00:07:39 · Ryan Petersen
[00:07:39] S1: Yeah. And there's something about understanding what their incentives are. What are they trying to do? What are they... It's... What... Do they care that American businesses are being hurt? Not really. Do they care that The US... $112,000,000,000 at a 35% duty rate. It's $35,000,000,000 for the government, but they don't care. They have a money printer. So why do they care about that? So what is it that they care about? I don't know. I'm trying to reframe it. It's probably about national security. I mean, is... It's absurd from a national security standpoint too because you can just import anything into the country. Anything. Fentanyl, bombs. I mean, yeah. Sure. Like, if we catch you, we might come after you, but we're not. We're not going after the people importing fentanyl into the country. They they let them go. So I think if you frame it that way, it might help a little bit being like, look, you can't let foreign companies just import stuff with no presence. I might be talking to the wrong people. I mean, the IRS also probably presumably cares more about collecting taxes. These, these country, these companies pay no income tax either. Right? Cause all the profit is now made offshore. Whereas if they imported it and then sold it, there would be a profit recognized, in The United States, they'd have to pay income tax. So I don't know. This has been a frustration of mine. I've spent... I've been in the DC, like, once a month for the last half a year or so trying to get people to pay attention to this issue.
00:08:58 · Ty Morse, Ryan Petersen
[00:08:58] S0: I know that you've studied a huge amount of, like, the history of global trade. So let's just start off on Dutch East India Company. You know, how did how did this thing get started? [00:09:08] S1: Well, Dutch East India Company was the world's first, joint stock company. And it's a quite interesting thing because the Dutch were a province of the Spanish, the Habsburg Spanish empire. The Netherlands was a province of Spain. You had the Protestant Reformation, the revolution, and there was a big war fought, Spanish Inquisition, and they managed to get independence. One of the first things they did was they had these fleets and they started raiding the Spanish, and actually it was more the Portuguese empire, but for a period there, Spain and Portugal had merged through marriage. So it was one empire trading both the Indies and The Americas for a brief period. And the Dutch during this time started sailing there, raiding sort of as pirates, and it became very, very profitable. They ended up basically taking over. And once they took over, you had more of a commercial aspect to this and an emergence of many different companies that were trading, and it became unprofitable. The competition was bad [00:10:20] S0: for And
00:10:20 · Ty Morse, Ryan Petersen
[00:10:20] S0: for And [00:10:23] S1: I forget the exact coordinating mechanism, a bunch of these merchants got together and they pooled their ships and said, Hey, we're gonna create this stock company and allocate shares to everybody, and it'll have this monopoly on trade in the East Indies. And and and then it got listed. It was the first listed public company where you could buy... These shares that you put in became tradable. And, yeah, it was a couple hundred years of, domination. Of course, the British eventually came and and took it over with the... And the the British East India Company took over the took over the business. But, but, yeah, that's that's kind of the origins of it was, some kind of early form of getting together and creating a monopoly, which now would be illegal under antitrust laws. [00:11:09] S0: I think it was a de facto government in effect. It was like a tradable government. [00:11:13] S1: Yeah. Especially the British East India Company. It was absolutely the government that ruled India for a couple hundred years. [00:11:20] S0: Do you want to go through kind of the history of the, like, major superpowers from Dutch to
00:11:25 · Ryan Petersen
[00:11:25] S1: Oh, you start there. I mean, you go way further back in time. And if you go all the way to the beach, trade is as old as... It's older than art. There's evidence for long distance trade going back, like, 40,000 years. The first cave paintings, they think, are like 25,000 years old. You can go way, way back, and most empires are built on trade. Roman legions marched on Egyptian grain, and it was a big part of that trade of bringing grain from around Mediterranean. I would say the Venetians trading throughout the Mediterranean were the dominant power from, like, it 1100 till they conquered Constantinople in twelve hundred, twelve oh four. So, and a lot of the, actually the crusades were as much about trade as they were about religion, being able to trade with the East and fighting for control over trade because the modern Israel is before the Suez Canal was an incredibly important trade nexus to reach between Asia and the Mediterranean. So the Venetians had rivals, the Genoese, and even Florence, which is not even on the water, but became really active in banking and trading through all these merchant fairs that they would have. So moving goods, moving, moving money was at in the, in the old days, hundreds of years ago, was physical. Like you had to actually be a logistics company to be a bank. Until not that long ago, mean, Wells Fargo and American Express both started as freight forwarding companies because you had to move the gold. Here in the American West, you had to get the gold on stage. That's why Wells Fargo has a stagecoach, a little bit their logo. Right? So you had Venice trading with the Muslims, and I think the the discovery by the Portuguese, the invention of the caravel, a lot of other early technologies, trade has largely been driven by these development of new technology. The quadrant, the sextant, some of these, the clock, the, the clock is incredibly important for positioning yourself. You can't do, can't do longitude without a clock. You need to know where you are in the world. You need to know what time it is when that's how you determine where you are in the world. And so these technologies, especially Henry the Navigator in the Portuguese, sort of like the original venture capital was funding this exploration down the coast of Africa. They didn't know where they were going to go.
00:13:54 · Ryan Petersen, Ty Morse
Don't know that they actually expected in the early days of Henry the Navigator to make it around Africa. They just realized that it was quite profitable, trading in slaves, discovering new lands. They discovered Madeira. Madeira is an island. Now it's most famously known as Cristiano Ronaldo's birthplace, but Madeira was this uninhabited island that... Madeira means wood. It was heavily forested. Now there's no trees there. They chopped them all down. Became very, very profitable. They set up vineyards there. I mean, land was, like, unheard of at that time. They hadn't discovered the Americas yet. So they realized it was profitable. They kept reinvesting those profits. And eventually, Vasco de Gama rounded the, the cape a few years after Columbus discovered the Americas, around 1498. 1498 is when they made it to around the, Cape Of Good Hope and made it to India. In the Islamic world, put down the set of iron curtain. You could trade, and they were very open to trade with the Venetians who were essentially allied with the Muslim caliphates and the Ottomans, but they could trade, but they couldn't go beyond. And the main things they wanted from the East were spices. Spices are really good for long distance trade in that time because they're very small and very, very valuable. [00:15:16] S0: You could just like dry them out and they wouldn't go bad. [00:15:18] S1: Yeah, they weren't that perishable and the value to weight density ratio is just so high. And so the markup, I think it was at least 1000x, it might have been 10000x from if you bought the spices...
00:15:18 · Ryan Petersen, Ty Morse
[00:15:18] S1: Yeah, they weren't that perishable and the value to weight density ratio is just so high. And so the markup, I think it was at least 1000x, it might have been 10000x from if you bought the spices... [00:15:31] S0: In India? [00:15:32] S1: No. The spices really originate in Indonesia in the spice islands called the Malukas. By the time they got to India, they were probably already marked up like 20 x or something, and then another 20 x, you you pretty quickly get to a thousand x or more once you reach Venice. And so there was this huge... People didn't know that, but they knew for sure, you know, you wanna get to the source, of these things. And you didn't even know where they were from. Really had no... It was like a lot of mythology. You didn't know. [00:16:01] S0: Oh, so the people in, you know, England might've been buying cayenne pepper or something, and they were like, we don't know. They They know companies are