>> Hello everybody and welcome to an evening with
Niall Ferguson. Historian, writer, broadcaster
and Harvard professor. Niall is actually the Laurence
A. Tisch professor of history at Harvard of course, but he is
also now on his way to Stanford as a senior fellow at
the Hoover Institution. No whether you are from
the right, whether you are from the left, or whether that
is not a meaningful description of you, Niall Ferguson
is out to make you think. Some of you may have read one
or more of his 14 books, Empire, Collossus, Civilisation, all
books that bring history alive with dramatic relevance. You might even have
worked your way through the meticulously
researched House of Rothschild volume
one and volume two. Well in his spare time,
Niall does do documentaries with the sort of award-winning
success that leaves some of us who have years in
television quite exasperated. His passion for the
[inaudible] leaves some of the world's top
thinkers, especially those from the left very frustrated. Here's a comment
from The Guardian, "In more than a dozen books
and countless columns he's to dismantle certain accepted
notions of history as well as the very concept of
agreeing with Niall Ferguson." But above all, he is
a [inaudible] man, educated at Oxford's
most magnificent college of [inaudible] and tonight
is very special for me because we were actually
freshman together. We spent just a year down
the corridor from each other at some rather basic
[inaudible] digs and we shared the same kettle. My endearing memory of Niall in those days was the
tightly pleated college gown that he wore that reflected his
[inaudible] scholarly status at Oxford, unlike our
rubbish black tea towels, and that also he
was usually adorned with some gorgeous creature who reminded me recently
of Taylor Swift. Three decades later
he [inaudible] for the remarkable
Ayaan Hirsi Ali and together they make
an impossibly smart and thought-provoking couple. Niall has a sort of big brain
to make some sense of the world, the very interesting
times we live in 2016 and put it in context. He is here as a guest of the
Centre of Independent Studies, and he's managed to fit in an Australian
[inaudible] overnight. Niall will talk. We will have a chat,
and then we'd like you to be asking the questions. Ladies and gentleman,
Niall Ferguson. [ Applause ] >> Thank you very much indeed. It's rather extraordinary to
go from those distant days, I wouldn't say exactly
how distant in Oxford, to the Sydney Opera House. Perhaps it's appropriate
because I decided to become a historian on stage. Admittedly, it was a rather
more modest stage than this one. I was playing the caterpillar
in a production of Alice in Wonderland that was a
musical in the Deans Garden at Christ Church College,
and it was one of a series of lousy parts that I'd landed
in my Oxford dramatic career, and halfway through the run, sitting on a large painted
toadstool smoking a hookah, I decided that I should
abandon the theatre and indeed abandon all the other
things that I'd and failed to do at Oxford, and go back
to the one thing I seemed to be fairly competent at, which
was to write history essays. Standing here all those years
later, I know it's a little hard for some people to understand
because theatre is glamorous. Look at this. And being a historian, let's
be absolutely frank is not glamorous at all. It's not coincidental that
the most boring teacher in the Harry Potter novels is
Dr. Binns, the history teacher. So boring is Mr. Binns that he
has died without realising it and continues as a ghost to
lecture on the goblin wars. When you think about it, historians do have a slightly
morbid [inaudible], don't they, because they are people
who broadly speaking prefer to spend their time with the
dead rather than with the living and if not with the
dead than people who are really very,
very old indeed. Now why would you prefer to spend your days turning the
pages of the letters and diaries of the dead, of the
really, really old. Isn't there something slightly
sad about being a historian? Well, I thought what I
would do tonight would be to explain why I decided to
stop being a caterpillar, or a luff [phonetic], and become
a historian, and I'm going to do it with reference
to a couple of books. First the extraordinary
autobiography of a philosopher of history almost
none of you are likely to have heard of,
R.G. Collingwood. And Collingwood was the
very model of an Oxford don. He was entirely made of tweed, but he wrote a wonderful
autobiography, which set out what I
discovered when I came across it was my
philosophy of history. Let me quote from this wonderful
book, published just on the eve of World War II, "We
study history in order to see more clearly
into the situation in which we are called
upon to act. Hence, the plain in which
ultimately all problems arise is the plain of real life, that
to which they are referred for their solution is history." I realised when I came across
Collingwood's autobiography that he was talking my language. He was arguing for what I
would call applied history, the study of the
past with a view to understanding
the present better. In another wonderful
passage, Collingwood says that historians are like
woodsman who are very familiar with a wooded landscape. Because they've read a lot
about the past, they see things, he calls them tigers
in the grass, that the unwary traveller
may not see. Another exponent of
applied history was and is Henry Kissinger
whose biography I'm halfway through writing. The first volume was
published just last year. And I wanted to begin by sharing
the four things that learnt from writing that first volume. There are four insights
which seem to me relevant to almost all of us and to illustrate why
studying history is a way of understanding
the present better. One of the first things
that Kissinger pointed out to his contemporaries
during the cold war was that nearly all decisions
that would have to be taken in the cold war were
between evils. And the moral challenge
for the statesman was to choose the lesser
or the least of evils. There were very few motherhood and apple pie type options
likely to present themselves. The second thing that I learnt
from writing this book was that any decision that might
be taken by a strategist or for that matter a businessman
was essential conjectural. It was based on a
conjecture about the future. If you thought catastrophe
was approaching and you acted to preempt catastrophe,
the problem was that if you were successful,
there was no real payoff because nobody is really
grateful for disasters averted that therefore don't happen. Whereas it's much more tempting
to kick the can down the road as we now say and hope
that all will be well, hope that something
will turn up, and of course sometimes
you get lucky. So this problem of
conjecture that Kissinger talks about I find extremely
insightful. The third thing I
learnt about Kissinger, and I'll probably talk about
this a bit with [inaudible] in the discussion was that far
from being the arts realist that he is often portrayed
as being, the Machiavellian or Bismarckian figure, actually
Kissinger was an idealist who spent most of his academic
career writing critiques of ruthless, cynical
Machiavellian types. [Inaudible] Bismarck were
not his heros contrary to popular belief, and in
fact Kissinger concludes his unpublished biography of
Bismarck, which I found in amongst his private papers,
that's the unpublished book. He concludes it really
by arguing that Bismarck's career
illustrates the danger of trying to base a foreign policy, base a
strategy, on complete cynicism. But the fourth thing, which
is most relevant tonight is Kissinger insight about history. Kissinger says at one
point that history is to states what character is
to individual human beings. You can't understand your
counterparty in any negotiation if you don't understand the
history of his or her country. This is a simple insight, you
might even think it obvious, but it's become clear to me that the overwhelming
majority certainly of American statesman have
not approached the world in that spirit. Imagine trying to deal with the
Russian President not knowing any Russian history. Imagine a meeting with
the Chinese President without any real background
knowledge of Chinese history. So history is for me a way
of understanding and trying to solve contemporary problems. I've never studied
it for its own sake, because I think I was
told at Oxford I should. I've always been much
closer to Collingwood and Kissinger in
thinking about it. So then I decided tonight to
do something very ambitious. I thought I'd try and summarise
all this I have written about over 25 years
in five minutes. Now I want to make it clear
that this is not to excuse you from buying all 14 books,
but it doesn't really matter if you don't read them, because
you'll know what they say when I'm done. So the first point I think is
that I believe that the spread of what we used to call
Western civilisation. The spread of ideas
and institutions from northwestern Europe to
most of the rest of the world after around 1500 or maybe 1600
was on balance a good thing. Not an unmitigated good thing. It had many, many
costs, but the benefits in my belief outweighed
those costs. Now the extraordinary divergence
that happened from around 1600 to about the 1970s, between
the west and the rest, is one of the most staggering
facts of economic history, and explaining it is one
of the great challenges that a modern historian
has to grapple with. In this weekend's
Wall Street Journal, my old friend Deidre McCloskey
has a go at explaining it. She and I agree on many things
but differ I think on one point. In my view, the success of the
west had nothing whatsoever to do with the things that
people thought it had to do with a hundred years ago. A hundred years ago
it was very common to explain western
success in terms of race, but that was all nonsense. And it was nonsense too to
try and explain it in terms of religion or culture. That doesn't work either. Nor with all due respect
to Jared Diamond [phonetic] and others can we really explain
it in terms of geography, otherwise why did it happen
after 1600 and not after 600. The geography didn't change. So the argument that I have
made in a lot of my recent work, such as the book civilisation,
is that the great divergence has to do with ideas
and institutions. Not just ideas, which is really
what Deidre McCloskey argues, but institutions too, and
the two need one another. The idea of competition
is something legitimate. The idea of the scientific
revolution and the institutions that made it possible. The idea of the rule of law
based on private property and the law courts
and noncorrupt judges that made that possible. The idea of a scientific
approach to medicine and healthcare and
the institutions like my father's profession, the
doctors who made that possible. The idea of a consumer society. The idea that you should all
have multiple cotton garments. And I know you all do. I don't need to look in
your wardrobes to know that you have too
many clothes actually, and you just keep
buying more, don't you, and that's really
important, because without that infinitely elastic appetite for clothing there
would be no point in having an industrial
revolution. And finally the idea of
work itself, the work ethic, which Max Weber [phonetic]
wrongly thought had something to do with Protestantism. Well he hadn't met my
students at Singwa [phonetic] who have a work ethic that would
make almost any Protestant I know weak at the knees. So these were what I
call the six killer apps of western civilisation, and
the point about it was to say that anybody could
download these. They were open access software. They were not specific
to white males. Anybody could benefit from
these ideas and institutions, and most of the world's history
is the modern period has been shaped by the downloading of
the killer apps by the Chinese, by Indians, by a whole
range of different societies that previous lacks these six
extraordinary advantageous ideas and institutions. So the British empire was
not itself a killer app. It was certainly a
killer in some respects, but it wasn't an app in
the way I'm using the term, because empire was the least
original thing that people from northwestern Europe did. It was what everybody did. Most of history is the
history of empire, get over it. And you can't explain the great
divergence in terms of empire since everybody imperialism. What do you think the
Aztecs were doing? What were the Ming doing? So it can't really be about
empire, but what is true is that by creating in
the course of the 17th, 18th and 19th Century,
the largest empire ever, what the British created
unintentionally was a transmission mechanism for
their ideas and institutions. And in some places they
forcibly imposed those ideas and institutions and in other
places they didn't really have to. They just spread there because
the empire let it happen. By the middle of
the 19th Century, certainly in the
second half of it, the British empire
was an enormous engine of globalisation,
promoting not only free trade but the free mobility of
labour and capital on a scale that had never been seen
before, and this country is to a very large extent a
product of that process. [Inaudible] empire I
tried to explain the costs and the benefits of
British imperialism. It was published in
2002 or three I think, and it was at that
point, of course, that the United States
was embarking on an imperial project
of its own. What was it about
Afghanistan and Mesopotamia that seemed so familiar. But of course these
were exactly the places that other empires had
gone, not only the British but many before and after them. In Colossus I argued that the
problem with American project of empire was that it was
unlikely to be as successful as the British because
of three deficits. The first was a fundamental
manpower deficit. Americans unlike Scotsman do
not like going too far away hot, poor, dangerous countries,
whereas to us it just seems like an improvement
in the weather. [laughter] Americans do
not have this [inaudible]. They've already arrived
somewhere where they want to be, and the notion of spending more
than six months in somewhere like Iraq is really an
unpleasant one to them. So it was a fundamental
manpower deficit. Americans don't want
to live in Iraq. They just don't. Then there was a fiscal deficit. It was already obvious in 2004
that the United States was going to spend much more on wars
in Iraq and Afghanistan than anybody realised,
and it already was in an unsustainable
fiscal position. The third deficit though
was the most important one. I was the guy who spotted
that the U.S. empire suffered from attention deficit
disorder syndrome. It had an attention deficit
meaning that after around about at most four years, most people in the electorate would have
lost interest in the project of trying to create some kind of stable democratic state
in a place like Iraq. So this was really
where my thinking was in the mid-Bush years. And it was thinking about the
fiscal deficit that led me to start thinking about the
financial institutions more broadly that shaped the world because there is a special
subset of western institutions that got globalised
in the age of empire. Institutions like banks. Institutions like bond
markets, stock markets, mortgage markets,
insurance products. In the sense of money,
I try to show that one of the distinctive features of western globalisation
was the spread of a system of financial institutions
that was really quite unique, and this had been
globalised by the mid-2000's to an unprecedented
extent, and then I realised, this was in 2006, oh God, the whole thing is completely
unstable and is going to blow up, and it's
going to blow up because of something completely absurd,
sub-prime mortgages in places like Memphis, Tennessee. You have to picture the scene. I'm in Channel 4's headquarters
in London, shiny office, self-confident commissioning
editor. I'm trying to sell the
idea of a television series about the coming
financial crisis, and it's a rather
sneering response. Niall, you know, I just don't
see why British viewers would be remotely interested in
sub-prime mortgages. I said, trust me, trust me,
this is going to matter a lot. And sure enough, but the time
the [inaudible] was finished and the book was being
published, the crisis had begun, which meant that I had
to change all the tenses in the introduction
and the conclusion. It's very inconvenient
to do if you've ever had to change the tenses from
the future to the present. Economic shocks on the scale of
2008 happen really quite rarely. There really have only been
three depression-like events in the modern era. Everybody knows 1929, but
there was also one in 1973, and I've been thinking a lot
about that crisis as well as the crisis of the 1930's. The reason I think
a lot about this is that after any major
financial crisis, history tells us
there's trouble. There's usually an
enormous macroeconomic shock and unemployment and
people lose money and for several years
all anybody thinks about is how to cope. But then after a while as
things begin to improve, they turn to politics, and
they are looking for payback. Economic volatility of
the sort that we have seen in what Australians
call the GFC [laughter], nobody else calls it that. [laughter] If you
say that in New York, they don't know what
you're talking about. So events like that in the 1930's had
cataclysmic consequences, and in a book called "War
of the World" I argued that it was the economic
volatility colliding with multi-ethnic societies in
conditions of imperial decline that made central and eastern
Europe the most explosive part of the world ever in the 1940's. The bloodiest, most
destructive violence in human history happened
there and then partly because of the economic shock that the depression
administered. So obviously we need to
understand and think carefully about whether or not the
consequences of our financial and economic shock
could be comparable. If "War of the World"
implied anything, it implied that we should be
concerned about the economic and political consequences
of a major financial crisis. I'm going to speak for just 15
minutes more, and what I want to do in that time
is apply history. I'm going to apply what
I've learnt over 25, 35 years of studying the subject
to our present situation. First I'm going to
tell you a formula. It's not really a formula,
it's a kind of recipe, because history is not a
science, let's be clear. It's more like a cookbook, but
the formula or the recipe is for populism, and I'd
like you to follow me. I gather Nigela Lawson
[phonetic] spoke here recently and also Jamie Oliver, so this
is the moment for the historian to do the celebrity
chef routine. So were going to do is we're
going to take a little pinch of rising immigration,
just add that into the pot, and then we're going to add
some widening inequality, and then we're going to get some
public perception of corruption, and then we're going to
add a big financial crisis, turn the heat up on this, turn
it up, get it boiling nicely, and then we'll finish the dish
off by adding the demagogue. This is the recipe
for populism always. That's how it works. And all over the world right
now, we're seeing demagogues pop up in precisely the
kind of boiling sauce that I've just concocted. And the one that everybody wants
to talk about is Donald Trump. I'm almost a bit embarrassed to
talk about him because he was of course, is of course, the son
of a Scottish woman, [laughter] and while I like to
lay claim to most of the world's great inventions,
whiskey, I'm not so keen on golf, but golf,
economic liberalism, Donald Trump I'm afraid is
at least partly our fault. [laughter] Now you, like me, are
succumbing to the temptation not to take Trump seriously. Arianna Huffington famously when
Trump announced his intention to run for President said she
would cover the Trump campaign in the entertainment section
of the Huffington Post. Well I think a lot of people
who were paid a lot of money for writing about U.S. Politics
should be seeking gainful employment in some other
field, maybe fast food, because they were all
spectacularly epically wrong. And they are still being wrong. It's still very hard
to get people to realise just how likely it is that Donald Trump
becomes the next President of the United States. Let me tell you how like it is. The betting prediction
markets give him a 28 percent probability right now, sort
of one in four type chance. But three national
polls appeared on Thursday comparing Trump and
Clinton in a general election, and Trump was ahead by three
point in one and by five point in another, and only behind
in the third of the polls. Ladies and gentleman, there is
a 50/50 chance, there's a one in two probability that he
will be the next President of the United States. And so it really, really
matters to ask the question, is this the 1930's all over
again as some good friends of mine sincerely believe,
or is this something else? Is that the wrong analogy. The 1930's got overused
as an analogy because I sometimes think
it's the only history some people know. And if you only know about the
1930's, then everybody looks like Hitler at least if you,
you know, blur your eyes a bit. [laughter] I think it's the
wrong analogy, and here's why. The economic shock of
the 1930's was much worse than ours has been. The unemployment rates
were three times as high as the peak unemployment
rates in the major economies. And what we're seeing today
is populism not fascism. What's the difference? Only a historian can tell you. Just don't bother asking
the political scientists. They'll come back with
a regression analysis that will be entirely worthless. Fascism is about
uniforms, violence, and war. Populism is different. Populism is about restricting
immigration, putting on tariffs to limit free trade,
attacking banks and limiting free
capital movement. It's distinctive in its
tone, and its distinctive in its policies, and this
is populism, not fascism. It's actually doing a violence
to what happened in the 1930's to confuse these two things. I'd like to single out
to illustrate the point, the case of Dennis
Kierney [phonetic]. Put your hand up if you've
heard of Dennis Kierney. Good for you sir. [laughter] Have you thought
of applying to Harvard? Dennis Kierney was the
Trump of the 1870's. Dennis Kierney led a movement,
Californian-based movement to restrict Chinese immigration. The slogan was kick
the Chinese out. He was very like Trump in a lot
of respects including the fact that he himself was
immigrant in origin. He was an Irishman. And the Kierney-ist movement
has much more in common with what we see in
America today than anything that happened anywhere
in the 1930's. The reason I tell you
this is that the style of populism should not
lead us to underestimate it because Kierney achieved a very
substantial part of what he set out to achieve before he
vanished into oblivion. In particular, he achieved
the 1882 exclusion act, he first of a succession
of legislative measures that excluded the Chinese
from the United States, ended the Chinese immigration
to the United States. Populism is consequential. Those who say, what he says on
the campaign trail is one thing, what he'll do in
office is another. It's a coming to a delusion. Populists have to deliver to their fickle followers
or they're done. That is why the wall
along the Mexican border, the ban on Muslim immigration, all of these policy ideas are
not simply throw away lines, they are the essence of
a true populist project. So two further questions, and
then I'm going to wrap up and go into a discussion with you all. Does populism lead to conflict? You see if you draw a slightly
straight line from the 1870's and 1880's when populist
movements like Kierney's sprang up all over the world, they
existed in Europe as well. If you draw a line to
1914, you might be tempted to think populism leads
to conflict, oh dear. But actually that would
be wrong, because the road to World War I led through
progressivism, not populism. A lot had happened in Europe and
in the United States by 1914, and the decision makers of 1914
were actually not populists. The populists had really
vanished from the scene by then. In Britain, Lloyd George had
just passed his people's budget. He was a progressive
if there ever was one. In the German Reich,
the biggest party in the Reichstag was the
social Democratic party, and in the United States, an earnest Princeton
constitutional lawyer, Woodrow Wilson, was the man who would ultimately lead
the United States to war. The fact of the matter is
that it hasn't been populists who have tended to
lead anybody to war because populists don't
really like going abroad for any purpose at all. [laughter] Their dominant mode is
isolationism, not war. It's amazing that Trump
has revived the slogan America First. To me that was just a
massively staggering moments of cognitive dissonance
revealing just how historically ignorant many people
are because surely that whole concept was
discredited by its use as a slogan by isolationists
in the 1930's, isolationists, some of whom were indeed
fascist sympathisers. So American First
doesn't imply conflict. At least I don't think it does. And now we come to the
challenge, the really hard bit of doing applied history. And that is to do historical
analysis in real time. We all have to make a judgement,
at least those of based in the United States
have to make a judgement about what exactly the Trump
presidency would imply, if he has that 50/50
chance of winning it, if he's just a coin toss
away from the White House. The only way of doing that I
think is to analyse a document. Now Donald Trump's foreign
policy has been articulated, if articulated is the word, in a
variety of speeches, interviews, and in one particular speech
in New York a few weeks ago that was designed to
be the flagship speech on foreign policy with
the finally honed skills of an Oxford-trained
medievalist, I am now going to try to understand this
document on your behalf. It matters. I think it means America First
based on national interests, no more free trade, a revival
of cold war bipartisanship. Two, increased military
spending, reduce the debt somehow or
other, revive manufacturing. Three, press Americas
allies in Europe and Asia to contribute more. Four, do a "great
deal" with Russia. I must say that great deal
has me very worried already. What exactly is Trump going
to do a deal with Putin about? So real estate seems
like the obvious thing. There goes eastern Ukraine. Can you see Trump
Towers Damascus? I think that's where he's going. Build the wall and
make Mexico pay. So a kind of stimulus programme
for the Mexican economy, and here's where it
gets really interesting. China. Second largest
economy in the world. The rising power. A place that you
and Australia need to watch very closely indeed. Trump proposes to impose
across the board tariffs on the Chinese economy, to force
the Chinese government to reign in North Korea, and to
end its island building or enlarging programme
in the South China Sea. So that's interesting because
I think it implies a much more confrontational stance
towards Beijing than anybody in Beijing currently expects, and I've just spent
two weeks there. And the standard Chinese
response to Trump is this, oh, American politicians always
bash China on the campaign trail and then when they get into
the White House, it's fine. And he's a businessman so we
can do a great deal with him. This is a mistake. This is a mistake. To imagine that Trump
is not going to deliver on these pledges is
a fundamental error. It comes with misunderstanding
populism. Dennis Kierney didn't just
say, I was just kidding about stopping the Chinese
coming to California. He went after exclusion
until it was legislated. Never underestimate
the commitment of populists to their programme. The final and perhaps
most puzzling potentially inflammatory part of
Trump's foreign policy is that he intends to treat radical
Islam as the primary enemy. To end or scrap the Iran deal, to have what he now calls
a pause for reassessment of Muslim immigration, and
in some unexplained way, to destroy Islamic state. ISIS's days are numbered. Trump wouldn't say
why or how because "We have to be unpredictable." [laughter] So what I did
there was essentially I tried to be a historian thinking
of Trump's foreign policy as if it's 20 years down the
line or 30 years down line and I'm sitting there trying
to figure out how did we get into that incredible
mess in 2017. Why was it that everybody
underestimated the man's chance and become the Republican
nominee, then then underestimated
his chance of becoming the President, and then they underestimated
the likelihood that he would actually do the
stuff he said he was going to do. And what will the
consequences be if something like this happens? We only have history
to guide us. And we can't be sure. This is the intellectual
challenge that makes applied history
so rewarding ultimately. It isn't easy. What is ISIS anyway? A rag taggle of fanatics
who could be taken out by special forces
in a matter of weeks. I've heard that said. Or are they where the Bolsheviks
were exactly a hundred years ago on the brink of becoming
an authentic state with vast resources posing a
mortal threat to our freedoms and actually gaining sustenance from Donald Trump's
crass rhetoric. As I mentioned earlier,
history is not a science. Perhaps it is closer to
cooking than it is to physics, but it seems to me that
applied history is something that we need to do more of, that
our leaders need to study more. I'd love to see applied history
central to the curriculum of all the major universities
in the western world, and I'd like to see historians and history departments studying
these issues rather than, I don't know, sex,
class, identity and antebellum South Carolina,
circa 1853, which doesn't seem to me to be the way
ahead for our subject. Let me conclude with a
quote from Kissinger. "History is not,"
Kissinger said in 1967, "a cookbook offering
pretested recipes. It teaches by analogy
not by maxims. It can illuminate the
consequences of actions in comparable situations, yet
each generation must discover for itself what situations
are in fact comparable." Ladies and gentleman, that
is why I study history and why I chose not to
spend my career sitting on painted toadstools on
stages less grand than this, and I hope tonight at least in
some measure I've convinced you that we need to apply
history much, much more. Thank you very much. [ Applause ] >> That's brilliant, otherwise
we'll get every other word. Niall, that was a tour de force. Thank you very much. Can I start with Kissinger. You've already done
something like this in terms of the most impossible
task ahead of you, two volumes of the
House of Rothschild. How did you come to decide to do
Kissinger, volumes one and two? To be honest, [inaudible],
I tried to avoid it. Having done one vast
archivally based project in the Rothschild history
and then a modest biography that was still very
document heavy, a biography of Siegmund Warburg,
I was very hesitant indeed about writing Kissinger's life, and when he suggested
it to me, I said no. I should explain by way of
background how this came about. I first met him years
and years ago in London, and we had a very
interesting conversation about a book I'd written
on the first world war, the "Pity of War," and something
extraordinary happened, which has always
remained with me. In midsentence Kissinger
vanished and reappeared on the other side of the room at least 25 feet away beside
the super model Elle Macpherson, who had just walked in. And I remember thinking, I could
learn something from this man. So we had a correspondence
and a conversation, and out of it came the idea
that he might commission me to write his biography, and I wasn't the
first person he asked. And I may have even have
been third, and I said no because I thought, A, it's just
going to be a massive amount of work, huge piles of
material, and then, then is more than 10 years ago now, and then
Christopher Hitchens will write this really searing
review of the book, so-- >> Indeed. Well sadly that's not
going to happen now. >> It's very sad. I was very fond of Hitch, and I probably would
have hated his review, although a little part of me
imagines that perhaps just to spite his left-wing friends
he might have given it a good review. In any event, I said no, and Kissinger wrote back this
very Kissingerian letter, which went like this,
I won't do the voice. How very disappointing. Just as I had made up my mind
that you were the perfect man to write the book and
just as I found 154 boxes of private papers that I
had thought had been lost. I don't know if any of you
engage in fishing as a pursuit, but a fly landed on the surface
of the water, and the fish of Ferguson swam
towards it and bit. So I went a couple of
days later, and a couple of weeks later, I was sitting,
going through these boxes, and the material was
just so extraordinary, that I realised I
had to, I realised-- >> And you talked to him, presumably you talked
to him often? >> Yes, well I interviewed
him early on not realising that Henry Kissinger is
going to live to be 150. So you'll be there for volume 2. >> Oh, certainly. I expect him to give the
memorial address at my funeral. [laughter] >> Niall, a little
contrarian, unlike you, Kissinger the idealist. >> Yeah, some people think
that subtitle was just designed to infuriate readers
of the New York Times and maybe the Sidney
Morning Herald, which it was, I have to admit, but it
was based on an insight that hit me almost as soon
as I began reading these, these early, many unpublished
essays and letters and diaries, he wasn't the realist
that I had expected. I had actually imagined
subtitling the book American Machiavelli. That was my original
book proposal subtitle, and within a very
short period of time of reading the stuff I
realise this is all wrong. The young Kissinger, and this
first volume is the first half of his life, the young
Kissinger was none of the things that I had been led to expect. He was not influenced by
Machiavelli, never referred to-- >> This is perfect
territory for Niall Ferguson. >> Well it was, I don't,
I suppose I'm attracted to writing history
because I always found out very quickly once
I get to the document that everything that's been
written before is wrong. And that's very exciting,
and it's uplifting in a way, because then you realise, ah, there is a point to
writing this book. I really have something
new to say, and in at least three
respects Kissinger turns out to have been an idealist. He was an idealist because
he thought appeasement was a realist policy that had
gone disastrously wrong. He was an idealist
because he immersed himself in the philosophy of Immanuel
Kant while he was at Harvard, and he was an idealist because
he repeatedly defined the cold war as a battle of ideas. A battle between
the idea of freedom and unfreedom defined
by the Soviet system. He was not one of those people
who thought it was a struggle between economic systems. In fact, he was clearly
an antimaterialist in his philosophy, so no
it's not just a provocation. I think it's absolutely clear
that people have got him wrong. He's highly critical
of [inaudible]. He's highly critical
of Bismarck, and I see the early Kissinger
as truly an idealist. >> All right. Well we'll forward to volume one and then volume two
a little later. Let me get back to populism. I loved your recipe by the way. How did the United
States end up with two of the most disliked
candidates in history. I think that's what
Huffington said, wasn't it? >> Yeah. Well I think because
the political establishments in both parties completely
underestimated the populist backlash. They didn't realise that there
would need to be something much, much more compelling in the
wake of the financial crisis than Jeb Bush or for that matter
Hillary Clinton was offering. And so I think it was
mainly a failure of elites, and elites failed to get it
because they're so disconnected from ordinary Americans. This is a point my good friend
Charles Murray made several years ago in his brilliant
book "Coming Apart." American societies come apart
so much that people who sit at Harvard or sit in
Washington think tanks or who are running the major
parties are in Congress, have almost no contact with
the regular Joe six pack guy who is the core Trump voter. So they didn't hear it. They weren't in the bar. They weren't having
conversation. And, you know, I have
a curious advantage over these professional
commentators. Because of my wife's courage,
her work on the problem of Islamic extremism, she and therefore I also
require security. We require protection. And it turned out that the guys
providing our security were a better guide to the
U.S. election than any of the professional
commentators on CNN, way better, and they got early on the
significance of Trump. He tells it like it is. I remember that phrase
from early on. He's going to shake things up. That's really what
it's all about. I think the policy detail, you
know, the immigration changes, even the wall, I think that's
much less important to the guys who support him than
the broad idea that he is not this damned
corrupt political establishment that was to blame
for the crisis. >> So the last 24, 48 hours he's
come out probably predictably with the RA on guns,
actually suggesting that the Clinton
administration would get rid of the right to bear arms. Now surprisingly perhaps, Hillary Clinton has
come back at him. Now normally for
populist reasons, the Democrats would
run away from trying to position themselves. I'm just wondering whether
this is something new. >> The [inaudible] is a bit
eccentric because it's one of the odd things that Sanders
is actually not left wing about, maybe the only thing
he's not left wing about, so it's an opportunity
for her to try to rally her left wing support, which is essentially
fading away. If it weren't for
the super delegates, Sanders would get
the nomination. The super delegates are the only
thing that's keeping Hillary Clinton in this game. And because the Democratic
party is more rigged than the Republican party, the populists can't
actually get the nomination, but when you think about
it, that's why Trump is such a good shot at this. The latest polls show that
Sanders would beat Trump, but they suggest clearly that
he has a very much better chance against Hillary because
the mood is so hostile to the establishment. And I think that's
really the key to understanding this election. >> Let's go to promises
and breaking promises because that's something that
resonates here in Australia. Now your fellow, Dennis
Kierney in 1870's California, a great orator I understand,
now he actually said apparently that to shoot encouraged the
crowd, to shoot the first man that goes back on you after you
have elected him intelligently. >> Yeah. >> Now the breaking of
promises and backflips. There's a video going viral
at the moment of 13 minutes of Hillary Clinton lying, how
significant, how significant and how damaging is that whole
idea of breaking promises? >> Well I think it's the key to why we shouldn't
underestimate Trump's readiness to do some of this stuff. People close to him have said
publically, he will execute. He himself has said that within in the first hundred
days the design for the wall will be done. He'll have all the CEOs
into the White House, into the Oval Office,
to tell them that if they outsource
jobs they'll be fined. I mean I think there
will be action. The grave mistake is to
imagine that he's a sort of American Berlusconi,
who's going to win power and then just throw
bunga bunga parties. [laughter] Uh uh uh. Uh uh uh. This is not Italy,
and this is not Berlusconi. And, you know, Trump, I think
in that sense is going to act, and that's why the
populism analogy is good. I was teaching for two weeks in
Beijing, and I taught the case, the example Kierney and
the exclusion acts of 1882, and I could see these young
Chinese students were absolutely stunned to realise that a
populist had with relatively, completely relative ease
had got the U.S. Congress to pass this extraordinary
blanket ban on Chinese immigration. So let's not pretend there
couldn't be a blanket ban on Muslim immigration. That could-- it's one of
the most popular things that Trump has proposed. >> You're warning strongly that Trump will actually
deliver on what he promises. >> Yeah. >> And in a way that
this will be very bad. >> Yes, that it will be very
disruptive, and we can't really with any confidence or any
certainty dismiss in the way that I hear him being dismissed, dismissed Trump is
somebody who's in the campaign trail making
all these noises, but when he's in power will be just-- >> Is it not possible he
might be more of a chameleon than that, that he actually
might be able to get into power and then convince the electorate
that actually no, if the, you know, a pullback of free
trade is not actually the way to go, that he will be
able to manage them, perhaps like he can do between
now and November on women. >> I think the lesson of the
Trump experience is clearly that he can believe five
contradictory things a day and nobody minds, and this
is part of the reality TV, Twitter age that we live in, but I think that his supporters
are not stupid people, and they are alert and will
be alert to any abandonment of the core anti-globalisation
essence of the Trump movement. It is an anti-free
migration, anti-free trade, anti-free capital party,
and if Trump doesn't deliver on those things, he will
be a one-term President. And I always ask my students, what do you think the first
question someone asks themselves is on the morning after
they're elected President of the United States? And the answer to that question
is how do I get reelected for a second term. Every single President
asks that question, and he will be no different. >> So where does this
leave the elites? Where does this leave
the Republican party, and indeed if we look at
our own Prime Minister here, the expectations that he
would drive a reform agenda, that is not happening. What is it going to take for
leaders to get up and lead? >> Well I was attending,
along with your husband, the Australian leadership
retreat in Hayman Island just
before I came here, and I was very mystified by
the invitation that I received because I misread it, and at first I thought
I was being invited to the Australia
leadership retreat. [laughter] I thought
that was the essence of Martin Turnbull's campaign. [laughter]. So the problem is,
to be serious, that leadership has
been wholly absent. In the United States and
in many European countries, political establishments are
essentially led by subtle moves in response to polling. There hasn't really been any of
the kind of leadership we saw in the 1980s when
leaders, Margaret Thatcher and Ronald Reagan, made decisive
and difficult choices that ended up having enormously beneficial
consequences for their countries and I think also for the world. Today's elites, whether they're
on the left or the right, whether they're social Democrats
or conservatives or liberals, in Australian terms, need to get
to work redefining their agendas and offering the
kind of leadership that has been conspicuous
by its absence. People have a right
to better answers to this very simple question. Why are things worse than
they were say 16 years ago. For most Americans, I know for most Australians
they're not worse, but for most Americans they are, the median household is
significantly worse off. >> And Niall, the
issue of inequality, it is such an important issue. That great Ted talk in 2014,
the pitchforks are coming, that doesn't seem to
have been addressed. The nexus between the
political elites and the banks, we've got the, you know, royal
commission into banking, a very, very strong idea that's being
pushed by the opposition. At the moment it's
a very popular idea. How do leaders get over
or solve for inequality. >> Well let me answer briefly and then before the
pitchforks come out, we should probably take some
questions from the floor in the spirit of democracy,
I think that the key to redefining the politics
of our time in fact lies with the intellectuals. In the 1970s, there was a
great rethink on the right. A fundamental rethink that Greg
Lindsay, who is here tonight, was a part of in setting up the
sense of independent studies, a reassessment of the
marked rereading of higher, fundamental revitalisation
of what became in the UK conservative
politics in the [inaudible] era, but it had its versions
all over the western world. And so it began in fact
with the intellectuals. Nothing comparable has
happened, at least in the U.S., in the last 10 years
with the result that the establishment
candidates went out on the campaign trail
with very, very lame, dusted down versions of earlier
policy platforms, tax cuts. In an age when inequality
is the issue, and tax cuts have
happened, tax cuts cease to be a salient proposition. They only lead to, in the
case of the United States, noncredible fiscal programmes. So I think there needs
to be a big rethink. Institutions like CIS will
undoubtedly be a part of it, but until that happens, establishment politicians will
essentially be without the kind of dynamic ideas they need to
have to counter the populists. Donald Trump filled a vacuum. There were no credible answers to the question why
did we get screwed over the last 16 years,
and he provided them. His answers, I think, are wrong. I don't think that you can
blame it on immigration. I don't think you can
blame it on free trade. I think both those things
were in fact very good for the United States, but I
think you probably can blame at least some of the problem
on a corrupt political elite. And precisely that energy
that's being directed against a discredited elite is
what could very well put him in the White House. >> All right, we would like
as many people as possible to be able to ask questions. Now you'll see microphones
numbered. There's two, four at
the back, three and one. If any of you have
a question would like to make your way towards
them, I'll just have one more, if I may, while we're waiting
for this, because you called it, and I think here, Niall, for
the first time, on inflation, on deflation, sorry, you've
future historians will look back on the first quarter of
2016 as the turning point, the end of the hangover. Boy that's a big call. >> Well if everybody believes
in secular stagnation, which is now more or less
where we are, then it's time for the contrarian, which is
what I probably am by nature, to push back, and
financial history leads us to expect the hangover
to end at some point. I think it's ending
around about now. I think that's already obvious
in at least some indicators. I think the monetary policy is
ultimately having the effects albeit after long lags that it
was intended to have at least in the United States,
and I think the idea that the world is going to flat
line for the foreseeable future, which is the central idea of Larry Summer's Secular
Stagnation is not very historically plausible,
so yeah, it's a big call, I may turn out to be wrong. If you turn out to be wrong, one thing I have
learnt, is don't dig in. Just don't dig in. [laughter] The data will come
in over the next few weeks and months, and we'll see
whether there was an inflexion point or whether Larry's right
and we're in secular stagnation, but trying all these
things in real time is part of what applied history
should be. We should be looking
to challenge anything that becomes conventional
wisdom. That's what I was doing. >> Terrific. All right. Mike, number two, sir. >> Thank you. Niall, you made a case that
the world should think more about history, and at the same
time you talk about populism and these clearly fundamental
changes between history of the elites, which
really was the case until people were
enfranchised and the era of the 140-character
thought bubble. If you add to that, the
democratisation of economics, with the middle class saving
for its own retirement for the first time in
the world's history, do we run the risk of relying on
the crutch of what's gone before in order to solve the problems
that are coming to the future. >> Well let me-- I'm going to
give really short answers to try to get to as many people
as possible in 12 minutes that remain on the clock. I think the central problem
is in fact an old one. It's a problem Edmund Burke
identified when he said that the real social contract
is between the generations, between the dead, the
living, and the unborn. And nearly every country
including this one is guilty at this point of a
transfer of resources from future generations
to the current generation, and in particular it's already
going on from young people to the people who are
retired, and that imbalance, that generational inequity, is
unsustainable, unjustifiable, and would ultimately
produce a backlash, a reaction by young
people against what seems like a system stacked
against them. So one of the central projects
in my mind for a new politics in the 21st Century
addresses the problem of generational inequity and
starts focussing people's minds on posterity instead of now. Instead of me, what
about the grandchildren? What is our future
of the long run? That is something that in modern
democracy has sadly vanished. >> Number four. [ Applause ] >> This is a similar
question, so with the rise of globalisation, the increasing
free movement of people and of course the rise of China
and then with the breakdown of the intergenerational
social contract and also national-level social
contract, what do you see as being the future of
the western welfare state? >> It needs radical reform. And it will vary from
country to country, but that reform must be based on
creating generational balance. We can't possibly create a
system and sustain a system which is this skewed
against future generations. It can't be right that we
should live off the future, that we should live
off the unborn just because the unborn
don't get to vote. So my appeal, and I'll
simply reiterate this, to politicians is, could
you please include those who are disenfranchised
by their youth or the fact that they haven't been
born in your calculations. Let's make policies
for the long run, and that must imply
some fundamental reform. Otherwise, it's one
of two things. This is a point Larry
Koflacov [phonetic] made, my friend at Boston University,
years ago, either we are going to saddle future generations
with far, far higher tax bills than we paid in our time,
or they are simply not going to receive a fraction of the
benefits that we received in our time, and it may be
some combination of the two, but that's the way
it's currently set up in nearly every democracy. And it's odd because previous
generations did not make arguments that excluded
posterity. My grandfathers thought
when they went to fight in the world wars of me. They thought of me even
though I didn't exist because they risked their lives
fighting for freedom always with an eye on future
generations. And for some inexplicable
reason, the baby boomers deleted
posterity from the speeches, and we need to change that. >> Okay. Number three. [ Applause ] >> Niall, good evening. My name is Cameron. You cast your argument about
however we should be aware of Donald Trump, some of
which I wouldn't agree with, but how do you suggest
history might lead us to remove this blanket
of political correctness, which is smothering us? [applause] >> Anybody who works in an
American university lives under that blanket
on a daily basis. The safe spaces, the trigger
warnings, the dread moment when you'll be called on
to check your privilege, and it's a slightly bizarre
culture, it's like a sort of parody of the Chinese
cultural revolution in which a relatively
small number of [inaudible] students
create an atmosphere in which free discussion
becomes harder and harder. And the negative consequence
of this is not just, it seems to me inside
universities, broadly speaking it creates
an appetite for plain speaking on behalf of ordinary people. Playing to the point
of vulgar and brash. So Trump is in some
measure a reaction against the PC constraints. What was to many people
deeply exhilarating about Trump's speeches was their
completely unfiltered quality, that every single thing that was
politically incorrect was there, and I don't think it would
have been as appealing, it would not have
been as exciting if these had not become taboos. Now I can't condone the
xenophobia, the misogyny, it's all in there,
and it's malignant. But the reason that
it's popular, the reason that it resonates is that we've created an
almost stifling culture of self-censorship in our
academies, in our universities, in the media, and I think
ultimately will destroy itself. This will destroy
itself as a culture. The absurdity of much of
the research that is done in the humanities is
simply self-destructive. These departments of post-modernist mumbo-jumbo
will be gone in 20 years' time. They simply will not be
able to sustain themselves because nobody wants
to study this stuff, and the class sizes
just keep shrinking. So I would be of good cheer. What you're witnessing
right now is the sort of dialect taking action. You know, it's almost
[inaudible]. This political correctness,
the thesis, there's Trump, the antithesis, and presumably
some grim synthesis will emerge over the coming years. >> Number one. [ Applause ] >> Niall, I don't think there'd
be many people these days who would not agree
that the United States and George W's actions in
Iraq were a mistake in the way in which they were carried out. I'm wondering after 40
years now since the end of the Vietnam War, what
Henry Kissinger's view is of the American involvement
in Vietnam. >> Well, that I've
already covered in volume one at some length. I'll say briefly that I
think the two wars were very different, and of course
Vietnam killed many more people than the Iraq war and was quite
different in its character because it was embarked on
by Democratic administrations and the belief that there were
dominos that would fall right across Asia if North Vietnam
overran South Vietnam. Iraq was different. It was a war of choice, which
I think with the benefit of hindsight most people
would admit it was a mistake or at least was carried
out so ineptly that it would have been better
if it had not been done. One of the things I
show in the volume one of the Kissinger biography is
that Kissinger was a critic of the Vietnam war much earlier
than most people have realised. In 1965, he went to
Vietnam for the first time. He was in no way an Asia expert. He'd already had deep doubts
in '63 at the time of the coupe against the DM government
in Saigon. On his trip in Vietnam, which he
writes up in an amazing diary, which was one of the reasons
I decided to do the book. It's just a great document. He identifies very accurately
all that is going wrong with the American
effort in South Vietnam and with the South Vietnamese
government and comes back at the end of that trip
essentially convinced that the U.S. will have
to get out of Vietnam by diplomatic means, and for
the next ten years, a very large and rising proportion
of his time was spent on trying to achieve that. So I have the second
volume still to write and the obviously crucial
chapters still to write about Vietnam and about
Cambodia, but yeah, I think I've already begun to make an important
contribution on that issue. >> Back to number two. >> Hi there. You talked about the opportunity
of using history and historians to better inform
decision making. If that were the case,
are you in favour of a more evidence-based
approach to assessing our experts because
there's always the danger that we spend a lot of time
listening to eloquent people who are wrong a lot of the
time and people who are not so eloquent or not so precise but are generally
correct are ignored. So is this an intellectualising
entertainment game or not? >> I think it's very good
that you asked the question. [applause] I [inaudible]
has been writing a lot about the problem of bogus
expertise, and there's no doubt that in the realm of public
intellectuals there's shockingly little accountability,
and I can think of at least one eminent
New York Times columnist who constantly claims to
be right about everything, claims that it's
very easy to disprove by simply reading back
through the years. I, I hope hold myself to
a higher stand than that. I have established the practice
of assessing every prediction that I make and trying,
you're desperate to interject, could I finish? And what I've learnt is that one
needs to be extremely rigorous about identifying
what one got wrong. If one's made a predictive
statement of the end of the year, look
back, see how it looks. So I've become much
more formal in the way that I assess my own
performance, when I'm commenting on current events, but
don't let's hold people to impossible standards
as is often the case. In the world of Twitter, a
single error, even a tiny error, is somehow held up as evidence
that you have bad faith and should be in
every way discredited. Let me tell you, nobody
is 100 percent right, and nobody can have 100 percent
confidence in what they predict. The reality is that
it is impossible to predict the future
of human history. It is a process too
complex to model, and most of what people say in
settings like this or on shows on ABC is conjectural, and
sometimes they will be right, and sometimes they
will be wrong. The key thing is to be right
more than you're wrong. No one's a hundred
percent right. >> All right. >> I've got a brief-- >> No, no. Sorry, there are
so many questions, number four, thank you. >> I have a question on
the end of stagnation. Adjusted monetary [inaudible]
for the U.S. dollar stands at four times what it
was in September 2008. If you are correct,
is it necessary for the U.S. Federal Reserve to start expanding its
balance sheets soon and will that be difficult. >> No and therefore
it doesn't matter. The evidence on balance sheet
expansion through the ages, and for those of you
who are not obsessed with monetary policy forgive us,
but the evidence is very clear that central banks, for example, in world war II greatly
expanded their balance sheets. They didn't really ever
contract them nominally, over time economy's grew, and in relative terms the
balance sheets contracted. I don't think there is going
to be any sustained effort to reduce those balance
sheets in nominal terms, and I think it would be
futile to try to do so. >> Right. Number three. >> Niall, you mentioned
China and Russia. They are countries
with long-term strong, stable leaders, whatever we
might think about their system of government and philosophy. In this country, we've had five
prime ministers in five years. What do we need to change? [applause] >> Oh no. >> The one thing that
I learnt from writing, another of the things
that I learnt from writing the Kissinger book
was that a Harvard professor in a foreign country
should be extremely cautious about [laughter] offering
opinions about local politics. Every single person in
this auditorium knows more about Australian politics than
I do, and so I'm not going to make the mistake that
Kissinger made when he was on a lecture tour
I think in Pakistan and was a question along
these lines about Pakistan, and as he describes it,
at the time, you know, I felt as a Harvard
profession I was omniscient, and if somebody was
asking me a question, it must be because
I knew the answer. I really don't know the
answer to that, nor am I going to attempt to confect or construct an answer
off the cuff. It would be incredibly
pretentious and arrogant of me to do that. >> Do we question
from number one? [applause] Yes ma'am. >> Hi, you spoke earlier
of I guess the demise of intellectualism
and that there needed to be some sort of backlash. What do you envision
saying of backlash. Well I think the backlash
is happening in the sense that populism hates
academic elites. I mean if I say I'm
a Harvard professor to the average truck
driver, the contempt that will cross his face
is really blood curdling, so I think the disconnect
is not just a disconnect in terms of [inaudible]. There's a kind of disconnect in
terms of intellectual traffic. The people who are outside
college America regard college America with distain and
it's reciprocated by people like my colleagues who
would never give the time of day to a truck driver. I think it's deeply unhealthy. I grew up in Glasgow, as you
may still just about be able to detect in my accent, and
one of the benefits of growing up in Glasgow was that I
was taught by my parents and my grandparents to
treat everybody equally and to regard the bus driver as
much worthy of a conversation as the Duke of Montrose. And that was a fantastic
preparation for life. It has meant that I've never
ever hesitated to engage in conversation with the
proverbial Joe six pack, and often those conversations
are a lot more fun than the conversations I have with my more politically
correct colleagues. I think one of the things
that makes me feel at home in this town, in this country is that there is a somewhat similar
spirit here, and travelling as I have done in the last
couple of days back and forth and plains, I noticed
immediately that there isn't the same sense
of intellectual disconnection that seems to mar American
public life today and explains, I think why, you know,
why Trump has resonated in the way that he has. I think none of this would
be possible if it hadn't been for the [inaudible],
this fundamental betrayal by the intellectuals of
the very working class that they always seem to claim
to be acting on behalf of but never actually mix with. >> One from number two. [applause] >> Hi there. Australia is at an
interesting crossroads. We company to the end of
the, of an economic boom. I think heading to an election, the leaders will possibly
be looking for new ideas so that the economic
system [inaudible] improved. Was there a country in the
past in a similar situation, and is there anything
we can learn from them? >> This is a great question,
and it's an opportunity to do applied history. I think that the prosperity
that Australia has enjoyed has in fact been enjoyed in somewhat
similar forms by a whole bunch of countries that found
themselves on the right side of a resources boom, driven
mainly by Chinese demand, and compared with some of the
other players in this space, you have done much better. Think Brazil. Think Russia. So in fact Australia's boom
when I take a step back and try to understand it was not
too narrowly confined to the resources sector that
others did not benefit from it. And Australia's economic
policies , which I think were on a very secure
foundation to begin with, going back to the
time of John Howard. This country was put
through a fiscal prenup that many another country
wishes it had done, and that has given it a great
deal of breathing space, and perhaps it might be
said space to make mistakes. So the lessons are
fairly obvious, and I don't think they're any
different from the lessons that some of us were offering
at the time of the boom. This is the chance, that was the
chance to get the house in order for the long run and
not to create the kind of fiscal imbalances I
was talking about earlier. Any country that has resource
wealth has to be very careful in managing it with the
interest of posterity in mind because extracted industries by their very nature
have a finite life, and that matters a lot if
you're thinking in terms of the long run, Australia's
next 100, 200 years. Paul Collier, my old friend at Oxford has written very
eloquently about this, about mainly African countries,
but the points he makes in books like "The Plundered Planet,"
actually apply equally well to developed countries with
large resource sectors. And let me make a general
point as I'm sneaking away from talking too
specifically about Australia, just out of my own ignorance, we
should hold developed countries to the same standards that
for years we've been trying to hold less developed
countries too. In the World Bank, in the
realm of [inaudible] economics, over the last generation or
so, there has been an argument that there must be greater
transparency, that there needs to be budgeting for the
long-term, that there needs to be rule of law, and
so forth and so on. There needs to be explicit,
constitutional, underpinnings for the management of
resources, that there need to be really large
sovereign wealth funds built so that the benefits of extraction now are
not consumed solely by the generation living now. All of those arguments
have been made about mainly developing
countries. They should equally apply
to wealthy countries. In the great degeneration,
I made the point that it's one thing to
improve the institutions of a poor country, and
we're all in favour of that, but it's another thing
to allow the institutions of a rich country
to deteriorate. And that insidious process where institutions get
worse imperceptibly because people are complacent,
that has gone much further in the United States than
here, but it could happen here. And sometimes I think
what Australians need to do is a little bit more
comparative [inaudible] economy. Ask yourselves the question,
could our future end up looking like America's present. Could the middle
class be hollowed out? Could the generational
imbalances become completely unsustainable? Could the media and the
intellectuals be so estranged from the rugby league fans
that ultimately Trump emerges in some Australian incarnation. And those are the
sorts of lesson that Australia should be
learning while it still has time. >> [Inaudible] thank you. [applause] Now it pains me to
say this, and I'm terribly sorry for those who are in the
line to ask questions, but I'm afraid our time
is up, and I would love to lock the doors right
now and just keep you here for another 24 hours
because everybody hangs off of what you day, and
Niall, thank you so much. It's been the most
wonderful evening. Thank you. >> Thank you [inaudible]. Thank you all very much indeed. [ Applause ]
