Billy Riggs (00:43)
Before we get started with today's episode, some of you may have noticed in our last episode that we failed to acknowledge the name of a female speaker alongside our guest, John Gilderloom. We apologize for this and we appreciate some of our listeners for bringing this to our attention. The name of the female speaker was Carla Snyder, a very esteemed nonprofit leader in the Arizona region. We appreciate Carla for joining us.

And we apologize for the oversight on behalf of me, one of the co-hosts, for not bringing up Carla's name in my discourse. Part of that was an equipment failure on behalf of me, and the name was omitted in our editing processes. I am sorry for my error, and I apologize to Carla. I hope you enjoyed this episode.

And I really appreciate those of you who identified that we omitted Carla's name in the editing process. Thank you very much. And let's all work hard to keep rewiring the American edge.

Billy Riggs (01:44)
Welcome to Rewiring the American Edge. I'm Billy Riggs. And if you've not joined us thus far, this is where we talk everything automation, innovation and the future of

cities, technologies, and the global shifts that are shaping the competitive future of the planet, let alone the urban spaces that we inhabit. And as an urban planner, as a transportation enthusiast that focuses on automation and innovation at the core of what I do.

It's been a really fascinating couple days because we've seen a acceleration of stuff that may slow down. I think the edge on innovation. Vipul do want to talk about kind of what's happening with tariffs, trades and, just for transparency to the audience.

know, Vipul and I have been really responding to one article that we've been texting back and forth from the New York Times. It's just really about alignment between the European Union and China and this growing isolation that the United States may be facing. and the question is: will we be diving into a future,

where the US may be more and more isolated and lose a grip on innovation and where some of our closest allies build new trade frameworks and new innovation frameworks where they strike out in new innovation partnerships without us.

Vipul?

There he is. How's it going? Looking good.

Vipul Vyas (03:23)
Get the full beard going.

Billy Riggs (03:25)
What's going on with this New York Times article? Sorry to drop this bombshell, but what's going on here?

Vipul Vyas (03:32)
What Trump and tariffs?

I mean, it's part of a different way for the US to show up in terms of, I think there's always been some element of this, of course, and that's just, you know, realpolitik and the way the world works. there is a much more public way in which the US is using its leverage.

let's just say, and it is naked use of leverage. You know, there's a Ronnie Chung comedy bit about MAGA as an example of just, you know, the sentiment and why there's some logic, you know, why there's logic in it to some degree. You know, and the sort of Let's Go Brandon rally cry.

But to answer your question, essentially, just as Trump is trying to use NATO's military spending, know, budget appropriations in the EU and the UK to get them to foot more of the bill, there is now, this is a privilege to the American market tax. And because everyone needs the dollar, everyone needs that medium of exchange to trade,

And we're the ones who print it, we're the ones who make it and control it, access to the US market to get more of those bits of, you know, little pieces of paper, you know, digitally these days is super valuable. And so he's putting a toll on the toll road, on the road. And before there was sort of this understanding that in exchange for compliance in other regards,

security guarantees, etc. The US was effectively going to let people trade and the notion was the US would continue to upskill and that would be fine and access the US market was what you got as you know for in exchange for being a compliant partner in with the US. Now the Bretton Woods regime has run its course apparently.

Billy Riggs (04:57)
you

Vipul Vyas (05:17)
Those institutions aren't considered to serve the US well. And that's a perception. And now tariffs are used to exact, some people would say, extort concessions from trading partners for things that the US desires or wants. And it's in no service interests. that's always a little bit of the case. It's just being done publicly and sort of nakedly.

Billy Riggs (05:38)
With a certain degree of volatility. I think what's the risk there is and the logic being is that if the EU keeps throwing up tariffs and builds a trade map that has substantial degree of volatility,

Vipul Vyas (05:39)
versus behind.

Yes.

Billy Riggs (05:55)
then the implications go beyond just economics, then it ventures over into geopolitics. And that's where supply change and incentives get jeopardized and you build up not economic walls, you build up other alignments that are not economic alignments.

And so that's, think, you know, what, what we see this article saying, and I referenced in my introduction, just so the audience is saying that, you know, reference this New York Times article of this really talking about the European Union pushing for these new trade pacts with Indonesia, India, South Africa, you name it. the idea is to hedge against unreliability and volatility.

in the Trump administration. Is it economically irrational for Trump? No, it's I wouldn't call it economic irrational. mean, is it rational for for to use an economic tariff on behalf of the US to exact what it wants? Probably.

That's probably economically rational from a US perspective. But is it responsible from a geopolitical standpoint? Probably not.

Vipul Vyas (07:00)
Well, no, they're one of the same, think. I would say actually everything's economic. It's all the money makes the world go around, sadly. It's not love. The Beatles were wrong. And all you need is not love. When was a Mark Twain said, "money isn't everything, but it sure makes poverty bearable." And I think that the issue really comes down to they're all one of the they're all together. If you if you have this kind of volatility, people can no longer trust you as a counterparty.

as a stable political counterparty around which to make plans because you can't plan with this kind of volatility. Now, my working assumption or my hope, and maybe they're all one the same, that this is all trying to get sorted out before the midterm elections because after the midterms, all bets are off. The scope and the flexibility with which the administration can maneuver is going to be substantially, potentially curtailed. And so the review is get it all out of the system now.

That's why they did the whole, we're going to cut all 90 deals in 90 days, forget what it was, something like that. And that was never going to happen. These trade deals often take years to come together, but they're trying to force a fast track. And so I think that's where the volatility is coming from. And in the effort to try to get this stuff done by the end of the summer fall, they're abusing their muscle, like against South Korea, against Japan.

They're making these threats. Now, to your point, all that being said, people are figuring out that whatever, even if this stuff settles down, the US isn't exactly as predictable as it used to be. And so they need to find redundancies and alternatives and a little bit more independence because being dependent on the US was probably a safe bet for a long time.

But Trump has made it a not so good bet. Maybe that's actually in the US's interest. You know, in some ways, we'll see. In some ways, it's not, obviously.

Billy Riggs (08:46)
Well, what's

Let's talk about why this might be a threat to US innovation. clearly we have this podcast that talks about automation and innovation in a global sense. But when we think about the American edge and we're connecting this to a threat to US automation, AI, robotics, clean energy, we've led in these sectors in parts because we've had trusted access to global markets and talent.

How might this be a threat to accessing those markets and that talent?

Vipul Vyas (09:18)
Well, you already see lot of Chinese talent leaving, but we are still bringing in a good bit of talent. 30 % of many prestigious elite universities are the students, 30 % of them are foreign born or from overseas. And so they're international students. our top tier institutions are still doing quite a bit of brain drain. And so

I think there is that sucking sound from around the world that we've been known for and what's really given us a competitive edge is to extract talent from everywhere else. Though I think as other economies separate from what Trump is doing, as other economies become more competitive and more developed, India, China, a lot of folks will choose to remain there because there's now opportunity there. And there hasn't been in the case of China for a long time, obviously. And that...

the level of attractiveness of those economies is going to go up. Even such that people who have studied here, maybe have lived here for long time, are going to go back. And so we're not going to be quite as much of an engine in terms of that extraction process. Because there are some economies and colonial structures that extract raw materials, we extract talent. And we've done that pretty well for a long time.

by just being an attractive place to be, or an attractive place to be because there's a rule of law, there's social mobility, there's all these things that make the US attractive historically. Those things are not quite as assured anymore. Social mobility can like, is that as...

clear path, it was not as obvious as it used to be in terms of income and quality. The ability that the rule of law, some would argue, is a little less clear in terms of its application. And so there's things about the US that historically have been very attractive that may be eroding a bit, or at least perceived to be eroding. That will be a problem in terms of attractiveness.

Billy Riggs (11:04)
Well, mean, I would,

and I think those are things that we can and are resolving, but I think, you know, part of what we are facing here also is this idea of we are really kind of facing a potential for giving competitors the ability to

I thrive on this talent. And, you know, I think what we're, we're giving the ability to, to a lot of these nation states to do is to create essentially a third block and a third block that trades freely and avoids this, this power rivalry and

sets up separate standards and separate ways of dealing with emerging technologies. And what I would cite is looking at already what's happening between the European Union and China in terms of chip fabrication, looking at what's happening between China and the Netherlands and some of the advances

with their ability to fabricate, amazingly complex, chips that are powering, the world now. At the same time, we heard from Dr. Henriette

a couple of weeks ago and I think we're gonna see a lot on automation standards from China and I think we may see a third block come from China with regard to automation. It could be that we see Europe and China outpacing us on automation and AI. So when we look at some of these case studies on

mobility in robotics there could be a scenario where companies in the US becoming household names like Waymo in the Bay Area get boxed out or even outpaced by companies like WeRide like Pony like Baidu like BYD.

Vipul Vyas (12:49)
Possibly I actually think Europe partnering with most anyone is like tying two rocks together to see if they'll float I just don't see Europe with this extreme regulatory Mindset Being able to innovate anytime soon, you know, maybe bias there But a lot of the best European minds are coming here still

I think China is interesting in that it fosters a certain level of innovation to a certain degree, to a certain extent, to a certain size. But once a company and especially its leadership become too powerful and powerful enough to compete with the CCP itself, they are taking down a peg.

Jack Ma, there's a bunch of examples, right? But you basically have to stay under a certain level in China to be able to operate successfully, right? And we can see it here in the US, right? Musk is an extremely, richest man in the world, right? And he tussled with the most powerful person in the world. It's in the White House. And that was public and happened, and he's not in jail. That's not the same that can be said for people in China. ⁓

Billy Riggs (13:54)
Yeah.

Vipul Vyas (13:55)
So I think there's these inherent, so the Chinese won't let you get too powerful because you will compete with the power structure that historically is representing the central government that's been part of the Han culture for early thousands of years and is deeply ingrained there. And so you can only get so far. So there's a limit. And in Europe, you're constrained by the shackles of a mindset that says we can

craft law to craft to get ourselves to solve any problem to figure anything out and That's tied them up in knots. So long story short, I think the US's biggest enemy The US's biggest challenge is not Europe. It's not China. It's the US The worst enemy of the US's worst enemy is itself and its political dysfunction its inability to get out of its own way

Billy Riggs (14:28)
Yeah.

Vipul Vyas (14:44)
And it's...

continued inability to do big things in a bipartisan fashion. And I think what we're going through, and the reason why all that's happening, or reason why there's so much dysfunction, is because the systems that were in place for 80 to 100 years no longer work for everyone. And we're sorting out what new systems have to take their place. And we haven't figured that out yet. And in that vacuum, the bitterness, the level of

bickering or infighting or inability to cooperate you know is the political process essentially playing out a a conflict to figure out what comes next and you have Trump and his brand of populism and you have Mamdani and his brand of populism on the left now as a standard bearer if you will and this is what's getting reconciled and until the US

Billy Riggs (15:28)
Well, you're making

You're making Mamdani as standard bear now. This is a little fresh take there. Little fresh take from Vipul Vyas.

Vipul Vyas (15:33)
Yes, mean, he's the only one with any kind of political confidence on

the left. I mean, at the end of the day, it's going to be what gets settled between these two conflicting... I politics is the crucible in which conflicting interests are sorted out and settled. And these are two different takes on how to settle those, and they have to accommodate one another at some point.

and that process is still underway. Until it resolves, there's going to be a contentious environment in the US, and that contentious environment is going to stifle a lot of things because your energy is going to go to navigating conflict versus moving forward. So that's where we are.

Billy Riggs (16:13)
Yeah. Well, I think I like that you're your positive approach. think I think there's a first. This is a first for me that you've been more positive than I have on this podcast, because I think I'm usually the more positive approach to co-host here. But I get what you're I can imagine a GPR future for automation. That is a massive that is a massive failure.

and where there is almost a tax on innovation. And so I can see a bit of a challenge in this kind of automation standards race where there's American-made AVs or robots that have to meet European specs and there's some kind of tax on innovation.

as it tries to race towards the future in Europe and it can't race fast enough. ⁓ yeah, and I think that's where why innovation has galloped so fast in California.

Vipul Vyas (16:56)
In Europe, that's the I regulation is a form of tariff in a way.

Billy Riggs (17:07)
And it's galloped in a way where it's not been absent of regulation, but it's been agile regulation. And it's been something that's been, as someone who's given a lot of lectures on automation policy in California, it's not been absence of regulation, but it's been regulation with discourse.

And it's been regulation with constant evolution. And it's been hard to articulate to Europeans that it's regulation with agility. I think that's, it's messy, but it's not, and it's not pretty, but it's what's really, really worked for some of these particularly self-driving experiments. So.

Vipul Vyas (17:45)
Look, would say just to add to that, I don't want to make it sound like Europe's some kind of basket case. When it comes to big collective efforts, Europe is more competent at executing big projects, whether that's high speed rail or a consortium enterprise like Airbus, which is, you know, beating the tail off of Boeing, to be honest, right? And that they're good at that. But when it comes to these sort of small

saplings, these seedlings that are coming up, you know, in the understory, the small businesses where like this early kernels of innovation happen, they're not as competent there. That's where the US actually has a leg up and has demonstrated that for a long time.

Billy Riggs (18:22)
So Vipul, where do we go from here on this? And I think I'm the one that's been really obsessed with, I think, the volatility here. And I think what I fear is that the volatility will slow down innovation. So how do we respond?

Vipul Vyas (18:38)
I think you have to acknowledge that there is volatility, but know that that volatility will probably come to some conclusion, as it always does. Hopefully one that's less messy than, know, short of war, obviously, that there's a path to resolution based on the political gyrations of midterm elections and some other factors that are at play. So I think you have to hope for the best. That's where I'm optimistic. That being said,

I think that a lot of what's happening right now is inevitable, whether they're tariffs or not. We are practically in a multipolar world. There was sort of the developed world and the developing world and the gap between the two level of destitution, level of capabilities was just vast. It was unthinkably that brought big the gap. I mean, was a chasm that couldn't be crossed, right? Versus now you've got places like India sending landers to the moon.

Right? Planning, you know, manned moon missions. And you have China developing, you know, high-end fighter jets. You have a lot more. And you have Turkey. You have Ukraine developing drone technology. That's all military stuff, you know. But sort of a signal in that the point is that the gap between the wealthiest and the poorest nations has positively been compressed. And so...

What that means is that you're going to have a multipolar world. The hegemony that the US enjoyed over everyone else is not there. And that's part of what we're sorting through is that we can't just get rich by the fact that we are so much farther ahead technologically and in regard to infrastructure, education, all these other factors. We just don't have that advantage to the same degree that we did in the past. So we have to come up with new advantages.

And the fact that those advantages have shrunk is just playing out in all the things we're seeing. And that's a good thing. We're just, we're not the big, we're still the big 800 pound gorilla on the block, if you will. But there a lot of other gorillas and that's just what's getting sorted out is this new world where we don't dominate like we have over the past 30 years.

Billy Riggs (20:48)
Yeah. mean, and maybe what's, what's influencing me yesterday was Bastille day, right? And over the weekend, I went to a number of events, one, one at the French consulate. And it was funny to have the French consulate celebrate and sing the national anthem at Bastille day event. so they were actually celebrating almost

being American at a French event and I thought it was charming and slightly weird that they would sing the American national anthem. And to be honest, it was a very operatic version, which it was way too long because it was like four times longer than the French national anthem. And I was like, whoa, this I've never heard an operatic version of it's like bring back the baseball version.

But long story short, Yeah. So, but long story short, you know, I, it, it, I think what it, it reminded me that, yeah, we need to in kind of, you know, the, this tariff stuff kind of, yes, invest in domestic capital, you know, invest in domestic capacity.

Vipul Vyas (21:31)
Jimi Hendrix, the Coliseum.

Billy Riggs (21:50)
bring back jobs to America, bring back manufacturing to the Midwest. Do that, do it smartly. The CHiPs Act, the Battery Act, mining jobs, recycling jobs, do all that stuff and bring back blue collar, green collar workforce in the US and do so in a way that right sizes that workforce, but...

without export markets, without research partners, without rebuilding trust with allies and without the talent marketplace where you're bringing in the best and the brightest and without cooperative research and development, I do think you're sacrificing the future of American innovation. And that is my point.

Vipul Vyas (22:30)
Probably.

Probably, but I think what's also happening concurrently is jobs are one thing, right? That's important, obviously. But crudely, crassly, this is about maintaining leverage. And we're using our reserve currency status and other factors to use our leverage as it exists today.

to extract the ability to have leverage tomorrow. And what do I mean by that? If we are dependent on everyone else for every little thing, for rare earths, for small electric motors, for ball bearings, for what, you name it, right? If we are dependent, we are someone's, you know, we can fill in the blank. And

we don't have leverage. We have a modicum of leverage, we have significant leverage still right now, and we're using the leverage that we have today to get and preserve leverage for tomorrow. That's what this is about. I think the jobs part, the other pieces are ancillary benefits, but it's about maintaining leverage. And our traditional source of leverage, which is, you know, this wonderful manufacturing base, this innovative

economy, the reserve currency status. We still have innovation. Like the biggest technology and innovative companies in the world are still in the US without a doubt. There's some competition obviously coming from Asia, but by and large, they're still here. That is probably perceived to be more fragile than it used to be perceived to be. And so this whole effort is about bringing a lot of stuff back.

So we're not beholden to anyone. And it's more about, like I said, leverage than it is really bringing up the opportunities of a lot of people through jobs. I think that's actually a side benefit, to be honest. That's the politically palatable veneer being put on what's happening.

Billy Riggs (24:15)
Yeah, and it shouldn't be about punishing another economy either. mean, if we if you look at the Chinese economy, it's not it's not shrinking either, despite these tariffs. So I think it's a

Vipul Vyas (24:26)
Only 15%

of their trade trading activity.

Billy Riggs (24:29)
Yeah.

Vipul Vyas (24:29)
I I think in the end, sorry for, I'll just say that the volatility here is the mob boss, if you will. That's not a great analogy, it's, what's happening is essentially a war among the five families kind of thing.

And until it's, you know, this happened, whether was the same the Godfather, this happens every so often. You got to clear up the bad blood. And I think that's what's happening. Because in the real world, you know, the real world is rough at that geopolitical level. It is not dictated by idealistic thoughts. Those are all veneers, paint jobs on what's really going on.

and it's really kind of It's an ugly place at that level.

Billy Riggs (25:08)
Yeah.

Well, my real world is about to get real because we're recording this right before dinner and I really might get knifed if I don't start cooking. no, it's, this has been a really fun conversation, but I'm going to get, get, give Vipul the final word here.

Vipul, final thoughts there. You've had some really good, really good one-liners by the way, this episode. Five families. That was great.

Vipul Vyas (25:31)
⁓

My only parting thought is everyone is acting rationally in their self-interest, whether that's China, whether that's the US, whether that's, know. Now, are they acting rationally in the most advantageous way for the long term? That may be debatable to your points, the points you've made, but...

what we're having, what's happening right now is a sorting out of the new, I hate to call it a social contract, but contract among nations, right? There was a sort of understanding free navigation. See, there's something about the post-Brenton Woods world, was a, with clear mechanisms for dispute resolution, the WTO, et cetera, IMF, and the World Bank were helping to finance development in large parts of the world.

All these regimes, all these entities have existed for a long time, right around 100 years or a little bit less. And what's happening is some of them become ossified. no longer work. I'm not saying it's the ones I just mentioned, but just as those examples of things have been around for a while. But we're having a rethink on them because they're not meeting the needs that we all need.

And in the process of doing that, this is natural. Those institutions will evolve and change. This is the process for making that happen. And so I'm optimistic in that what's going on is a chaotic but not bloody, by and large, a chaotic but not bloody reimagining

and redeveloping of new understandings and agreements and what I call social contracts among nations of how the world should work. And I'd rather happen this way with tariffs and some other things than through World War Now. To be noted, people say that the tariffs in the 1930s led to World War II. Fair enough. And some of the trade disagreements in the early 1900s led to World War I. But

I think it's avoidable now because there's enough institutional capacity to keep that contained. So in the next five years or so, I think, or even less, we'll come out of this with a new set of understandings of how the world should operate. And it's going to be much less dominated by one or two players and much more diffuse in its power bases. that's, that's where I, that's not a last word. That was the last novel. I, sorry about that.

Billy Riggs (27:47)
Yeah, I think that's good. mean, I think that's great. I

mean, I think I think we we I would echo that. I mean, I think that we are experiencing a restructuring. These are powerful economic levers that are being pulled. The map is being redrawn. We have to decide if we want to be a part of the design or just another data point.

We have to decide how we want to harness the power that we have; if we want to be a little less powerless. And I do think that there is agency that we as individuals have and that we have as a country. And this is where what we have explored in past episodes is that we don't have, for example, a blueprint.

for automation, we don't have a national strategy. And so as we go into the next episode, some of the stuff we are gonna explore are what are policies for automation? And we're gonna talk to people, we're gonna dive into a factory and we're gonna talk to somebody at a factory. We're gonna talk to Marcy Harris about what she's doing for international AI policies.

The map is being redrawn. We have agency. What are we going to do about it? That's my final word. What are we going to do about it? ⁓ What are you going to do about it? Yeah. So we'll find out. Thanks everybody for joining us. Thanks for being here. We really appreciate it. This is Rewiring the American edge. I'm Billy Riggs and the Vipul Vyas. We hope you join us next time.

Vipul Vyas (29:01)
Yep. We'll find out more of that. ⁓

Billy Riggs (29:18)
For our next episode, you can find us online at rewiringtheamericanedge.com or at any place you find your podcasts, subscribe, share, let us know what you think. Peace out.