America feared that letting Ukraine use US weapons to attack far-off targets in Russia would escalate the conflict. Why has President Joe Biden finally changed his mind? Markets soared when Donald Trump was elected, but the longer-term impact of Trumponomics may be less positive (9:42). And why airships are back in our skies (18:12). Runtime: 24 min

America feared that letting <a href="https://www.economist.com/topics/ukraine?utm_campaign=a.io&utm_medium=audio.podcast.np&utm_source=theintelligence&utm_content=discovery.content.anonymous.tr_shownotes_na-na_article&utm_term=sa.listeners">Ukraine use US weapons</a> to attack far-off targets in Russia would escalate the conflict. Why has President Joe Biden finally changed his mind? <a href="https://www.economist.com/leaders/2024/11/14/whats-about-to-hit-the-world-economy?utm_campaign=a.io&utm_medium=audio.podcast.np&utm_source=theintelligence&utm_content=discovery.content.anonymous.tr_shownotes_na-na_article&utm_term=sa.listeners">Markets soared</a> when Donald Trump was elected, but the longer-term impact of Trumponomics may be less positive (9:42). And why <a href="https://www.economist.com/science-and-technology/2024/10/30/airships-may-finally-prove-useful-for-transporting-cargo?utm_campaign=a.io&utm_medium=audio.podcast.np&utm_source=theintelligence&utm_content=discovery.content.anonymous.tr_shownotes_na-na_article&utm_term=sa.listenersv">airships are back</a> in our skies (18:12). Runtime: 24 min

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The Intelligence

How will US long-range missiles help Ukraine fight Russia?

Ukrainian soldiers camouflage a damaged MT-LB (light armored multi-purpose towing vehicle) in the Donetsk region of Ukraine

The long game: how will US missiles help Ukraine?

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Rosie Blau [00:00:10] Hello and welcome to the intelligence from The Economist. I’m your host, Rosie Bloor. Every weekday, we provide a fresh perspective on the events shaping your world. When Donald Trump was elected, the markets soared. But in the longer term, will the effect of Trump nomics really be good for America’s economy? And airships seem like a strange relic from the early years of flight. But they’re cheap, efficient, and the technology is pretty simple. So blimps could be making a comeback. But first. Ukraine has long been pressing America to let it use US supplied long range missiles in Russian territory. This weekend, President Volodymyr Zelensky seemed to get his wish. Though not officially confirmed by the White House. Zelensky said yesterday that missiles will speak for themselves.

Rosie Blau [00:00:10] Hello and welcome to the intelligence from The Economist. I’m your host, Rosie Bloor. Every weekday, we provide a fresh perspective on the events shaping your world. When Donald Trump was elected, the markets soared. But in the longer term, will the effect of Trump nomics really be good for America’s economy? And airships seem like a strange relic from the early years of flight. But they’re cheap, efficient, and the technology is pretty simple. So blimps could be making a comeback. But first. Ukraine has long been pressing America to let it use US supplied long range missiles in Russian territory. This weekend, President Volodymyr Zelensky seemed to get his wish. Though not officially confirmed by the White House. Zelensky said yesterday that missiles will speak for themselves.

Clip [00:01:27] Net announced a huge racket there. Sami Ziba Scott.

Clip [00:01:27] Net announced a huge racket there. Sami Ziba Scott.

Rosie Blau [00:01:32] There have been concerns that using such weapons would seriously escalate the war in Ukraine. So what difference might they actually make?

Rosie Blau [00:01:32] There have been concerns that using such weapons would seriously escalate the war in Ukraine. So what difference might they actually make?

Shashank Joshi [00:01:41] America has been dithering over this decision, you could say, for more than two years. The fact that it finally allowed Ukraine to use American long range missiles inside Russia, it’s a really significant policy shift.

Shashank Joshi [00:01:41] America has been dithering over this decision, you could say, for more than two years. The fact that it finally allowed Ukraine to use American long range missiles inside Russia, it’s a really significant policy shift.

Rosie Blau [00:01:59] Shashank Joshi is our defense editor.

Rosie Blau [00:01:59] Shashank Joshi is our defense editor.

Shashank Joshi [00:02:02] It isn’t going to dramatically turn the battlefield around, but it will boost morale in Ukraine. It will strengthen their hand ahead of talks. And it could also mean there’s a fairly tumultuous couple of months ahead as Russia thinks about how it will respond.

Shashank Joshi [00:02:02] It isn’t going to dramatically turn the battlefield around, but it will boost morale in Ukraine. It will strengthen their hand ahead of talks. And it could also mean there’s a fairly tumultuous couple of months ahead as Russia thinks about how it will respond.

Rosie Blau [00:02:17] Before we get to what the missiles mean. After all that dithering, why has Biden made this decision now?

Rosie Blau [00:02:17] Before we get to what the missiles mean. After all that dithering, why has Biden made this decision now?

Shashank Joshi [00:02:24] Fundamentally, I think it’s about North Korea. It’s about North Korea sending thousands of troops to the Kursk region inside Russia to repel this Ukrainian attack there. And I think America was fairly shocked by this. They saw it as a major escalation. They think that if Ukraine can use these missiles to inflict significant costs on those North Korean forces, it will make Kim Jong un, the leader of North Korea, think twice about whether he should send more, because that really is the big Western concern that this becomes a North Korean pipeline. Having said that, I think there’s also a bit more to it than just North Korea. I think that Biden will be very conscious that Ukraine could face a dramatic change in its circumstances with the arrival of Donald Trump. He could cut aid. He could restrict commission on intelligence sharing. So by giving him this permission now, he may be helping to strengthen Ukraine’s hand while he still can. He might also be judging to some degree that Putin isn’t going to dramatically escalate before Trump comes into office because he thinks he has something to gain from Trump. So there may be lots of complicated calculations going on inside the Oval Office at the minute.

Shashank Joshi [00:02:24] Fundamentally, I think it’s about North Korea. It’s about North Korea sending thousands of troops to the Kursk region inside Russia to repel this Ukrainian attack there. And I think America was fairly shocked by this. They saw it as a major escalation. They think that if Ukraine can use these missiles to inflict significant costs on those North Korean forces, it will make Kim Jong un, the leader of North Korea, think twice about whether he should send more, because that really is the big Western concern that this becomes a North Korean pipeline. Having said that, I think there’s also a bit more to it than just North Korea. I think that Biden will be very conscious that Ukraine could face a dramatic change in its circumstances with the arrival of Donald Trump. He could cut aid. He could restrict commission on intelligence sharing. So by giving him this permission now, he may be helping to strengthen Ukraine’s hand while he still can. He might also be judging to some degree that Putin isn’t going to dramatically escalate before Trump comes into office because he thinks he has something to gain from Trump. So there may be lots of complicated calculations going on inside the Oval Office at the minute.

Rosie Blau [00:03:32] All right. So one of the things that seemed to be holding Biden back was the idea that allowing these long range missiles to be used would be seen as an escalation. And you’re now saying you don’t think that that is the case?

Rosie Blau [00:03:32] All right. So one of the things that seemed to be holding Biden back was the idea that allowing these long range missiles to be used would be seen as an escalation. And you’re now saying you don’t think that that is the case?

Shashank Joshi [00:03:44] No, I think Biden will absolutely still think he’s engaged in a risky activity here. And that’s for a couple of reasons. And I think, Rosie, you and I talked about maybe a couple of months ago. These are not just normal missiles that you hand over to Ukraine and they fire them off anywhere they like. And it’s just a matter of permission. America is giving Ukraine assistance in firing some of these long range missiles because they’re typically fired against very defended, quite high value targets. And Ukraine will need assistance in terms of intelligence, how well-defended the targets are. Mission planning, as we call it, when you prepare these launches. And so it is true that there is a deeper degree of Western involvement with this, as with similar French and British cruise missiles that we can talk about later. And so Putin warned explicitly a couple of months ago that if these were used on Russian soil, that he would see this is direct involvement in the conflict by the West. So I think Biden knows there is still an escalation risk, not just inside Ukraine, but what Russia might do elsewhere. I think he’s just decided that that risk is now worth bearing, given the other circumstances of this conflict.

Shashank Joshi [00:03:44] No, I think Biden will absolutely still think he’s engaged in a risky activity here. And that’s for a couple of reasons. And I think, Rosie, you and I talked about maybe a couple of months ago. These are not just normal missiles that you hand over to Ukraine and they fire them off anywhere they like. And it’s just a matter of permission. America is giving Ukraine assistance in firing some of these long range missiles because they’re typically fired against very defended, quite high value targets. And Ukraine will need assistance in terms of intelligence, how well-defended the targets are. Mission planning, as we call it, when you prepare these launches. And so it is true that there is a deeper degree of Western involvement with this, as with similar French and British cruise missiles that we can talk about later. And so Putin warned explicitly a couple of months ago that if these were used on Russian soil, that he would see this is direct involvement in the conflict by the West. So I think Biden knows there is still an escalation risk, not just inside Ukraine, but what Russia might do elsewhere. I think he’s just decided that that risk is now worth bearing, given the other circumstances of this conflict.

Rosie Blau [00:04:48] And Shashank, what might some of those well-defended targets in Russia be that Ukraine will now be able to strike?

Rosie Blau [00:04:48] And Shashank, what might some of those well-defended targets in Russia be that Ukraine will now be able to strike?

Shashank Joshi [00:04:55] It depends which bit of Russia rosy, because the initial indications we’re getting are that Biden will restrict the use of this system to the Kursk region. That kind of makes political sense if the aim is to respond to North Korean escalation. It doesn’t make much military sense because many of the targets that Ukraine would most value are not in the Kursk region. They’re elsewhere along other parts of the front. But if you stick to Kursk, really there are still a large number of command posts, ammunition depots, logistics hubs, for example, railway sites that Ukraine can strike.

Shashank Joshi [00:04:55] It depends which bit of Russia rosy, because the initial indications we’re getting are that Biden will restrict the use of this system to the Kursk region. That kind of makes political sense if the aim is to respond to North Korean escalation. It doesn’t make much military sense because many of the targets that Ukraine would most value are not in the Kursk region. They’re elsewhere along other parts of the front. But if you stick to Kursk, really there are still a large number of command posts, ammunition depots, logistics hubs, for example, railway sites that Ukraine can strike.

Rosie Blau [00:05:30] And you mentioned French and British missiles earlier. What impact will they have?

Rosie Blau [00:05:30] And you mentioned French and British missiles earlier. What impact will they have?

Shashank Joshi [00:05:34] Well, Britain and France have provided missiles called storm shadow or scalp. And these are cruise missiles, not ballistic missiles like catacombs. But they’re very, very capable. And so far, neither country appears to have given permission for the use of those inside Russia. I think it’s quite obvious they’ve been waiting for a joint decision with the White House. And my guess is it’s no more than that at this stage. Reality is that this American decision will now free up the French and the British to say you can also use our missiles inside Russia. What’ll be really interesting to see is if they can. They’re used to Kursk province, or they let Ukraine use these anywhere if they let them use them anywhere. I think there could be some very nasty surprises in for Russia in the days ahead.

Shashank Joshi [00:05:34] Well, Britain and France have provided missiles called storm shadow or scalp. And these are cruise missiles, not ballistic missiles like catacombs. But they’re very, very capable. And so far, neither country appears to have given permission for the use of those inside Russia. I think it’s quite obvious they’ve been waiting for a joint decision with the White House. And my guess is it’s no more than that at this stage. Reality is that this American decision will now free up the French and the British to say you can also use our missiles inside Russia. What’ll be really interesting to see is if they can. They’re used to Kursk province, or they let Ukraine use these anywhere if they let them use them anywhere. I think there could be some very nasty surprises in for Russia in the days ahead.

Rosie Blau [00:06:16] Over the weekend, we’ve seen a slight divergence in some ways over what different leaders have done, because this weekend, also Germany’s chancellor Olaf Schulze broke with other Western nations and called Putin. How significant was that as a decision?

Rosie Blau [00:06:16] Over the weekend, we’ve seen a slight divergence in some ways over what different leaders have done, because this weekend, also Germany’s chancellor Olaf Schulze broke with other Western nations and called Putin. How significant was that as a decision?

Shashank Joshi [00:06:30] It was significant because Schultz hasn’t spoken to Putin, to my knowledge, in two years. In fact, very few Western leaders have, other than what you might call kind of pariah states or rogues like Viktor Orban of Hungary. And so a lot of people raised their eyebrows. Now, the argument you could say, for Germany is, first of all, Donald Trump has spoken to Putin allegedly, and we’re not sure about that. The Kremlin denies it. So we don’t know for sure. But Trump has spoken to Putin, seemingly so why shouldn’t Europeans and we all know that talks are coming up and therefore we should send a message to Putin, as Schultz did, that we are still committed to Ukraine. On the other side. It immediately provoked a backlash from other leaders, including a lot of Mr. Lenski and also Donald Tusk of Poland, who was very critical. And the argument is Schultz is doing this because he’s in the middle of a domestic political election campaign in which he’s trying to portray himself as the responsible leader against the more reckless, aggressive, belligerent center right leader or his opponent. And I think the criticism is really that by doing this now, by breaking this gap in communications, Schultz is signaling weakness. He is indicating, I need talks more than you do, and that the Kremlin will effectively smell this and sense weakness rather than strength.

Shashank Joshi [00:06:30] It was significant because Schultz hasn’t spoken to Putin, to my knowledge, in two years. In fact, very few Western leaders have, other than what you might call kind of pariah states or rogues like Viktor Orban of Hungary. And so a lot of people raised their eyebrows. Now, the argument you could say, for Germany is, first of all, Donald Trump has spoken to Putin allegedly, and we’re not sure about that. The Kremlin denies it. So we don’t know for sure. But Trump has spoken to Putin, seemingly so why shouldn’t Europeans and we all know that talks are coming up and therefore we should send a message to Putin, as Schultz did, that we are still committed to Ukraine. On the other side. It immediately provoked a backlash from other leaders, including a lot of Mr. Lenski and also Donald Tusk of Poland, who was very critical. And the argument is Schultz is doing this because he’s in the middle of a domestic political election campaign in which he’s trying to portray himself as the responsible leader against the more reckless, aggressive, belligerent center right leader or his opponent. And I think the criticism is really that by doing this now, by breaking this gap in communications, Schultz is signaling weakness. He is indicating, I need talks more than you do, and that the Kremlin will effectively smell this and sense weakness rather than strength.

Rosie Blau [00:07:42] And, of course, let’s not forget Ukraine in all of this. Over the weekend, Russia hit its power infrastructure in a massive missile attack. How big an effect will that have had on Ukraine in its day to day life, in its workings?

Rosie Blau [00:07:42] And, of course, let’s not forget Ukraine in all of this. Over the weekend, Russia hit its power infrastructure in a massive missile attack. How big an effect will that have had on Ukraine in its day to day life, in its workings?

Shashank Joshi [00:07:54] It had a really substantial effect. Not only did we see seven people killed, which is, of course, a tragedy, but also there were blackouts and restrictions of power in all the regions of Ukraine. And as anyone who’s listening from there will understand, will know very well, the temperatures are getting extremely low. So heat is a significant problem. And I think that this is an indication Putin fully intends to try to freeze, terrorize and sap the morale of Ukrainians over the winter period in the hope that their ability to resist and withstand his campaign will be substantially diminished come the spring. And then he hopes he’ll be able to simply dictate terms to Donald Trump.

Shashank Joshi [00:07:54] It had a really substantial effect. Not only did we see seven people killed, which is, of course, a tragedy, but also there were blackouts and restrictions of power in all the regions of Ukraine. And as anyone who’s listening from there will understand, will know very well, the temperatures are getting extremely low. So heat is a significant problem. And I think that this is an indication Putin fully intends to try to freeze, terrorize and sap the morale of Ukrainians over the winter period in the hope that their ability to resist and withstand his campaign will be substantially diminished come the spring. And then he hopes he’ll be able to simply dictate terms to Donald Trump.

Rosie Blau [00:08:33] Tomorrow will be the thousandth day of this war. Ukraine is entering winter. We’ve already said it’s a perilous moment. Should Biden have made this decision earlier?

Rosie Blau [00:08:33] Tomorrow will be the thousandth day of this war. Ukraine is entering winter. We’ve already said it’s a perilous moment. Should Biden have made this decision earlier?

Shashank Joshi [00:08:43] Yes. We in our lead pages have argued that America should have eased restrictions on missile strikes, not lifted because I accept there are some things they shouldn’t hit that are very risky or may cause escalation. So we’ve always said that. But alongside that, I offer this warning, which is that if anyone thinks this is going to suddenly tip the balance on the front lines, bring Russian assaults to a halt, enable Ukraine to go back on the offensive, that’s nonsense. It isn’t going to do any of those things. It’ll have a modest effect on Russia’s military potential. It will strengthen Ukraine’s hand. But really, this is not going to cause a dramatic change in the front lines. It’s too late for that. It was probably never going to do that on its own. Let’s keep this in perspective. It would be my piece of advice to everyone.

Shashank Joshi [00:08:43] Yes. We in our lead pages have argued that America should have eased restrictions on missile strikes, not lifted because I accept there are some things they shouldn’t hit that are very risky or may cause escalation. So we’ve always said that. But alongside that, I offer this warning, which is that if anyone thinks this is going to suddenly tip the balance on the front lines, bring Russian assaults to a halt, enable Ukraine to go back on the offensive, that’s nonsense. It isn’t going to do any of those things. It’ll have a modest effect on Russia’s military potential. It will strengthen Ukraine’s hand. But really, this is not going to cause a dramatic change in the front lines. It’s too late for that. It was probably never going to do that on its own. Let’s keep this in perspective. It would be my piece of advice to everyone.

Rosie Blau [00:09:25] Shashank, thank you so much. I’m sure we will talk again soon.

Rosie Blau [00:09:25] Shashank, thank you so much. I’m sure we will talk again soon.

Shashank Joshi [00:09:29] Thank you very much.

Shashank Joshi [00:09:29] Thank you very much.

Rosie Blau [00:09:45] Not everyone was delighted when Donald Trump won a decisive victory in the presidential election ten days ago. But the markets certainly were.

Rosie Blau [00:09:45] Not everyone was delighted when Donald Trump won a decisive victory in the presidential election ten days ago. But the markets certainly were.

Shashank Joshi [00:09:53] Right now, the stock market is rallying around the news that former President Trump will be named the 47th president of the United States. The Dow actually hit a new record high early in trading this morning.

Shashank Joshi [00:09:53] Right now, the stock market is rallying around the news that former President Trump will be named the 47th president of the United States. The Dow actually hit a new record high early in trading this morning.

Rosie Blau [00:10:05] Though the American economy has outpaced its rivals. Many voters thought it was in the doldrums and plumped for Trump because they expect him to turn it around. So will Trump’s policies deliver prosperity or pain?

Rosie Blau [00:10:05] Though the American economy has outpaced its rivals. Many voters thought it was in the doldrums and plumped for Trump because they expect him to turn it around. So will Trump’s policies deliver prosperity or pain?

Simon Rabinovitch [00:10:19] Donald Trump’s economic policy? Or Trump nomics, as many call it, consists of four big things.

Simon Rabinovitch [00:10:19] Donald Trump’s economic policy? Or Trump nomics, as many call it, consists of four big things.

Rosie Blau [00:10:27] Simon Rabinovitch is our U.S. economics editor.

Rosie Blau [00:10:27] Simon Rabinovitch is our U.S. economics editor.

Simon Rabinovitch [00:10:30] One tax cuts, two aggressive deregulation. Three tariffs on foreign trade. And for a crackdown on immigration. We saw a preview of much of this in his first term, but in his new term, he’s likely to expand on what he did and push even farther.

Simon Rabinovitch [00:10:30] One tax cuts, two aggressive deregulation. Three tariffs on foreign trade. And for a crackdown on immigration. We saw a preview of much of this in his first term, but in his new term, he’s likely to expand on what he did and push even farther.

Rosie Blau [00:10:50] Okay. So let’s take the first two of those. The tax cuts and aggressive deregulation. What’s he planning?

Rosie Blau [00:10:50] Okay. So let’s take the first two of those. The tax cuts and aggressive deregulation. What’s he planning?

Simon Rabinovitch [00:10:58] On tax cuts. He passed a big tax cutting law in 2017. A significant chunk of that, especially the individual income tax cuts, are due to expire at the end of next year. So he wants to extend that. It’s actually a very expensive policy. It’ll cost the government about $4 trillion plus in lost revenue over the next decade. He also has talked about reducing the corporate tax rates, currently 21%. Maybe he’ll take it as low as 15%. And while on the campaign trail, he had every week another new tax cutting promise from no taxes on tips to no taxes on Social Security benefits, to letting people deduct more of their local taxes from their federal tax bill. The general conclusion of economists is that a lot of these things might be good for growth in the short term. And indeed, that’s why investors are pretty optimistic about the outlook for markets. But in the longer term, there are some clear concerns. America’s fiscal deficit is already really, really high. The budget deficit is running at about 6% of GDP. If Trump got his way on all of his tax cuts, that deficit could hit more than 10% of GDP, which is eye wateringly high.

Simon Rabinovitch [00:10:58] On tax cuts. He passed a big tax cutting law in 2017. A significant chunk of that, especially the individual income tax cuts, are due to expire at the end of next year. So he wants to extend that. It’s actually a very expensive policy. It’ll cost the government about $4 trillion plus in lost revenue over the next decade. He also has talked about reducing the corporate tax rates, currently 21%. Maybe he’ll take it as low as 15%. And while on the campaign trail, he had every week another new tax cutting promise from no taxes on tips to no taxes on Social Security benefits, to letting people deduct more of their local taxes from their federal tax bill. The general conclusion of economists is that a lot of these things might be good for growth in the short term. And indeed, that’s why investors are pretty optimistic about the outlook for markets. But in the longer term, there are some clear concerns. America’s fiscal deficit is already really, really high. The budget deficit is running at about 6% of GDP. If Trump got his way on all of his tax cuts, that deficit could hit more than 10% of GDP, which is eye wateringly high.

Rosie Blau [00:12:06] And where does deregulation fit into all of that?

Rosie Blau [00:12:06] And where does deregulation fit into all of that?

Simon Rabinovitch [00:12:09] So deregulation is partly about reversing the momentum that was seen under the Biden administration towards tighter regulation of banks, of companies that are involved in cryptocurrencies of the way that tech companies are experimenting with AI. All of those regulations are ones that the Trump administration wants to undo. They also want to make it easier for energy companies to drill for oil, to drill for gas, and then to export that. And again, that’s something that has markets pretty excited and arguably could actually be a good thing for America’s growth fundamentals.

Simon Rabinovitch [00:12:09] So deregulation is partly about reversing the momentum that was seen under the Biden administration towards tighter regulation of banks, of companies that are involved in cryptocurrencies of the way that tech companies are experimenting with AI. All of those regulations are ones that the Trump administration wants to undo. They also want to make it easier for energy companies to drill for oil, to drill for gas, and then to export that. And again, that’s something that has markets pretty excited and arguably could actually be a good thing for America’s growth fundamentals.

Rosie Blau [00:12:45] The one that people talk most about abroad is tariffs. What’s the plan for tariffs?

Rosie Blau [00:12:45] The one that people talk most about abroad is tariffs. What’s the plan for tariffs?

Simon Rabinovitch [00:12:50] Well, Trump was very clear on the campaign trail that he wants to raise tariffs in Trump’s first term. The focus of his trade war was against China, and now he wants to take tariffs even higher. He brought them up on many products to about 25% against China. He’s talked about going to 60% on all made in China goods. But he’s also talked about maybe a 10%, maybe a 20% universal across the board tariff on everything out of America being brought into the country. That’s something that a lot of economists and investors as well are worried about. There’s a question about whether he actually means what he says. And I do think that if you look at Trump over the years, a belief in tariffs, I would argue, is one of the consistencies in his economic outlook. He thinks it’s good for the manufacturing sector. He thinks it’s good for America. Economists disagree. They think that tariffs will make things more expensive. They’ll push up inflation. They’ll actually be a drag on growth. So we’ll see how much he pushes out of the gate in terms of raising tariffs. But he certainly seems minded to move quickly on this front.

Simon Rabinovitch [00:12:50] Well, Trump was very clear on the campaign trail that he wants to raise tariffs in Trump’s first term. The focus of his trade war was against China, and now he wants to take tariffs even higher. He brought them up on many products to about 25% against China. He’s talked about going to 60% on all made in China goods. But he’s also talked about maybe a 10%, maybe a 20% universal across the board tariff on everything out of America being brought into the country. That’s something that a lot of economists and investors as well are worried about. There’s a question about whether he actually means what he says. And I do think that if you look at Trump over the years, a belief in tariffs, I would argue, is one of the consistencies in his economic outlook. He thinks it’s good for the manufacturing sector. He thinks it’s good for America. Economists disagree. They think that tariffs will make things more expensive. They’ll push up inflation. They’ll actually be a drag on growth. So we’ll see how much he pushes out of the gate in terms of raising tariffs. But he certainly seems minded to move quickly on this front.

Rosie Blau [00:13:55] One of the other things Trump has consistently said would be good for America is to deport millions of undocumented migrants. What would that do to the economy.

Rosie Blau [00:13:55] One of the other things Trump has consistently said would be good for America is to deport millions of undocumented migrants. What would that do to the economy.

Simon Rabinovitch [00:14:05] If he actually follows through on his promise? Deportations? It would first and foremost be a human tragedy. So just the scale of the deportation and how they would actually do it and what that would mean for families. The second order question then is what does it mean for the economy and is bad for the economy as well? Migrants are a critical part of the labor force. They’re absolutely integral to sectors like construction, like food service and food preparation, agriculture. These are sectors that during the pandemic, when there weren’t as many migrants coming in for a time, were beset by labor shortages, and that raised prices. It made production really difficult. The question is logistically, is he actually going to be able to do what he says? I think it’s quite clear that he’ll be able to be quite strict about enforcing border measures. He may not be able to get to his promised deportations of millions and millions of migrants. It might be kind of an upward case of maybe 1 million per year, but even that would have a clear negative impact on growth and on inflation as well.

Simon Rabinovitch [00:14:05] If he actually follows through on his promise? Deportations? It would first and foremost be a human tragedy. So just the scale of the deportation and how they would actually do it and what that would mean for families. The second order question then is what does it mean for the economy and is bad for the economy as well? Migrants are a critical part of the labor force. They’re absolutely integral to sectors like construction, like food service and food preparation, agriculture. These are sectors that during the pandemic, when there weren’t as many migrants coming in for a time, were beset by labor shortages, and that raised prices. It made production really difficult. The question is logistically, is he actually going to be able to do what he says? I think it’s quite clear that he’ll be able to be quite strict about enforcing border measures. He may not be able to get to his promised deportations of millions and millions of migrants. It might be kind of an upward case of maybe 1 million per year, but even that would have a clear negative impact on growth and on inflation as well.

Rosie Blau [00:15:05] On this, some questions about whether he might limit legal migration, too.

Rosie Blau [00:15:05] On this, some questions about whether he might limit legal migration, too.

Simon Rabinovitch [00:15:11] Yeah. So here he’s sort of spoken with a forked tongue where at points on the campaign trail he’s said that he likes the idea of having a pathway for university graduates to get green cards. America needs to have skilled people, and economists would agree with that. But they would also say that you need to have unskilled migrants as well. You need to have all kinds of people coming to America because the native born working population is beginning to shrink. Now, as I said, he’s spoken with a forked tongue because if you go back and you look at his previous administration, he actually made it a lot harder for would be green card holders to get the right to stay in America. And if you look at his personnel, for example, Stephen Miller, who was a key figure in the first Trump administration, he’s going to be deputy chief of staff in the White House for policy, which is a really, really powerful position. And he is absolutely, number one skeptic about immigration. And he’s going to be involved in such an important policy position. I would say a fair assumption is that this idea of making green cards easier is going to disappear when it actually comes time for Trump to govern.

Simon Rabinovitch [00:15:11] Yeah. So here he’s sort of spoken with a forked tongue where at points on the campaign trail he’s said that he likes the idea of having a pathway for university graduates to get green cards. America needs to have skilled people, and economists would agree with that. But they would also say that you need to have unskilled migrants as well. You need to have all kinds of people coming to America because the native born working population is beginning to shrink. Now, as I said, he’s spoken with a forked tongue because if you go back and you look at his previous administration, he actually made it a lot harder for would be green card holders to get the right to stay in America. And if you look at his personnel, for example, Stephen Miller, who was a key figure in the first Trump administration, he’s going to be deputy chief of staff in the White House for policy, which is a really, really powerful position. And he is absolutely, number one skeptic about immigration. And he’s going to be involved in such an important policy position. I would say a fair assumption is that this idea of making green cards easier is going to disappear when it actually comes time for Trump to govern.

Rosie Blau [00:16:14] So it’s a dramatic scheme of policies that you’ve laid out. Simon What do you think the overall outcome would be? What would be the effect of Trump nomics?

Rosie Blau [00:16:14] So it’s a dramatic scheme of policies that you’ve laid out. Simon What do you think the overall outcome would be? What would be the effect of Trump nomics?

Simon Rabinovitch [00:16:24] Well, I guess the first thing to say is that in the short term, the market is incredibly optimistic about what it all means after he was elected. American stocks were already basically at record highs and they’ve climbed even further up. The dollar has strengthened. Crypto assets like Bitcoin have soared. If you look at the stocks that are moving, many of the ones that have been doing the best are ones that are specifically related to Trump. So gender, so big energy companies, financial firms, even operators of prisons have performed incredibly well. However, when Trump begins to push ahead with tariffs and with deportations, I think he will have a reassessment in markets about what it all means, because those are not going to be good for the economy. They’re going to drive up inflation, they’re going to slow growth. It’ll take some time for him to get these policies into place. It will then take some time to actually see what their impact on the economy is going to be. But I think by the end of next year, as we head into 2026, we’ll begin to see problems emerging from tariffs, from deportations. Ultimately, Trump was elected with a mandate to shake things up. He’s certainly planning to shake things up. There’s optimism right now. I don’t think that’s going to last, though. There is a lot to be worried about in the outlook for Trump nomics.

Simon Rabinovitch [00:16:24] Well, I guess the first thing to say is that in the short term, the market is incredibly optimistic about what it all means after he was elected. American stocks were already basically at record highs and they’ve climbed even further up. The dollar has strengthened. Crypto assets like Bitcoin have soared. If you look at the stocks that are moving, many of the ones that have been doing the best are ones that are specifically related to Trump. So gender, so big energy companies, financial firms, even operators of prisons have performed incredibly well. However, when Trump begins to push ahead with tariffs and with deportations, I think he will have a reassessment in markets about what it all means, because those are not going to be good for the economy. They’re going to drive up inflation, they’re going to slow growth. It’ll take some time for him to get these policies into place. It will then take some time to actually see what their impact on the economy is going to be. But I think by the end of next year, as we head into 2026, we’ll begin to see problems emerging from tariffs, from deportations. Ultimately, Trump was elected with a mandate to shake things up. He’s certainly planning to shake things up. There’s optimism right now. I don’t think that’s going to last, though. There is a lot to be worried about in the outlook for Trump nomics.

Rosie Blau [00:17:43] Simon, thank you so much.

Rosie Blau [00:17:43] Simon, thank you so much.

Simon Rabinovitch [00:17:45] Thank you, Rosie. My pleasure.

Simon Rabinovitch [00:17:45] Thank you, Rosie. My pleasure.

Rosie Blau [00:17:48] And you can hear more about Donald Trump’s. Agenda and checks and balance are weak. The US Politics podcast, which was out on Friday, you’ll need to be a subscriber to listen subscribing to Economist podcast plus helps make our journalism possible. So thank you. Search Economist Podcast Plus for a free trial. Mention human flight. And most of us probably think about the invention of the airplane. But despite the glory heaped on the Wright brothers for taking wing in 1983, it’s easy to forget that people actually flew over a century earlier in balloons. Over the years, the hot air in those flying balloons was swapped for gases like hydrogen and helium. The premise remained the same, though the vehicle was lighter than air. By the 1920s, airships were circumnavigating the world.

Rosie Blau [00:17:48] And you can hear more about Donald Trump’s. Agenda and checks and balance are weak. The US Politics podcast, which was out on Friday, you’ll need to be a subscriber to listen subscribing to Economist podcast plus helps make our journalism possible. So thank you. Search Economist Podcast Plus for a free trial. Mention human flight. And most of us probably think about the invention of the airplane. But despite the glory heaped on the Wright brothers for taking wing in 1983, it’s easy to forget that people actually flew over a century earlier in balloons. Over the years, the hot air in those flying balloons was swapped for gases like hydrogen and helium. The premise remained the same, though the vehicle was lighter than air. By the 1920s, airships were circumnavigating the world.

Clip [00:18:54] And look at the size of the Graf Zeppelin, which looks big even with the Atlantic Ocean under it. Destined to set a record for round the world travel.

Clip [00:18:54] And look at the size of the Graf Zeppelin, which looks big even with the Atlantic Ocean under it. Destined to set a record for round the world travel.

Rosie Blau [00:19:04] They were so popular that the Empire State Building was built with an airship docking mast.

Rosie Blau [00:19:04] They were so popular that the Empire State Building was built with an airship docking mast.

Clip [00:19:10] Apple now offers late maneuvering in the high wind and editing currents around the big building. The blimp circles off the mast.

Clip [00:19:10] Apple now offers late maneuvering in the high wind and editing currents around the big building. The blimp circles off the mast.

Rosie Blau [00:19:19] Admittedly, there were some pretty dramatic failures, notably the Hindenburg disaster in which a German zeppelin became a ball of flame and eventually airplanes improved and airships fell out of vogue. But now this old technology is exciting. Renewed interest.

Rosie Blau [00:19:19] Admittedly, there were some pretty dramatic failures, notably the Hindenburg disaster in which a German zeppelin became a ball of flame and eventually airplanes improved and airships fell out of vogue. But now this old technology is exciting. Renewed interest.

Benjamin Sutherland [00:19:38] The airships of today aren’t anything like the 1930 Zeppelins.

Benjamin Sutherland [00:19:38] The airships of today aren’t anything like the 1930 Zeppelins.

Rosie Blau [00:19:43] Benjamin Sutherland writes about technology.

Rosie Blau [00:19:43] Benjamin Sutherland writes about technology.

Benjamin Sutherland [00:19:46] There’s been quite a resurgence of interest in commercializing airships, and some of the innovators involved are being backed by pretty big aerospace firms in the United States and Europe. There’s been a vague effort to see if airships can finally, after centuries of existence, if you go back to hot air, balloons become viable for moving cargo.

Benjamin Sutherland [00:19:46] There’s been quite a resurgence of interest in commercializing airships, and some of the innovators involved are being backed by pretty big aerospace firms in the United States and Europe. There’s been a vague effort to see if airships can finally, after centuries of existence, if you go back to hot air, balloons become viable for moving cargo.

Rosie Blau [00:20:12] I have to say, Ben, I thought of airships as very much a last century thing. Why would you use them rather than planes or drones?

Rosie Blau [00:20:12] I have to say, Ben, I thought of airships as very much a last century thing. Why would you use them rather than planes or drones?

Benjamin Sutherland [00:20:21] Well, for starters, airships have what engineers call an incredible lift to drag ratio, which means they can be moved with very little effort. So anything that’s floating, whether it’s a boat, a blimp, a bubble, it can be moved and parked, for that matter, with very little energy applied to it. They don’t consume much fuel. And of course, they’re not as fast as airplanes, but they’re not slow either. And you don’t have the problem with traffic jams or fly over height limits or other impediments to moving goods by ground. So theoretically, at least, airships would make for incredible cargo delivery vehicles, freight vehicles.

Benjamin Sutherland [00:20:21] Well, for starters, airships have what engineers call an incredible lift to drag ratio, which means they can be moved with very little effort. So anything that’s floating, whether it’s a boat, a blimp, a bubble, it can be moved and parked, for that matter, with very little energy applied to it. They don’t consume much fuel. And of course, they’re not as fast as airplanes, but they’re not slow either. And you don’t have the problem with traffic jams or fly over height limits or other impediments to moving goods by ground. So theoretically, at least, airships would make for incredible cargo delivery vehicles, freight vehicles.

Rosie Blau [00:21:07] You say theoretically, I’m sensing a coming.

Rosie Blau [00:21:07] You say theoretically, I’m sensing a coming.

Benjamin Sutherland [00:21:10] Absolutely. So. The big stumbling block so far has been something called variable buoyancy. When you’re going to be picking up cargo and dropping it off somewhere else, the weight of the airship changes a lot, and you have to be able to compensate for the lift or their ship is either going to come down to the ground or it’s going to fly off. Now, you might think you could just release helium or whatever other lifting gas is used, but there are problems with that. It’s logistically tricky. You’d have to have supplies of these gases all over the place, and they’re just too expensive. Helium, for example, the most commonly used lifting gas now costs about $35 for a cubic meter. And that’s how much you need to lift a single kilogram. So it’s just impractical.

Benjamin Sutherland [00:21:10] Absolutely. So. The big stumbling block so far has been something called variable buoyancy. When you’re going to be picking up cargo and dropping it off somewhere else, the weight of the airship changes a lot, and you have to be able to compensate for the lift or their ship is either going to come down to the ground or it’s going to fly off. Now, you might think you could just release helium or whatever other lifting gas is used, but there are problems with that. It’s logistically tricky. You’d have to have supplies of these gases all over the place, and they’re just too expensive. Helium, for example, the most commonly used lifting gas now costs about $35 for a cubic meter. And that’s how much you need to lift a single kilogram. So it’s just impractical.

Rosie Blau [00:22:01] So has anyone found a way through this problem of variable buoyancy? What are people doing to try and make cargo ships?

Rosie Blau [00:22:01] So has anyone found a way through this problem of variable buoyancy? What are people doing to try and make cargo ships?

Benjamin Sutherland [00:22:09] Yeah. So one way to do it is to compress and then decompress helium drawing in heavier air from the outside to compensate, which can allow you to adjust the weight according to what you’re carrying or whether you’ve just dropped off a load. But the most straightforward approach is to carry ballast. The most practical appears to be water. So, for example, flying whales. A French airship designer expects one of its largest markets to be moving heavy logs from forests to sawmills. And of course, there’s no problem dumping a large amount of water into the forest. And any sawmill is going to be in an area where you have access to water from the main system. So there are plenty of situations where water is practical.

Benjamin Sutherland [00:22:09] Yeah. So one way to do it is to compress and then decompress helium drawing in heavier air from the outside to compensate, which can allow you to adjust the weight according to what you’re carrying or whether you’ve just dropped off a load. But the most straightforward approach is to carry ballast. The most practical appears to be water. So, for example, flying whales. A French airship designer expects one of its largest markets to be moving heavy logs from forests to sawmills. And of course, there’s no problem dumping a large amount of water into the forest. And any sawmill is going to be in an area where you have access to water from the main system. So there are plenty of situations where water is practical.

Rosie Blau [00:23:01] So, Ben, being realistic, are we going to see blimps coming to a sky near us soon?

Rosie Blau [00:23:01] So, Ben, being realistic, are we going to see blimps coming to a sky near us soon?

Benjamin Sutherland [00:23:05] Well, one sign for optimism is that there’s a lot of pretty big established firms that are getting behind the ideas. It’s also encouraging. There’s a lot of creativity in the area. For example, there’s a few firms that are developing what they call flying warehouses. And the idea is to have an airship serve as an aerial mothership or a hub for fleets of drones, dropping Amazon packages in backyards and on doorsteps. Aros, an airship maker in Los Angeles, is one of the companies developing such a system, and they’re expecting to have a commercial demonstration operating about L.A. by early next year. Now, the note of caution here is that the world of airships has attracted, sometimes it seems, as many Dreamers as hard nosed engineers over the centuries. So it’ll be exciting to see if they can pull it off this time around.

Benjamin Sutherland [00:23:05] Well, one sign for optimism is that there’s a lot of pretty big established firms that are getting behind the ideas. It’s also encouraging. There’s a lot of creativity in the area. For example, there’s a few firms that are developing what they call flying warehouses. And the idea is to have an airship serve as an aerial mothership or a hub for fleets of drones, dropping Amazon packages in backyards and on doorsteps. Aros, an airship maker in Los Angeles, is one of the companies developing such a system, and they’re expecting to have a commercial demonstration operating about L.A. by early next year. Now, the note of caution here is that the world of airships has attracted, sometimes it seems, as many Dreamers as hard nosed engineers over the centuries. So it’ll be exciting to see if they can pull it off this time around.

Rosie Blau [00:24:01] Fascinating. Feels like there’s a metaphor in that. The idea of an Amazon warehouse in the sky dropping things on us. Ben, thank you so much. Great to talk to you.

Rosie Blau [00:24:01] Fascinating. Feels like there’s a metaphor in that. The idea of an Amazon warehouse in the sky dropping things on us. Ben, thank you so much. Great to talk to you.

Benjamin Sutherland [00:24:09] Thank you.

Benjamin Sutherland [00:24:09] Thank you.

Rosie Blau [00:24:24] That’s all for this episode of the Intelligence. Let us know what you think of the show. You can get in touch at podcasts@economist.com. We’ll see you back here tomorrow.

Rosie Blau [00:24:24] That’s all for this episode of the Intelligence. Let us know what you think of the show. You can get in touch at podcasts@economist.com. We’ll see you back here tomorrow.

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