WEBVTT

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Hi, I'm Ira Kalish, chief economist of Deloitte, and this is your weekly Economic Update.

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For over 70 years, the US has been the dominant economic, military, and political power

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in the world. It was a major trader and a major source and recipient of cross-border

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investment. It was a major military power, buttressed by its alliances with

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other major democratic nations. That's starting to change. The US is now turning inward.

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What does that mean? It means it's going to be trading less, which means there will be less

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cross-border investment. It means that the US has in the past year,

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withdrawn from several dozen international organizations. The US has

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questioned the usefulness of military and political alliances. The US has cut back

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dramatically on immigration, which over a long period of time could have a negative impact on

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innovation and entrepreneurship because immigrants traditionally played a

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disproportionate role in those things. Has this happened before? Yes. In

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fact, in 1918, the US, with its massive industrial power, helped Britain and France to

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victory in World War I, but then the US turned inward rather than participating in

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the design of the world that followed the First World War. So, in the 1920s and 30s, while the

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US remained the world's major economic power, it didn't exert political influence. And in fact, when

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the Great Depression came along, the US engaged in protectionism and currency depreciation,

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which damaged this trading post. So what does it mean, then, for the US to turn inward? It means for

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other countries that traditionally relied on the US as an economic, political, and military power,

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there will be a need to seek other things. And, in fact, in recent weeks, we've seen the leaders

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of several major democratic nations that were allied with the United States visit Beijing

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and seek greater trading, investment, and political relations with China. So we're now

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embarking on a new world in which the role of the US will be very different. It will still be a

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major economic power, but it's engagement will decline, and that could have significant

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geopolitical and economic implications. That's it for this week and I hope you have a good week.