3rd Lisbon Conference: POWER

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Friedman thanks for coming it's an order and the pleasure with you here I just gave a brief explanation about the changement of our panel but mainly we are here to listen from you and we are very glad that you could come to Lisbon and China's in this conference the floor is yours thank you it's always good to be in Lisbon it's a happy place there are a few happy places in Europe today but this is one of them either you know something the Europeans don't know or you don't know something that Europeans do no I don't know which so I want to begin with two dates that are crucial and understanding this moment what is 1992 three things happened in 1992 in the fall the Soviet Union the signing of the Maserati the instrumentation of the mazzard treaty and the emergence of the United States is the only global power remember that until 1992 there was a cold war it did not always look like the United States would win the United States is obsessed with the Soviet Union Soviet Union was obsessed with the United States with the folder Soviet Union it was like if you've ever seen tug of war and suddenly cuts throat the United States was completely off balance he did not know how to respond it still does not know how to respond we should remember that the British Empire begins with Britain being defeated by a third world power that could never possibly do that the United States nevertheless in spite of this defeat the British Empire emerges and dominates the 19th in the first part of the 20th century it is almost inevitable when you look at Rome or other empires but the first stage of beginning empires not planned and the political system that is governing it doesn't know what to do so it should not be surprised that one of the characteristics of the world is the only global power very uncertain as to how to respond to events what are the things that matter to the United States where should it involve itself where should it not involve itself these are uncertainties that will take a generation to work out so we live partly in the world in which the organizing power is highly disorganized and this is simply the process of unilateral global power in 2008 something else happened that's extremely important what I will call the global export crisis from the 1980s onward the international economic system overbuilt is industrial plant this is particularly true in emerging countries like China their industrial plant had to be larger than a domestic consumption because this was how they would generate the capital to maintain that and this was regarded as brilliant because it was believed that those countries that could export the most were the most efficient and those who couldn't export were weak it ignored one basic problem which is that the exporting power was a hostage to its customers if its customers couldn't buy its industrial plant was paralyzed to some sub agree in 2008 a financial crisis the fourth since world war to hit and it destabilized first the United States and Europe which were the great customers of China and they could no longer buy as much as they had from China and that Chinese who were dependent on the marginal increase of exports suddenly staggered their basic model of neglecting domestic consumption and maximizing exports ran into a brick wall they were in effect owned invisibly by the United States of Europe as I say Walmart and cata four were the great powers that govern China's future and suddenly China had to find a new way to manage a system after this you wound up with another problem which is those countries that sold to China primarily industrial production industrial minerals oil coppers now they had lost their markets for a very long time it appeared to the commodity markets that well the Chinese will go back to conduce consuming the price should stay up by one buy more because the Chinese will consume they did not understand that the decision on consumption by China was in Europe and the United States if they could buy then they would buy more Goods finally in 1940 and 2014 it became apparent that the Chinese production capacity would not rise primarily because although the United States so slowly returning to normal D the Europeans were much more divided in their consumption patterns much more limited in what they were going to do it meant that China now facing competition from Vietnam from Colombia from Paraguay other countries at lower costs was not going to regain the position it had and so the price of oil particularly fell this destabilize Russia in the sense that the promise of some sort of construction of a normal modern economy which had been neglected since 2001 for various political reasons and structural reasons was not going to happen now Russia had to worry about its ability to maintain its national budget and that was very difficult to have to dip into its reserves and it's still struggling with this question what had been a very powerful position an exporter of energy became a trap because it energy consumption was not growing in fact in many places it was declining the second country that experienced this of Saudi Arabia Saudi Arabia was built politically on oil it was built politically on oil because it could maintain the internal stability of the Saudi Kingdom with the careful distribution of wealth stabilizing the tribal systems within the royal family all these things that had to happen the Saudis are no longer able to do this suddenly the Iranians emerged dominant in Iraq present in Syria dominating Lebanon operating Yemen so you look at the map all around Saudi Arabia the heart of the Sunni it's surrounded by a Shiite power how deep how powerful this power is is another question but it certainly destabilized the Middle East so you had a situation where the Chinese now had a financial problem which always follows a decline in exports now how to manage bad debt and they didn't know how to do it because managing an NPL crisis is non-performing loan crisis normally requires somebody to be hurt the creditors the debtors somebody is gonna pay and the Chinese like every country didn't want anybody to pay but since they were going to have to pay it had to have a more powerful central government to control the pain and gee emerges not out of China strength but out of weakness if it was strong they wouldn't need a dictator but it's not strong and it needs a central government that can stabilize it through an extremely painful period of time for example it has to get rid of the corruption and for that it needs a powerful leader who is not vulnerable to counter action in Russia you have Putin who had promised prosperity and returning Russia to being a great power not quite having the prosperity any longer not quite a great power doing things in Syria partly because he can because he must do something but of course the grade is danger in Europe is Europe the problem of Europe is Germany Germany exports 50% of its GDP that's an extraordinary amount for the fourth largest economy in the world we're not here talking about the Czech Republic or Slovakia we're talking about Germany its largest conceal country consumer is the United States because the United States is an import power it imports which has his own crisis and the problem is that the United States is going to have a recession we have never gone longer than 10 years without a recession we go in eight and a half now we will have a recession because recessions are necessary and healthy to an economy it gets rid of weak businesses it frees capital for new businesses it is as every economist knows part of the business cycle and necessary and we will have one now the first thing you will stop buying is industrial machinery that's always the case in the United States and who will be buying industrial machinery from the Germans so now the Germans are facing the possibility of an American recession and that this American recession will not hurt the Americans nearly as much as the Germans normally they would depend on their financial system but this is the amazing thing Germany economically seemingly powerful has a chaotic financial system Deutsche Bank Commerce Bank they cannot finance the German way through an economic crisis partly because they avoided economic crisis by using Deutsche Bank in commerce bank to finance their way out of that crisis so now Europe faces its own problem in each country this becomes a social and political problem for China the solution thus far is G that is this political solution for Russia it is a strengthening of Putin's hand and the question of who is in the shadows waiting for Putin we will see this is Russia for Europe it is the rise of nationalism because Europe has never established the idea of what it is what the European Union is is a Treaty Organization you draw join a Treaty Organization that's good for you you leave when it's bad but it also wants to talk about a European character that's good idea but the problem is the Germans know they're not Greeks the Germans say I'm not Greeks it will have got good give the Greeks money and the Italians know that they are not French the English no they're not really European and so what is happening is the rise of nationalism to which the answer is younger yelling at everybody to stop doing it but of course they're not going to stop doing it because the question in Europe is what is it that holds us together the answer is prosperity what is Europe without prosperity or what is Europe with divided prosperity in which Netherlands has one set of expectations of what life is about and Greece has another so the problem here is hyper in the interdependence throughout the world in the previous crisis like this the third world debt crisis interdependence was much lower it was therefore managed in a certain way that did not have ripples across the entire system this crisis has ripples everywhere and they won't stop in this crisis Germany depends on this country for its consumption that country depends on another everybody depends on each other and it works perfectly in prosperity but it is the management of economic dysfunction that is the measure of a model and that isn't there and so it is a good idea that all of Europe be one but the Europeans have long memories I am bored and hungry and my mother still would not forgive Romania years ago so my father says for Europe the basic principle is never forget never forgive and mah Zurich was designed to say everything is forgotten everything is forgiven and it was until 2008 and then the question became what does Germany owe Greece Germany is lecturing Poland on liberal democracy without any sense of irony by the Germans that this is a very strange thing to do the Hungarians are going their own way and they don't care what happens you've seen Europe return to what it is a continent of 52 different nations of different languages different histories different enemies different friends who had gotten together to be rich they did not get together to help the Greeks in the midst of all of this the United States has an import crisis the import crisis of the United States is we fueled our economy by cheap imports from the world as a result large segments of the American society lost their jobs and the this segment has risen up and that rise has produced an extraordinary person Donald Trump but you would expect it you may not expect this much but you would expect you would expect a very strange player because the people who used to be in control have for this segment of society about half America lost credibility so the difference is I'd like to say Obama would have said about North Korea we regard this as a serious violation that will have the gravest confidence they great greatest consequence well what Trump said we're gonna bomb you to you glow both said the same thing but in different words Obama was much more pleasant about it now this is an opportunity for the enemies of Obama to say he's crazy and for Obama to say this a swamp and we Americans love to have fun we're having a great great time with our politics but it doesn't change the fact that the United States is 25% of the world's economy and the only global power and it doesn't know what it's doing how could it it didn't expect to be in this position we are still trying to figure out a generation later what it means to be the world's only global power and whether we want to be the world's global power or whether we'd rather be left alone and you could recently see this in Syria where from said one day I'm leaving and the next day he bombed the Syria's but the nice thing for the United States is can afford to do that we can afford to be crazy many European countries don't have that room for manoeuvre you have to be much more careful in what you do so what we are living in is this in 1992 for the first time in 500 years no European power was a global power none Russia was the last and it fell the only global power was the United States which was completely unprepared for this the world created a structure that was what alcohol cantilevered like a Gothic cathedrals every part dependent on every other part if you pulled one part out the entire thing came down plunging the world into an economic crisis which is now a social and political crisis you can't put the genie back in the bottle in Europe and China in the United States anywhere we are now in a political period of instability and in that political period we will hack through for the next ten years at least trying to find out what to do but there is one constant in all of this nationalism which the European Union wants to declare to be evil and it can but the fact is that there's a secret in Europe a secret in China secret in Russia in the secret in United States I'm an American you're a Portuguese they're Russian he's a Chinese and we love who we are we have a love of one's own the notion of a European well Europe is a place it is not a people and so as this crisis deepens we were drawn farther and farther apart yonkers solution I love younger because every day gives me something to laugh at it's to demand that it stop well good but somehow order bomb doesn't matter listen we demand that the Chinese stop aggressively exporting but they must they have no choice we want the Russians to stop being pseudo aggressive they're not really aggressive but they want to look that way they can't and you want the Americans to stop being irresponsible and we won't so we are in a world where we are trapped by reality and all of the fine position papers that are produced in Brussels and in Washington are irrelevant to the fundamental problem which is that we're in a moment when history is out of control and we're traveling this is not necessarily the most comfortable position to be in but it's even more uncomfortable when we have the illusion that we're in control what policy will we follow who cares history is on its own it is very difficult to conceive of being control of this situation especially until the United States grows up so and that lovely note let me stop and be told why I'm crazy [Applause] Thank You mr. Friedman I must confess I was curious about the development of certain heightens that you mentioned in the recent interview of one of the major news Portuguese newspapers and you covered all of them so I think we have a good base for debate and discussion and I give the floor to Professor German oral fellow free Radle to make some first comments thank you thank you very much I am very happy to be here although my English has not been trained during last year's I think what Professor Friedman what Professor Friedman explained to us is something very important because globalization as we know it from the 80s from the 1980s to today has been an asymmetric a very symmetric economy with a huge country with huge left hujj deficits United States and three or four countries with huge surplus but what is curious is that this is the best way that a country with an international currency does because the United States with their deficits gave liquidity to the world economy and created the conditions to the development of other countries the problem was that this deficits never constitute a problem because the United States created depth that everybody in the world - bye with the slept United States could have a very extended defense paratus that was not paid all of it by the United States citizens that's what's very important to understand because who bought Depp bought United States depth first of all the Asian countries that were protected by the United States one from the other because the asia-pacific countries have very problems with each with each other but the presence of United States give peace and give them the opportunity to develop economy and not spend managing many money in weapons the second origin of the capital that gone gone to the United States was Persian Gulf with the oil countries that were friends of the United States so everybody bought the depth of the United States and United States could create more deficits and give more liquidity to the economy to the global economy the problem was that in a certain moment thus as attained a tipping point and then exploded it was the crisis of 2008 this is a very important crisis because it was the first crisis in the United States having a capital market financial system which make for Europeans with bank financial system completely completely impossible to understand what has happened the United States they add the the answer of the United States to this crisis well was to go to the cyberspace cyberspace is the most global and free space in the world there are no frontiers United States invented the cyberspace the firms of United States organized the cyberspace and the cyberspace is the opposite of protectionism but when everybody needed some new country to F deficits the answer of Germany was we must have more surplus today the the the eurozone is the biggest surplus of the world not today it is not China it is the eurozone so euro zone directed o leader by Germany as the complete is complete opposite of United States with international currency it as serpents when the world needed that Europe would have deficits so the tension between the United States and Germany is going to be extraordinary deep but the sneh doesn't this is not about protectionism this is about a new phase of globalization and we are all very badly prepared as Professor explained to well but I have faced in Europe just as the last thing I will say in this first intervention I we are covering the May of 1968 in my modesty I was an actor of this crisis in Portugal with the student movement today fifty years after when I think what is what was the importance of May 1968 in France I will say today it was president computer because president poppy who changed two things very first I decided to invite United Kingdom to Europe contrary to the oldest tradition and second when they were discussing how to give dollar a lesson Europeans President Pompidou come to a Soros to have a meeting with Nixon and from where can jaws Pompidou from the Rothschild Bank Russell Bank is an extremely important reality that that that does not exist for us it's completely secret not secret understand what is important today it is that president macaron comes also from the Rothschild Bank and so friends is trying to show that they understand Germany what they don't that it they are they are disposed to do everything to satisfy Germany which they don't but they understood clearly two things first it was important to speak to trend second it was important to decide to build the new fighter aircraft to Europe you know uniting United Kingdom and friends this is as nothing to do with European Union this is to do with the strategy of the states states must have strategy to survive this is something which we have completely forgot during last 30 years in Europe and input discipline I don't know if you want to comment right now you prefer to have this second first comment it's up to you I would say only one thing about 1968 which i think is a crucial year it was a period not only the French rising it was the period of riots in Chicago the election of Richard Nixon who later had to resign it was a worldwide uncertainty it was the Chinese proletarian revolution every 50 years or so the global system undergoes spasm it not doesn't necessarily produce in any new but it's spasms in 1928 before then it was the great global depression that hit the United States but also hit Europe and so on and in each of these cases the most interesting thing was the rise of what had been exotic political leaders the political class that emerges from that is unlike that which went before and that period appears to be catastrophic so if you look at 68 one of the things is what the students said which is the problem with students as they grow up and they stopped being students and then what happens but what happened was it appeared to every reasonable person that the global system was collapsing it didn't get reformed itself so now we have exotic leaders exotic leaders in China exotic leaders maybe in Russia you want to call it exotic certainly in Europe you've got quite a crew and we have the best of all because we're Americans and we always do the best but the thing to remember about this is that this marks the transformation of the global system not in and of itself and unsustainable crisis so you say how will the United States survive Donald Trump very nicely how will China Sivaji is done if a thousands of years it will manage so our horror at what is happening is really the birth pains of a new era and all the things we were seeing around us is simply saying the old era that we love so much is unsustainable just as 1968 basically said the old culture and era of that period was unsustainable and 1928-29 said this is unsustainable and the thing that we have to do is remember two things first no one will believe that they will complete tin you the wait to bring back everything the way it was and second won't go back and the people will make money will those who know which won't go back and will anticipate the future and those who will have political power will also be those so as you said Pompidou understood that it can't go back Nixon understood that it couldn't go back but he didn't know what to do so we had Ronald Reagan eventually taking the United States into the future you must understand that whether you want it or not history is doing its rhythm you are part of that rhythm and Portugal will not be the same afterwards we'd also like to add that when I speaking about the European Union failing that's not Europe Europe is a prosperous enormous ly important place and it consists of Portugal and Spain and Italy and Germany and all these other places but it is structured that was created in the mausoleum which was only a few a few decades old this may not necessarily survive but Europe is going through many such changes so that's what I would like to take from you in your talking of 68 it represented a very good model of this global specimen and killed Fernando thank you it is it is an honor to be here I was not supposed to be here but that's why I consider this a double honor well my intervention is as this one in my perplexity I will put at the end after Second World War growth economic growth I mean and all the dynamics associated to economic growth started let's say a very long wave the first 25 years United States Europe and in general developing world at grow even the socialist world suffered suffered no benefited from economic growth a lot of things happened a lot of systems were built and accommodated and then suddenly we entered into political and energetic rises associated with the rise in the 70s and then this long economic cycle after the second world war entered into a negative slope let's say by the mid of 70s somewhere alongside the eighties until the end of the Cold War and it was in this second phase of the cycle in this negative slope that emerged a lot of things that were the response I'm speaking about the technological response the economic and productive response to a new world we should remember that a lot of innovations came to the fore since mid 70s with computerizing miniaturizing optical fibers new materials engines that spared energy etc etc the the the related economic things about the initial strategic defense initiative of Cornell program and things like that and then when the surge surge of globalization I mean the second long economic cycle in my view that were living today after the Second World War emerged by the end of the eighties also with a very strong political Earth earthquake which was the end of the Cold War and off other things also and Maastricht etc etcetera but in the first and the first phase less - first Achatz the nineties and the first decade of the century we add growth economic growth in developed countries in developing countries at the end rest of the century europe european union began to collapse if we speak about economic growth as a consequence of decisions taken before about the creation of new currency and the problems associated to it and other questions also and certainly mainly when we approach the middle of the second decade these long economic cycles began on the negative face and we are in this negative phase my point and my perplexity is the following now we are again hearing and speaking about technological innovations about things that maybe will be a part of the answer to the problems we are facing like robotics like artificial intelligence like something that could in some way counter the effects of devaluation of labor in industrialized economies and in some way could also going on the counter effect of the negative things of nationalism because I do not think that nationalism is negative per se is not negative or positive is effect a fact of life so my point is for you George because you didn't speak about this aspect of the things how do you look at this interaction between the political situation and its effects and economic situation its effects on the social if we put together the technological innovations that we are in this moment witnessing would you see that this is an important factor we don't know what will happen of course you said that that before but how do you look at this will this really be an important aspect to follow is it important I know that we can say here in this room that it is important for the politicians and for governments to think or to do that and they don't care they don't listen to us and they they don't even know what to do so that anyway we are in the conferencing we are in a divide so my my first point should be the this autumn you look for this negative economic and political slope but at the same time a very positive if we speak about innovations technology how should this min go how do we look at this thank you [Applause] you began speaking about the 1970s I think in terms of core technologies technologies that spawn other technologies the steam engine electricity which spawns communications and a range of other things the internal combustion engine which transforms transportation now we pick 1915 arbitrarily as the beginning of the mass-produced internal combustion engine automobile by 1965 it is mature it is not that it's useless is incredibly useful to continues to exist for decades but its development has only marginal you know you can make a disc break out of a regular brake you cannot transform it and its impact them on growing productivity declines so when you introduce your new bill you have a massive upsurge in the 1920s then by 1965 50 years later it's not growing language the microchip today is the same age as in terms of industrial use is the same age as the automobile was in 1965 it is not high-tech it is a mature technology and it's been a long time since I've had any app aside from tinder that I want to look at really when you take a look at productivity growth in this period it looks very similar to what you saw in the late 60s early 70s a sudden decline so feeding into debt crises feeding into structural shifts you have the maturation of a technology again the maturation doesn't mean it's useless or getting rid of it it will be here for a long time but the quantum leaps in product that it produced or not there no in the 1960s all the fantasies were about a continuation of transportation transportation was a great and we would have rockets that go from city to city we've heard of rockets to Mars we would have all sorts of transportation because when a technology exhausts itself you believe in the extrapolations you ever watch The Jetsons I don't know if you got it here when you know that they were going to be jetpacks that we were going to fly around it so the entire fantasy was yes it's exhausted but wait until all the new things happen now we are now in the same period where the only imagination of new technologies is more of the same and we call it artificial intelligence I was working in artificial intelligence in 1988 and to produce maps that we needed and it was easier to do it by hand they called it artificial intelligence I don't know what artificial intelligence is no one does because we can't produce an analog to our intelligence because we don't know how we think we do not understand thinking how do you produce artificial tell you will produce more powerful programs more powerful model microprocessors you'll produce any number of things with the idea that we are going to produce an analog to human thought implies that we understand human thought but it's an important thing to watch the fantasy the fantasy of the 1960s was all sorts of fantastic things made out of the old technology same thing with the first airplanes were conceived of having a steam engine in this didn't work but it was the point of extrapolation which means that the next decade is going to be a very difficult one like the 1970s where you had economic crises you had an exhaustion of that particular technological culture and normally it takes about a decades for it to come out and it's nothing you will ever conceive of so I will the first time I saw a microchip was in a store at Cornell University and it was a handheld calculator and it had a microchip in it by EULA Packard and I looked at this and they say you want 250 dollars for this is crazy I never thought that because of that I would be buying clothes at Amazon and never leaving my bedroom it never understood what it meant so the next technology will be similar it would be something that's here now no government is producing it some crazy guy who can't get a date his is sitting in his garage in every bathes and he finds things and he doesn't even know what he's finding and that will be it and I have no idea what it is but historically if you go back in the Industrial Revolution there is an imperfect rhythm I made it sound perfect it's not perfect it's an imperfect rhythm of the production so this is a classic period to 2020s particularly of economic dysfunction social instability and decline in technological innovation enjoy yourself [Laughter] [Applause] thank you just before going on debate and taking some questions I would like to put one from my own your idea is that Europe namely European Union never was an independent body until beginning of the 90s because it was controlled either by the US either by the USSR and only after masters until 2008 when the Soviet the Russia expansion and lemon Brothers crisis arrived it was a short period that European Union was controlling his own bodies my question is who is controlling Europe now no one controls Europe until little men with mustaches decide they want to take it off Europe is never it's not easy to control it resists centralized control because it is so diverse it is true that until 1992 Europe was occupied it was occupied by the Americans and the Russians the Russians wanted to impose governments the Americans wanted to make money but still the question of war and peace was not decided in Lisbon or Berlin or Rome it was decided in Washington Moscow and I should ask add that Washington Moscow behaved incredibly carefully to avoid war had European diplomats from 1939 a 1914 villain charged God knows what to happen and then this important to remember because we tend to think of the Russians as irresponsible and the Americans as crazy they were very careful not to rock the boat then Europe was free to do it wanted the United States was the first one that wanted a free trade zone a part of the Marshall Plan was an integrated European economy the French resisted they didn't want to be working with the German they didn't want to be working with the English the French didn't want to work with anybody so nothing changes 1992 was a critical moment and it has to be understood this was not a European moment this was an American moment it was a Russian moment it was a Chinese moment it was a world system shifting apart and opening the door for Europe to chart its own future and it did it was the Maastricht Treaty and how it comes out well you know my opinion but how Europe comes out as Europe fits is still there it is still a one magnificent place so I would argue that it has to be understood that the European Union does not exist in isolation it is part of a global system that adjusted itself in 1992 and gave space for the European Union and then the European Union aligned itself very carefully with forces in China that were developing aligned it's all very carefully with the United States but the idea that suddenly there's this independent European Union it is in the same way as the United States or China is intimately integrated into the international system and the idea that the international system can fail or decline or have a crisis in Europe not be subject to it is the essential problem you said there was one crisis from my point of view there were four crises financial crisis there was the municipal bond crisis there was the third-world debt crisis there was a savings and loan crisis my favorite I never understood it and then there was the subprime crisis each of them were built around one assumption a class of assets that could not decline municipal bonds could not decline third world could debt could not decline because spaceship earth was running out of oil and you just invest in that you will make money savings as long I don't know what couldn't decline and houses and prices in the United States could not decline so it begins with a complete misunderstanding of what it was now how did the Americans deal with it on a Sunday afternoon Paulson and Bernanke and six bankers got together in a small room broke 50 laws and the banks opened the next day and that was it there's no room to hold all of the ministers of the EU I mean where will you have that meeting in the soccer field and this is the fundamental question that sometimes in political systems you must get a bunch of peoples with the common interests and they must make a deal and Bernanke looked at the sentence the Citibank and said you're donating 17 billion dollars they said I wouldn't know that yes you are I'll send you to jail all right well give it so but there's no one in the EU is not built to handle crises when the crisis hit you hear the national governments are trying to cope with them but they didn't control their currencies so it was I think a free trade zone makes perfect sense we don't tell the Mexicans what to do we tell the mixer's what to do but they don't listen to us I mean you had the free trade zone those working wonderfully they became too ambitious so you will find a new place but I think the urgent thing to understand is that Lisbon depends not only on what has happened in Europe but it depends on us having the United States in China and elsewhere because that is defining what is happening in Europe none of us are fully in control of what goes on at least of all Europe okay we are taking three questions to start we have two and Wonder thank you I'm afraid of al-adel I'm a professor in Paris and I'm Brazilian but nobody's perfect I do agree perfectly what you said you said that history's tragic and particularly in this moment and I do absolutely agree with it but I would question the feeling about it hmm which is that there is another constant in history is the more it gets worse the more you have will and people trying to solve the problem on this and humanity can be mean and it had been mean for a long time but no one likes to commit harakiri some nations try but they didn't really succeed they're still there and another thing that nationalism in the end is a very recent ideology as an ideology and dissing can die too so when you say the hyper-connected world it has to face this resurgence of nationalism I do agree but you also said that we cannot go back and if national is win its cows and cows is not a solution so we are in a transition I think we do agree with that but we are in a transition from a model that exhausted itself mass production for mass consumption with mass media and you're entering I don't know how and when and whatever in a model with its network customized production to customize consumption and customized media of the social networks the question is politics how the new politics will to this new model which is a new revolution so important than the Industrial Revolution in the beginning of the 20th century and so it can be an authoritarian model it can be a model that is more can defend our rights and fundamental rights but that depends on the people who are going to do that so it is bad for us that our old people but for young people it is quite exciting the spirit you have to build everything about so that's why I'm question will be the feeling I'm old too so I'm saying oh this world is bad we're gonna have horrible everything's gonna go down so have fun yes we can do all this but for the young people cannot say that to them you cannot say have fun no you have to say go ahead take take charge try to find new things this is the only thing I want we take the second depression now very much any mood to fight yourself my name is Mary Caldor from the London School of Economics my question is very much along the lines of the last question if we think about these phases in economic development the automobile phase even though it started in 1915 was only really globally diffused after the Second World War and it was the consequence of politics it was the consequence of big government it was the consequence of a commitment to redistribution of income it was to left politics actually and I think at the moment what we are facing is that our political institutions are not fit for purpose they don't fit the technological changes that have happened and that explains the current crisis but I think history's always a kind of mixture at dialectic between the idealistic and the cynical and and what I missed really was the idealistic if I think about what you said about Europe for my generation and I'm old - I'm the post-war generation and for us Europe was all about ending wars on the European continent it was a peace project it was about ending fascism ending imperialism and there is an idealistic element to the European project that hasn't completely gone away if I think about and under the early steps of European integration were not only the free zone they were also the agricultural policy which was a kind of social policy there were also structural funds and if I think about the Maastricht Treaty it was immediately after the cold war when there was a kind of idealistic reinvigoration of the Peace Project because we wanted to end the Cold War divided of Europe we wanted to end the occupation by the United States and Russia and at that but it was a compromise actually between the European is that kind of Europeanism expressed in Jacques de lor and at the same moment and this seems to always happen in moments when the technological model exhausts itself the rise of market fundamentalism so and I think that's what's led us to the crisis so I suppose my question once and Owen just finally at I think if we are going to find political institutions for the new era we can't rely on the old nation-state model and what's interesting about the European Union is that it's potentially not a new nation-state a new great power in the making it could be a model of global governance I'm not saying it is but it could be that is about taming and dealing with the worst aspects of globalization and it's that kind of institution that we're going to need if we're going to become a crisis I am an idealist unfortunately I have different ideals so which one of our ideals one of the foundations of war is different ideals the Soviet Union was idealistic Nazi Germany was idealistic they both had terrible ideals I distrust idealism I distrust idealism because people kill in its name and the idea of idealism is benign sometimes in other ways so I'm certainly not feeling that this is the end of the world 1970s wasn't the end of the world we had a magnificent up but I'm saying that we are in a difficult period and there will be an upsurge upsurge based on new technologies new institutions and so on now I want to talk a little about the nation-state because there's a contradiction between the fear of the nation-state and the belief in liberal democracy when you read Montesquieu when you read Rousseau the nation was the foundation of liberal democracy because national self-determination was the fundamental thing one of the great moments of European history was 1848 and 1848 was the Rise of Nations asserting themselves against empires saying I am NOT a Hopps Borg subject I am a Hungarian and I want to with my fellow Hungarians determine my nationhood so Europe has a very complex history now if national self-determination which I recall back you during the heights of American intrusion in other countries is a fundamental value the national self-determination must be in some sense are about the nation if it's not about the nation then what determines what is determined if there is no action by the citizen directly in controlling what the government is and the commonality between the government well you don't have national self-determination to cut liberal democracy off from national self-determination creates a theoretical problem embedded in liberal democracy so Europe of course created the EU but that's because it had a catastrophic history it had Nazi Germany who had taken nationalism to a point of horror and it was Europe's project never to allow that sort of thing to happen again it was understandable now it's trying to find the balance between the fact that we must never allow national self-determination to devolve into Hitler and the same time we must retain the principle of national self-determination to enable our liberal democracy and this is the problem that you're at faces it fears itself and tries to build institutions to keep itself from doing what it did understandable I'm Hungarian and I wish you wouldn't do what they do did but at the same time you believe in liberal democracy and then beaten believing in liberal democracy you can't simply separate off liberal democracy from the right to vote and the right for that vote to determine what kind of government you have I mean you can do that if you want but it it doesn't work it's not only doesn't work it's empirically not working and Poland and Hungary have had huh votes that the EU disapproves of and that's very nice but this Orban and the polish Prime Minister essentially were of whelming elected now how do we manage Europe on the principles of the Elizabeth which believes in national self-determination in the context of the EU where the EU says there must be national self-determination but if the vote goes in a way that we disapprove of we may intervene or if it says we are overwhelmingly committed to not allowing Hitler to happen again so if you appear to be like Hitler we have the right to stop you the EU confuses me the EU confuses me because I don't understand the rules and the rules keep changing it is not that the idea of united Europe is unpalatable frankly I don't care Serkis virtuous but it doesn't seem to have a clarity it wants to have all sorts of things blended in so my view is one I certainly don't I'm not despairing and I have grandchildren and I expect them to live in a much better world but it's gonna be a lousy five ten years that's that's life and I don't feel that Europe should not have a degree of uniting but I think it needs clarity and I don't think it has the political will to clarify that but if it does then it will but in the end my American side says do what you want guys if you're satisfied with how things are turning out it's not my problem my Hungarian side says it's very dangerous when and super national entity comes in because that's what the Habsburg Empire was that's what the great imperial powers were now this is not a great imperial power you say well to a lot of people in Europe it appears that way and they have to be addressed so it's a confusing issue I have no solutions I don't live here it's okay [Music] Thank You professor just like you comment on three points first the reconciliation of North and South Korea how it comes what was the trigger what is the expectation were very build what what will be the result by the end second point is all the mess in the Middle East do you think there is after that kind of democratization of this country's changing regimes if there is a plan for a new sykes-picot agreement to remodel the Middle East and the last point is what about fundamentalism it is it going to be to continue as a day happenings it is going to rain or it's going to increase what's European thank you well I mean Korea the answer is that South Koreans open this door because the North Koreans had artillery aimed at Seoul and they really didn't want to have their capital city destroyed and so they opened a dialogue with the North Koreans and the North Koreans didn't want war they were using their nuclear program to bargain with the United States the problem now is everybody has a different goal if the North Koreans give up the nuclear weapons they're gonna want something for it and what I suspect they're gonna want is withdrawal of US forces from South Korea a partial withdrawal but some loosening of the American presence the South Koreans don't want that they've made that clear they don't trust the North Koreans that far the Americans don't want to draw because they don't open the door to the Chinese the Chinese want to draw because they wanted to rope the Japanese are horrified by all of this so finding the solution between all of the stakeholders here is very hard to imagine but we've had very good photo ops and I suspect since - this is diplomacy they will avoid the problem by carrying on talks to the next 30 years because I don't know what they may have some solution that I can't imagine on the Middle East nobody imposes an order and certainly no conference will impose an order the Middle East runs by its own clock now particularly because it is no longer strategic importance to the United States or Britain or anyone else the development of oil in the United States has reduced the significance of the Persian Gulf and whereas in 1973 the United States regarded this at a fundamentally important area it isn't so this is what happens in a region where no one cares so people want no one intruding into a region this will be it in the meantime the basic problem of the region is not fundamentalism it is the Iranians the Persian Empire is about back cutting that overstates it but they are operating with great power in the region the Israelis are getting ready to hammer them the Americans are hoping that they don't have to get involved but they will get involved the Turks are trying to figure out if they can stay alive with the Iranians or have to the Turks of the most interesting because there historically the most powerful country in the region and normally they impose the kind of settlements it's not pretty when they impose it state just impose it but the Turks are not ready to take that role they don't want to take that role they are amazingly lied to the Russians and the Iranians sort of against the Americans except quietly the Americans are written with so this is the Middle East so I will tell you a joke a frog is swimming across the Suez Canal and a scorpion says give me a ride across and the Frog says I'm not going to give you a ride across you'll sting me and kill me and the Scorpion says why would I kill you I mean I drown with you alright get on board halfway across the scorpion stings him the Frog says why the scorpion says welcome to the Middle East that's my only joke I have no other jokes good a teacher mr. George Friedman I am Fernand water and I am retired of millennial busy people my asking my question to you is very simple don't you believe sir that England will ask in future to return to Union European Union coming back with it's come out and will ask to stop it's away thank you you understand I think you said go back I think that England in future will return to join a union yes I I think the British will want you what did I think the British will want with the Germans must have a free trade agreement with Europe Britain is Germany's third largest partner Germany cannot get exports to them as the United States France and Britain it cannot break trade relations with Britain that's insane they will not let it happen so Britain is prepared I think to have a free trade zone Britain is not prepared to have the brussels prepare override its laws and things like that it also is historically balancing now that's historically but between the United States and Europe and as Europe fragments its reliance on Europe declines and it turns to the United States where it can also have a free trade agreement very quickly I think and I think all parties would welcome that and so Britain is taking advantage of its strategic position between the two tilting back and forth as it sees fit but I think you know for all the rhetoric that comes out of the British banking community I mean they're missing the point which is that Britain is the second largest economy in Europe and it's simply being expelled from it would vastly disrupt the European ships supply chain so the idea that the Europeans except for younger of course is my favourite that the Europeans really want to punish the British they're good negotiators it'll go on for a while but I think they will leave I think they will get a free trade zone of some characteristic I think after that may will be replaced by someone who condemns everything she did but changes nothing so his British politics as usual thank you very much my name is Ansari sucio economy I think globalization and domination is very different because for the collaboration it Califf occasion the production very important but the United States United instead advantage donation for economy is now because policy is very different for economy his name is nav it policy is domain economy is not economic policy or politics in domination in economy in the world thank you from my point of view politics and economics are the same thing it's different ways to look at it but you cannot understand the society without economics you can't understand it without politics they're constantly interplaying one can be understood mathematically sort of on the other can't so different departments and universities handle them but from my point of view there are three elements of any nation state one is economic one is political when it's military all of them are real all of them interact all of them have different grammars but I one of the principals geopolitics is to argue the distinctions that we talk about here don't really have much meaning how can I understand economics without politics vitarka yolk refers even pregunta nodosum is simply kava okie kikyo senior staff ascetically there's Winnie sixth a traveler yo in the knobs Buick necessities of appearance maxxtow - no no scoffs sorry I'm so breeze mr. Fox Tejas severe who kicks posada de Quijas por que no te vi at rubella des Vinicio he extremists ver que está de pasar por que no stops where protester over a water air repair ESO la de dos imperious Cali father's novo if he even rs.20 politically as the cache of Pandorum - obrigada volunteer labor - yes not the conference Ian tears of his aims in Esther confrontation buying air on graphic recording Raja Elma forma the most ragged nominated neck region is fraud - Duke stop estar en tiempos representations it bad okay Calista eldest Ava's hecho por la foret voice no fee not cadets au k don't wash material photography's it was nose into the radium cyst there's no such a association in this publication from stare Emma Pharma denim are good but the desde example quoi Oh Daniel prodigal star a physio travel deal even we're on fear the government action free pass that you possible over our George okay so Empire is a term that's used very lightly Empire to me means an imbalance of power such that one nation can have unbalanced influence among the others that imbalance is not a conspiracy or an attempt to it may be a preface to it but it is not itself a problem it is a natural occurrence so the United States at this point because of the size of his economy 25 percent of the world it's a military force has an imbalance of power in the world and therefore it can influence events to a greater extent in others you could call that an empire it's useful term to talk about these imbalance of power but we usually think of Empire as the British Empire system of systematic exploitation and political oppression in various areas that's one form of Empire the Persian Empire was a very nice system like the EU it is one central government but you go have your own until we don't want you to there are many forms of it I determine his become a probiem since Lenin it's understandable why many people offended by it but I find the term explanatory okay we are going to have one two questions and then we have first first we have one question there and after there will be [Music] [Music] okay so ambassador thank you and foreign devs I'm fortunately retired ambassador and I'm glad you said that your opinion confuses you it means you have scored a point confusing the Americans isn't one of our objectives this was supposed to be a joke I said that I'm glad that you said that your opinion confuses you that means that we didn't have score the point where I can feel it about having said that I appreciate very much your crude realism but there's one point you didn't touch which is what is how much does the financial institutions deregulate is our conditioning democracy this is one point a second point related to that one is that when you deal with underdeveloped countries one of the problems is that they are not able to collect taxes they are not able to go out to test the ship tonight from the the economy in the vet country and now we have more or less the same situation I mean these have this huge - cyber or whatever go to the name of the new technology companies that don't pay taxes fortunately in your opinion someone is trying to make them pay taxes but you if you think about these companies that don't pay taxes there was I don't remember which one or whatever it was not paying three thirteen thousand million billion euros in Europe to add to that with the fish relational capital you have the young shores so the problem is that nobody's paying taxes or at least as it used to be which means that those who pay taxes are being punished it and and those institutions that don't pay taxes have a huge control in the policy world thank you I would summarize the problem this way ever since the 1980s there has been a movement of rationalization of the economy both in moving it to low-wage states in re-engineering the corporation as it was called and part of that in the United States at least is driven by the tax code that made it advantageous to invest and this is created a social catastrophe the accumulation of wealth within a narrow stratum at the top has created one crisis which is more money that can be invested driving the cost of money down and the other has been a devastating loss of jobs and income through the American heartland so I am Not sure that the deregulation was the problem I think it may have been but I think the essential problem was the change of the tax code which remember had to be done because there's a massive capital shortage in the 1970s interest rates were astronomically high and by changing the tax code it encouraged an investment and we had a surge in the economy but as with everything economic all good things must end in bad and we are at that point of badness and this is really almost a worldwide social problem certainly a problem in the United States and Europe because one of the things is the social disjunction between those who cling to the institutions that made this happen and those who are rebelling against it so in the brexit story I mean they were those rebelling against it and those who were saying these people were ignorant and had no idea how terrible it was and to which the other people said you have no idea how terrible it is down here and this is a social problem of the United States it is a social problem of Europe in a very strange way to social problem of China but it's a worldwide problem of we might call it a lager key but it's more complex than that I think deregulation of financial institutions probably lend to it but I really think it was the restructuring of the economy to cope with the capital shortage that was not stopped as it never stopped in time please how do you see the risk of Europe becoming as mid as relevant as the Middle East is to die sooner or later that will happen according to history I would we see that risk in denier or and not so near future to happen to Europe no not about immigration about old according to history told all the powers increase and decrease and they die and Europe will die as all other powers how do you see that risk looking from to die I think it's very high it's very high because even within the context of the European Union the divergence of national interest is already showing itself look who would have imagined 20 years ago that Scotland would seriously think of leaving England and 45% would decide it how many people would have thought that Catalonia would come back but we would have all thought that Belgium would be fighting with itself but the point I'm making is if you step back there are movements in Europe that you would not have imagined possible 20 years ago Catalonia you are also animosities in Europe developing that you wouldn't have imagined you wouldn't have imagined Poland and Germany facing each other the way they are Hungary in Germany facing each other the way they are Britain leaving the EU I mean step back take a look at way the world was ten years ago take a look at the way Europe is now and the change is dramatic it is not dramatic Justin's in rhetoric of professors or anything like that it is fundamentally changed with fragmentation of states being taken very seriously between states schisms reappearing and so the question is what is the force that contains this now to be a little cynical it's not a new policy paper out of Brussels there has to be a systemic shift somehow that accommodates the forces that are demanding this but as we would expect they are being dismissed and frequently held in contempt I read this reminds me of 1920 in Europe when the rising forces of fascism we're dismissed as unimportant and rather than getting in there and competing for the sympathizers of fascism and bringing them over to the party they further alienated them by holding them in contempt under estimating what would happen so I think it's a very dangerous time being the very thing that the EU was designed to avoid is emerging I say this not as a theory it is you know a demonstrable empirical fact now one of the problems in the 1920s was that the liberal parties could not speak to potential Nazi supporters fascists they could not formulate a position the difference in the United States we had our fascists UE long and Roosevelt created a coalition of southern racists northern blacks Jews and Italians and it was an amazing coalition he understood that he could not isolate racism he had to embrace it undermine it do what he could with it in Europe who was far more rigid but the Europeans never imagined that the fascists could win until they won and this is the problem you used the term populism as if a self-evident evil another way to use it is a deep dissatisfaction among the public that is being exploited by parties that you despise the more you despise their members the more they will join so I think that Hillary Clinton lost the election not because the Russians but when he called all of trumps supporters deplorable no one ever wins running against the other party's voters you need to take them but that is the most troubling thing about Europe the self-satisfaction of the elite and the feeling that the solution is to isolate their opponents I think the Roosevelt example of completely unprincipled manipulation really has to be considered somehow or another you the coalition has to be put together of enemies now I don't know many European politicians who have the subtlety for that thank you we have now two final comments and then a final statement the statement from our speaker the floor is yours professor it was a fascinating discussion you generally sing I want to say it is about question of United Kingdom United Kingdom it's not all the second economy in Europe is the only modern economy engine all over Europe but United Kingdom and the stood better the US and before us that create an international currency and open our frontiers to migrants in an indiscriminate way was something which was going to have bad results and they maintained outside this project when they when they decided to live unit the united Europe we must not admit that we are going to in the continent put all of us integrated centralized as a new world power what is going to do to happen is that Germany and France are going to reflect about what we want of Europe and in two years three years we are going to see that Germany wants not a brexit but Dominic's because Germany has not the capacity to integrate the south of Europe and east of Europe when Germany nowadays as I had said before macro has decided that they must have United Kingdom with them so what I think is that in three four years we are going to have a free trade area without Brussels and with the extremely good relation with United States in the second presidents of 10th I think it was going to be that like that hmm well who knows that's a fascinating thing just to see there are of course other alternatives and they are not exactly contradictory to each other because there are common interests in both ways I mean I believe that up to a certain way there is a very strong push towards maintaining at least peace in Europe just so business and economics can continue its own way anyway my point I had an extended conversation yesterday I would say for this panel unfortunately with George Friedman because I put all the questions that I had to put to die yesterday to him so I will not commit the same I will not do the same I will only ask George to tell us something that I told yesterday and I think it's important for Portugal and the question for him it's not a statement from me it's a question the question from forum is forecasting the near future is very difficult but it's his job not mine can you foresee the role a role for Portugal in all these controls world's first I'm gonna say I have tremendous admiration and confidence in Europe the European Union is not Europe it is an institution the Treaty Organization that may or may not be useful but having even born in Europe having enjoyed Paris enjoyed London having studied in Freiburg in Germany I mean this is a an invaluable part of humanity it is however an invaluable part of humanity that is historically going in very strange directions sometimes painful ones one should never be confident in Europe that said I mean the future of humanity in many ways is here more than in the United States even for now later we'll see what role do I see for Portugal I mean I can project the future primarily by looking at the past Portugal is very unique in Europe it is boarded by one country Spain and Spain is in some ways unpredictable your historic commitment has been to Britain the British had an interest in this region and you had an interest in Britain and you've had a long and very fruitful relationship with Britain and that would seem to me to be the foundation of Atlantic Portugal now since your Atlantic Portugal and since the US Navy now dominates the Atlantic we might extend that to a relationship to the United States and Britain since the british-american relationship will get much stronger I think this is an other block so we think about you know various blocks such as the Baltic block and Black Sea block I think there's an Atlantic bloc developing and that Atlantic block has common interests and you should you need to be agile everybody likes agility there's a theory in practice it's very uncomfortable because you have to keep moving but agility for or Portugal at this point is critical but it's back to old habits staying inside the EU outside the EU Britain is your key partner in America could become that Thank You mr. Friedman on behalf of Club of Lisbon thanks for coming and share with us all your views about these different items and I see you here in this one next time puto Deus top Rockefeller was a presence in under Coolidge War II you program a continual departed our topic up [Applause]

Channel: Clube de Lisboa

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Length: 104min 16sec (6256 seconds)

Published: Fri Aug 17 2018