What Today’s Crises Will Mean Tomorrow: A Conversation With Adam Tooze

[Music] thank you good morning my name is Tino cuellier and I'm the president of the Carnegie Endowment for International Peace it's a great pleasure to welcome you here today the Carnegie endowment was created at the start of the 20th century very tumultuous time as a new kind of organization that could use knowledge and ideas to reduce conflict and increase effective cooperation across borders across governments when we tell the story of geopolitics in that Century the 20th century we often focus on major security events the two World Wars the development of nuclear weapons the Cold War Regional conflicts the creation of global institutions dedicated to reducing armed conflict but this story is incomplete if we don't also discuss changes in global prosperity and in the economic order that emerged in parallel sometimes in close connection with these security developments global life expectancy has risen from less than 47 years in 1950 to 71 years in 2021. the male female Gap in primary and secondary schooling globally is almost disappeared even just between 1990 and 2010 the percentage of the population living in extreme poverty around the world plunged from about 72 percent by most accounts to 14 percent and this all played out in parallel to the growth of a global trading regime the creation of international Economic Institutions like the IMF the World Bank the WTO and the dominance of certain ideas about the right way for economies to grow today the world is experiencing what our guest is called the poly crisis that tests every part of the economic order Russia's war in Ukraine has triggered massive spikes in the prices of Commodities like Metals grain ongoing tensions between the United States and China could lead to as much as a two percent decrease in global output according to the IMF in the face of climate change experts expect that the global energy transition will cost approximately four trillion dollars a year over the next decade and of course deepening economic inequality around the world has raised fundamental political questions about how best to harness markets but also public policies to provide sustained Improvement and well-being for everyone individually these challenges are daunting yet together they compound with implications for food Fuel and debt prices geopolitics and climate the resulting story is complicated but when underscoring the importance of the kind of insights that our guest today is known for so this morning I'm pleased to welcome one of the best people in the world to make sense of this poly crisis of the intersection of politics economics and security an unusually perceptive expert on the complexity of our Global political economy and a colleague here at Carnegie who's a non-resident scholar as well as a noted academic and professor at Columbia Adam too Adam is the Catherine and Shelby Cullum Davis professor of history and director of the European Institute at Columbia University previously he taught at Yale University Cambridge I had the pleasure of meeting him about 10 years ago when he was a guest of my colleagues and me at Stanford presenting some of his work on German economic history and I still remember the jaw-dropping experience of reading the wages of Destruction is brilliant analysis of the German economy in World War II Adam is a prolific writer whose body of work includes several award-winning books a must-read newsletter entitled chart book that many of us read and regular columns in foreign policy magazine in the financial times Adam thank you for the time and for being my colleague at Carnegie and welcome thank you pleasure to be here Adam I want to start with a paradox of sorts on the one hand as I alluded to earlier prior to the pandemic the measurable quality of human life on the planet had gotten to a port where it had never been better on the one hand you know the pandemic at least temporarily disrupted progress in many areas compounding the negative Trends we've seen and deepening economic inequality uh waning trust in Democratic institutions geopolitical competition and yet if you look at 50-year 60-year-long Trends the world has gotten richer and healthier what do you make of a world that is paradoxically so much richer and in many ways more prosperous than it was 50 years ago and yet also so replete with conflict tension disaffection and a sense of crisis well I think first of all as heads of quantitative proportion is crucial here I mean I think we have to take the numbers about living standards life expectancy infant mortality maternal mortality all of this like hardcore stuff about the human existence captured in statistics absolutely seriously that is the Bedrock anchoring phenomenon the reality that the humans collectively have lived in the last half century so if you take allow for Wars and displacement and all of the other stuff and adjust if you like human qualitative life years by that I still think broadly speaking we're on an uptrend and the vast majority of people around the world over two generations have experienced steady Improvement in some cases absolutely dramatic Improvement and if you have not experienced Improvement you're in a pretty small minority at this point and and that is a shocking experience of course the other thing to say is that when we use the term polycrisis we're not talking about poly disaster or you know the end of the world right this is a post-malthusian concept it is more I think about if you like the the almost I I hesitate to say this but I'll say it because clarity's sake the perception if you like of the world I mean another way of putting it is that crisis crises are things that happen are things that happen to people who are alive it comes from the Greek medical terminology and it's the course of an illness which reaches a crisis point in other words the patient's not dead yet and so crisis is if you like a condition of struggling to manage and reaching a critical turning point and the notion of polycrisis emphasizes the fact that those choices currently are plural multiple and very complex it's not necessarily saying they're worse than they were in before I think if you think back to the 1970s and the array of crises that face southeast Asia for instance or East Africa or the Cold War and the risks there of actual confrontation which would in many ways I think higher than they are still today but they weren't perhaps compounding in quite the way that they are now but to get to your question I mean how could this how could we end up in such a miserable intense situation despite all of this growth I mean I think there were different mechanisms that would explain this I mean one is that not everyone experiences the growth in the same way and if you look within advanced economies there has been massive increase in inequality and there is also a widening gap between the global growing segment which is about two-thirds and the segment which really hasn't grown very much notably consecrated in sub-Saharan Africa which constitutes a kind of a pool of misery a condition of inviseration in some cases even downward trajectories which are very extreme so that's one potential driver even when you have convergent growth as we were experiencing between China and the West that too can become a source of conflict right that's the that's the other kind of key motor here is that the liberal idea somehow the you know do come as the the softness the community of trade would lead towards peace is I think naive without the super and supervening politics and diplomacy to actually broker a piece right just to rely on foreign direct investment or something like that to moderate political conflict between fundamentally different regimes is is a liberal conceit and really nothing more than that and that bluff has been called in the world that we're currently in and now we're in a world acknowledged conflict and massive entanglement and that's kind of new in its own right the third obvious element would be to say well many of the solutions which we think of as the solution to the problem which say Malthus first outlined in the early 19th century of the limits to growth are now running up against those limits for a long time they allowed us to outrun environmental constraints in a spectacularly successful way but all of the best science now tells us to a considerable extent as a warning about the future but for hundreds of millions of people already as a present danger that we are running up against those boundaries and the chickens are going to come home to roost on a huge scale and this summer will be a test of that in many places in the world we don't even need to elaborate so that's the third reason and the fourth is I think that if you look back over the last half century there is progress in certain domains it's uneven and in itself a sort of conflict and in itself a source of problems but there are also a handful of issues of regions of areas where we have simply struggled and failed to provide any kind of resolution thinking notably of the situation in Palestine right now in the Middle East and problems unaddressed over a period of time don't remain the same some do but many don't they Fester their new take they become different they become worse through the sheer disillusionment of people's historical understanding that they've been living with the problem since you know the 1940s and the failures of those moments then translate into new types of more aggressive more apocalyptic kind of politics I mean think about the condition of Palestinians in the West Bank you how else would you think your situation except an apocalyptic terms and that leads from you know the relatively conventional nationalism in the Arab world of the 1960s and early 19 70s to the much harder to manage live with contemplate the future of Islamic radicalism of Our Generation which points to much more apocalyptic options because it sees salvation outside the real world ultimately and that is quite You could argue quite reasonable reflex of the of the sense that really nothing will ever solve this problem so those would be mechanisms I think through which you could see an overall success story not turning into a benign calming scenario but in some ways exacerbating the tension well make an analytical observation that cuts across your four points and then a question that follows for policy makers and for institutions like ours analytically it highlights I I just highlight that you're describing a process through which part of what drives conflict is not only objective reality of course it's expectations it's how people see themselves living relative to how others are living it's their own sense of what is appropriate for them and if that then gets overlaid on a climate crisis or for example I mean there are other ways to tell the story but what I hear you saying is how could a policymaker representing millions of people in the developing world not take account of the fact that the development trajectory of countries like the United States like Japan Western Europe all reflect a set of choices that were made at a time when burning carbon was much easier from the policy perspective it was not considered problematic and now we somehow face the prospect of bringing billions of people into the global middle class when the rules of the camp are changing and how can that not create a degree of resentment and frustration that's that's the analytical point the the policy question then is how to take account of that expectation and at the same time recognize that some of what has allowed the world to grow and increase its Prosperity is now being questioned including for example the degree of global economic integration what do you make of that how how should thoughtful policy makers who want to be pragmatic about meeting the moment but also don't want to throw out the baby with the bathwater respond to that yeah I mean to go back to your very general point about identity again crisis is something that happens to like an identity right crisis doesn't happen to inert material crisis is almost constitutively a subjective experience it's a body it's a person it's a psychology it's a polity it's a nation it's an ecosystem everything organic if you like anything that has life I think is capable of experience in crisis and so issues of identity are constitutive of it you can also therefore to a degree pursue a politics of identity which defines crisis out of existence I mean we saw many extraordinary examples of this within Europe the way the French and the Germans for instance held dealt with the Eurozone you know incredibly technical issue in the German case it became a matter of belief and identity and the French just sort of rushed it under the table as a technical matter for Bankers that could be sorted there and that has huge consequences for how you deal and this goes to the climate point right at what point does climate become a matter of global Justice and Injustice at which point it's almost impossible to digest right because the obvious demand would be that folks like ourselves immediately stop our lifestyles and then pay reparations in a very dramatic form and in what way do you kind of do a realist well you know bygones where are where we are we want a common solution don't we and how can we move the conversation to the relatively safe space relatively safe space because I'll come on to the quibbles here the issues here of talking about Solutions and and then I think two things really intrude which is well 3 things at least right so the solutions would be presumably that we redefine development in the terms of the sustainable development goals of 2015 as being about forging a new Green Path for Africa for sub-Saharan Africa in particular that's clearly a huge you know on this the future of one to two billion people depends and the conditions with which the African continent lives with its immediate Neighbors in in Western Asia and Europe so that's the challenge and the idea is okay well then the good news is that we have a variety of energy options which we're rapidly developing on incredibly promising cost curves that at some point are going to make the energy provided that way cheaper than any energy we failed previously to provide to you in the fossil fuel age right because it's not as though as it were Mali for instance was was on a promising fossil fuel trajectory before it was interrupted by the insights of the Green Revolution no development had stalled had failed for a complex variety of both external internal reasons that in turn had begun to produce in the Islamic Insurgency across that belt and extraordinarily destructive meaningful but destructive kind of immobilization and so you're operating into that space and the promise now is that in fact solar and wind are incredibly well adapted to the African continent it might very well emerge now anyone would have to say and this is the next Point finally you know after a 50 years of postcolonial development or 60 to 70 of postcolonial development and frustration and of course 100 100 Years of colonialism and 200 to 250 years of the incorporation into the slave trade as a site for development so technology is there the realization of a possibility is there and the third element that then as it were is on the table and was put on the table at the conference in Paris recently is the question of Finance right because it's all very well to know that there could be technological solutions than to be able to sketch markets possibilities say for the export of hydrogen or or ammonia or byproducts of those uh uran or cement for instance the vision the Germans are cultivating in Namibia for instance right now and many other people in in hydrogen development in Africa there's the the next key element is is financed to make it to make it possible and finance is as you know any Keynesian and I count myself as a Keynesian will tell you ultimately a matter of a matter of technique it's all talking about their matter of Law and Convention and political Bargains but you do have to put those laws and those conventions and those political Bargains in place and that's why the conversation is all about de-risking and the remodeling of the balance sheets of the Bretton Woods institutions the IMF and the World Bank and the possibility of the mobilization of private money on terms which are both reasonable and sustainable for the people who end up ultimately having to pay the debts back in the developing and low-income world and for the taxpayers in the rich World which have to de-risk this activity and have been you know spanned over a barrel repeatedly in a series of moves by big Capital worldwide which have had the effect of socializing the risks and the costs and the losses and privatizing the profits which goes back to the 2008 experience and so that's I think the space within which the conversation is happening no one really imagines I think we're going to see gigantic green States or massive Global new New Deals being pushed through the stressed budgets of the advanced economy world to the benefit of the developing world but I think there is adorning and I think pretty Consolidated understanding now that unless we address investment needs at the level of several trillion dollars a year four decades the carbon we are steering open eyed I mean we may you know choose to look away but our eyes are basically open into disasters perhaps overreach but really A catastrophic failure of potential and the reality of course is that even when if one closes one's eyes the skin feels the heat at some level yeah no no the heat is coming and the the the disasters that will unfold in the Mediterranean for instance as we speak almost on the daily basis of desperate entrepreneurial desperate energized people trying to find a better life for themselves in the north and drowning the irony is that so many of the issues you've just raised now though they are not about U.S China competition in a few key National capitals they're viewed largely through a lens of U.S China competition and certainly one cannot ignore that Dimension to almost any serious discussion of Reform of the international financial institutions for example or the global trading regime and yet you know it it also raises the quite if you one pulls away from that perspective and wants to think about the world from the point of view of a number of powerful and important countries that are sometimes described with the term middle power which may not quite fit anymore but the Indonesians the Egypts the brazils the turkeys the mexicos what do you make of their reaction to this poly crisis their economic policies their political economy and where is that going and I think this is really an absolutely fundamental and it goes back also to the China us competition I mean how do you view this emerging it's not even emerging the reality of multi-polarity um world um you know from the from the point of view of recent shocks so if you look at 2008 if you look at 2020 if you look at the years even in between um we do seem to be in a really rather new regime in the sense that the managerial capacities the crisis fighting capacities of the shall be called them the G20 or the G30 a middle doesn't you know to me doesn't really do it justice like why would you call Turkey a middle power or an Indonesia I mean these are gigantic hugely complex you know players uh by any standard and certainly by their own Reckoning right um their ability to withstand Treasure of various types has dramatically increased and is a factor in itself to reckon with also in commentary right there's a limit to how often we can cry wolf about the impending Prospect of a global debt crisis invoking implicitly a story like the 1980s or the late 1990s in Asia and I really just don't think that's ever coming anymore because look at Turkey I mean you know if a country was ever going to deliberately bring upon itself a crisis it's turkey and it's not even in Argentina's position not even close right so the capacity of States like that is to harness the very considerable internal resources both of their middle class their business their state apparatus the desire of international Capital the fine locations to invest in it it changes the game very very considerably and I think the question really is for the you know what in that kind of schema get called the major the big Powers not the middle passes as well how they relate to this and I think there's really a very fundamental set of questions here I mean the Europeans to their credit I think have essentially announced that they Embrace multipolarity what when they talk about de-risking what they mean de-risking in their relations with China is not that they want to stop investing or trading with China they just want to pluralize multiply their potential Partners in the world so from their point of view the existence of this multipolar sphere are very large very significant emerging and middle-income countries is nothing but a bonus there's really no downside to it and I think that's why we're seeing this new effort by the Europeans for instance to restart Mecca the relationships with Marco build out these kind of relations the ongoing dance they do with with turkey for instance and the huge interest there is now in cultivating relations with India are all part of that effort to actually make the best of multipolarity China of course talks a good game of multi-polarity this is what they say and profess to want depends I think where you are in the world if you're in the immediate vicinity of China in the South China Sea it feels pretty rough but they think broadly speaking if you look at Latin America they can quite credibly say that they have delivered on that right nothing has in a sense empowered Brazil more in the last 20 years than it's extraordinarily Dynamic trading relationship with China it's an incredible story right the surge in Latin American China trade over the last 20 years is is really a world historic development because it repolarizes the internal logic of the western hemisphere in a way that I think Washington has been quite asleep to or that's a little unfair but really struggles to provide an answer to and that in a sense be my question is like where does America actually stand on the multi-polarity issue because again of course you know in the trumpian mode um you could say it's pretty clear Trump wanted to do Bargains he'd do Bargains with anyone there was a sort of cynical multiplayer out here at work he would deal with the Saudis he would deal with the Russians he would deal with erdogan Manor a manner it was kind of like a simple story and it fitted with his apocalyptic story about American decline as well I think actually for Liberal Americans the current bide Administration which count you know I count many people and in that were associated with it as my friends I think in that sense for us if you like or at least for them for these people I think it's much one level they would not deny of course the multiple attendant multiple attendancy and would push against any claim that they want to exert the unit polar dominance or hegemony but de facto a very devoutly committed to the idea that America does have a exceptional position as a leader in the world and that without America's leadership if you think about blinken's opening statement you know whether we like it or not the world doesn't organize itself so America needs to come back to the table well you know people might differ about that whether or not America the world organizes itself in the absence of America it kind of did actually and then the final element in the story now is of course that if you take the confrontation with China and ultimately the containment of China's rise under its current leadership as a historic mission of the Biden presidency and they say so in so many words then are you really committed to multi-polarity or do you actually want to to consolidate new alliances and a new block do you actually want to coincolidate alliances of democracies do you want to Define friends and enemies how far do you want to you know allow the play of sanctions to operate so I think it's actually really without wanting to foreclose on this I think it's actually a rather profound dilemma for American policy it's fascinating so I mean one subtextile this of course is that there's a degree of connection between the domestic approach the white Administration has taken and at that particular Mission you articulated globally that that they might prioritize in domestic investment and so on and raises interesting questions of implementation and how effectively government institutions can deliver on that but another subtext or subplate here is about technology because if we go back 30 40 years it does seem like certain perspectives on trade might have played down the distinction between between different things you might trade and here you know if I'm trying to decode a little bit the Biden administration's approach there's a particular sensitivity around technology access to it it's long-term impact on economic political and military power and the perhaps greater desire to have countries sort of choose whether they're going to treat China let's say as a as a legitimate provider of like deep technological infrastructure and you know the by the administration might point out that there are various risks that countries have to take seriously in that sort of decision making but it does raise this interesting question of how much the current moment is defined by a special kind of technological competition and uh you know certainly AI being in the news highlights and underscores this discussion but it's about semiconductors it's about 5G what do you make of all that I think this is a really fascinating Dimension I mean as a historian I feel I should probably say that it's not it's not radically new in the sense that during the first cold war with the Soviet Union after all technology was also an issue very much actually especially in transatlantic relations with the Europeans the succession of American administrations looked discards at the willingness notably of German industrial companies to do business in the Soviet Union and Supply what was regarded as sensitive technology and there was a long list also including early microelectronics avionics and this kind of thing are Goods which were absolutely prohibited in trade with the Soviet Union and NATO coordinated this uh you know there's a precursor to our current moment I think the big the huge difference is that multiple I think is a the current um disenchantment and the current effort to de-risk and disentangle the new couple comes against the backdrop of 20 to 30 years of unprecedented integration um which is very unlike the relations that anyone ever had with the Soviet Union um secondly China is a much more significant player in its own right in the technological space than the Soviet Union was in and I mean the Soviet Union of course had areas of Excellence nuclear technology despite your novels still is a dominant where Russia totally dominates in the global energy and nuclear business military hardware and in space right so in those were areas where the Soviet Union was in fact World beating um but China was in a you know infinitely a more powerful position and more broadly I think one would have to say that Tech has come to play an outsized role in our lives over this last half century and so the combination of those three things means that this issue between China and the US is much much more pervasive much more tricky much more complicated to sort out and that Taiwan of all places should become as it were you know it's this because that's technology that we still really don't know whether you can do large-scale three nanometer production Elena think anywhere outside Taiwan it's just not obvious you can right and if that's the case it's really a kind of world historic it's as though world history came to revolve around the white wine vineyards of burgundy like what would we do if that was the case um it's uh how ironic that if you go back even just 20 years the promise of Technology was taken to be an utter disruption of the significance of geography right yeah exactly it would disrupt geography and it would disrupt boundaries and I think you know to be honest of course Apple the single most valuable company that's ever been in the entire economy ever lived that model and and has is goes on living it not in the sense that geography doesn't matter but that it straddles geographies and articulates them with each other and builds geographies and you know the the hope is in a sense to make viable this alternative Vision that you can replicate that but but if so it's a long shot we've not done that before and it will certainly involve a lot of disentangling um it's truly striking to me that the new headset that Apple has introduced you know this breakthrough technology and the the that's the supply chain for that is entirely Chinese again so even in this moment um it's a telling fact or it is in as much as I mean not a fact or just I mean just a a case study in as much as so much discussion about declobalization or even about re-globalization without China fails to recognize that at least some American companies are still making bets to some degree that those Supply chains will be viable uh I mean maybe Apple has nobody understates it the most valuable company in the American Stock Market the most valuable company ever the most valuable American company ever is wholly committed to the prospect of being able to and has no plan B as far as anyone's able to tell the India story is out there but like has no plan B still really doesn't have a plan B so we're going to go to questions in a moment from the audience but I want to ask you maybe one last query or family of queries before we go to those questions and it's about the changing nature of economic ideas which is something you've written about thought about quite a bit so if I take the fed's recent actions we've had like a 500 basis point increase in Titan monetary policy to First approximation and yet you know the U.S economy hasn't really felt it that much some investors just observe that there's good reason to think that a lot of them models people carry around in their heads or in their computers to estimate the connection between for example monetary policy and economic growth unemployment seem not so functional and accurate and if I generalize that point to just how much of this poly crisis has produced responses from quantitative easing to the massive amount of German subsidies the energy prices and so on what do you make of that shift in the Overton window as it were with respect to what counts as responsible economic policy and it's somebody who just described yourself as a Keynesian what do you take to be the limits of responsible you know macroeconomic policy making from your perspective yeah I mean this is a another fantastic and huge question I mean at one level you know I think there are two different views one would be to say that at some level we live in a fairly unchanged world really in the same thing when John Williams gave this quite vigorous defense of Defense position and the pages of the Ft today or yesterday in Long interview with Colby Smith um in which you basically said you know just give it some time this is going to work its way through yes you know a five percent interest in interest rates will in the end slow the American economy now it is slowing down it'll just take some time and I think that's a very reasonable position and it's broadly could be articulated within the you know the kind of new Keynesian framework that has dominated American and Global policy economics de facto since the 1980s and we are in an extraordinarily unusual and to call it a standard business cycle I think is quite misguided we are still unraveling the truly remarkable shocks of 2020 and then in the European case the energy shock of last year which was epic by any standards so this is very complicated the toolkit is working at some level it's slower than people that dissipated but I don't really see any need to declare a revolution on the other hand on the industrial policy side we absolutely have seen an opening of the Overton window some would say a Pandora's box right in the sense that the old belief that picking winners using government money to deliberately you know structure industrial policy um that taboo has disappeared and and people are engaged in it I mean I think and that's important I think there are three things to say about that that really worth saying it was always a bit of a myth that industrial policy didn't exist it was something that folks who identified as hardcore neoliberals told each other but just fly in any airplane anywhere in the world and you are flying in the product of massive industrial policy whether Boeing or Airbus what else is it right drive any car in the world if it's a turbo diesel It's the effect of a certain rather discrete European industrial policy that's running that way secondly if you dig into the actual techniques that are being used in the ira somebody like Daniella Garbo will say they're actually rather familiar hands-off public-private partnership kind of de-risking packages so who's a challenge we're really still in that in that in that old world and I think that would suggest that at some level you know we're not we're not really Paradigm broken so much as modifying progressively modifying where I do see a really radical change is simply in the ambition I mean the inflation reduction Act is after all simultaneously trying to address the climate crisis adjust China and fix the American middle class and thus secure democracy in the future of the American Republic whether you know a policy dimensioned at the scale of about half a trillion dollars um and following in the wake of previous policies that were dimensioned in the scale of several trillion dollars and that I think is really the quite fundamental break it's not so much that Economic Policy per se is radically different or that the you know at some level the problems are familiar because deciding you're going to do industrial policy doesn't mean you actually know how to pick winners it just means you're going to take the Gamble and probably fail in many ways you anticipated but you're at least trying why are you trying because these urgencies are so extreme and the very least you can say about the Biden Administration is they're super smart people who totally see recognize and fully I think understand the gravity of those challenges and are trying to formulate policy to react within the limits of what the American democracy and the congression very fine balance in Congress will permit them to do it's an amazingly impressive at one level dauntingly you know people call it a Swiss army knife for a reason because the thing about Swiss army knife is it's a pen knife you know if you're relying on a Swiss army knife to confront World historic challenges well good luck to you Brave person like you know go for it God speak but it's a pen you know it's a pen knife with a lot of different attachments it's a very legitimate answer let me just push you a little bit and imagine yourself as the designer of that Swiss army knife and uh somebody who either had to advise a president or or advising the people advising the president about when the knife got so crowded with too many tools that it would just be not something you can put in your pocket so like the notion of picking winners and losers which is a bit of a uh you know one framework for thinking about why industrial policy gets tricky there are elements of that that probably your analytical work would push back on and say it happens all the time but where would you maybe see like okay there's a limit I would not want even a responsible government I generally trust to take on quite that much because I doubt it would work for me actually it's the bit which is biggest and it's the microchip story like I don't I don't I mean it that seems to me let's put it this way it it's it's the area which is most clearly driven by geopolitical military logic at some level I think though people who really know this stuff tell you that China can find a way around almost all other problems on AI you just make slightly less efficient therefore slightly hotter or slower driving engines but it may even encourage the Chinese to do more algorithmic stuff which will ultimately make their stuff smarter than ours but any case that for me is the real rub because if you had to pick an industry that you would not wish to attempt to manipulate the government policy it would be the microchip industry it is just ethically mind-blowingly unbelievably Capital intents like Samsung's quarterly investment budget runs into tens of billions of dollars there is only one company that has so far managed to do really large-scale mass production at the three nanometer level you've already you already know who the winners and the losers are in so far as your backing Intel you're backing a company which is demonstrably failed to make the leap into the new level of Technology because it didn't understand the significant of lithography and is now at the next level trying to make up for that you know if you looked at the industrial policy history book you'd say this looks like a really bad bet but if you look at the numbers which the Biden Administration is celebrating now for the surge in investment in manufacturing where is it of course it's in that sector because building the plants is so incredibly expensive so it's to me like and so it's a real that's where you really see the hard trade-off between the supposed geopolitical logic and the the likely success story in terms of economics and also ultimately this isn't just money out the window right this is a this is something you have to legitimate to the public you have to justify to taxpayers you have to seriously ask why are we you know in the German case why are we spending 10 billion euros to subsidize an Intel plan when Germany is screaming and crying out for investment in God knows how many other areas it's justified in terms of security how many Brigade battle groups would Germany actually be able to provide to the Baltic if it spent 10 billion rapidly building then I think it's in the order of three or four maybe which would enormously increase its you know contribution to Nato and any conventional understanding of security much more than building this chip plant so it's it's these are really serious trade-offs and that will be the one I would focus on yeah it's a lotably specific we have a couple questions from the audience about the long-term impact of the war in Ukraine say a bit about what scenarios you imagined playing out particularly if we take into account not only the hot Wars it were but the challenge of rebuilding the economy of Ukraine dealing with the various issues of corruption and and social well-being there as well long term yeah I mean this is obviously the the absolute the real sort of shock um experience I mean in a in the sense of Russians aggression and then the positive shock of the extraordinary resilience the ukrainians have shown the upshot of that is that we now face this I mean I think in my memory unprecedented situation where you have a a real war not a you know not a war which is a war of choice where we basically know the outcome of the question is whether the U.S military can suppress the Insurgency but a full-on fully contingent existential struggle between two will turn out to be two rather significant military Powers one of which has the second nuclear Arsenal in the world like we have not confronted a Jeopardy of that type before and it's it's really extraordinary serious and its implications and the short answers we simply don't know yet what the outcome of this is going to be because we don't know how the war is going to be concluded I mean it's it's very very difficult I think to to to to Really map out any well the so the the scenario that many people would tout is the good scenario which will be a crushing Ukrainian Victory exposes us to the huge question of what happens next to the Russian state and if you don't go down that route then the question is how on Earth do we broker a piece which could be acceptable to Ukrainian democracy after the sacrifice is heroism and success they'd achieved so far but it's limited it's not conclusive it hasn't given them what they want in Crimea or you know the Eastern territories back and this offensive and you know I'm not a day-to-day military expert but it doesn't look like a kind of breakthrough operation of the type and there was no real reason to expect they could perform that again against the settled Russian defense so I think it's incredibly difficult to see how this has good outcomes anytime soon and the consequences of that well for the global economy I think at this point they're largely cauterized they're they're priced into an extent and they're largely they're largely quarterized Ukraine's question is of survival on the economic front as well as on the battlefield and whatever partial reconstruction they can get done and need to get done to see them through another year of War I think at this point um and the Really pressing issue um one that needs to be urged I think also in the public mind is where the US stands on that because the US was absolutely critical in the first phase of the war on the level of American Support is like no one else has given um but the real question here is from the economic point of view is is there any willingness on the American part to match say the European offer of 50 50 billion euros over a over uh of the next uh till 2027 it is isn't it um uh as a kind of package because what Ukraine desperately needs is stability in its in its financing and without that they risk tumbling into acute IMF dependency emergency bailout packages over the course of this fall or going into the winter and the question is is America just holding back because America's not made that matching commitment this time around to what the Europeans have does the Americans have another plan in mind is this a matter of political tactics on the part of the Biden Administration that they don't dare to ask Congress it's not in as far as I can tell in Biden's budget that was announced in the spring I think the seven billion in there for Ukraine that's not that's not enough that's nowhere near the ballpark we need to be at so where is that answer going to come from given the shifting political mood in the US on this issue in the upcoming elections and so that you know you know even even the I mean the prospect of a prolonged war from the Ukraine from Ukraine's point of view must be terrifying in absolutely every respect and you can see why they are so urgently and dramatically and with extraordinary I mean if you've been in any of the meetings personally with Ukrainian side and their allies in Eastern Europe it's a kind of moral pressure that I've never experienced in the public setting before I mean it's it's really dramatic and I that's that but for me raises another question is how do they digest what I fear is going to be then expect to be their disappointment because America for very good reasons is I think holding back for making very extensive promises on NATO membership anytime soon for you know because America has to make these awesome has has the awesome responsibility of wielding the nuclear discount and and needs to guard that and needs to protect itself and Biden has been admirably forthright I think in in spelling out the limits of what he's willing to do but how then does Ukraine given this massive mobilization of public opinion how do they digest the the upcoming disappointment I don't I I'm very I I have only um Bleak and worried and feelings and thoughts about that that's perceptive sometimes intellectual honesty requires us to just acknowledge the scale of the problem but in particular I also acknowledge your point about how difficult it is to be completely dispassionate about what's happening ultimately all of us who are in the position of being interpreters of what's happening in the world are called upon to be mindful of objectivity and of the need to be very practical and realistic but at the same time there is a moral and ethical Dimension that's impossible to ignore we have an initiative here trying to think about some of these very issues around how to rebuild Ukraine how to guarantee it security and it implicates a lot of the dilemmas you realize you you've you've shared there's a question about 1914 and discussions that sometimes highlight structural similarities between the current moment and 1914. what do you make of that Adam um I mean I I uh the the most important thing to say to my mind as a historian is is that um we're in a different we're in a world I mean you know structurally it may make sense to to analogize I don't know between the British Empire and the rising and the rising power of Imperial Germany America you know what we actually confront is something far more radical right because because China isn't just a medium-sized European nation-state doing its thing China is at this point by far by very very large margin the single most populous and Powerful State our issues has ever produced full stop no no societies ever previously managed to organize 1.4 billion people at the level that China currently does and if that's the rising power no Rising power like that has ever confronted an incumbent as powerful and as well armed and as convinced of its righteous you know exceptional role in leadership as the United States I mean the British Empire looks mild by comparison and certainly vastly less potent than the United States is if it was the first and only true old style you know it was both an Empire and radically Global but the United States is something very different right it isn't it's a global nation state with with uh with a system of global reach that that no status ever previously matched so in this respect I find those analogies I mean they're not of after all they're hardly reassuring to compare the current situation to 1914 but they don't really actually capture what ought to be both the terror and the horror of our current moment right to me the prospect of a war between China and the United States is just it's utter if you go back to your point you just made to you know it's I find it outrageous that it is actually the subject of daily conversation and wargaming and scenario planning and matter of fact preparation in the way that it has become in recent years and I think you saw over the course of the first six months of this year within very responsible centers in the Bible Administration also a sense of alarm about just how concrete it had become and how like 1914 it was beginning to feel and we saw and we've seen after all with the vet visits by both blinken and Yellen to China efforts to manage the tension in a way that are quite new and very significant I think they may not yield any positive constructive outcome that the sheer presence of secretary yeleman Secretary of State Lincoln in China is in all itself significant compared to where we were 12 months ago um but I really think we shouldn't and I mean this seriously we shouldn't reassure ourselves by you know by comparing this situation to 1914 you need to grasp the this is you know this is the checkerboard is now full right with China's development and India's development this is it this is the globe the frontier is closed these are the big units which are going to play out if we are seriously going to play out and contemplate a future in which war between those units is possible it is an unspeakably Bleak Outlook Adam when when the editors pull out the the money quote from this discussion you and I have been having I suspect it will be we shouldn't reassure ourselves by comparing to date in 1914. yeah last question for you you have an uncommon uh Insight from my perspective into subtlety into things that maybe the rest of the world hasn't quite grasped yet that need attention we've covered a lot of topics some of which are getting plenty of attention some less attention tell us about one Trend region problem that you think deserves more attention and isn't getting it right now well I mean I actually want to I mean because we've been specific on quite a number of points I hope you forgive me if I don't give you a specific answer on this but give you a very general one which goes back and links directly to what I've just said which is that that it's meaningful to say what I just said which is we shouldn't reassure ourselves by comparing our current situation to that of 1914 goes to this point that we we have to Grapple as best we can with with a truly awesome realization that this time is quite fundamentally different and on a scale and at a pace and with consequences of irreversibility that are simply you know unprecedented in our Collective history in modern times that's what the climate diagnosis when taken seriously means and yet what I see you know in in Welling meaning conversations again and again and again with folks that one has these conversations with are these moves which position it back in a history that we've already experienced like you know classically people will ask Okay so we've got to do the energy transition tell me what the precedents are for doing energy transitions so which the answer is there are no precedents to doing the energy transition in fact we've never ever done an energy transition ever I mean you can imagine the energy transition as being you know horse and buggy Railway train motor vehicle aircraft that if you look at Humanity's Global use of energy we didn't transition out of anything ever we've just progressively increased our consumption of everything right so what we're what we're planning to do in a kind of matter-of-fact way the crucial thing to understand about it is it doesn't have any precedence at all ever in our collective experience we have never simultaneously repressed the use of three major sources of energy fossil or not you know because we've increased our consumption of wood and biofuels over time because systematically animal power is the one thing that we produce use of for traction but we eat more animals than ever before so the herds of animals are getting bigger and bigger that we have never shut down the use of coal oil gas and essentially beef has to go to in the space of 20 to 30 years and that's the the thing that we don't and in the sense we need to Shield ourselves against this realization because it is so deeply just for teaching us is that none of this there is no roadmap for any of this and and what we're embarking on there for and we need to do it at extraordinary speed like seven percent per annum reduction in CO2 emissions that's one and a half percent per quarter every single quarter for 30 years this is like running a rapidly growing business in the other direction or a business which is totally changing its business model over 30 years right and I don't think that is really that is something that I feel we just have to repeat to ourselves it's not something we're just going to understand it's something like a practice almost that you have to internalize this wake up in the morning and go we are in an unprecedented situation yes I'm not crazy I'm not radical I'm not out with the you know the fairies like imagining this we genuinely are and tomorrow will be extreme and different again as well and on and on for the rest of our lives our children's and our grandchildren's lives Adam one of the uses of history that I think is underappreciated is underscoring where history runs out as an analogy and I appreciate it telling you that note and if anything it reaffirms the importance of our mission I'm very glad to call you a colleague I look forward to more dialogues and thank you for all your insights today thank you Tina as well thank you to the whole team

Channel: Carnegie Endowment

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Id: WH79yahnxBM

Length: 51min 12sec (3072 seconds)

Published: Tue Jul 11 2023