Talking to Yascha Mounk

Greenland, trade wars and more

Yascha Mounk is a political scientist at SAIS who is also a really interesting Substacker. I was struck by his writing about Trump’s passive-aggressive foreign policy — my term, not his — and wanted to interview him about it. This was actually recorded more than a week ago; I held it back because I was afraid that it would get buried by the flood of economic news. Since we seem to be in a (temporary) pause, here it is — with subtitles! Transcript below.

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TRANSCRIPT:
Paul Krugman in Conversation with Yascha Mounk

(recorded 4/14/25)

Paul Krugman Hi, Paul Krugman, with my latest video. And today I'm talking to Yascha Mounk, who has his own Substack and is an international relations expert? Would that be fair to say?

Yascha Mounk Yeah. Perhaps a little like you I have a professional identity crisis. I’m trained as a political scientist, mostly in political theory, but I write about a lot of international relations and comparative politics nowadays.

Paul Krugman Okay. And, also Substack-er. And, I decided to do this after reading your post on Greenland, in which you said that Trump might very well occupy Greenland. Which is a little startling but I think is a good place to get into what the hell is happening. Why don't you talk about that and we'll see where we go from there?

Yascha Mounk Yeah. I mean, I've really been trying to work my mind through this intentional paradox and how Trump talks about the world over the last months. Because on the one side, he doesn't seem to like the idea of American power projection. He doesn't seem to like the idea of America being a world policeman on many topics. He seems to actually want to step back from American power in the world.

So he doesn't seem particularly to care about the fate of Ukraine, and seems to think of the country effectively as part of Russia's sphere of influence. When it comes to a place like Taiwan, he has suggested in various comments that he doesn't really mind what China might do with it. In his inaugural address, he said he wants to be measured, you know, by the wars he doesn't start. I mean, on the other hand, he has this incredibly bellicose rhetoric, around places like Panama where he feels that the United States should get control of the Panama Canal and, of course, Greenland, which he said repeatedly, America absolutely must get control over. And I think that the way to understand that is that he really thinks of a world in terms of spheres of influence.

So, you know, Ukraine is part of Russia's sphere of influence in his mind. Doesn't really matter what happens over there. Let the Russians do what they want. You know, Taiwan? Part of China's sphere of influence, not really a concern of America. But the places that he thinks of as America's sphere of influence, the places that he thinks of as part of where America should read should rule the roost, he thinks America should just be much, much more brutal; much, much more ruthless in what we might do there. And so I think that we should take seriously when he repeatedly says America just must get control of Greenland. But that really is part of his mental model. And as we might be able to get into, there's nothing really stopping him if he wants to go ahead

Paul Krugman Well, there’s no Danish garrison. The only thing approximating a garrison is a couple hundred Americans there. But you would think the consequences of the US actually invading an erstwhile ally would be huge, right?

Yascha Mounk I think that's right. So in this piece in my Substack, in terms of a kind of framework motive and opportunity: The first thing, obviously, clearly he has a means. Denmark has a few tens of thousands of people under arms. You know, the main military presence they have in Greenland is an elite dog sledding unit.

I'm sort of half joking, but not really. I mean, it really is extremely limited. The United States already has a military base there. There’s only about 50 or 60,000 people living in Greenland. So even though there's no reason to think that they would welcome American troops with open arms, you know, it's very unlikely that you would get the kind of very, very costly, rebellion and war of attrition that America faced in Iraq.

If America decides to simply march into Greenland, occupy the territory, it is something that almost certainly the US Army would be able to accomplish without that much money and very likely without that much loss of life. The question is what would the consequence be for America's standing in the world? It would obviously be a profound rupture in the transatlantic relationship, which is already under deep strain. I mean, European views of the United States have soured very rapidly over the course of the last two years. Europeans are apprehensive about what the United States under Trump, thinks about them, but they still, in the majority, think of the country as a strategic partner. But perhaps it's much more transactional than before. Perhaps a little bit more worried about how America might treat Europe. But it's not an enemy. I think the moment that Trump would annex the sovereign territory of a member of NATO, of a member of the European Union, European views would become very, very hostile.

And of course, it would give a blank check to other countries around the world to pursue wars of territorial aggression themselves. Whatever you think about the status of Taiwan, which has a very complicated history and a complicated place in international relations, there's no way to argue that the Chinese mainland has less of a claim to Taiwan than the United States has to Greenland.

So these consequences would be very radical. But I'm not sure that Trump minds. I mean, he's very, very critical of NATO for example, and just getting rid of NATO by a declaration from the White House might elicit a lot of pushback in American public opinion. If NATO becomes a casualty of this war of political aggrandizement, if it becomes sort of a side effect of America, adding more territory to itself and Trump being able to say that he is the president in American history who has expanded American territory by the greatest number of square miles, perhaps you would see that as a feature rather than a bug of that extraordinary plan.

Paul Krugman There is a question with the whole Greenland thing is that Trump just doesn’t understand the Mercator projection on maps, that he thinks it’s much bigger than it is.

Yascha Mounk But even without Mercator projection, it is huge, right? And he would become the American president that has added the most territory to the United States. You know, more so than the Alaska Purchase, more so than the Louisiana Territory. And for a real estate guy, and he's clearly obsessed with his place in history, that is perfectly rational. I disagree deeply with the idea, but, you know, if you try to inhabit his mind and say, what's going to present me in the history books as being great and grand and so on, adding more territory to America than any other president, you can see why it would appeal to him so much.

Paul Krugman I may be an amateur here but Panama would be a very different story, right? My understanding is that we pulled out of Panama because the military said it’s indefensible. Am I right about that?

Yascha Mounk I wasn't sure about that. I mean, my understanding was just that the United States occupied Panama because of the strategic importance of the Panama Canal. Panama, because of our long term presence, is actually one of the countries in Central and South America that is most friendly to the United States. You know, a lot of people actually have english first names and they follow the NFL. It's actually quite an American place in many ways.

You know, there's a contract about the Panama Canal, which assures that I think about half of its board of directors are American. And the other half are sort of local Panamanian leaders many of whom have close links to the United States. And so I think the idea was that it was no longer necessary to have a military occupation of Panama, because we could guarantee the safety of the canal without it, and because obviously it would improve America's reputation in Central and South America to basically not have a kind of colonial possession in that continent. So the administration is now talking about the fact that because some Chinese or Hong Kong companies control some of the ports around the Panama Canal, but not the Panama Canal itself, that somehow gives China control over that crucial shipping lane. I don't think that that story stands up to scrutiny. But, certainly, Panama is a densely populated country where controlling it militarily would come with greater risks than Greenland. But it's not clear to me that anything in particular would stop America from going in. Panama itself doesn't have, I believe, an army at all. So that, too is on the bingo card of crazy things that might happen in the next four years.

Paul Krugman I had thought of this but I think you were much more clear about it than I was, but there’s a close link in terms of our assessment of the risks between threats of military expansion and the craziness on trade policy. That if you're a president who says, “Oh, 80 years of trade agreements, never mind that,” you’re also going to be a president who says, “Well, there’s no army to stop us in Greenland.”

Yascha Mounk Yeah. I think it goes back to the age old question about how to interpret Trump, right? And there's this famous quote from an insightful conservative journalist called Salena Zito from 2016 or perhaps early 2017, in which she says that, you know, “the problem is that, the press takes Trump literally, but not seriously. Where his supporters take him seriously and not literally.”

And I think that there is something to that. Clearly, part of the way that Trump operates is that he says these outrageous things to shock and to amuse, you know, calling Justin Trudeau, who until recently was the prime minister of Canada, the governor of Canada, implying that Canada might somehow become the 51st state of the US. And then people sort of become apoplectic about it and they write angry op eds, as you and I might, or they write angry tweets and we get to be very humorless about it. And Trump turns around and says, “Look, I just have a good sense of humor. You know, it's funny that I'm calling Trudeau the governor. Don't be so uptight about it.”

And that is a lot of his appeal. And I think that sort of missing that he does have a sense of humor and does he does often joke is something that’s generally gotten the opposition to him in trouble before. And so, you know, the problem with that is that, especially in the second term in office, he has done some things that are much more radical than we expected.

And this is more your area than mine but he’s always talked about tariffs. He's always talked about the economic threats from Japan since the 1980s, right? He clearly was obsessed with the idea of a trade. Deficits are a very bad thing. This is a longstanding fixation, a longstanding obsession. He was quite clear about the fact that he wanted to introduce more radical tariffs

if he came back to the White House. But few people imagined that he might do something as extreme as Liberation Day, because we sort of got into the habit of saying, “Look, when he's sounding too outlandish, then probably we need to take seriously that he wants to, you know, reduce the trade deficit. But he’s not literally going to go and put all of these crazy high tariffs on all of these countries. That would be a disaster! Even he must know that!”

But it turned out he is perfectly willing to do so. And so I think this sort of willingness to pursue this radical idea to the end in the area of trade policy would also change our assumptions about what he might do in other areas. And if he keeps telling us, “I must have Greenland,” he keeps telling us, “This is non-negotiable. This is absolutely something we should do.” Well, perhaps we have to take him literally. Not just seriously.

Paul Krugman What struck me about the tariffs is, during the campaign, he was floating 10% tariffs across the board and 60% on China and all of the newsletters, banks and so on were saying, “well, of course, that's not really going to happen. It'll be some much more limited thing.”

And what we've actually gotten is bigger. It's somehow changing day by day, but as of Friday it's sort of 10% across the board and 130% on China and then maybe more down the pike. So it really has exceeded all of the smart money's expectations.

But what strikes me about the trade stuff, and this is in a way more in your wheelhouse, is that it's not just the numbers on the tariffs and the sort of macroeconomic analysis, but the fact that we have a system, or we had a system. I was in the US government for a year, rather weirdly under Reagan, but sub-political, and there would be meetings, interagency meetings. Usually I'd be the guy behind the chair, because I was very young at the time, passing up notes to my principal.

Somebody would propose something or say something, and the guy from the US Trade

Representative's office would say, “that would be illegal.” End of story. And this is Reagan, who was not exactly, you know, the most internationalist, and was also fairly protectionist. But explicit, blatant violation of our international agreements was a conversation stopper. He just didn't do that. It seems to me in some ways that's more important than the numbers.

Yascha Mounk Right, and it goes back to the fact that America has created the rules of – this is a term that is deeply unpopular for a reason – the liberal international order. The joke is that out of those three terms, only one is popular, and that's the word “order.” But it is in fact true that the United States has set the rules of trade, has set some of the basic rules of international engagement, and that even though that constrained the United States in various ways and sometimes in the short term gave other countries advantages because it meant that some policy that the Reagan administration wanted to pursue was not legal and so therefore something that may have been in the interest of the United States couldn't happen, on the whole, it created very important public goods for the world as a whole, right?.

We've seen over the last decades that contrary to the expectations of protesters against

the WTO in Seattle in 1999, who were saying “this is going to impoverish countries like China,” we've actually seen billions of people rise out of poverty in good part because of that international trade and those international investments over the course of the last few decades.

But of course, it has also given huge benefits to the United States, which is a phenomenally wealthy country to an extent that I think many Americans don't realize.

And one of the stories of my lifetime, I was born and raised in Germany at a time when German GDP per capita was pretty similar to America's GDP per capita in the 80s and 90s. And today, the United States has a GDP per capita that's about twice that of most European countries. The GDP per capita of West Virginia is now higher than that of the United Kingdom, right?

So, actually, the US got many benefits from this international trading system. And one of the interesting things about the Trump administration is that it perceives all of the burdens that America's dominance of this global system has imposed on the country, but it doesn't seem to be able to recognize any other benefits.

And of course, if you blow up the global trading order, it doesn't just mean that suddenly

the things you want to buy on Amazon that are produced in China are going to be more

expensive or that China is going to do retaliatory steps like banning the exports of very important materials that we need in order to produce microchips and electric cars and so on in the United States. It's also going to make many other countries challenge America's predominance in this international system. Perhaps there are going to be attempts by these different countries to reach a trade agreement with each other that bypasses the United States.

And all of that, I think, is a real threat to America's global role, but also to America's

wealth and affluence and the wealth and affluence of average Americans.

Paul Krugman Yeah, I'm much more keen to at least European discussions than the great majority of American economists. So while Trump feels terribly victimized and that everybody's taking advantage, I'm reading the Draghi Report, which is, “Oh my God, the Americans are pulling away from Europe. Why can't we compete?

It's a weird failure. If the system is so wrecked against us, why are we doing so well? I guess that's not how Trump sees it.

Yascha Mounk Yeah, it's remarkable. I'd love to hear from you how you think countries in Europe might or should react to what is going on. I think there's going to be a real battle within Europe about what to do. As somebody who is both a US and a German citizen and believes deeply that there are values that free societies in Western Europe and North America traditionally share. I've always wanted those countries to work together as closely as possible.

I'm also very interested in Chinese culture and appreciate it very much but I don't think that giving the CCP a greater role in international relations would be a positive thing. But there's obviously now going to be loud voices in Europe that say, look, “We built our entire strategy and foreign policy, our entire economic order on the assumption that we have a reliable long-term strategic partner in the United States. That no longer is the case. If big parts of the American administration seem to look at us in a very, very hostile manner, we simply can't afford to continue to be distant from both Russia and China at the same time. So perhaps we have to cozy up to Beijing and cut a deal.”

And I don't think that would be in Europe's interest. I don't think it would be in America's interest.

But you can see why those voices are already rising and are going to be Rising more strongly in European discourse over the next years.

Paul Krugman Just a question, the European sort of detente with China is still really problematic, you can see it. Geography is working against it there, but the idea that Canada might kind of reorient itself towards Europe seems like much more of a live issue.

Yascha Mounk Yeah, I think that's very likely. I don't know sort of to what extent that would pose a direct problem to the United States. And of course, Canada is small enough in terms of population and therefore, you know, the Canadian market is not a substitute for Europeans. Perhaps the European market to a slightly bigger extent can be a substitute for the

Canadians. But of course, I mean, you will know this figure better than I do. I think 70 or 80 percent of foreign trade that Canada has is with the United States. I mean, you know, that'll be incredibly hard to substitute.

And of course the Europeans have a problem they already fear. All of these cheap Chinese exports, part of which were an economic problem, because part of them do come down the road with non-adherence to environmental standards and state investment and overcapacity in a way that makes it very difficult to compete with, those were already coming to us. Now that they're not gonna be able to go to the United States, even more of them are coming to Europe. I don't know that Europeans at that moment will then be very keen to say, “And we want to open up our market to a lot of competition on high-value goods from Canada.”

Yeah, in a sane world, I would have thought that the defining problem of international

trade right now would be that China seems to be unable to take steps to do without massive trade surpluses and it creates tension with everybody. The US Congress may say, “cheap goods is good, but the political economy was impossible.” And to the extent that the United States is turning more protectionist, Europe gets the spillover.

But as it is, the United States is the one that's really creating massive trade havoc at the moment.

Paul Krugman I’m interested in your take, but just let me try this. What strikes me is also, we're talking about how trade is kind of an omen for the other stuff. I thought that the trading system, in addition to being about prosperity, was always about peace through trade. It goes back to Cordell Hull and the benefits of trade for peace. There was this kind of Pax Americana that was trade and security and peace all fit together. So now what do you think is gonna happen [when you take that apart]? And this is, of course, a very old theory.

Yascha Mounk You go back to the great 18th century theorists of the modern economy: Montesquieu, but also Adam Smith, Benjamin Constant in the 19th century. And they're all deeply invested in the idea that, what people in previous times got by war, today we can get by trade. You don't have to invade a country in order to partake in some of its riches. You trade what you produce that's valuable for what they produce that's valuable. And through the contact between people and the ability to have mutual benefit from each other, the need for war decreases.

Of course, to some extent that theory has never fully worked out because we did have massive wars in the 20th century, even though at the beginning of the 20th century the world was already quite globally integrated.

But I do think it's true that commerce is a stabilizing factor in international relations because it simply decreases the incentives for war when you have this mutual dependence. And the other thing I'd add here is that it was also a deterrent, that countries knew that if they did something really dangerous and really morally objectionable, American sanctions might result.

I do think that one of the reasons why China has so far not attempted to, as they would put it, “reunify” with Taiwan is that they're worried about the consequences both for China's reputation in the world and for its access to trading systems. It worried about its access to the world market. It didn't feel that taking Taiwan today rather than in 10 or 20 or 30 years was worth it if

it meant that suddenly China might not be able to export those goods to the United States.

Well, you know, as we're speaking today, and who knows how that might change tomorrow or

the day after, America's tariffs on Chinese goods are so prohibitive that consideration is basically out of the window. And so one of the big reasons that would have been weighed in those policy discussions in Beijing about when and whether to take action on Taiwan no longer exists.

And so I think there's all kinds of dangerous second and third order effects of that kind

that the White House doesn't seem to be thinking about. And frankly, in our public discourse, we haven't yet quite figured out.

Paul Krugman Let me just go back for a minute to Trump and those around him and what they're thinking. Then I want to talk more about Europe.

Do you think that Trump or anybody in his circle kind of understands this, that they have

any sense at all of why we have these trade relations, why we have these institutions?

Yascha Mounk You probably know the sort of economists or the economic thinkers in that universe better than me, though I can't imagine that you're close friends with any of them. I think they have two starting points. One of them is that the old order didn't work for us at all. When we go back to Trump's first inaugural, dubbed the American Carnage speech, it is such an overemphasis on the negative aspects of the current situation that you're no longer able to see the positive. Which, by the way, sometimes is true of the far left, right? Which perceives America as purely and exclusively defined by its evils in such a way that it no longer becomes capable of recognizing some of the things that are good about this country. So there's a weird sort of meeting of minds there, right?

But when you start by saying, you know, “our cities are hollowed out and America is weak in the world and people are laughing at us and under Obama we were the butt of the joke everywhere in the world and everything is terrible.” Then of course the costs to complete disruption go down a lot. When you think, “well, what do we really have to lose?” Which is, I think, a very dangerous way of perceiving the world from whatever ideological vantage point.

Paul Krugman I grew up in the 60s and everybody was saying America is fascist, which it wasn't remotely, and now it kind of is, but you don't hear that as much.

Yascha Mounk Right, I mean you have to be able to take the measure of things and you can be full of anger at the real injustices, the real problems in your own country. But if you come to think that that defines everything, that is very intellectually dangerous because you run into these kinds of problems. So I think they don't have that small, conservative instinct that any government official usually has, of saying, “Look, before anything else, let's make sure that we don't really royally screw up because things are kind of okay and we don't want to be responsible for that.” I think they're starting by saying, “everything is so terrible that, you know, this old system is so broken that whatever we do to throw a wrench in it can't be so bad.”

Whatever comes after must somehow be better.

So I think that's one of the kind of core beliefs. And then the second is that they do think of

manufacturing as core to not just economic greatness but national greatness. That they do think that the number one imperative of policy should be to bring manufacturing back to the United States and to reduce trade deficits. And of course there's some kind of grain of truth in the fact that it's a problem if you don't produce any steel in your country for national security, it's a problem. If you outsource production of too many of your high value microchips,

And even of the factors that you're alluding to, that China, through state policy, really has led to a lot of cheap goods that don't just reflect its natural advantages in manufacturing and still relatively cheap labor force, but that go beyond that and that needs to be redressed.

The problem is that there's a kind of picking up on those things which are real, but not integrating them into any coherent theory of what to do about that without crushing

the stock markets and risking global recession and isolating America and the world.

Paul Krugman Let's talk a little bit about Europe. You're European, or you're transatlantic.

Actually, I think you're probably a globalist. A bad thing! The big question I guess some of us have is, we're worried about America, but the question is, to what extent can Europe rise to this occasion? I'm actually in Europe at the moment. Despite all of the technological lag and so on, they have advanced economies, advanced societies, a solid GDP. The European Union is sort of two thirds the size of the United States, so it's still a very big player. But the European Union is sort of not so unified. What do you think? What do you hear about how Europe might respond to all of this?

Yascha Mounk Yeah, so look, my economic thinking about Europe has been deeply influenced by your writing over the years, particularly when it comes to some of the structural defects of the euro and some of the poor decisions of European statesmen during the euro crisis. I think that Europe is now in a crisis that goes even broader than that. It is deeply bound up with the architecture of the euro and the European Union, but it's even broader than that.

For 60, 70 years many European countries, particularly Germany, but others as well, have

really relied on American leadership for their strategy on politics and international relations, on the economy and so on. And much of that model is now running aground. They thought they could outsource military support to the United States. A country like Germany thought it could outsource its economic growth to exporting goods to China, and it could outsource a production of energy to Russia.

And each element of that model has now broken apart because you can't rely on America led

by Donald Trump to create security on the European continent and protect you against enemies because China now no longer is importing fancy Mercedes and Volkswagens. It is to some extent, but it now produces a lot of its cars in its own country and actually is starting to export a lot of electric vehicles that are very good and very cheap to Europe. And of course, the idea that it can run an economy on cheap imported gas from Russia ran aground when Putin decided to invade Ukraine.

Now, even more broadly than that, I think that Europe has gotten a little bit used to the idea of being a museal continent. Like, “we don't have to be at the forefront of things.”

“We don't have to be at the cutting edge.”

You know, “we're not going to be a player in artificial intelligence.”

“We're going to regulate AI by passing laws in Brussels and talking a lot about this thing called the Brussels effect, according to which, you know, because we pass some rule in Europe and Europe is such an important player, Sam Altman in Silicon Valley and whoever runs DeepSea in Beijing is going to have to listen to what we do.”

And that, I think, is just a deep delusion that is now becoming obvious.

And so I think the most fundamental challenge for Europe is this assumption that they can

have a slow, gradual, graceful decline in which, “we're no longer at the cutting edge, we're

not growing all that much, but we're a rich continent, we're a big economy, we have a nice

welfare state. And in 10 or 20 or 30 years, things will be a little bit less good and will be a little bit more marginal in the world even compared to today. But most Europeans are still going to have safe lives, affluent lives, fulfilled lives.”

I think it's becoming obvious to me that that equation was just fundamentally wrong and

that therefore Europe now has a choice of either really reinventing itself, making those

economic investments, building world-class universities which the continent mostly lacks today, getting to the forefront of research and development, being able to defend its own national and European interests by having a functioning set of armies, you know, helping to shape its own fate so that history doesn't shape the fate of Europe for it.

And whether that recognition has sufficiently arrived in the minds of European leaders and

whether the continent is able to deliver on the vision it would take for that, I think it's open to question. I think it could go either way. But I'm fearful they'll make the wrong choice. I think perhaps more likely they'll make the wrong choice, but I'm hopeful that they will rise to the occasion.

Paul Krugman A European official said many, many years ago that in front of the Berlaymont, the headquarters of the European commission, they should have a statue of Joseph Stalin because he made it possible. I wonder someday if they'll want to have a statue, a golden statue, I guess, of Donald Trump. If Europe does pull itself together, it will be in response to this shock.

So, you're hopeful, but not optimistic, basically.

Yascha Mounk Something like that. Yes. I mean, I don't want to throw in the towel before the game is over. I'm skeptical and I'd love to hear your impressions from being in Europe at the moment if European leaders have understood the magnitude of the change that is necessary.

If they've understood the crisis. They've understood that things have to change.

Things like the Draghi report do talk about investing and so on, but are European leaders and are European publics willing to take the steps, some of which will be painful, but are required in order to actually be able to secure their own defense on the continent, to make those massive investments, to getting into the forefront of the economy, to making the structural changes that are needed, for example, to build a VC ecosystem in Europe that is completely lacking today, to make their welfare system sustainable? That will take a lot of political capital and a lot of will for reimagination and I fear that things will have to get a lot worse before Europeans are

willing to do that and once we've gotten a lot worse it'll be that much harder to accomplish those goals.

Paul Krugman Yeah, I wish I could say that I was talking to European leaders, but I'm not.

I'm having cappuccinos and Aperol on the piazza, which is not quite helping me.

I guess maybe it's the bigotry of low expectations. I mean, I've just been impressed to see Germany loosening the debt break, being prepared to actually spend money on defense and

infrastructure, which is a big break, but maybe it's something that looks like such a big break because it was so bad before.

Yascha Mounk That would be my assessment and you know, I don't want to earn a reputation of being more critical of Germany than you are, since you have a well-earned reputation for being quite tough on Germany and I think for the most part you've turned out to be right in those criticisms. Look, I think it is good that they're now spending, you know, I believe it's 500 billion

dollars…

Paul Krugman I think they got a trillion euros lift on the debt break, which is going to be some combination of defense and infrastructure, probably mostly defense.

Yascha Mounk Yeah, so I think it's a mix, right? So there's some money that's going on defense, some money that's going on infrastructure, which is certainly a good investment.

German roads are not as good as they used to be, and German rail is now actually worse than

Italian rail on its punctuality ratings, which is really quite astonishing. So I think investing some money into that is good.

You know, there's some money that is going into, I think, environmental projects, which are the wrong ones. A lot of it is going into throwing money into existing solar installations, for example, rather than investing into actual technological development that could help the industry be a leader in the green industries of the future and so on.

Some of it is going to go into welfare state measures, which are perfectly fine, but not

really helping to set the country up for a different future. And of course, in some of the really painful things, the country still hasn't moved. I think one of the strange German obsessions is an unwillingness to use nuclear energy, which is the best source of energy for climate change because it emits very little carbon. And a very important one for foreign policy because it weens you off the reliance on Russian gas and oil, which is very, very heavy in Germany. And it's because of the Ukraine war that German industry now pays such heavy costs for energy that the country has a real competitiveness crisis, which might, over the course of the next years, claim some of the big automakers. I mean, it's no longer unimaginable that Volkswagen or Mercedes or BMW or one of those companies might go bankrupt in the next years, and that will be a huge shock to the German economy.

But on nuclear, for example, this new coalition treaty between social democrats and Christian democrats between the center-right and the center-left, led by Friedrich Merz, a Christian democrat, has not made any, has not announced any movement. You know, they're investing some money in things that are important. Germany needs to spend money on its military, which is very, very weak. It needs to reinvest in rail and in roads, and all of that is fine.

Does that add up to an economic vision for how to get Germany back at the cutting edge of

global economy? I'm somewhat doubtful.

Paul Krugman How do you think this ends? Do we just spiral off into a kind of Orwellian vision where the world separates into hostile blocks, spheres of influence? Is there a moment of awakening when the United States says, “hey, no, we can't do this, and let's get rid of these people and try to reconstitute the old order?”

Yascha Mounk Well, predictions are always dangerous, especially about tomorrow, especially when Donald Trump is involved. And I think the best way of thinking about this is with a broad range of outcomes, right? Any point estimate is going to have pretty low probability attached to it. And there's a range of scenarios.

I think there is a scenario in which, you know, this adventurism, whether with the trade war or whether with a potential invasion of Greenland or something like that is going to be so unpopular with the American public and wreak such havoc in the world that future American leaders remember this as an object lesson for what not to do. And that by that indirect route, we actually go back to an international order that turns out to be more resilient than before.

I also absolutely think that it's possible that, you know, the Trump administration does some really irresponsible things that blow up the century of American dominance in the world and that we enter a multipolar order in which America retains some control over its sphere of influence, we get a lot more global instability, but we have a kind of transactional world that is

reasonably stable, avoids World War Three, that avoids a massive undermining of democratic states.

But thirdly, it's also possible that 50 or 100 years from now, we will see this as the beginning of a Chinese century or the beginning of the authoritarian century, as the beginning of a moment in which we got the emergence of perhaps not a new hegemon because China isn't quite there, but a new primus inter pares, a new first among equals that really sets the rules of global politics.

Those are the three kinds of scenarios that I'm thinking about. It's going to depend a lot on what the White House does over the next three years but also perhaps a lot in happenstance, a lot of factors that we don't yet fully grasp, which of those three scenarios we end up in.

Paul Krugman Alright, grim but maybe a good ending point. Not a good ending point, but a place to end. Well, we don't know what's going to happen, but the world looks a lot

scarier than it did even a few months ago.

Yascha Mounk That sadly is right.

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