Conversations: Featuring Niall Ferguson II

[Music] [Music] [Music] [Music] ladies and gentlemen please welcome John Anderson and Neil Ferguson thank you very much for being with us last time you and I spoke in your place or your place of current residence and the west coast of America we were talking about freedom and the threats to the freedoms that we value and should value more and you saw those threats in ascending order as being first radical Islam secondly the rise of China a one-party state and the risk of miscalculation superpower versus the rising superpower but thirdly and interestingly I thought fascinatingly you said the greatest threat is our self-loathing and our lack of understanding of our own history so cultural issues if you like what we've become now place our future in some jeopardy now perhaps the most respected and preeminent of Australian print journalists the editor-at-large of the Australian here Paul Kelly wrote recently and I thought was a very sobering words of I can quote him said that it may not be possible for leaders to succeed in societies that have lost their traditional virtue and much of a Civic glue that held them together so to start off with a simple one do we in the West individually and collectively need to rediscover those virtues and I had to go and have a good look to make sure what the classic virtues were prudence justice temperance and courage we need to rediscover them virtues an and I think Civic glue is perhaps the more important variable there if you live in the United States you'll constantly assailed by the the noise of the culture war and the culture war is tearing America apart tearing it apart along multiple lines racial generational gender you name it there's there's a division that somebody's trying to exploit and although these divisions are not new what it I think is new is a completely uncivil quality to discourse the old rules of engagement the rules of debate that I I suppose I I grew up with in the west of Scotland were that there were certain rhetorical rules but generally speaking an argument had to be supported by facts in the culture war that doesn't any longer apply in the culture war what you try to do is to destroy the reputation of the person on the other side you simply attack their good faith and does really matter what facts they may bring to the table the question is simply one of of the approving that they're their bad faith and I think this atmosphere is deeply unhealthy it's very difficult to have a democracy function if it's being torn apart in this way and if rational argument is no longer a legitimate mode of settling differences my wife is much more interesting and and wonderful than I'll ever be ayaan Hirsi Ali said in a in a recent speech in of all places Chile that we no longer live in a democracy we live in an emic recei where emotions trump facts and i was profoundly struck by this I wish I'd said it myself and I said that's an amazing idea because that that's absolutely right it's not a question of of being able to debate of conventional debate in which arguments are deployed with with evidence it's now just whose emotion wins who is most upset who has been most wronged that's how we are now trying to settle issues issues often of great complexity so I do think that that he's right that there's something amiss in the way that we in the way that we debate that virtues think about virtues is that they are as perennial as Isis one of the hardest things to understand about human history is that there are certain things that are constant in the human condition which enable us to understand the acidities or Shakespeare I was recently reimbursing myself in Shakespeare as a kind of mental diet really mental cleansing or mental restoration I stopped listening to podcasts and watching your Twitter feed listen to Shakespeare and the most striking thing about about reimbursing myself in Shakespeare which was was wonderful I discovered lots and lots of old 1960s BBC recordings in Paul Scofield as Macbeth was the realization that we can completely understand the dynamics of Macbeth we understand Macbeth somewhat unthinking ambition and we understand Lady Macbeth's more intellectual ambition that the self destructs we completely get with Beth I took our seven-year-old son to see Macbeth in London over the holidays and he got it too I mean that's a long time ago we're talking about half a millennium apart we understand the dynamics there and yet we are playing out virtue and vice ambition and revenge hubris and nemesis in a technologically transformed landscape that Shakespeare would be baffled by were he to wander in and wonder what on earth we were doing so I I think that the key here is don't expect us to be more virtuous than the Elizabethans and don't expect us to be much worse than them that the virtues and the vices have been in this endless struggle over the centuries that will never change the question is whether we have institutions of civic life that encourage incentivize us to be virtuously and that's I think the problem right I think was a colleague of yours Thomas Sol who who noted recently well those sort of clever little lines that you hear occasionally it's not that little Johnny doesn't know how to think it's not the little Johnny doesn't know how to feel the trouble is a little Johnny can no longer tell the difference that's a perfect cue for a glass of scotch don't you think I want to assure you that I'm having this for purely medicinal purposes because I have a slightly ticklish throat and only whiskey can prevent me from coughing convulsively that is the only reason I'm drinking Laphroaig tonight Laphroaig a delicious aisle a single malt my favorite he's monopolizing it I might add you you're very welcome to have it John but but I can't pour it into that glass because there's way too much water whenever you're ready well we had a good question on this question of feelings versus reality from Peter Madden just back from a stint in Ghana helping out with their economy and prudential arrangements Peter my question Adam Smith wrote the Theory of Moral Sentiments before The Wealth of Nations Smith's recognized the people in a community tend to share a sense of mutual sympathy for one another I think this is what led to trade and commerce but after life in sub-saharan Africa I see the West is hyper occupied with social personal feelings including in the workforce from your writings on civilizations the role of finance and economics generally I'm interested in your thoughts on how does this new moral sentiment look to be affecting our social fabric thanks Peter welcome welcome back from from Ghana I I think everybody as part of a good university education should read both the wealth of nations and the Theory of Moral Sentiments I I grew up in in Adam Smith land and Scotland and I remember one day I was ill and couldn't go to school and my father who didn't really believe in illness in his own children who's a doctor and he didn't regard illness as legitimate in his own children came in before he to work and handed me a copy of The Wealth of Nations with the words you'd better read that he never handed me the Theory of Moral Sentiments and I came to that book much later but it's a natural companion to the wealth of nations and the key point to understand is smith's observation that one can't regard the market economy in isolation it's embedded in civil society and we can't really have a functioning market economy based on exchange without trust and and empathy in particular which is a really key idea in smith's thinking so we all need to make sure we don't just read The Wealth of Nations I sometimes think a generation of economists we're only really thinking about the wealth of nations I'm not sure they even read the book but they kind of read the Wikipedia summary and not realizing that that if you just do a market economy without civil society it's unlikely to work this this is really well illustrated by what happened in the Russian economy after the Soviet collapse the political scientists and economists who rushed over to advise the Russians essentially said well all you have to do is very simple old elections and and then have a stock market and done and they didn't realize that in the absence of I mean there was no civil society in the rubble of the Soviet Union if all you do is is elections and privatization in a stock market then pretty quickly the oligarchs are in charge because there wasn't that foundation of civil society that did still exist in a country like Poland that hadn't been under communist rule for so long so this is is a crucial insight that Smith the Smith gives us and a reminder that we can't have economics without the the social and cultural foundation within which a market economy can only function it's the same really as the rule of law you can't expect a market economy to function without the rule of law so I guess that's really a really general and universally applicable insight now if Smith were around today he would have to write a different book and it would be called the theory of moral outrage because the default setting for anybody wishing to make a point in politics today's outrage one has to be in a state of moral indignation to to get anywhere and so really this is echoing when I I said earlier that the tenor of debate tends to be almost the opposite of that empathy and sympathy that that Smith saw is so central to a functioning society if you really want to be outraged and get yourself worked up into a state of righteous indignation you must first cut off the empathy you must not attempt to see the other person's point of view because that that would make it much harder to be outraged empathy is what a good parent teaches a child as soon as possible children don't start off very empathetic and you try to train them to be empathetic you know don't you think that you know Johnny really didn't particularly enjoy that punch you gave him on the nose that I say that to Thomas on a regular basis and gradually Thomas has acquired has acquired empathy he'll lose it again when he becomes a teenager of course but you know you you you live in hope that you'll embed it but I have the sense that the the social justice warriors of American campuses are engaged in some rather different process to try to stamp out empathy don't for heaven's sake put yourself in the position of somebody who voted for Donald Trump because if you were to empathize for our moments with their position as say a relatively unskilled white working-class voters from middle America if you were to empathize with them you might forget for a second that they are nothing other than the instruments of white supremacy and the patriarchy to be crushed so we are at witnessing a sustained campaign against empathy in order to keep the level of moral indignation high enough for whatever goal is in in the minds of the social justice movement you touched on the issue of trusts as being vitally important in this whole question of the relationship between if you like a civic society and good economic and political outcomes there's research everywhere in this country demonstrating that Australians have lost trust in the system the levels of distrust in politicians is at record levels the lack of trust is at record levels we've just had a royal commission of inquiry into banking and financial services with confronting something like 7075 recommendations out of it you could say it's a good thing we had it because it turned up all sorts of things that people were horrified by you could say it's a good thing that there's recommendations but the issue it seems to me is that every time Trust breaks down and we find that people won't do voluntarily what we expect them to do we're us for the rule book we look to coerce them and I actually have come to think that there's quite a relationship between the breakdown of trust and the potential for the loss of freedom those new rules the policing that will go with it the censorious attitude that's developed it will cost it will cost it will not be a good thing for our economy or for our society it would have been far better if it had never been needed the relationship between trust and freedom any thoughts many thoughts thankfully amma wrote a book about this years guiding in the 1990s and i remember being very struck by the observation that the trust is a kind of social capital that some societies have and and others don't he just was in africa there are some African societies work where there really is almost no trust and one relies on on the Kalashnikov rather than trust I remember a friend of mine a Chinese friend saying you know the big difference between you guys meaning Westerners and ass is that your default setting is to trust someone when you meet them and ours is the precise opposite so I thought about how long ago did you say that this was about 10 years ago I wonder if each I hope he'd still said what he said it in Singapore not in mainland China and yet he was from mainland China I think if one looks at the decline of trust in institutions because that's a different thing from trust in a stranger there's been a steep decline in in the trust that people feel in institutions in most developed countries if you look at the polling on the United States very few institutions have not seen a marked decline in trust over a 30 to 40 year time period because we have Gallup data in the u.s. going back to 1970s the decline in trust in Congress is very striking I mean it's been down in the single digits at some points in recent years but you've also seen a decline in trust in the Supreme Court and surprisingly perhaps the presidency for that certainly predates Donald Trump the military is an exception in the American case Trust has actually risen in the military relative to the 1970s perhaps that's not surprising because the 70s was the time of Vietnam there's still high levels of trust in the police but most institutions have experienced a significant decline in trust and amongst the worst non-political institutions in these terms of the bank's journalists and the bank's kind of vie to be bottom of the the trust league table now is this because people have for whatever reason withdrawn their trust capriciously no it's because the banks and indeed the media in most developed countries have lost people's trust by the way they've acted I'm not going to get into the details of the Australian banks but let's let's look at the biggest banks in the world and the ones that in many ways were the epicenter of the financial crisis the American banks they had behaved in a range of ways that were no illegal they were compliant with regulation or at least the regulator's tolerated them but the consequences for ordinary people would catastrophic not just because of the mis-selling all financial products that were bad but because the whole thing turned into a massive systemic crisis that nearly blew up the world economy the way the 1929 crash did we we had a very close shave I mean you kind of forgotten it now but there nearly was a Great Depression because of the way the banks were run and I wrote a book about this the sense of money and spent some time thinking about what had happened and one of the striking features and this goes to your question John about the banks is that they were actually the most regulated entities in the US financial system on the eve of the crisis people had worried that hedge funds would cause the next financial crisis or the unregulated derivatives markets no no it was the highly regulated banks which a whole bunch of regulators were supposed to be watching over and it hit me as I was writing the ascent of money that the culture of banking had fundamentally changed over the 20 or so years before the financial crisis from a culture which was based on informal understandings and relatively light supervision in which you tried to do the right thing to a culture in which you simply complied with the regulation are we compliant is a very different question from are we doing the right thing I read a biography of a man named Sigmund Warburg a really unusual figure in financial history because he didn't really mean to be a banker he was really a scholar intellectual who'd become a banker because of the way the Nazis had forced him from his German homeland and he started over in London and he built a financial business SG Warburg that was fundamentally based on his own sense of integrity and Warburg was the kind of person if he didn't like the look of somebody wouldn't do business with them no matter how much money they had Robert Maxwell walks into wargs and walks out again and war says we will have nothing to do with that man that scene in which a moral judgment is made about a potential relationship that kind of scene had simply ceased to happen on Wall Street by 2006-7 the only question was and we compliant can we do this can we do this is this okay and that's a completely different mindset from the one that Wahlberg saw as central to a successful functioning financial order the bankers in America and I think this was true even perhaps even more true in Britain lost the trust of people for a reason and they have to win it back and they're not gonna win it back in a hurry any more than the media companies who've peddled fake news misrepresented stories opted for sensation over facts any more than those media companies are going gonna win back trust so let's not blame all three people for losing trust whether it's in the US Congress banks they have every reason to have lost trust and the institutions have got to win it back and that's not going to happen overnight the question of regulations and interesting one just as an aside one of the institutions that came out of the recent inquiry I think what the most bloodied nose frankly was the iamp stranding mutual problem Society it was set up quite a while ago by a clergyman and Geoffrey Blaney one of Australia's most eminent historians wrote Harvard that it was became after the church as one of the greatest forces for economic and social good in the country and it was trusted to an extraordinary degree my point is that was happening in a day when there was very very little Prudential Regulation indeed they were simply trusted to do the right thing without coercion well the problem is that in the aftermath of the crisis and I imagine it will be true in the aftermath of this commission what people say is well look how dreadful these people are what can we do about it well we really must regulate them more tightly so let's have even more regulation with the even more detailed prescription of this or that bad practice let's have it runs a hundreds now thousands of pages and certain neither regulation that was produced in the u.s. after financial crisis is enormous li long complex and and surely once we've written a a regulation for every possible misdeed then good behavior will ensue and this is just an amazing illustration of our ability as human beings to keep doing the wrong thing in the face of all experience because clearly the more complex the regulatory framework they're more the mentality becomes our we compliant and can we gain this so the big problem with regulation is not just the the unintended consequence that people stop asking is this the right thing they just ask is it compliant there's another problem and and that is that the big players are actually protected by complex regulation and new entrants are excluded because if you want to run a bank in the United States today you need a compliance Department the size of ten times this room if you want to be in new bank for start a bank forget it because the costs of that compliance Department are gonna stop you getting off the ground no new banks were formed in the United States for 10 years after the crisis because it was too difficult to start a new back never in American history has there been a period after a crisis when no new banks were formed so regulation has this double downside the more complex it is the more it actually protects the incumbents and reduces competition so we need to fundamentally rethink the idea that if there's a problem we can fix it with regulation the only law of history is the law of unintended consequences and it really applies in this domain I wrote a book about this called the great degeneration I wish it had been more widely read and it's lessons applied I'm sure it's all very well in Australia well I do although how well it's sold in in Australia but may maybe maybe maybe tonight we'll give it a last recommends else I recommend it's not even a long run it's my shortest it's my shortest book but one of its central themes is that regulation is the disease of which it pretends to be the cure Karl Kraus was a brilliant Viennese satirist he was my hero when I was an undergraduate at Oxford Christ said that psychoanalysis the disease of which it pretended to be the cure so I adapted this to regulation and it is true I mean that the reality is the financial crisis arose from the way that the regulatory system was so complex that nobody really applied the rules and we've made it even more complex luckily luckily the Trump administration actually moved to simplify the regulation and guess what banks are once again being created but but I do think that the law of unintended consequences in the realm of regulation is not well understood and voters are still rather inclined to respond to the sensational news that bad people did bad things and financial institutions by saying something must be done about this that something should probably be regulation and politicians feed this and journalists feed it I mean Paul Krugman an American journalist he used to be an economist has often argued that the financial crisis all happened because of deregulation which is absolutely not true and therefore the solution must be more regulation but that kind of argument plays well and voters are kind of yeah that sounds right yeah probably if there were no regulations they were bad therefore what we need are regulations but but it's actually completely the wrong way of thinking about the problem what's needed is simple regulation very very simple regulation and then regulators with discretion there were not complex regulations in the financial system that Walter Badgett wrote about in the late 19th century in fact the remarkable thing about the extraordinary complex system operated at London in the late 19th century was our little regulation there was but it worked pretty well and that's precisely the point simplicity of regulation powerful discretionary oversight that's what a financial system needs and surely a culture that recognizes Trust is integral to our freedom and and that Trust is good for business because if institutions are competing to win trust then you end up in a much better place if the question becomes how can we win the trust of our customers back not how can we fleece the suckers you get a very different outcome so I do think that we do we need to get back to some of the key insights of the the LES affair era but don't kid ourselves less if it doesn't mean it a free-for-all that there were powerful regulatory instruments mostly wielded in those days before the first world war by the Bank of England the phenomenon of the governor of the Bank of England's eyebrows you may be aware of that the governor of the Bank of England by moving his eyebrows could have a profound effect on the behavior of an institution and I I've always tried to persuade my American economics friends you know I know you guys love rules but actually what water badger is saying is not that you need very rigid rules you need actually powerful regulators with discretion of course those regulators need to have some some ethical sense themselves but but I think for the Victorians that was self-evident Neil to change gears and go back for a moment to civic glue as we look in this country to America and we certainly have since the Second World War as our great protector and our great friend and as I think sometimes said we might not always be totally comfortable the way they go about things but there are no great issues we can resolve that without the help of the Americans it really does look to us though that the Civic glue that bounded together and made it so successful is dissolving and I just want to ask you Trump is often depicted I think as the problem by many but it seems to me that in many ways he's more the product rather than the cause of that tribalism and that distrust and that division that now so blights Western countries and he's owned of course America yeah that's clear charles murray wrote a brilliant book called coming apart which I think was published in 2011 or thereabouts and Charles argues in it that the United States is experiencing social polarization between a cognitive elite in the super zipcodes that has absolutely nothing to do with a lower class that is expelled sealed off from from the elite and coming apart was a remarkably prescient book a brilliant book if you read coming apart you saw Trump coming because you understood that the polarization had created a fundamental sense of alienation amongst the latter group I think Trump was a manifestation of the kind of social problems that charles murray wrote about in coming apart it was not difficult to see in the course of 2016 that four people in the so-called flyover States for middle America for non college educated white Americans there was something so badly wrong with the political system as personified by Hillary Clinton that you needed somebody to come and and disrupt it that the two things that most neatly summed up Trump's appeal was said to me by a wonderful man Gerry Blake who was one of my wife's security detail and Gary is is no fool he's former New York Police Department detective he previously was in the Marine Corps he did not go to college but Gerry is no fool and as a New Yorker Jerry knows quite a lot about Donald Trump's defects because you would have had to be blindfolded with noise cancelling headphones on as a cop in Gerry's time not to know about Donald Trump's defects Jerry was the first person to explain to me in early 2016 that Trump was gonna win it's gonna be it's gonna be Trump knew it's gonna be trouble I like Jerry come on give me a break all my Harvard professor friends say he has no chance and she's like yeah really and Jay said because because he tells it like it is he tells it like it is which meant he takes like me and and my mates he doesn't talk like a professional politician with eight talking points that they memorized before they went on TV and the second thing was even more telling he said Neil he's going to shake things up he's going to shake things up and I thought that's it he's voting Trump for disruption Trump's a wrecking ball from Mike and Jerry the political system had become so disgusting Hillary Clinton so personified all that they hated about the elites their hypocrisy you know whole climate change in the private jet climate change in the private jet their inability to speak in normal American English that it was necessary to bring in Donald Trump and blow the whole thing up so I I think you are absolutely right John this is was a symptom of underlying divisions that had reached breaking point it took me months to realize that Jerry was right I mean I had this kind of learning experience and in 2016 will maybe come back to it during Briggs's and that came out of Briggs it okay now I get it because the Jerry's of Britain had voted for breaks it and gradually it came became clearer and clearer to me that that this was gonna happen and from the point of view of Jerry there wasn't gonna be a miracle all the manufacturing jobs were not magically gonna come back Trump was not gonna be some super hero Jerry had no illusions about a Trump and understood that the probabilities of making America great again were not under percent but the point was to take this chance to take this chance on disruption because it was preferable to the continuation of the same-old same-old the Clintons I mean the choice they were initially presented with would you like Clinton or Bush which dynasty would you like your next president to be from and the revolt was essentially against that and it was as much a revolt against the Republican establishment as it was a revolt if people do to get better it started as a revolt against against Jeb Bush against all the Republican establishment against the neoconservatives that's where it began it was actually start in some ways less important the revolt against the Democratic establishment the big revolt was the one that got him the nomination so yeah I think all of that is right and most of the things that people try to blame on Trump Oh terrible toxic political atmosphere I mean come on it was already there the polarization you can measure that it was already there the divisions were already painfully obvious that you know academic America had completely cut itself off from middle America I can give you an illustration of this there was a an academic group on a campus close to me that had a conversation along the lines of I wonder if anybody here has ever you know met a Trump supporter and somebody said actually yet I am a trump supporter and it was like one of those Bateman cartoons where he goes because it never occurred to them in their community of being personal professors there might actually be a Trump supported the question was had anybody met one so that level of distance that complete isolation of the academic elite from the rest of the country was part of the the pathology that Trump was elected to deal with tell me something you often make the comment that the six killer apps that the West has that'll make it more successful one of them is free speech it allows for free debate for the testing of ideas the rejection of bad ones for innovation at the very least it seems to me that Trump by saying the unthinkable according to the elites that happened to accord with what people in the street were thinking surely it's been if nothing else good for free speech it's interesting that Trump recently opened up a new front in that debate by saying in a in a speech that he gave it at AIPAC that he was gonna come after colleges that didn't allow free speech on campuses by withdrawing federal funds a very interesting development that he should weigh into that debate if you take a step back obviously it is a reality that free speech has become more circumscribed on American campuses it is also becoming more limited on the on the Internet and there's no question that the skew is against the right rather than against the extremes on the left Trump's contribution is an interesting one because one defining feature of Trump's discourse is that it is not very truthful and the president has a relationship to truth that is casual at best but and so endless op-eds get written about our this is the 1913 fly that prong Trump has uttered since becoming president and and that is true he certainly is not somebody famed for his veracity but there are certain truths that Trump has uttered that are in some ways more politically salient and important than his many many untruths and I I think people forget that the substance of Trump's campaign was more important than the style the star was important and he tells it like it is that mattered but if it had just been Trump kind of winging it like a guy in a bar is that a couple of drinks that wouldn't have been enough there was content there and it was powerful and important content said Trump essentially observed that the the problems of middle America were consequences of globalization that had gone too far that there would had been unrestricted migrations including substantial illegal immigration and previous is that had impacted the lives of ordinary Americans that Chinese competition and the outsourcing of manufacturing jobs to China had been something that had affected the lives of ordinary Americans and that America's trade deals had not been fair deals they'd actually been harmful to the United States and I think that's the key to Trump's victory both parties had signed up essentially to the ideology of globalized and free trade and you weren't allowed to criticize that and Trump was regarded as the committee maverick for starting to talk about tariffs and saying that the Chinese were guilty of of bending the rules but it was true then was absolutely true that globalization had been very beneficial for the 1% at the top of the income distribution and actually not great for that was true and because Trump was the first politician to come out and say us to challenge the globalization consensus that was why he won so yeah lots of little lies about stormy Daniels and much else but the key truths about the situation of the median American household those are the things that got him elected not the lies so that feeling of alienation of not being heard so on and so forth plays out in the form of a controversial president blowing things up the other side of the Atlantic it results in Briggs it they tell us a lot about the price we pay when crust breaks down when we stop understanding others and their perspective when they feel alienated from their own society from their own leaders you yourself had something of a change of views on Briggs it but what does it tell us and how do you see it unfolding now brexit was suddenly clear to me one night in a pub in South Wales the Prince of Wales which is a wonderful pub my favorite pub in the world and I was sitting in the prince a week or so before the referendum and I should make it clear I was on the side of romaine I was against brakes at night I'd written a variety of articles and given interviews and speeches and the core of my argument was essentially this is divorce and divorce costs a lot more and takes a lot longer than you think when you start out any divorces here anybody want to disagree with that it's certainly not easy and I also felt politically that the consequence of the referendum going for bricks it would be the fall of David Cameron the Prime Minister that I thought was talented and I had the strong suspicion that the beneficiary would be Theresa May about whom I had a much lower opinion so I had my practical political reason to sitting in the pub in South Wales and I am next to a man I don't know and he's introduced to me as the man who owns the biggest liquor store off-licence would he call him here place that sells booze in Bridgend like oh very nice to meet you they's dunno do you know the most popular beers we sell and I'm you know conversations are always interesting in the Prince of Wales so I go no tell me what are the most popular beers that you sell and he says Polish and Lithuanian beer I'm oh well I said very naively that must make you a big supporter of remain if your principal customers happen to be employees from the new member states of the European Union working in Britain and spending their hard-earned money in your store he looks at me as if I'm completely demented he says no he for brexit because it just shows how much bloody money they're making here now the whole basis of the remain campaign was the brexit was going to be expensive and George Osborne then Chancellor of the Exchequer and his mandarins at the Treasury had calculated exactly how much it was gonna cost every single Britain to the last penny and I said to George we have a problem because they don't care about the cost they the guy in the bridge and off-licence doesn't want to be selling beer to Polish and Lithuanian workers so breaks it wasn't about economics regs it was not about economics it was about immigration mainly and and not prejudice it wasn't that he had any prejudice against the Polish and Lithuanian buyers of beer in fact the striking thing about Briggs is its kind of racism free because I don't know if you ever been to Poland and Lithuania but people from Poland and Lithuania look exactly like people from South Wales in fact you couldn't tell them apart so this couldn't really be interpreted as racism it was just the sense that too many people were coming to South Wales or for that matter the South East of England and the usual arguments about you know services are overstretched which they always are in the case of the National Health Service crucially this is the thing that I learned in the last couple of years people don't vote about past immigration they vote about future immigration and the reason that brexit happened was not the poles and Lithuanians that were already there it was the perception that many many more people were going to come why because the German government had just left 1.3 million people into Germany mostly as it happened from Muslim majority countries in an extraordinary policy vault FASS biangular Merkel and the killer argument and I heard it more than once in pubs up and down the country was so kneel about the 1.3 million people that they've just let into Germany if they get German passports can they come here and the only honest answer to that was yes so that was the essence of brexit and I can remember realizing that this was a problem the conversation went something like this we should talk about immigration that's all anybody cares about no we can't go there so the campaign was don't talk about immigration just talk about the economy and the great British public was we don't care about the economic costs of this that's not the point mate it was very unlike the Scottish independence referendum which I've also been involved in if you tell the Scots this is gonna cost an awful lot of money like okay forget it like that and so you know the mistake that they were covering George Osborne made was they tried to play the same game as they played in the Scottish referendum by saying to English across voters us is going to cost a lot of money an English Rossford has said we don't care do it and sure enough the problem was that on the one hand I was right it is like divorce it's very costly more cost in you expect it takes longer than you expect it's not necessarily the solution to all your problems but as a friend of mine said after I published that particular article yes Neil but you did get divorced and yeah Britain is getting divorced and it's just as messy as my divorce was but when you finally confronted with divorce terms years after you embarked on the process and you think exactly the way people react to the withdrawal agreement when Theresa May brought it back I mean I can remember the night this thing dropped if he's reading it going holy expletive this is terrible and it was jaffa exactly the same way about the terms of my divorce I'm like reading it going oh no oh God back stop which was the key problem for many people the back stop with respect to all it's like the terms that govern your children under a divorce you can look at again no no but it's that's it that's the divorce there isn't another better divorce available and that's why I think eventually some version of this gets done because that's what divorce is like I mean it's awful but I think Britain ultimately needed to get divorced from the European Union and I came round to the view that actually the English and the Welsh voters were right why because because the projects of a federal Europe is not something the United Kingdom can be part of it just isn't and that's really what Europe's leaders have been bent on since the 1980s that's what Maastricht was about what's that monetary human was about I mean they didn't do the bunt reunion because they thought it would be cute to have euros they did it in order to further the cause of the federal Europe they did it so that eventually after a crisis every say okay we better have a federal budget as well and that's exactly where the French president macron is you know now you see you need a budget so the inexorable moves towards a federal Europe are carrying on much as Mark Margaret Thatcher came to see late in her term in office they would so Britain at some point was gonna have to get out because there's no way Britain is gonna be a federal state in a in a European United States of Europe and I come to realize that yeah I was probably on the wrong side of that argument and David Cameron was too because what he should have done when the Europeans came back as they did in what was it February of 2016 with terrible terms like we'll make the following concession to you you can have one tiny little bone that size when they did that which was a question of immigration he should just have said actually that's not good enough so I'm backing brexit that was his fatal mistake not calling the referendum the fatal mistake was not to say to the Europeans at that moment okay if that's the best you can do I'll back brexit if you've done that he would still be Prime Minister as you say it was more about immigration and future immigration then economics but Hannah had a question that goes to the economic issues wonderful to be here both with you Niall at Neal and John so the last six months of British politics have been dominated by the seemingly futile quest for an exit deal with a you how important is it for Britain's economic future that it leaves with a deal or can it go it alone in the global economy thanks Hannah I think the No Deal scenario is not a realistic one where you say well in that case we're just going to crash out without any agreement so understandings about how trade between Britain and Europe will be conducted and I I think that would have been like me at some point and divorce just tearing it all up and saying well I'm just gonna walk out I mean the truth is you can't really do that under these circumstances because he could that would be very disruptive for a time I think the people who argue for that are being disingenuous about how disruptive it would be and how ordinary people would be affected in a way that they haven't been thus far because that's why actually normal service has been maintained but hard No Deal brexit would be a complete disruption of cross channel traffic air traffic it would be I'm absolutely sure a self-inflicted disaster so I I think you gotta have to do the divorce that you negotiated for better or for worse for all its imperfections this is it this is what's available this is what she negotiated probably that could have been about to deal with a better Prime Minister but this is it I don't think there's a future questo to come back to what I said earlier I think Britain needs to follow through on this the proponents of brexit need to recognize that there was never going to be a perfect brexit I'm very suspicious of people and there are clearly some people in the European reform group who having come thus far would like brexit to fail so that they can say well you see brexit was never done if only it had been done we'd be in a better place if that's their game that they're gonna just claim that briggsie would have been wonderful if only it had been done then I want no part of that they made this happen they campaigned for it they greatly understated the costs they told fairy stories about money for the NHS and this is a result and they need to own it and they need to make it work I'm very against on the referendum I don't think that would be at all a good outcome imagine imagine if they held another referendum and who knows what people are going to feel completely cheated whatever they will never trust the established political system again they will leave the Tory party all mass trust again so right Rhys thank you yeah and you know alters if you'd rerun the reference when they leave would win again that what would that achieve so I think we should dismiss the idea that there is some heroic Churchillian No Deal option that is not nonsense that is just recklessness and that's a recklessness that will affect the lives of ordinary people and by the way that too would lose trust if the conservative party presided over the kind of economic upheaval that and no deal breaks it would cause they would forfeit the confidence of the public for a generation what's the alternative at this point that would be Jeremy Corbyn but most left-wing leader the Labour Party's ever had so it's a matter of political responsibility not to make briggsie an economic disaster that that seems to me the the strongest argument for getting this withdrawal agreement through with all its imperfections is she gonna do it she's so incompetent that she probably will fail again what will then happen like students who haven't quite got the essay finished they'll ask for an extension and I always felt that two years was too little of time so you know getting divorced took me four and a quarter years as long as the First World War with very similar results and I think yeah I wouldn't be surprised if Briggs it takes another two years and then probably drags on after that with negotiations about the implications but that's what divorce is like and I just wish the people who'd made it sound like it would be a quickie in Vegas had been a bit more honest about what divorce was really gonna be like it coming too divisive Ness and polarization the Democrats understandably in America accused Trump of sowing division you can't deny that in many ways you've been divisive but their solution seems to me to look very much as though they think the answers to move further left themselves surely that in itself only exacerbates the very social polarization that they say they're trying to fix they're opposed do you know one of the things that that I got right was that once you have the populism of the right what tends to happen is that the next thing is the populism of the left so you can't as swing all the way out here and if it doesn't work out as well as you thought you think I should have voted for Bernie Sanders so it was not surprising to me that the Democrats began to shift left think what happened in Britain that no sooner had we embarked down this road to brexit than the Labour Party swung left and Jeremy Corbyn was leader and the next thing you know he's appearing at Glastonbury and is for a brief and thankfully not too serious moment that the most popular politician in Britain we're now seeing the similar process unfolding in the United States in the rather more glamorous figure of Alexandria Acacio Cortes or Alexandria occasionally correct a caller and an AOC which is easier to say them that long name AOC is a very interesting figure because she has burst onto the scene with a set of radical policy recommendations of which the green New Deal is the most impactful but but I actually it's it's also her style that has been striking because what AOC is done is to learn from Trump how you use social media for politics that that's the key to the new politics there are two kinds of politicians now that those who understand social media and those who lose and she gets it and the key to social media is not truth or facts as she herself said you know it's all about being morally right not actually right and she's mastered this art the Trump earlier Mustard of being always in the news know the way to be always in the news is to say things that aren't true that then people say aren't true and then you say well actually I didn't really mean that because that becomes news too you say not only that you're gonna stop American economic growth and you know essentially surrender economic leadership to China which is what the green New Deal would then you issue a FAQ sheet that says you're actually going to abolish air travel and cows everybody hurries heads explode at this point and you say no no no no no we didn't really issue that you try and honest you it and everybody runs around for two days trying to find copies of the original FAQ that's how you were in the news the whole time in some ways AOC is a very latin-american figure you know the idea of being kind of halt and kind of really far left that's a very Latin American idea there is new to Americans because remember up until now being a socialist was Bernie Sanders who is in all kinds of ways interesting but not hot so as he is like wait socialism and heart and this is kind of for the American media intoxicating I mean if you're from Argentina it's like not that again not not lipstick plus socialism but I you know I think it's going to be interesting where this leads all candidates for the Democratic nomination have had to get on board at some level with the aoc Express and the speed with which the front-running candidates endorse the green New Deal which I prefer to call the green leap forward because of its Maoist implications that's amazing you should all call it the green leap forward by the way because that is a good joke and they all said they were in favor of it even though if you look at it it implies essentially zero growth for the US economy I think she may turn out to be the greatest gift the Donald Trump has ever received because as these candidates move left words because it kind of it's the zeitgeist we'd better get with it remember all these kind of mainstream candidates they're all baby boomers like the client Nanyang I can say this because I am a baby boomer technically the baby boomer generation stops in 1964 annoyingly because that was when I was born so I'm technically a baby boomer but so is Kamala Harris and Elizabeth Warren I think is a senior so they're all like oh yeah we're totally done with the curry New Deal which is hilarious when you think about what that's going to be like when one of them is the candidate and up against Trump and debates I mean he's just gonna destroy he's gonna destroy them because socialism in middle America is an obscene word I mean you may be able to say socialism on the campus of Boston University where IOC apparently learnt economics I mean I like teasing my colleagues at Boston University's like she's one of yours really so you can say oh why I'm a socialist delivery goes oh that is so woke have another latte anywhere in land and say the word socialism they're like did you just say socialism so so the fact that they're having to endorse all this stuff I mean it's just it's just insane that the longest suicide note in history up until this point was the Labour Party manifesto of 83 they have come up with a longer suicide note it's the green New Deal so yeah great carry on luck good luck with this in 2020 let's take out something that's very important here now you and I both we have children on one step ahead of you I've got grandchildren as well I decided to have my own grandchildren cut out the middleman so 16 month old son and I told my eldest is 25 you're off duty no rush I have I have this grand told thing already done well but both in Britain and America you're sort of seeing this attraction the young people who feel that their futures are being blighted 92% of young Australians don't think they'll have the same economic opportunities as their parents hadn't it's largely because of stagnant wages rising asset prices you know for young people trying to buy their first residence in this country it's a horrendous problem so that's a playing out here as it is in America they're attracted superficially to these sorts of simplistic solutions which ultimately must work against their very interests and we just tease out I mean plainly a economic growth is very strong in America at the moment all their debts exploding now to go the green New Deal would stall the growth presumably and push the debts through the roof as if it wasn't already the biggest losers would be our children and grandchildren they're the ones who are left with its if you like a breaking of the contract as Edmund Burke put between footage I think between you know the living that yet to be born and those who have gone before us I'm really exercised and I think you are too and motivated by this need to ensure that young people actually understand what baby boomers may be doing to them with ideas which sound good like free education or you know solving a climate change problem but doing it in ways that actually will their opportunities later on what do we do about it how do we made those youngsters a right that they will be worse off from her parents if those policies are pursued it's kind of guaranteed I think that the young they're idealistic it it looks grim but how do we get over them many of the solutions that are being put up it's simply going to make it grimmer the challenge here is that firstly we don't really teach young people about socialism so if you actually knew anything about the history of socialism which been tried in many different countries in many different ways and it's always failed then you'd be unlikely to think it would be a good idea there's a lot of confusion around what this word socialism means and it turns out when you actually quiz people that they're really just talking about Sweden and the welfare state and what they really mean is we'd quite like to have more redistributed progressive taxation and my response that we'd like to have a different system of single-payer health care and my response to that is well that's not actually socialism because those policies were devised by Christian Democrats as well as Social Democrats after World War 2 to prevent socialism from happening so if that's what you were in favor of then don't call it socialism because that's a category era because socialism is about the state controlling the means of production and that state control designed to prevent free enterprise has been a disastrous failure wherever it's been tried because it is a recipe for corruption and economic failure and if you don't believe me Venezuela is kind of that way so please can we try to just have a little bit of conceptual clarity here point to young people have not been well educated about fiscal policy in its distributional implications in the great degeneration I made the point that if young people understood their own self-interest in the United States they would all have been fans of Paul Ryan's roadmap for entitlement reform which never happened because entitlement reform was scrapped as an idea by Donald Trump but entitlement reform is is crucial because the main reason the federal debt is growing in extra bleagh each year is that there are a whole bunch of unfunded liabilities and Social Security and Medicare and Medicaid that we don't have any way of affording and the problem gets bigger with every passing year the losers from these fiscal policies are clearly younger voters and and the unborn Larry Kotlikoff ironically at Boston University and professor of economics at Boston University she must have taken none of his courses that's the only explanation because Larry Kotlikoff has argued for years that there's this massive generational imbalance and that what the current policy does is to transfer resources from the young and the unborn to baby boomers and seniors in massive generational inequity that as you rightly say Jon violates Burke's contract between the generations they all want to be right-wing they should be campaigning for entitlement reform they should be campaigning for the kind of policies that would bring the debt under control so there is what used to be called false consciousness at work here ironically many young voters are lured into siding with the very interest groups that have their interests least at heart eg public sector unions now public sector unions in most developed countries are villains of the peace who want to create huge liabilities in the form of pensions for their members to be funded by future generations of workers but young people will be for some reason duped into aligning themselves with those very interests that have their in their interest least to heart so we've had a double failure of education and I'm an education person I've been a professor most of my career trying to teach young people I've totally failed total and abject failure I fail to communicate to more than it must be a handful of people the socialism doesn't work and communism is a total disaster which I mean it's just the extreme form and I've failed to communicate to more than a very small number of people that the way that public finance works is deeply against the interests of young people and so I kind of conclude that the teaching doesn't work it's more than the handful of young people here tonight you're convinced by what he's saying it's not because you took my classes if you've come round to this vantage point so we have a problem and it's probably not that surprising because if let's face it I'm rather an unusual figure in the academic world most universities are not teaching people what socialism is really like and most universities and not teaching people to think about public finance in a rational way because most universities are staffed by liberals progressives and socialists and there are no conservatives left pretty much so we can't be surprised if the young are wandering around with stars in their eyes about about redistributed policies and cancelling student loans and free this and free that I mean that's we educated them to think that way on the the issue of social activism on the part of people who if you like have come to have their doubts about capitalism and business is not in good standing in this country I will say that I don't think anybody disputed we've got some magnificent business leaders but by and large they seem to know that they're not liked so they're out there saying well we'll put our core responsibilities to our shareholders to one hand behind us and we'll keep quiet about that and we'll go looking to win some kudos by backing popular causes this is leading us into some pretty difficult areas and an old friend of yours ticky Fullerton's here tonight and I think she's got a very important question about it my favorite think is yes Neil just on this subject and as John says at a time when big business certainly here elsewhere has has lost trust what do you make of this latest pressure on huge investment companies superannuation to then put pressure on big business company boards to change we've seen this and and in the context of the culture wars we've seen this with climate action 100-plus and Glencore and it will happen to others we've seen this with diversity and they've been very successful and as you will have noticed in the last couple of days there's some alarm about industry super now with union representations on boards but much more broadly than unions that the AO sees of this world will move in a world where wealth inequalities could be the next big moral challenge of our time we'll move to go directly to these big investment companies to push for wage hikes thanks ticky well it I should have known that you'd ask a really difficult question took you know I were awkward together hardly any time ago just a few years ago and it's it's lovely to see you again here and I I I'm conscious that something quite institutionally peculiar has happened in Australia namely you've accumulated these fun's the use of representation on them and they're clearly going to be playing a political part and leaning heavily on on Australian corporations this is somewhat unusual typically if you're a large American company you're more terrified of a hedge fund activist then you are terrified of a trade union activist so the story is somewhat different in the United States but not wholly different because what you're describing here is a general phenomenon whereby campus politics spreads out of the campus and into the marketplace and it does this in a number of different ways it does it within corporations because they hire people who've been educated and Berkeley and Stanford and they start to take their campus politics into the workplace but what also happened on campuses in the last ten or more years was successful campaigns by the student left to force university endowments the source of the wealth of American universities to divest from this all that which of a particular industry they decided they didn't like and I think this is really where this began the idea that you can politicize the investment process and once you've figured out how to do that for oh I don't know I guess it come and got going with apartheid South Africa then it kind of spread more widely into old don't invest in fossil fuels don't invest in the arms industry stop don't invest in Israel and once you've kind of got the habit of forcing people to make investment decisions on the basis of whatever the fashionable issue of the day is then this can become a major problem for corporations now corporations are not by and large run by courageous people when they get to a certain size they're run by bureaucrats the entrepreneurs have long left the scene and the bureaucrats are kind of busy dealing with like all the different things that come up if you want to incorporation have their corporate PR people and they are the most risk-averse people in the world and when those people sense anything that could be negative headlines their first reaction is to capitulate and that I think is a really important factor here it's not just that there will be pressure yeah they'll be pressure just as they'll be pressure from activist shelters what is dis distinguishing here is the tendency for large corporations to fold when they come under that kind of pressure instead of arguing back and challenging these increasingly politicized forms of pressure so I think that's the way to think about this I I guess there's something very distinctive about the Australian institutional structure but it's not that different from what's going on the other way in which you see corporations dealing with this problem is virtue signaling so virtue signaling is a kind of very standard response where you say yeah we hear what you're saying but how would you like to look at our animal rights program how would you like to listen to our philanthropic story would you like to hear all that we are doing for you mentioned diversity so the kind of standard feature of corporate responses a smokescreen of virtue in the hope that nobody will will necessarily scrutinize the specific investment or employment decisions and I think when it comes to two demands for higher wages that that may well be what ensues because if you stop folding on wages then it's goodbye margins and it's goodbye stock price and I you know I'm enough of a believer in the the discipline of financial markets to think that any company that is so ready to fold that it just decides to destroy its own business model isn't gonna isn't gonna last long at least the CEO isn't isn't gonna last long so the correct responses do not fold but do some virtue signaling they usually buy it all right if we can shift gears from the things that are challenging us from within if I can put it that way in our Western democracies let's come to the one that's you've been talking about a lot here in Australia though and we talked about youths orders a second major threat to to way of life the relationship between the superpower and the rising superpower first question in my mind might be that China's staggering economic growth plainly has been critically important to its rising status in the world to its intention to as itself confesses to at least rival in made America of the power of the Americans can they keep that economic growth that's so critical to the desire to be powerful in the world including militarily going possibly but it gets harder with each year at the moment to meet a growth target above six percent China has had to revert to increased credit creation this is going to be a reversal of some importance because last year the top was all about deleveraging and now it turns out that to keep growth up about 6% you have to real everage and there's been a sudden increase of so-called social finance so I think they can keep growth going at above 6% but it gets harder and harder and it requires ever larger piles of debt where that leads is unclear because China's not got a financial system like Australia or the United States it's it's a closed system with capital controls the state controls the banks and therefore we shouldn't anticipate a 2008 star financial crisis in China bart's it's clear that at some point something's got to give I inclined to the view that there won't be a China crisis and people who have been predicting that for the last 10 or 20 years have been disappointed I think you get a China slowdown and that comes a point at which the demographics overwhelm the leverage China's workforce is shrinking the principal source of China's growth was a large-scale migration of a growing working population into the cities and into industry that game is over between now and the end of the century the working population will actually shrink by up to 200 million people and under those conditions I think China is bound to end up in a more japanese-like situation of much lower growth and meaningful deflation so that's where we're heading and I don't think there is a policy in the world that can keep China growing at 6% beyond a few years from that that growth rate is coming down with a kind of an extra ball gravitational force which is probably a good thing for a bunch of reasons including the environmental reasons I mean I even have all the green new deals in the world in the Western world you can stop growth dead in Australia and in the United States it doesn't matter at all for the climate issue if China continues to to pollute on the scale that it currently does so one thing that would be kind of good would be if China slowed down the question that you raised though John is is is not just economic its geopolitical even if China's growth slows down too low single digits even if his growth rate falls down to Japanese levels over the next 10 or or 20 years it's still by at least one measure a larger economy than the US and it might well end up being by current dollar measure a larger economy than the US cajon was in town yesterday Chinese economists are based at the London School of Economics but a PRC citizen she said it's inevitable that we will be number one and maybe that's right what does that mean for the world because there's never been a bigger economy than the United States since the 1880s the Soviet Union never got close in order Japan nor did West Germany I think this is a huge question because if China is not only economically number one but increasingly able to compete with the United States in the realm of military capability in the realm of Technology in particular in the realm of artificial intelligence potentially in the realm of constant computing then we are in a new world and that new world is one that I I find many people are in denial about because they would like to believe that what I called or than ten years ago now chime Erica is still in business now in 2007 chai America was real China plus America was the key to the world economy was a symbiotic relationship Chinese did the saving and the Americans did the consuming the Chinese did the exporting and the Americans did the importing but the argument of that original touch America piece was was a pun that was a chimera this wasn't sustainable and I'm sure enough America wasn't sustainable it's now falling apart and it's falling apart not just because of the trade war that President Trump began but because of a bunch of other reasons so I think the question that we really confront now is are we on the threshold of a new Cold War because this rivalry between two now roughly the same size economies which is also ideological because let's face it all hopes that the Chinese were going to liberalize politically have been dashed that seems to me to be the really interesting the really interesting question for 2019 and it's a very troubling question for Australia and on that question Marcus has a question Marcus on that issue thank you very much guys for coming tonight so in recent times Australia has assumed that America will defend our interests in the event of national conflict and there's only spent modestly on defense it now appears that this American defense capability and even willingness to help us may be severely reduced and at the same time China's military might appears to be growing rapidly Greg Sheridan has said that there's a national defect in our character and we should be taking defense much more seriously should Australia be taking more responsibility for protecting our own freedom yes it's a great question when one assesses China's defense spending maybe defense is the wrong word there's a very rapid growth in China's offensive capability China is for example building up a missile capability that would pose a profound threat to US aircraft carrier groups in the event of a conflict you're all familiar and I hardly need to repeat it with China's construction of military facilities in the South China Sea but there's a whole bunch of less visible stuff going on as China invests in what in effect is a new generation of military capability the drone swarm is going to be an important part of any future conflict and China has a natural edge given its capacity for building drones so number one there's no question that China's spending a lot on its military and to call it defense is to stretch the meaning of that term secondly one characteristic feature of America first as a policy is the President Trump has not exactly been reassuring to traditional US allies and the Alliance system it was a great source of concern for both general McMaster his former national security adviser and general mattis his former defense secretary they've gone and I think one has to worry a little bit about how firm the resolve of the United States would be towards any of its allies in the face of a conflict so when you put those two things together Australia can hardly be complacent about its security look let's just do some basic history here history is mostly the history of empires it's not actually the history of nation-states and it's mostly the history of conflict not the history of peace you get peaceful periods no question we've been in a relatively peaceful time since the end of the Cold War but to assume that this will continue indefinitely would be to ignore the lessons of history another obvious lesson of history which has been true throughout the centuries is that if you want peace prepare for war and vice versa if you want war act like it'll never come allow your defense capability to atrophy for an enormous island that is thinly populated in relative terms compared with Asia that has a vast store of natural resources for such an island to be defended seems like the most spectacular historical folly in particular when it is in relatively close proximity to a one-party state with obviously imperial ambitions it's quite a long way away from its principal Ally the China's imperial ambitions is obvious the more Chinese leaders in their speeches say China never does conquest the one I'm like seriously you really got to make that argument I mean the Ching Empire was taking great shots in Russia just over a century ago so let get real here this is not a good situation it was okay during the Chimerica era when the Chinese were like okay it's no problem we'll just sell you stuff cheaply and under pay our workers and lend you money it's cool we'll buy Australian stuff not a problem market price how much do you want that was all fine but anybody who thought that that was gonna last indefinitely was dreaming because the whole point of to America was that it was a temporary illusory relationship and that at some point China wouldn't need it anymore and the Chinese are kind of getting to the point where they don't need us anymore and the bets that we placed from the clinton-era that they would liberalize or that the internet would somehow turn them into a democracy all that's gone China's actually gone in the opposite direction politically Xi Jinping has increased the central control of the party is a reimposing doctrinal orthodoxy he's cutting out such free speech as had developed in China's public square I mean how many more flashing red lights do you need so I think this is kind of getting to the point of urgent and what I see in Australian politics is a debate that if it was going on in a regional council in Scotland would seem parochial the parochialism is stunning true a considerable efforts been made by the intelligence and national security community in this country to awaken people up to the potential threat the Australia faces but it's Australia in any way prepared from a naval point of view for Chinese acts of aggression no way so I think this is a moment of truth actually I said yesterday that we were entering a new Cold War and we should stop pretending otherwise that's right and this cold war will be very different from the last cold war it will be fought in different ways it will be an arms race for everything from artificial intelligence to quantum computing more than for clear weapons or rockets to the moon and the battlefields will be different when you consider what China's belton Road initiative has become it is nothing less than belts politique than a global policy it's far extended beyond the original concept that was essentially a Central Asian Indian Ocean concept and has become global and the search for commodities is not a trivial part of what is involved and pass some level are about acquiring commodities at below market prices that's kind of what empires are or at least not trusting to the market to deliver you the commodities so it's better during the reader statement own the minds control the supply chain and not be at the mercy of the market or the mercy of a navy which China currently is the US Navy so we need to clearly understand the historical logic of China's expansion to have security China cannot be dependent on imported commodities and market prices when you think about what that implies for Australia it's really quite scary because Australia is a prize Australia's a hugely attractive place from a Chinese vantage point and not just as a vacation destination or replace to study and learn English and I'm stunned by the lack of awareness of the strategic vulnerability of Australia when everything should be screaming to you prepare I think we'd all agree that it's extremely sobering it's worth noting that Australia only became a nation in 1901 the federal government at that time read what was happening in Europe better I think than the Europeans did realized trouble was coming and in 1907 just six years after we became a No they ordered what was what could be described as a tier 2 Navy from the Brits it arrived here just five years later by way of contrast in 2009 it was decided and generally agreed as a matter of national urgency we needed 12 near state-of-the-art submarines by the time the first one is delivered it'll be 25 years from that decision at the earliest that is the length of time that equipped that elapsed between the beginning of the First World War and the end of the Second World War thank you I have to say too I believe that's a very very timely warning to us all on this circus question of the technological race you've been talking about AI there's a debate going on about whether in fact the Americans might not have lost out already to the Chinese in that race but to feed into a specific we're starting to understand the extraordinary control the Chinese Communists are now exercising over there people including the deployment of very sophisticated technology to monitor their people this horrendous ideas it seems to me of the Social Credit system which is obviously a great user and deployer of technology seems chilling how should we understand it well you're probably all familiar with what's happening in China which is that the the Internet has enabled the Chinese governments have access to data about its citizens without parallel in the history of authoritarian regimes and with the deployment of surveillance technology cameras and facial recognition technology the government is edging towards having real-time coverage of its its populations every move the the amazing thing that happened was that China was able to keep the American Internet companies out allow its own internet companies to flourish Baidu Alibaba 10 cent creator an extraordinarily vibrant ecosystem in which Chinese citizens like their American counterparts gave up their data to the network platforms the difference being that the Chinese government was able to say to the network platforms oh that's interesting we would like to see that and they can see it and so what has happened is like this extraordinary variation on a theme by George Orwell if you remember in 1984 which you should all reread if you haven't read it recently the telescreen is on the wall of every apartment and everything that Winston does is is seen by the telescreen but this is a very different kind of telescreen because we carry around with us and we kind of volunteer for surveillance Social Credit is kind of beyond regular credit your credit score is not just going to be did you remember to pay the electricity bill your social credit score is going to be why are you a good citizen when it came to fill in the blank did you in fact fully live up to the ideals of Xi Jinping fault so this is kind of beyond 1984 because the level of surveillance is far greater the ability of the citizen to bathe outside the range of monitoring will be greatly limited and we should all be scared about that because this is not something that necessarily stays in China or the other hand on the other hand let's remember two things any regime that is so little confidence in its own people that it has to spend more money on domestic surveillance and policing down on defense is not strong secondly such a materialism even with 20th century technology failed and although he didn't have facial recognition Stalin pretty much had every Soviet citizen under as good surveillance because in the Soviet Union you didn't really know if you've been watched but you really didn't want to take the chance that you'll being watched so even if you were completely alone in an empty room you acted like you would be what's I know because I remember going there so it's not like this is completely new you acted in the Soviet Union as if you were being under permanent surveillance just on the off chance that you were and that system failed it failed completely it failed completely because human beings and not in fact designed to be under 24/7 surveillance by Big Brother or anybody else Mark Zuckerberg for that matter we are not supposed to be under that level of state control or corporate control Dostoyevsky's notes are underground is a must-read so dostoyevsky's notes from underground is great because he says somehow intuitively sensing we're modernity is going that we will be supposed to live under some timetabling so precise that our every move will be pre calculated and foreseen and and you know it's an amazing thing for somebody to write in the middle of the 19th century but it's like a vision of the future a vision of the future under surveillance with AI anticipating our every movement and dose if he says no no no man will revolt against this man will insist on his right to do the irrational on his right to defy what became Big Brother so I think while it's very chilling that the Chinese state is embarking on this enterprise it will fail because all projects to teve total central control of very large numbers of human beings fail and they they fail because that is not how we are designed by evolution to operate we're actually designed to operate in relatively free willing smallish networks actually we're quite close to the Dunbar number here tonight which is the right number of people we could all get to know one another and we could effectively cooperate together to solve all of Australia's problems that's kind of how we're designed and no we sat here in these nice leather armchair II much my kind of armchair and we've been the kind of guys on the platform but we've you know we can have a very much more informal dialogue oh we could actually swap it out and have a couple of you come up here that's that's how we kind of design failure to understand that is surely why Marxist theory is wrong it wasn't just the practice that people would give their loyalty to the state ahead of or the party the loyalties to the party and the notion that you are gonna have a hit off eight their personal this is not really ever gonna work so I'm ultimately confident that we will and this this this may apply to Australia as well as to the United States we will do the right thing when all the alternatives have been exhausted and at the same time our adversaries because their fundamental model is flawed will not prevail this is gonna be a very different ten years from the last ten years the next ten years are gonna surprise us in a lot of ways not least that the technological innovations that I add but I think we shouldn't lose sight of the lessons of the twentieth century it is not likely that highly centralized systems prevail over relatively decentralized systems that is not the lesson of the 20th century so although I was somewhat somber earlier in in warning Australia not to be complacent I want to end on a on a relatively optimistic note a free society wins freedom works it it was the great insight of the Enlightenment that free speech free thought a superior to central control to unthinking obedience to Authority what we must not do and this brings us back to where we began our conversation John what we mustn't do is kill off the real strengths that distinguish Western civilization yes there I said it from its historic enemies the things that distinguish it make it special ah that openness that readiness to compete to challenge one another to challenge our ideas that ability to say things that are contrarian may even seem heretical that's been the secret sauce that's the real killer app and as long as we remain true to that and don't allow various elements within our own society to shut down free thought and free speech then we shall be fine we can screw it up along the way that's definitely been part of our history but we have an ultimate edge over an unfree society the open society will defeat the closed society as long as the open society doesn't become closed itself O'Neill that answered the second issue that I was going to raise which was a young person who's here tonight said to me before we came in can you give us hope can you give us encouragement we who see the dangers want to make a difference but it's very hard you've just answered that question so you've been very generous with your time you've imparted an enormous amount of wisdom I'm amazed at how many people are listening to these conversations on podcasts and one of the things that keeps us going and in making them and and enjoying this conversation ease the number of young people who come back to us and say how fantastic it is to be able to hear a range of views and yours tonight your range of views and what you've given us has been unbelievably valuable and enormous ly appreciate it thank you thank you [Applause] [Applause] [Music]

Channel: John Anderson

Views: 212,231

Rating: 4.7845516 out of 5

Keywords: Conversations with John Anderson, John Anderson, Niall Ferguson, Niall Ferguson and John Anderson, Niall Ferguson on China, Niall Ferguson on Trump, Western civilisation, Trump, China, Brexit, Banking crisis, The Wealth of Nations, Adam Smith, The West, Trust, GFC, Banking regulation, Donald Trump, Populism, No-deal Brexit, AOC, Green new deal, Socialism, Corporate activism, Defence, Social credit system

Id: EYPCcwnueB8

Length: 101min 27sec (6087 seconds)

Published: Tue Mar 12 2019

Reddit Comments

[u/chokladgiffel]

Interesting interview. I find it really hard to buy into this whole "Yeah Trump speaks a lot of lies and seems generally dishonest, is not helping the polarized situation in the country ... BUT, the few straight things that come out of him are AMAZING" thing. I've heard it from many speakers. Sure, if you burn down your house you won't have a rodent problem anymore, but you also won't have a house. I also recognize that Niall is likely much smarter than me. What am I not getting?

[u/[deleted]]

Such a good interview. Nial really gets into it after the second glass of scotch.

[u/Smirking_Like_Larry]

Wow, my views have changed a lot in the last year since I first heard Niall on Harris, and went down the rabbit hole of awesome Ferguson interviews. The ones on Kissinger are absolutely fascinating.

I believe Niall's suggestions are correct, but are borderline un-implementable; or at least I don't see how they can be implemented. Take the regulations example, I 100% agree, simple and concise regulations are the best. But how can we change course away from legislators passing +10k word bills? The momentum of the legislative system, the entire legal industry, the bureaucracies that oversee and modify the law as policy; all have incentive to keep legislation long and complex.

Therefore, I've shifted focus toward what can plausibly be implemented and beings to move toward a long term solution. In the case of regulations, and where it overlaps with my pursuits. I just started a book where the author argues that since tech in the digital era is no longer inconsequential. We've entered the regulatory phase. And for startups to flourish, they must learn to navigate within that space, rather than avoid it. It's unfortunate, but also appears necessary and unavoidable.