Ricardo Hausmann on What it Takes to Win a Trade War

In this episode of the Odd Lots podcast, hosts Joe Weisenthal and Tracy Alloway interview Ricardo Hausmann, a professor at the Harvard Kennedy School, about economic complexity, trade barriers, and industrial policy. Hausmann explains how trade barriers hinder the ability to combine knowledge and create complex products, using the metaphor of "monkeys swinging between trees" to illustrate how interconnected industries foster economic growth. They discuss the rationale for market intervention, such as tariffs, and explore alternative policy instruments like subsidies and guarantees. The conversation touches on the geographical implications of trade, the concentration of industries in large cities, and the challenges of accurately measuring a country's economic performance in an era dominated by knowledge-intensive activities and foreign direct investment.