveals a significant increase in cocaine use since 2016.
And for the seventh year in a row, EU member states reported record amount.
Where do they say
Marko Papic: exactly where?
Jacob Shapiro: Uh, well, they say.
128 cities in 26 countries, but the countries that they call out, which
doesn't mean they're the top ones, but they call out Belgium, Netherlands.
Oh, Belgium, Belgium, Netherlands, and Spain account for 72% of the
cocaine seized by governments.
So that doesn't mean they're the ones that are doing the most, but
those are at least the places where the governments are seizing it.
Yeah.
Marko Papic: Oh my God.
I think that also needs a podcast by itself.
But again, you know, you hear a lot of this, uh, kind of narrative that Europe
is sclerotic and just without any vigor.
They took the advice and.
Did some lines, I guess.
Jacob Shapiro: Yeah.
I mean, I'm, I'm only joking about Gen Z, uh, snorting a bunch of cocaine, but
I did, I did think, because I'm, I'm a little mystified by the US continuing
to just bomb boats in the Caribbean.
I, I also just wanted to point out that last week the US hit a boat.
The Colombian government said, uh, that wasn't Venezuelan, that was Colombian,
and you killed Colombian citizens.
And now the US Columbia relationship continues to unravel, like very quietly,
I think one of the most significant breakdowns in US foreign policy.
Yeah.
Like that was the most important US security partner in South America.
And between, God, it feels so long ago that Trump was tweeting at Petro about
illegal migration, and then they've signed onto Belton Road, um, everything else.
Oh, I, I'm sorry.
One other statistic about cocaine.
That was incredible.
I was doing research.
They think that this, this will be the year that cocaine produces more revenue
for the Colombian economy than oil.
Like insane.
Right.
Marko Papic: Even, even though the prices have collapsed.
Jacob Shapiro: Yes.
Just
Marko Papic: think about that for a second.
Oh my god.
Yeah.
That's, that's a lot of cocaine.
That's a lot of cocaine.
Yeah.
Well, I mean, uh, wow.
Um, I don't know what to say about that.
That's very interesting.
Yeah.
Um, but,
Jacob Shapiro: um, you, you were trying to land the plane and I would,
in my La Dodgers fashion, I was like, here is a cocaine curve ball, Marco.
I'm just, I'm just gonna lay this in right here.
We're gonna go,
Marko Papic: no, you know what?
I think, I think the only way to land the plane on this is that, uh,
this is probably what's gonna happen with a lot of soft commodities,
which you are an expert on.
Jacob Shapiro: Mm-hmm.
Yeah.
There
Marko Papic: you go.
As emerging market tastes change.
Right, because the Southeast Asia and like the emerging markets like starting
to develop a taste for some Coke, I mean, that is also the same argument
for coffee, for chocolates, for cocoa.
Jacob Shapiro: A lot of, yeah.
And it's also, if I, if I really want to stretch, it's also an argument
against what you were talking about with globalization because any of
these things that get globalized, the price of these things collapses
and the people that produce them come under significant strain.
And I think part of Trump's protectionism and part of the, the glorification of
hard labor and industrial work again, which we, you know, we talked about
that months ago about how strange it was that we're glorifying that now.
Part of that is.
Okay.
Like the more you globalize, like yes we all get cheap widgets and all these other
things, but like people actually like the people who were making the things, their
lives are destroyed and these governments are not taking care of those people.
And so you have political movements that are rising that service those
people who are, you know, out there in the streets and protesting and
making their voices heard with votes.
So there, there's something in there too about the lower you drive the
cost of these things, the more you're affecting the producers and that some
of the politics that we're seeing is about trying to help the producers.
I don't know, I'd have to put some more meat on that bone, but,
Marko Papic: well, alright.
Alright.
I think, uh, I think we have, uh, exhausted our energy on
this podcast and neither one of us is going to rely on a bump.
To get it back up.
Jacob Shapiro: No, no, that's, that's never been my, uh, never been my vice.
Okay.
We'll talk, however,
Marko Papic: if anybody wants to sponsor the podcast from the beer
industry, we will drink beer.
Jacob Shapiro: Yeah.
On the show.
That would be great.
And please, like both Barstool stores, Barto Sports and The Ringer, we're open.
Like there, there's an opportunity for both of you to be on the
ground floor of geopolitics and you're both just wasting it.
Like seriously, like get your shit together.
Alright,
Marko Papic: Jacob, great talking to you, Matt.