Bessent's Wager and Why the World is Calling America's Bluff | Henry Farrell

In Episode 495 https://hiddenforces.io/podcasts/why-the-world-is-calling-americas-bluff-henry-farrell of Hidden Forces, Demetri Kofinas speaks with political scientist Henry Farrell, co-author of Underground Empire, about how the United States built its empire, why the hidden infrastructure underwriting American hegemony is now buckling under a compounding series of domestic and foreign policy errors, and what the collapse of the liberal, rules-based order means for the global economy and international security. The first hour examines two recent and consequential events—Canadian Prime Minister Mark Carney's speech announcing the breakdown of trade negotiations with the United States, in which he claimed his country was under attack by Washington, and US Treasury Secretary Scott Bessent's Financial Times op-ed declaring an "Economic D-Day," which reads more like a veiled threat to America's allies than a defense of the world Washington sought to liberate in 1944. They then explore the implications of both announcements, how they fit a pattern of behavior by an administration intent on converting the once liberal, rules-based international order into a more overt and darker form of American imperial power, why that process is failing, and what its failure means for the global economy, international security, and the lives of billions of people. The second hour explores the hidden infrastructure that underwrites US hegemony—the financial messaging systems, dollar-clearing networks, and internet surveillance architecture that quietly became instruments of American coercion. They trace how this "underground empire" was slowly built and eventually adopted by much of the world, when it began to be weaponized first against America's enemies and then against its own allies and partners, how that weaponization has corroded American power, and where the evidence of its decline is now unmistakable. They also examine how a world once held together by an establishment of lies and hypocrisies is giving way to one organized around clans, cartels, and naked self-interest, the role technologies like AI and social media play in breaking down and refashioning traditional political coalitions, the deeper sources of Western insecurity—including the risk of a new kind of world war that may arrive embedded in our systems of communication and control—and where Henry still finds grounds for optimism in an otherwise frightening new world. Subscribe to our premium content—including our premium feed, episode transcripts, and Intelligence Reports—by visiting HiddenForces.io/subscribe https://hiddenforces.io/subscribe. If you'd like to join the conversation and become a member of the Hidden Forces Genius community—with benefits like Q&A calls with guests, exclusive research and analysis, in-person events, and dinners—you can also sign up on our subscriber page at HiddenForces.io/subscribe https://hiddenforces.io/subscribe. If you enjoyed today's episode of Hidden Forces, please support the show by: Subscribing on Apple Podcasts https://podcasts.apple.com/us/podcast/hidden-forces/id1205359334, YouTube https://www.youtube.com/channel/UC8URhgYos5fjHqFSO4RSIEg, Spotify https://open.spotify.com/show/0TK6u251zGSlMgJKH6cOaP, Stitcher https://www.stitcher.com/podcast/demetri-kofinas/hidden-forces, SoundCloud https://soundcloud.com/hiddenforces, CastBox https://castbox.fm/channel/2629539, or via our RSS Feed http://hiddenforces.libsyn.com/rss Writing us a review on Apple Podcasts https://podcasts.apple.com/us/podcast/hidden-forces/id1205359334 & Spotify https://open.spotify.com/show/0TK6u251zGSlMgJKH6cOaP Join our mailing list at https://hiddenforces.io/newsletter/ Producer & Host: Demetri Kofinas Editor & Engineer: Stylianos Nicolaou Subscribe and support the podcast at https://hiddenforces.io https://hiddenforces.io/. Join the conversation on Facebook https://www.facebook.com/hiddenforcespod/, Instagram https://www.instagram.com/hiddenforcespod/, and Twitter https://twitter.com/hiddenforcespod at @hiddenforcespod Follow Demetri on Twitter at @Kofinas https://twitter.com/kofinas Episode Recorded on 08/26/2026

• 0:00Speaker 00

  What's up, everybody? My name is Demetri Kofinas, and you're listening to Hidden Forces, a podcast that inspires investors, entrepreneurs, and everyday citizens to challenge consensus narratives and learn how to think critically about the systems of power shaping our world. My guest in this episode of Hidden Forces is Henry Farrell, a political scientist, the originator alongside his co-author Abraham Newman of the concept of weaponized interdependence, and the co-author of Underground Empire: How America Weaponized the World Economy. By the end of today's conversation, you will have a much deeper understanding of not only how America built its empire, including the financial, military, and technological infrastructure

• 0:44Speaker 00

  undergirding its power, but how that scaffolding is buckling under the weight of a compounding series of domestic and foreign policy errors that have eroded the political consensus that made this empire possible, and the consequences of its collapse for the global economy and the world over which Washington has presided uncontested for most of the last 35 years. Henry and I devote the first hour of our conversation to examining two recent and very important events. The first being Canadian Prime Minister Mark Carney's speech announcing the breakdown in the latest trade negotiations between the United States and Canada, wherein he claimed his country was under attack by the United States, and the second being U.S. Treasury

• 1:26Speaker 00

  Secretary Scott Bessent's Financial Times op-ed declaring an "economic D-Day," which reads more like a veiled threat aimed at America's allies than a defense of the world Washington sought to liberate in 1944. We explore the implications of these two announcements, how they fit into a pattern of behavior by an administration that seems intent on converting the once-liberal, rules-based international order into a more overt and darker form of American imperial power, why that process is failing, and what that failure means for the global economy, international security, and the lives of billions of people. The episode's second hour builds on these insights through a comprehensive exploration

• 2:09Speaker 00

  of the hidden infrastructure that underwrites U.S. hegemony: the financial messaging systems, dollar-clearing networks, and the internet surveillance architecture that quietly became instruments of American coercion. We trace how this underground empire was slowly built and eventually adopted by much of the rest of the world, when it began to become weaponized against America's enemies and eventually against its own allies and partners, and why that weaponization has led to a deterioration of American power, and where we see uncontroverted evidence of its depreciation and decline. We examine how a world once held together by an establishment of lies and hypocrisies is quickly giving way to one organizer on clans, cartels, and naked self-interest, the

• 2:53Speaker 00

  role being played by technologies like AI and social media in facilitating the breakdown and refashioning of traditional political coalitions, and the deeper sources of Western insecurity, specifically the risk of a new kind of world war that may soon arrive on our shores, embedded in our systems of communication and control, and where Henry still finds grounds for optimism in what is otherwise a frightening new world. If you want access to all of this conversation, go to hiddenforces.io/subscribe and join our premium feed, which you can listen to on your mobile device using your favorite podcast app, just like you're listening to this episode right now. If you want to join in on the conversation and become a member of the Hidden Forces Genius

• 3:38Speaker 00

  Community, which includes Q&A calls with guests, discounted access to third-party research and analysis, and in-person events like our intimate dinners and weekend retreats, you can also do that on our subscriber page. And if you still have questions, feel free to send an email to [email protected], and I or someone from our team will get right back to you. And with that, please enjoy this incredibly timely, wide-ranging, and deeply insightful conversation with my guest, Henry Farrell. Henry Farrell, welcome to Hidden Forces.

• 4:17Speaker 01

  Thank you. I'm delighted to be here.

• 4:19Speaker 00

  It's my pleasure to have you here. I feel very fortunate that we scheduled this ahead of time. It wasn't—I didn't have any foresight into Mark Carney's speech, the breakdown in trade negotiations, or Scott Bessent's "economic D-Day" news piece in the Financial Times, but it's going to converge perfectly with what today's conversation is supposed to be about. Before we get into that, as well as your book Underground Empire, which is what inspired today's conversation, Henry, tell me a little bit about you. What got you started in political science? What's your background?

• 4:53Speaker 01

  I'm from Ireland originally. I was interested in political science and economics. I was not quite smart enough at math to be a good economist, but I was always very interested in the politics of the economy. That is, not thinking about the economy as a place in which you see all of these optimizing decisions happening and markets producing their wonderful things, which they do produce, but the politics that goes along with that, the ways in which actors try to use fair means and foul to gain position, to gain advantage, and to really shape the economy and shape markets in ways that suit their own particular self-interests, even if they do not suit the self-interests of others.

• 5:35Speaker 01

  So that is the kind of place that I think that Abe Newman, my colleague, and I have been playing in for the last couple of decades.

• 5:42Speaker 00

  So I want to also reference another conversation you had with Ezra Klein about six months ago, where the two of you discussed Mark Carney's speech delivered at Davos. And he has since delivered another speech, the one that happened a few days ago, announcing the breakdown in trade negotiations between the United States and Canada, in which he reiterated many of the same sentiments and also essentially said that Canada was under attack, and under attack from Washington. And that was followed up by a very curious article in the Financial Times written by Secretary of the Treasury Scott Bessent, in which he essentially compares the decision that foreign countries and U.S. allies in particular will need to make to Pascal's wager.

• 6:27Speaker 00

  And it comes across very much as a threat against America's allies. And so I'm curious, before we get into the book, what do you make of these two latest pieces of information? And what do you feel like is really happening to the global system, the global economy, and to the world?

• 6:45Speaker 01

  So I think—well, those are two very, very big questions, of course, and I think we'll probably get into them in different ways during the rest of the conversation. But I think if you look at this debate, I think Carney is expressing a sense of reality. That is, really building on what he said in Davos, where he made it clear that the old world system had gone. He is very fond of saying that nostalgia is not a strategy. We cannot just assume that the old world is going to come back. We need to face up to the world that we're in. And I think that really what we're seeing at the moment is a second stage of that strategy, where Carney has looked at the trade negotiations that are happening between the U.S. and Canada, has looked at the way in which the United States really wants to create a permanently

• 7:30Speaker 01

  subservient position for Canada, in which it would accept its subservience, and Carney has decided that Canada simply doesn't have any advantage from dealing with that, and is prepared to endure, at least for the moment, the short-term costs that are associated with Donald Trump getting mad at you and deciding to tariff the hell out of all of your industries and using whatever other forms of pressure he can use. So I think that's the Carney side of it. The Bessent side is very interesting, and this is a deeply weird op-ed, because really what he's doing—I think the part that I find fascinating, which you pointed out to me when we were talking as we were setting up, is this comparison between Pascal's wager

• 8:14Speaker 01

  and the situation of other countries in the international system. And really, what I think that Bessent seems to be saying here is, you've got to think about the United States as if it were God. You have to think about the United States as if you need to do everything you possibly can in order to appease this wrathful deity before it decides to smite you with lightning bolts, because if you don't, you do not know what is likely to happen to you, except that it is likely to be horrible. So Pascal's wager is more or less an argument that even if you don't believe in God, you ought to behave as if you do, because if you don't, the odds are that if God does exist, that you're going to spend the entirety of eternity burning in the fires of perdition, so therefore you ought to believe it.

• 8:58Speaker 01

  And so I think what Bessent is saying is, you need to believe in the United States the same way, because if the United States decides to get angry with you, you are going to find yourself in this situation in which you would wish that you would be in hell, because that is going to be much, much better than what Donald Trump has in store for you. So this is really—it feels like, to me, like one of these 17th-century Puritan preachers, you know, sort of sinners in the hands of an angry God, except that the sinners are the recalcitrant countries of the rest of the world, and the angry God is the United States of America, with Donald Trump as its prophet and also as its enforcer.

• 9:37Speaker 00

  Yeah, it feels as though what he's saying is that the realization of Trump's worst instincts represent tail risk, and there is no premium that you shouldn't pay to ensure yourself against the possibility of that tail risk actualizing. And that's essentially the wager.

• 9:55Speaker 01

  Well, the other thing that this makes me feel like, it feels like it is a angry, fundamentalist preacher who is losing his congregation, who is losing his audience, and is upping the rhetoric in order to try and keep the few fearful parishioners who are still there in the benches. So there's a famous phrase that Teddy Roosevelt used, which is that the United States ought to, what was it, speak softly and carry a big stick. In other words, that it ought to moderate its rhetoric, but keep its genuine threat in reserve. And so I think what we're seeing here is that Scott Bessent is adhering to an approach to US foreign policy, which is speak bigly and carry a soft stick. So

• 10:37Speaker 01

  these are big angry words, but everybody knows that the follow through is not particularly obvious. The key question for Bessent here is that the actor, the country which is doing the most to support Iran, or is capable of doing the most to support Iran, is China. So the question that Bessent does not really want to have answered, and you see some soft foot maneuvering happening around this, is if China continues to import oil from Iran, if China continues to provide a lot of support to Iran, is the United States going to want to try and visit the wrath of God on China's head? And I think that the markets and everybody else are betting, no, absolutely it does not. This is an empty threat. And in a certain

• 11:21Speaker 01

  sense, I think Bessent, by using this kind of ridiculous rhetoric, is really exposing how the United States is playing from an empty deck.

• 11:30Speaker 00

  So his mentor, Stanley Druckenmiller, wrote an op ed for the Wall Street Journal, which I just want to point out was also partly written by AI, which is very disappointing because Druckenmiller is a brilliant person who can afford a copy editor, and we should be doing better than that. But that aside, the substance was, I think, important. And I read a lot of things, so maybe I'm conflating what he wrote with something else I wrote. But I remember him essentially suggesting that what Bessent wrote was more of a sign of panic than it was of strength, to your point.

• 12:05Speaker 01

  Well, we certainly saw a lot of panicking happening, I think, back during Davos, where you, it was really interesting to watch the commentary coming from Bessent and from Lutnik, who I think are the Tweedledum and the Tweedledee of this particular administration, where they begin going into Davos, more or less saying that the entire world is going to fall at our feet, that the resistance of Europeans is ridiculous. And then you see over time, you see a genuine sense of panic beginning to set in when they realize that the Europeans are going to push back, and they start talking about how the Europeans really oughtn't to do this. It is not in everybody's best interest. Can we just get along with each other? And so I feel like something similar is happening here. And my read of this, and I don't know Bessent from Adam, but my sense is that he is not

• 12:49Speaker 01

  a particularly stupid individual. And so he is playing a extremely, he doesn't have very many cards to play with. He's doing the best that he can. But I think at a certain point, where you've been coasting on empty for a long while, you do begin to panic, you do begin to press all of the buttons that you can at random, in the hope that something magically will come along and will save you from this awful dire position that you and your colleagues have found yourself in.

• 13:20Speaker 00

  So I think another, before we get into the book, and some other questions I have about what's happening to the international system, it seems to me that many of us are still struggling to interpret the actions of this administration, and to understand whether or not there's an actual deeper strategy at work. And in my mind, there isn't. In my mind, there is essentially a capricious leader, a series of fiefdoms underneath him, whose lords are each competing for the attention and audience of the king, during which time they hope to achieve certain objectives that in some cases, in many cases are graft-related. In other cases, like Scott Bessent's case, I don't know what they are. Maybe they are,

• 14:01Speaker 00

  and I think this is also true of this administration, it certainly was of Trump's first term, you have cabinet members who essentially come into the administration thinking, okay, I'm going to do what I can to appease Trump. I feel like I have a good idea of what he wants to hear. I'll tell him what he wants to hear. I'll bend over backwards if I have to. But at the end of the day, I'll be able to shift the vector just enough so that I make a positive difference on the country and in the world. And I feel like what we're seeing with this administration is that no amount of backbending is enough, no amount of chaos is enough. And the percussion of these incidents of Trump lashing out, of

• 14:41Speaker 00

  waging wars, trade wars, real wars, is shortening and shortening. And it feels like we are running up against some kind of wall. And I don't know what that's going to look like, but I'm curious, how do you go about trying to interpret the actions of this administration? And what is the framework that you apply to understanding them?

• 15:02Speaker 01

  So I think that that is more or less right. And you see various attempts to try and cover over the chaos. So there is, of course, in the national security strategy, we saw the articulation of this new doctrine called, quote, flexible realism, unquote. And as far as I can make out, flexible realism does nothing more than to say, the United States is going to do what it wants, and everybody else had better react accordingly. So I think it is less a serious strategy than an effort in your terms to try and cover up the fact that there isn't really a strategic position here. And so I think that the comparison you make to a court with all of these fiefdoms, and these different squabbling barons and

• 15:43Speaker 01

  court officials, each trying to get its own interests, his or her own interests, each trying to, perhaps, some of them trying to do a little bit of good for the country, trying to fulfill some previous vision that they have had. I think that is absolutely right. And I think that the way that I think about this, there's a famous article among political scientists and sociologists by these two sociologists and political scientists, Chris Ansel and John Paget, which looks at the Medici. And more or less, it looks at this guy called Cosimo Medici, who was really, really good at making sure that every time everybody else did something, that he always had the last words, that everybody was trying to orient themselves towards him and towards his ideas. And so he manages

• 16:28Speaker 01

  to do this, and he manages to create this spider's web in which he is always maintaining the flexibility to do what he wants, and everybody has to pay attention to him. And he manages to get his way a lot. And so I think that what Donald Trump is doing is a really stupid version of that. And I don't think that this is a strategy. I think this is just, he wants people to pay attention to him, and he wants always to be the person who everybody is reacting to. And even if this leaves him to do some incredibly wildly stupid things in the long term, and even in the medium and short term, it doesn't matter to him as long as he is the center of people's attention. And this really creates a world in which, at a certain point, I think other countries, they just shrug their shoulders,

• 17:13Speaker 01

  and they start looking at this as an exercise in damage limitation. So I think that countries have not fled from the United States, but they are looking insofar as they can to really build their long-term strategies around the expectation and the assumption that the United States does not have a long-term strategy, that it is flailing around, that it is capable of doing huge damage to them, as well as enormous colossal self-damage. And so the best way forward is to figure out, how do you insulate yourself? How do you cut yourself off from the chaos as much as you possibly can? Which is, of course, is the exact opposite of what Bessent is saying. Bessent is saying, you better stick with America's systems, and you have no choice but to stick to America's systems. And I think other countries

• 17:57Speaker 01

  are beginning to figure out, well, if this is America, and if this is how these systems are likely to be used, we're going to look to see what other options we have.

• 18:05Speaker 00

  Yeah, I think also, I think Bessent is especially attuned to and concerned about perception. As a guy who has spent his lifetime working in financial markets, and there's an effort to manage the perceptions of America's competency and its imperial strength, while also struggling to bring the war in Iran to some kind of conclusion, fulfill his promises to end the war in Ukraine, all the things that this administration has talked about doing, I think there's a concern that the rest of the world is going to call Washington's bluff. Does that resonate with you?

• 18:42Speaker 01

  Very much. And I think you see that happening, of course, a lot in the last week or so, where there clearly is a lot of worry about bonds, and a lot of worry about what is happening to people's beliefs in the full face and credit of the United States of America. And here, I think, on the one hand, the United States still has a lot going for it. I think back to Bismarck back in the 19th century, saying that God loves fools, drunks, and the United States of America, which is perhaps its own weird version of Pascal's wager in reverse. You know, the United States manages to get away with a lot. And I think that is much more true now than it was in the 19th century, because the United States still plays a very central role in the global financial system. It still

• 19:24Speaker 01

  has an enormously powerful army, even if huge amounts of the ammunition and the materiel that it needs have been dissipated away in this foolish war against Iran. So the United States still has a lot that is going in its favor. But as you say, there is also a lot that the United States gets, not from its material power, but from other actors' belief in that material power, and other actors' belief in the continued centrality of the United States. So in a certain sense, I think, you know, the danger that the US faces is that, at a certain point, sometimes beliefs can become self-fulfilling. That is, if everybody gets nervous, that you get, if you're in an increasingly panicky environment, then

• 20:08Speaker 01

  suddenly you get perhaps the version of a financial crisis, which you have, when it is not so much a financial crisis in the standard sense, as it is a political crisis, where what you are beginning to lose faith in is not whether or not your counterparties are going to do what it is that they signed up to do, but you're beginning to lose faith that the United States is capable of behaving in a way that supports its own interests, an enlightened version of its self-interest with respect to the rest of the world. And you begin to sort of start figuring out, you begin to find yourself in a world where peoples and countries' efforts to protect themselves against that may begin to compound upon each other in unexpected ways, leading to crises, leading to panics, leading to all

• 20:51Speaker 01

  of these problems, which come from the fact that nobody believes that the United States is really capable of getting its act together on stuff. And so we get things like the efforts to try and spend over the last week, which are like trying to put a sticking plaster on top of a suppurating and festering wound, and telling people to just ignore all of the nasty stuff that is dripping out. So just pay attention, please, everybody pay attention to the sticking plaster.

• 21:18Speaker 00

  I feel like there was a broad consensus that was held not just among Trump's detractors, but also his supporters, that the institutions would restrain him. And what we have found is that is not the case. And I'm curious what that can tell us about the state of American institutional representative democracy, the state of the country. Like, what lessons can we draw from Trump's success and his ability to shape policy and to remain in office?

• 21:47Speaker 01

  So I think here, in a certain sense, this points to some of the flaws or the problems in the US Constitution and the efforts that the framers of that Constitution, who of course were extraordinary people, but were also, like all of us, were limited in their understanding of what could happen. The efforts that they tried to counter that have turned out not to be successful. So here, I think in particular, a Federalist paper, number 10, which is the place where you see some of the key people who write the Constitution, talking about how the best way to deal with political ambition, and here I'm being very crude and simplifying, is to set ambition against ambition. In other words, if you're in a world where nobody has complete control, or a country

• 22:29Speaker 01

  where nobody has complete control, where everybody is trying to vie with each other for power, that to some extent, my vying for power is going to be counteracted by your vying. And so you end up, if you create a system that is sufficiently good at doing this, you end up in a system where the different powers exhaust themselves and where you get something which roughly corresponds perhaps to the common good emerging. And so I think what we see with Donald Trump is the fundamental problem that we have is, crudely speaking, it is the Republican Party. And that is that typically, the United States system, and it has many flaws which go together with this, has been a system of factionalism in which presidents have always had to contend

• 23:10Speaker 01

  not just with the opposition, but with the fact that many people in their own party have different interests, don't necessarily want to go along with what the president wants, and so the president is forced perpetually to compromise. I think this has been the standard way in which you think about things. Furthermore, we have, within the government, there also has been, within the federal government, there also have been sort of various different power bases. And this also has created, as the administrative state has grown, it has created its own separate, independent source of opposition, which makes things much more difficult to do, but also ensures that a single, deeply stupid person cannot actually override everything.

• 23:52Speaker 01

  So I think we're in a world now where both of these things have been greatly weakened. On the one hand, the Republican Party, it works much more closely in lockstep with the president than past parties have done. And even people who clearly are deeply opposed to the president, within the centers typically have had a lot more power, have been extremely reluctant to confront him directly, even when he is doing obviously stupid things. And when you have a lock on all three parts of the government, that means that a lot of the opposition disappears. And secondly, we see also a effort within the federal government, which has been encouraged by the Supreme Court, to move towards some version of the unitary executive. And here, the theory is very, very crudely, that the president has been elected, that

• 24:37Speaker 01

  the job of the executive is to do the president's will. This is what the current majority of the Supreme Court believes and has embraced. And that means that when the president does really, really stupid things, some of the internal sources of opposition, some of the internal drags that prevent that from, you know, prevent really stupid ideas from becoming implemented in policy, all of that begins to disappear as well. Because you have a bunch of people appointed who are yes-men, you have things such as the inspectors general, who are supposed to ensure that different departments are behaving above board, you have them being either fired or terrorized, and you have, and this is the reforms that are going through at the moment, you have ordinary civil servants

• 25:20Speaker 01

  suddenly being classified effectively as at-will employees, so that if they do not jump five feet, when the president tells them to jump five feet, they are in danger of getting fired. And so this then creates, I think, almost this perfect storm in which, if you put somebody who is fundamentally not competent at the top of the system, you begin to get all of the crazy, bad stuff happening that we see happening right now.

• 25:45Speaker 00

  It's interesting that you brought up the theory of the unitary executive, because 25 years ago, we had an administration whose vice president in particular pushed that theory, and many of whose members of the administration lamented the loss of executive power that followed Watergate. How far back do we need to go to understand the sources of institutional weakening? How much of it can we point to as things like the unitary executive and the desire to enhance the power of the executive and what Schlesinger called the imperial presidency? And how much of it is a result of other things that have led to the loss of institutional trust on the part of the public?

• 26:21Speaker 01

  Okay, this is really, you know, this is a huge, huge question. And, you know, I guess, you know, this is something like where all of us as political scientists, as commentators, as politicians, we're all trying to figure out the answer to these big questions. There's a lot of stuff that is happening here. And I think that if you want to get into those other questions about loss of public trust, you would want to get into some general problems of, I think, government incapacity to deal with a more complex world, and also the increased inability of government to really pay attention to ordinary people. So I think that we're in a world now, and this is not just a problem in the United States. So I think that we can talk about the problems, the particular problems of the US Constitution,

• 27:05Speaker 01

  of the US design of institutions, but I think across the developed world, we are seeing a lot of people who are suddenly becoming very angry because they see these massive problems coming down the pipeline. They do not agree necessarily on what those problems are. Some people are deeply worried about climate change and global warming. Other people pretend that it isn't happening. But nonetheless, everybody is pretty mad because they see the government as not being capable of responding to the things that they want government to respond to. So I think that is a second compounding set of questions. And here, half my life I spent thinking about international politics and international economic coercion. Half my life I spent at the Agora Institute in Johns Hopkins University, thinking about

• 27:48Speaker 01

  the problems of democracy, and thinking about how to try to build up institutional reforms which are more responsive and more capable of being responsive. And I think that there are things that you can do. And if you want to see somebody, and this is, I guess, wandering somewhat off the initial topic, I think it's very, very interesting to see what Mam Dami is doing in New York. And here, what I'm saying here is, I don't think that you necessarily have to buy or believe in his particular political orientation, which is well to the left of the Democratic Party, to recognize that what he is trying to do is, he is trying to create feedback loops between what the public seems to want in New York, actually getting the government

• 28:29Speaker 01

  to do that stuff, and then also figuring out how to use social media to communicate that back to the public in a way that says, yes, I am here, yes, I am listening to you, yes, I am responding to you. And so I think that that particular set of problems, the broader set of problems about public trust, I think that the answer to that set of problems probably comes more from people on the center and perhaps on the right as well, adopting a Mam Dami-type vision of how to try and bring the different pieces together than it does from big questions of either constitutional design or, of course, geopolitics. Because the final thing, or the final stressor here, is that the United States is no longer the only big gorilla in town.

• 29:12Speaker 01

  It is having to deal with the rise of China. It is having to deal with the relative loss of its own power, influence, and authority. So we really have these multiple different crises happening all at once. And our job, I think, is to try and figure out how to navigate our way the hell out of them.

• 29:29Speaker 00

  So Trump famously gets along very well with Mam Dami. And in fact, he gets along so well with Mam Dami that it, in some cases, has made his aides feel visibly uncomfortable. When I look at Mam Dami's governance style, it seems very much like Trump's. It's just the difference is that we haven't yet seen Mam Dami veer off course. And this is what Trump did. Trump was regularly A/B testing ideas with the public, deciding what worked and resonated the best, and sort of promoting those ideas to them. And some of the policy proposals that he put forward heading into his second term, some of which were associated with Doge, were very popular among his base. He just hasn't happened to follow through with a lot of what he promised to do. So what is the difference between Trump's governance style, which is heavily populist,

• 30:14Speaker 00

  and Mam Dami's, and heavily populist, and also one that exploited and leveraged social media, and Mam Dami's, where he not only speaks to certain populist ideas, but also uses social media very adroitly, and has a very strong sense of camera presence?

• 30:30Speaker 01

  Okay, so I think that the question is here, really, you know, so there are clear similarities, as you say, in their adeptness with social media. I think the key question here, and the question does seem to me to be getting answered in the right way, is whether Mam Dami is willing and capable of using the administration, using the capacities of government, to actually do things that people want to get done. And there was a really interesting conversation that happened between Ezra Klein and Chris Hayes. Probably this must have been around the time when Mam Dami was beginning to rise, where Ezra and Chris were, you know, they're debating this, and they were agreeing that they really liked the style. They wondered whether there would be the follow-through.

• 31:14Speaker 01

  And I think that the follow-through, as far as I can see, does seem to be happening. People actually seem to, in general, be, I'm sort of, quite happy with the ways in which he is fixing stuff, like the, you know, he had this big thing yesterday about the expressway, which are a real of-

• 31:30Speaker 00

  Yeah, the BQE, which has been a crappy, I know. And I read that article, by the way, and I had the same reaction. It's clearly a populist policy. People want the express to be fixed, and he has entered office actually making promises to do all those things, but it's going to take a long time to fix the BQE. So I think that that still falls in my category of- Promises, but he has to deliver. And we haven't yet seen whether Mondami can and will deliver. He's very early in his administration.

• 31:55Speaker 01

  Yeah, absolutely. And we will see. But I would say that the initial auguries are more encouraging. And I really would love to see other politicians, as I say, on the center and on the right, try to build different versions of this. Because if we are in a world where instead of trying to gin up issues of one sort or another, the government is trying to respond to the problems that people actually have, this actually ends up, I think, of sort of bringing the United States into a much, much healthier space. And here's the other thing that I think is interesting and important about the Mondami governing style. And this is something which may be trickier. If you look back to the last time that I think the United States was in so much political turmoil, I really think you want to look back to the period of the Great Depression.

• 32:38Speaker 01

  And back in the Great Depression, Franklin Roosevelt says that what the country needs, what the country demands is bold, persistent experimentation. That is, trying stuff out to see what works, building on the stuff that does, and discarding the stuff that doesn't. So here, when I see things like Mondami proposing city-run grocery stores, I see this as experimenting. And then the question is, if stuff, you know, some of this stuff will work, some of this stuff will probably not work particularly well, some of this stuff may turn out to be sort of minor disasters, can you actually build a governing style in which you're capable of abandoning the disasters? And will ordinary people, will the media system be willing to bear that and be willing

• 33:20Speaker 01

  to actually, I'm sort of bear with a politician who says, this didn't work, I'm still trying to solve the problems, here's another way, let's try that way instead? That, I think, for me, is a big, open question. But I think you need to, you know, we're fundamentally in a much more complex, much more messy, much more difficult world. If we want to solve these problems, we do need that experimental attitude.

• 33:42Speaker 00

  So when Trump first came into office, it felt like what was clear was that he wanted to reset the terms of the international rules-based system. Shortly thereafter, I got the sense that, and so did many other people, that he was more interested in abandoning the system. And then the key insight that came to me at some point was that, no, no, no, he didn't just want to abandon the system, he and his coalition wanted to tear it apart. I feel like that no longer is a sufficient framework for understanding what's going on here. Based on the public communications of this administration, and taking the economic D-Day article by Scott Bessent in the Financial Times as the latest example, it seems that

• 34:22Speaker 00

  this administration wants to convert the soft power of American imperial primacy to a new form of imperial hard power, that in some sense, we're turning into a kind of dark empire. And I wonder if that resonates with you. And if so, what does that portend about where things are going and what the future of the international system or international non-system is going to look like?

• 34:47Speaker 01

  Okay, I think that's absolutely right. And here I would lean also on my co-author of Underground Empire, Abe Newman, and Stacey Goddard, who is a fantastic political scientist at Columbia. And the two of them talk about what they describe as neo-royalism. So they suggest that what Trump and people around Trump want to do is to move into a world in which this is much less about states and state interests, and much more about different clans, in a certain sense, different clans, you know, sometimes linked by family connections, sometimes linked just by, you know, relationships or connections of convenience, where they try to carve up the world economy around their interests in ways that sort of advantage them.

• 35:29Speaker 01

  And so that, I think, is plausibly part of where the, where I think the Trump administration would like to go. And if you go back to the famous Davos thing that we began with, you know, the Mark Carney speech, really, I see that Davos as having been an effort by the Trump administration to really try and, in a certain sense, create a kind of a coronation ceremony for Donald Trump, in which Trump would be recognized by everybody as more than the first among equals, as being the center, the sun king around which the world system gravitated, and that everybody would sort of effectively defect from the old way of doing things and move to the new. And Davos, because of course, this is a congregation of the rich and powerful, would be a place where that happened.

• 36:12Speaker 01

  And then we have, I think, Mark Carney, acting a little bit like the small boy in the procession of the emperor who has no clothes, rudely pointing this out and effectively completely disrupting the ceremonial aspect of this. So I do think that there is this effort, as you say, you know, so this is not just about destroying the old system. And I wouldn't say that this is a strategy, you know, I think it's a tendency more than a strategy, the sense that the United States really needs, you know, which Trump has been blunt about from the beginning. On the one hand, the sense that the United States needs to be much more blunt in pressing for its interests, even when others don't like it. And on the other, that the interests of the Trump administration and the personal interests

• 36:54Speaker 01

  of Donald Trump and of the United States all tend to coincide. So this is, you know, like Louis XIV, the sun king, la ta c'est moi, the state it is me. And so in other words, you know, this is a world in which the interests of the monarch, the interests of the country, and the interests of those around the monarch are all supposed to converge in the same direction. And that direction is a direction of supreme power. But, you know, so as you say, there is a sense of this dark empire, this dark kingdom. I don't think it's working. I don't think that people are aligning themselves towards it in the way that the Trump administration expected them to do. That's maybe partly to do with what happened at Davos. But I think it's much more to do with the fact that this kind of approach really doesn't work.

• 37:39Speaker 01

  So we talked earlier about how the Trump administration describes itself as engaging in a policy of flexible realism. And flexible realism, I think, in the way that the Trump administration interprets flexibility, is fundamentally incoherent. If you are a country that wants to get things done, you actually need to be, in certain ways, pretty fundamentally inflexible. That is, you have to be capable of creating binding guarantees and binding threats. You have to think a lot about your credibility. And this is the argument that old-style realists like Thomas Schelling, who won the Nobel Prize in economics, used to make, is that a country's greatest asset, in a certain sense, is its credibility. If you are flexible all the time, that is, you chop and change, and you decide to break

• 38:24Speaker 01

  promises when these promises are no longer convenient to you, and you make sort of grandiose threats, and those threats sort of disappear the following day, then at a certain point, others stop believing in you, others stop taking you seriously. And I think this is the world that we are in with the United States. On the one hand, people still take the United States' capacity to use coercion quite seriously, but they don't take seriously its capacity to do anything that involves long-term thinking. I think that this is much more like, I'm sort of, I don't know, grandpa has been on a bender and is waving around his shotgun. You say everything that you have to say in order to make sure that grandpa does not fire the shotgun at you, but you're humoring rather than actually responding to grandpa

• 39:08Speaker 01

  as being a serious actor who's capable of thinking in a long-term way.

• 39:12Speaker 00

  So it's interesting that you bring up Thomas Schelling, because I do feel like part of what we're dealing with here is a coordination problem, a coordination problem on the part of the majority of the public that would otherwise agree with a particular political agenda. In other words, a majoritarian coalition, I feel like, has not really emerged that is able to enunciate what its desires are and push them through in a new form of sort of populist governance. But let's go back to, because I feel like we'll have an opportunity to address this larger point by revisiting my original question, which, to your point, I do think we veered a bit off course with our conversation about Mondami. Let me ask my question about the institutions in a different way.

• 39:57Speaker 00

  Do you feel that whatever it is that is responsible for having weakened the institutions? First of all, do you agree that the institutions have been weakened and that this is why Trump has become emboldened and empowered? Would you agree with that? And that Mondami is winning in New York City, et cetera?

• 40:13Speaker 01

  Yes, I would.

• 40:13Speaker 00

  And that this is a global phenomenon? This was your point earlier, correct?

• 40:17Speaker 01

  Yes, I think that it is a global phenomenon, but it is manifesting in different ways in different countries. And in the United States, I think the United States, because of its particular mode of presidentialism, is particularly vulnerable to a certain kind of configuration. So we see in other countries, we see, for example, in Italy, you know, Italy is now governed by a formerly, and not especially formerly fascist, party, but its capacity to do stuff is limited, both by the Italian constitution and by the European Union. And so I think that, you know, a lot depends on the particular institutions of a particular country, and the United States has a particularly bad case.

• 40:57Speaker 00

  So my question is, is that trend reversible? Or does it need to play out and run its course? And if it is reversible, what do you think are the most essential sort of ingredients to reverse it?

• 41:14Speaker 01

  Okay, so I think that in a important sense, it is not reversible. And this gets back to, I think, to Carney's point that nostalgia is not a strategy, which I take as being an argument that whatever emerges from this is not going to resemble the kind of consensus that we had from, say, the early 1990s through to 2012, 2014, 2015 was when the wheels began to come off. I don't think we're going back there. I don't think that we can create a system which is going to go back there in any way. Equally, I think that the question of whether or not we are doomed to enter into a spiral of misery and awful, you know, there's no reason to believe that that is true. So I think if you think about trying to rebuild something which is better and

• 41:58Speaker 01

  different from the ruins of what we have, I think that there are genuine prospects in the United States. And I think that a lot of these have to do with the fact that the old system did not particularly work well. You know, so the, a lot of the problems that have given Trump the range to do the things that he has done emerged long before Donald Trump was himself actually particularly interested in politics. So I think if you want to be thinking about this creatively on the right, on the left, on the center, I think you need to start thinking about, you know, on the one hand, we're in a terrible situation. All of these institutions have been ravaged. We see in foreign policy, for example, the National Security Council is a ghost of its former self. We see enormous

• 42:39Speaker 01

  amounts of the expertise of government, which has shrunk and dissolved over the last number of years. And this is bad. This is really bad. There's a lot of bad things that have happened. Equally, this does provide some opportunity to think, if you have to build up institutions to some extent from scratch, what are the things that you want to build them up to do? So I do think that there are possibilities there. As you say, to some extent, this does depend upon this almost a dialogue happening between politicians and the public, in which you get a coherent public that seems to back, to some degree, a greater degree of institutional experimentation and change. And getting there is hard, but I don't think it's impossible. At the international level, I think, again, there is stuff that

• 43:23Speaker 01

  you can begin to work out. I think that we are going to end up in a much, much messier world than the world we were in in the past, because economic coercion, the risks of globalized networks and so on, are much more visible and apparent than they used to be. So I don't have nearly as good a sense of where the beginning points are for trying to build something better. I do think that it is possible to do, but it's going to take a lot of experimentation. And I can wave my hands vaguely in the direction of some kinds of experimentation we should be thinking about. But I don't have any grandiose schemes for getting us into a better place.

• 43:59Speaker 00

  You and your co-author Abraham Newman write in your book Underground Empire that we may be on the verge of a greater catastrophe, brought about not by chance, but by battles that tear apart the silken webs that weave the world economy together. What did the two of you mean by that statement?

• 44:17Speaker 01

  So I think what we meant by that was that if you look at the global economy, the global economy is fundamentally based upon the assumption of interdependence and the assumption that we can do things better economically and in other areas of problem solving by working together and by, in a certain sense, intertwining our national systems together into a much bigger system globally that allows us to do things. So if you think about global markets, you know, this is fundamentally the basis of globalization. It's the idea that you create all of these markets that are interdependent with each other. If you think about the internet, the internet is this vast structure, which is, provides most of the world, with a common store of knowledge, with common access, albeit

• 44:59Speaker 01

  with various restrictions, of course, in different parts, that allow you to, I'm sort of, build a common store of knowledge together. If you think about global supply chains, which really have built upon the promise of globalization, it used to be that trade involved primarily trade in raw materials or unfinished goods. Now we live in a world where still complex products very often involve a huge numbers of different components and subcomponents, perhaps from thousands of different suppliers in 70 or 80 different countries. So this is a bet on interdependence and on interdependence, producing a better world for all of us. And so the insight that I think that Abe and I had when we were writing this book is that this interdependence is very, very fragile. And it is especially

• 45:44Speaker 01

  fragile because when we were writing, the United States has, on the one hand, has sought to promote this world. On the other hand, the United States had felt that it was perfectly reasonable for it to try and create a dealer's advantage for itself, that is, to use these interdependent networks as a means of getting its own way and threatening other actors in other parts of the world, say, for example, with being cut off from the international financial system, which depends upon the US dollar, if they did things that the United States did not want them to do. And so I think when we wrote this, we were warning that this is a wonderful, extraordinary, intricate set of mechanisms. The United States has been chipping away at those mechanisms, and this is a bad thing. And now, of course,

• 46:28Speaker 01

  the Trump administration is going in there with a massive hammer, smashing away, I'm sort of half at random, at this or that part of the overall system. So I think we need to start thinking, and this is maybe what I said, that I had vague things that I, we ought to wave our hands towards, we need to start thinking not about trying to make our systems fully independent from each other, because I think that would be disastrous in a variety of ways. But we have to start thinking about the ways in which interdependence and resilience can go better together. And that partly involves building up independent capacities, so that countries cannot be threatened as much, say, for example, by the risk of withdrawal of this or that crucial component, or this or that crucial aspect of the financial

• 47:13Speaker 01

  system. But it also requires, I think, some much greater degree of conversation than has been happening to date between powers and other countries about how it is that you can exercise restraint in this world. So here, and this gets back to the ideas of Thomas Schelling, of course, because Schelling was pointing towards, in a certain sense, a much more disastrous possible set of outcomes, which is the possibility of nuclear conflagration. He was trying to work out systems through which the United States and the USSR could begin to coordinate expectations about the kinds of things that they would grudgingly assent to, the kinds of things that they would view as being completely out of line.

• 47:55Speaker 01

  And I think, you know, we are perhaps at the moment where we are beginning to start talking about this, but we are still not at the point where we have really begun to confront the system. And I think that one of the most interesting moments for Abe and I was last year, when we saw the big tariff day, and we saw people like, again, Bessent talking about how, you know, they impose these massive tariffs on China. And Bessent more or less says that we have all of the aces in our hand, China only has low cards to play. And a couple of weeks later, China plays the rare earth card, turns with the critical minerals card, and suddenly the United States realizes that it has a busted flush. And so I think that, you know, this was a really important moment, because I

• 48:37Speaker 01

  think this is the moment that you see this in speeches that are made by Marco Rubio and others, the moment at which the United States realizes that China is capable of substantially damaging the US economy. And it's very clear that the US and China since then have been living in a somewhat fragile, you know, state of mutual awareness that each could do things to devastate the other. But if there are real conversations that have taken place about how to build from that to something a little bit more stable, certainly I know nothing about them. But then again, I'm not the person you would want to turn to for insights on what is happening deep within the Trump administration.

• 49:15Speaker 00

  Well, what you're describing there is the, what you and your co-author Abraham Newman have coined weaponized interdependence. In fact, you were the two that came up with that term. Another framework that you've put forward that has echoed throughout many of your responses today is what you've described as the insidification of American power. Now, Hidden Forces listeners will already be familiar with the term insidification, because we recently had Corey Doctor on the podcast who coined the term to discuss it. So we'll be able to build on that framework in the second hour by applying it to the mechanisms undergirding American power, which you spoke to a few minutes ago. And in so doing, explore

• 49:55Speaker 00

  how, in more precise terms, the infrastructure of this empire is visibly buckling under the weight of what appear to be really a compounding series of policy errors, both domestic and foreign, that have eroded the political consensus that made this empire possible in the first place, as well as explore the consequences of this collapse for the global economy and the world over which Washington has presided uncontested, I would say, for most of the last 35 years. For anyone new to the program, Hidden Forces is listener-supported. We don't accept advertisers or commercial sponsors. The entire show is funded from top to bottom by listeners like you. If you want access to the second hour of today's

• 50:37Speaker 00

  conversation with Henry, head over to hiddenforces.io/subscribe and sign up to one of our three content tiers. All subscribers gain access to our premium feed, which you can use to listen to the rest of today's conversation on your mobile device, using your favorite podcast app, just like you're listening to this episode right now. Henry, stick around. We're going to move the second hour of our conversation onto the premium feed.

• 51:03Speaker 00

  If you want to listen in on the rest of today's conversation, head over to hiddenforces.io/subscribe and join our premium feed. If you want to join in on the conversation and become a member of the Hidden Forces Genius Community, you can also do that through our subscriber page. Today's episode was produced by me and edited by Stylianos Nicolaou. For more episodes, you can check out our website at hiddenforces.io. You can follow me on Twitter at Kofinas, and you can email me at [email protected]. As always, thanks for listening. We'll see you next time.