1 00:00:02,240 --> 00:00:06,080 Speaker 1: Jeffrey Sachs has been studying the intersection of policy, finance, 2 00:00:06,160 --> 00:00:10,760 Speaker 1: and development for decades. Now, more than ever, he says, 3 00:00:10,840 --> 00:00:14,440 Speaker 1: the US needs a foreign policy that reflects the big 4 00:00:14,520 --> 00:00:19,400 Speaker 1: shifts in economic power, a state craft that reflects America's 5 00:00:19,520 --> 00:00:23,880 Speaker 1: role as a superpower, but a chastened one, an economy 6 00:00:23,960 --> 00:00:27,720 Speaker 1: that no longer has the capacity to bend the rest 7 00:00:27,920 --> 00:00:32,400 Speaker 1: to its will. Donald Trump didn't create that need, he 8 00:00:32,479 --> 00:00:44,800 Speaker 1: does make it more urgent. Welcome to Benchmark, a show 9 00:00:44,840 --> 00:00:49,160 Speaker 1: about the global ecod I'm Daniel Moss, columnist at Bloomberg 10 00:00:49,280 --> 00:00:53,479 Speaker 1: Opinion in New York. Name scot Landman, Economics editor with 11 00:00:53,600 --> 00:00:57,920 Speaker 1: Bloomberg News in Washington. Jeffrey Sacks, of professor at Columbia 12 00:00:58,040 --> 00:01:01,280 Speaker 1: University in New York, is the author of a new 13 00:01:01,360 --> 00:01:07,480 Speaker 1: foreign policy, Beyond American Exceptionalism, published by Columbia University Press 14 00:01:08,120 --> 00:01:11,039 Speaker 1: out October two. He joins us this week, Jeff, Welcome 15 00:01:11,080 --> 00:01:15,360 Speaker 1: to Benchmark. Great to be with you, Jeff. Every few 16 00:01:15,440 --> 00:01:19,240 Speaker 1: years there are calls for a new approach to America's 17 00:01:19,280 --> 00:01:23,480 Speaker 1: dealings with the world. What's unique about this moment that 18 00:01:23,560 --> 00:01:28,000 Speaker 1: warrants a big change? Maybe we've needed a change for 19 00:01:28,160 --> 00:01:35,440 Speaker 1: quite a while. America has been admissed in wars almost perpetually, 20 00:01:35,520 --> 00:01:42,160 Speaker 1: almost NonStop. Now for decades, we seem to be creating 21 00:01:42,880 --> 00:01:46,600 Speaker 1: lots of crises, or engaged in a lot of crises, 22 00:01:47,040 --> 00:01:52,280 Speaker 1: and we're not solving major challenges that we face, such 23 00:01:52,320 --> 00:01:58,440 Speaker 1: as the global environmental crises. So what we are doing 24 00:01:58,960 --> 00:02:02,880 Speaker 1: is not working, and I think that that's why I'm 25 00:02:02,920 --> 00:02:05,280 Speaker 1: calling for a new foreign policy. But perhaps for years 26 00:02:05,280 --> 00:02:08,200 Speaker 1: and years there's been a sense that we're not on 27 00:02:08,360 --> 00:02:13,080 Speaker 1: the right course. Naturally, different critics would have a different 28 00:02:13,120 --> 00:02:16,440 Speaker 1: point of view. My point of view is that America 29 00:02:16,560 --> 00:02:21,520 Speaker 1: got awfully arrogant in thinking that it runs the show. 30 00:02:22,440 --> 00:02:27,359 Speaker 1: I used the familiar term American exceptionalism, and I think 31 00:02:27,360 --> 00:02:29,359 Speaker 1: that this is a big part of our hang up. 32 00:02:29,840 --> 00:02:32,360 Speaker 1: And when people remind an audience that the U. S. 33 00:02:32,400 --> 00:02:35,280 Speaker 1: Military is the most powerful in the world, we seem 34 00:02:35,320 --> 00:02:40,280 Speaker 1: to hear that fairly often. Is that necessarily wrong or 35 00:02:40,400 --> 00:02:42,840 Speaker 1: or does it miss the point? Or is it is 36 00:02:42,919 --> 00:02:48,400 Speaker 1: it not really that relevant anymore? We are far and 37 00:02:48,440 --> 00:02:52,680 Speaker 1: away the most powerful military in the world. We have 38 00:02:54,200 --> 00:02:58,040 Speaker 1: nuclear warheads that, as they say, can make the dust bounce. 39 00:02:58,320 --> 00:03:02,520 Speaker 1: We can destroy the world many times over. We have 40 00:03:03,880 --> 00:03:09,800 Speaker 1: hundreds sometimes it's numbered around seven hundred military bases and 41 00:03:09,840 --> 00:03:14,360 Speaker 1: around seventy countries around the world. We can project power 42 00:03:15,080 --> 00:03:20,040 Speaker 1: on our naval fleet, we have a basis for intervening 43 00:03:20,639 --> 00:03:26,320 Speaker 1: in other countries. So this military power is vast, without question, 44 00:03:26,400 --> 00:03:29,440 Speaker 1: But what is it getting us? What? What? What is 45 00:03:29,480 --> 00:03:35,400 Speaker 1: the point? After all? Well, it does, of course provide 46 00:03:35,440 --> 00:03:38,880 Speaker 1: a defense. No one would dream of invading the United States. 47 00:03:39,400 --> 00:03:43,920 Speaker 1: That's fine. But what it also has done has led 48 00:03:44,040 --> 00:03:49,680 Speaker 1: us into one conflict after another in Syria, in Iraq, 49 00:03:49,960 --> 00:03:55,880 Speaker 1: in Afghanistan, in Libya, in Somalia, in countless other countries 50 00:03:56,280 --> 00:04:04,440 Speaker 1: were covertly engaged or provide aiding air support as in Yemen, 51 00:04:05,280 --> 00:04:09,640 Speaker 1: and we're not solving anything from these conflicts, just like 52 00:04:10,200 --> 00:04:15,680 Speaker 1: we experienced with the Vietnam War, America with over powering 53 00:04:15,920 --> 00:04:22,080 Speaker 1: military strength, but we ended up leaving after more than 54 00:04:22,120 --> 00:04:26,200 Speaker 1: a million Vietnamese died in that war, and I would 55 00:04:26,240 --> 00:04:29,599 Speaker 1: say it was a war for absolutely no point. How 56 00:04:29,680 --> 00:04:33,960 Speaker 1: critical are the tectonic shifts that the global economy has 57 00:04:34,000 --> 00:04:37,040 Speaker 1: witnessed in the past few decades to the foreign policy 58 00:04:37,200 --> 00:04:44,160 Speaker 1: challenge presenting us now? My basic argument is historical. I 59 00:04:44,240 --> 00:04:48,960 Speaker 1: point out that because of the Industrial Revolution, Britain became 60 00:04:49,240 --> 00:04:52,760 Speaker 1: the dominant power of the nineteenth century. It was the 61 00:04:53,320 --> 00:04:57,640 Speaker 1: pos Britonica, the British Peace, the British Empire on which 62 00:04:57,680 --> 00:05:00,800 Speaker 1: the sun never set. And then I explained that in 63 00:05:00,839 --> 00:05:04,480 Speaker 1: the twentieth century, because of World War One, the Great 64 00:05:04,520 --> 00:05:09,800 Speaker 1: Depression in World War Two, essentially the British Empire faded 65 00:05:10,360 --> 00:05:15,560 Speaker 1: and the American Empire succeeded it. And in ninety one 66 00:05:15,800 --> 00:05:21,480 Speaker 1: the Time magazine editor Henry Loose christened the American Century, 67 00:05:22,000 --> 00:05:25,400 Speaker 1: and that was the declaration that America now rules the 68 00:05:25,480 --> 00:05:29,320 Speaker 1: roost and that we are the top dog in the world, 69 00:05:29,360 --> 00:05:33,720 Speaker 1: which was the case even during the Cold War when 70 00:05:33,800 --> 00:05:38,360 Speaker 1: it was a confrontation with the Soviet Bloc. The US 71 00:05:38,480 --> 00:05:45,720 Speaker 1: was far and away economically, more developed, more advanced, more prosperous. 72 00:05:45,960 --> 00:05:48,080 Speaker 1: Of course, both sides had enough to blow up the 73 00:05:48,080 --> 00:05:51,680 Speaker 1: world many times over. It's almost a miracle that it 74 00:05:51,720 --> 00:05:56,840 Speaker 1: didn't happen when the Soviet Union collapsed at the end 75 00:05:56,839 --> 00:06:00,400 Speaker 1: of the nineteen eighties, and then literally does of the 76 00:06:01,400 --> 00:06:08,960 Speaker 1: politically in December, the US took that as the full 77 00:06:09,200 --> 00:06:13,360 Speaker 1: confirmation that not only was it the American Century, we 78 00:06:13,360 --> 00:06:17,159 Speaker 1: were the only superpower standing. It was then called the 79 00:06:17,279 --> 00:06:23,680 Speaker 1: unipolar world. I found that very naive, very arrogant, and 80 00:06:23,800 --> 00:06:27,599 Speaker 1: very risky, because, after all, when you're five percent of 81 00:06:27,640 --> 00:06:31,520 Speaker 1: the world population, are you really running the rest of 82 00:06:31,520 --> 00:06:34,920 Speaker 1: the world? You really presume it. And I watched with 83 00:06:35,000 --> 00:06:38,080 Speaker 1: my own eyes and visits year after year the rise 84 00:06:38,120 --> 00:06:43,919 Speaker 1: of China, which really began its rapid ascent in eight 85 00:06:44,440 --> 00:06:50,400 Speaker 1: So we were declaring the unipolar world. America's the colossus, 86 00:06:50,520 --> 00:06:54,680 Speaker 1: America's the new Rome, America's the indispensable country, America's the 87 00:06:54,720 --> 00:06:59,360 Speaker 1: exceptional country. Just at the moment when a very large 88 00:06:59,400 --> 00:07:04,080 Speaker 1: country with four times the population was soaring ahead in 89 00:07:04,200 --> 00:07:11,560 Speaker 1: terms of investment, infrastructure, technological capacity, and by some measures 90 00:07:12,560 --> 00:07:17,360 Speaker 1: which one can technically argue about, China's roughly the same 91 00:07:17,400 --> 00:07:21,600 Speaker 1: size economy as the United States now, or or even larger, 92 00:07:22,320 --> 00:07:26,320 Speaker 1: And that suddenly runs against the grain of what do 93 00:07:26,360 --> 00:07:29,520 Speaker 1: you mean, were the unipolar power? How can China be 94 00:07:30,360 --> 00:07:33,600 Speaker 1: the same size? How can China be the larger trade 95 00:07:33,640 --> 00:07:37,000 Speaker 1: partner of other countries in the world. Now this is 96 00:07:37,320 --> 00:07:42,240 Speaker 1: again motivating yet another wave. This is the fundamental driver 97 00:07:43,120 --> 00:07:49,080 Speaker 1: of Trump trying to really break the international rules of 98 00:07:49,120 --> 00:07:52,920 Speaker 1: the game, because he he thinks that the US will 99 00:07:52,960 --> 00:07:58,240 Speaker 1: fall behind if these rules continue the way they are. 100 00:07:59,200 --> 00:08:03,080 Speaker 1: In one sense, He's right. If we actually play fair 101 00:08:03,120 --> 00:08:06,240 Speaker 1: and open, it wouldn't be surprising that a country four 102 00:08:06,320 --> 00:08:09,440 Speaker 1: times more populous than the United States and very clever 103 00:08:09,600 --> 00:08:14,200 Speaker 1: and uh and very effectively governed, would be able to 104 00:08:15,200 --> 00:08:19,920 Speaker 1: reach American technology levels. And that that is exactly what's happening. 105 00:08:20,960 --> 00:08:23,000 Speaker 1: Let's go back to the end of the Cold War. 106 00:08:23,320 --> 00:08:28,160 Speaker 1: President George H. W. Bush is generally praised for his 107 00:08:28,280 --> 00:08:32,160 Speaker 1: handling of that period. You had a vantage point as 108 00:08:32,200 --> 00:08:36,000 Speaker 1: an advisor to Mikhail Gorbachev, the last leader of the 109 00:08:36,080 --> 00:08:39,800 Speaker 1: Soviet Union. Jeff, what did you observe well? I did 110 00:08:39,880 --> 00:08:45,880 Speaker 1: have an unbelievable seat at the theater, really unbelievable. And 111 00:08:46,360 --> 00:08:52,960 Speaker 1: where George Bush Sr. Was quite good was nineteen eighties, 112 00:08:53,600 --> 00:08:59,200 Speaker 1: eight eight nine in teaming up with Gorbachev for a 113 00:08:59,360 --> 00:09:07,360 Speaker 1: peaceful transformation of Eastern Europe and for German reunification. I 114 00:09:07,400 --> 00:09:14,960 Speaker 1: believed strongly then that Gorbachev's vision of a peaceful common 115 00:09:15,000 --> 00:09:18,920 Speaker 1: home of Eurasia that would stretch from Rotterdam to a 116 00:09:19,000 --> 00:09:21,680 Speaker 1: lot of astok as he said, from the Atlantic to 117 00:09:21,720 --> 00:09:25,520 Speaker 1: the Pacific in a common home was was really a 118 00:09:25,559 --> 00:09:30,120 Speaker 1: great idea. But the idea that Cheney had, who was 119 00:09:30,160 --> 00:09:33,160 Speaker 1: the Defense Secretary at the time, and started to be 120 00:09:33,240 --> 00:09:37,960 Speaker 1: implemented was head No, we won. Now we're on top. 121 00:09:38,320 --> 00:09:41,360 Speaker 1: This isn't an open world, this is now a US 122 00:09:41,520 --> 00:09:46,400 Speaker 1: led world. And the so called neo CON's began their ascent, 123 00:09:46,520 --> 00:09:50,280 Speaker 1: and I was chagrined at the time, but not really 124 00:09:50,400 --> 00:09:55,079 Speaker 1: understanding the full import of how misguided this was. I 125 00:09:55,720 --> 00:10:02,959 Speaker 1: was rather idealistic. I thought Gorbachev was terrific, and I thought, 126 00:10:03,320 --> 00:10:07,400 Speaker 1: let's all live in peace, as it were. And instead 127 00:10:07,800 --> 00:10:12,200 Speaker 1: what the US did was start to expand NATO. One 128 00:10:12,280 --> 00:10:14,880 Speaker 1: might have thought NATO could have been disbanded. It was 129 00:10:15,480 --> 00:10:20,520 Speaker 1: the military alliance against a country that no longer existed. 130 00:10:21,200 --> 00:10:25,040 Speaker 1: But no, not only did it continue, but it started 131 00:10:25,080 --> 00:10:30,080 Speaker 1: to expand eastward uh and pretty relentlessly, until, as I 132 00:10:30,120 --> 00:10:33,400 Speaker 1: point out in the book, it really crossed a trip 133 00:10:33,440 --> 00:10:38,360 Speaker 1: wire in two thousand and eight when the US invited 134 00:10:38,760 --> 00:10:44,760 Speaker 1: Ukraine and Georgia into NATO, and Putin said, are you kidding? 135 00:10:45,400 --> 00:10:49,920 Speaker 1: That's our border? No way, And that is a lot 136 00:10:50,000 --> 00:10:57,600 Speaker 1: of the recrudescence of the tensions that are plainly evident 137 00:10:57,920 --> 00:11:47,120 Speaker 1: until now, ye Jeff moving eastward from Soviet Union in Russia. 138 00:11:47,320 --> 00:11:51,040 Speaker 1: I have to admit that, as a journalist covering economics, 139 00:11:51,160 --> 00:11:54,480 Speaker 1: I went straight to the economic section of your book 140 00:11:54,480 --> 00:11:57,520 Speaker 1: and found the framing of the whole situation as you 141 00:11:57,640 --> 00:12:01,880 Speaker 1: discussed earlier, As you discussed earlier, very interesting. I was 142 00:12:01,960 --> 00:12:08,400 Speaker 1: particularly struck by your writing about the japan relationship with 143 00:12:08,480 --> 00:12:13,360 Speaker 1: the US and the parallels with today's relationship between the 144 00:12:13,480 --> 00:12:16,600 Speaker 1: US and China. And and you talk about how the 145 00:12:16,679 --> 00:12:22,480 Speaker 1: US was responsible or at least complicit, in Japan's economic 146 00:12:22,559 --> 00:12:26,360 Speaker 1: collapse after its boom in the nineties eighties, and now 147 00:12:26,440 --> 00:12:28,559 Speaker 1: the US seems to be trying some of the same 148 00:12:29,080 --> 00:12:33,120 Speaker 1: kinds of tactics against China. How do you see those 149 00:12:33,200 --> 00:12:37,240 Speaker 1: parallels and why do you think again America will will 150 00:12:37,320 --> 00:12:42,400 Speaker 1: not be able to contain China's economic rise. Well, let 151 00:12:42,400 --> 00:12:46,960 Speaker 1: me say first that my view is a bit heterodoxident unusual. 152 00:12:47,160 --> 00:12:50,360 Speaker 1: It would not be the textbook or the mainstream view, 153 00:12:51,640 --> 00:12:56,200 Speaker 1: and I can't prove it to the decimal point. But 154 00:12:56,920 --> 00:13:02,920 Speaker 1: having been quite involved with Japanese policymakers and US policymakers 155 00:13:03,000 --> 00:13:08,640 Speaker 1: over the years, my sense is that in the nineties 156 00:13:08,640 --> 00:13:12,880 Speaker 1: seventies when Japan was soaring, and then in the early 157 00:13:12,960 --> 00:13:17,679 Speaker 1: eighties when one of my colleagues at Harvard, wonderful sociologist 158 00:13:17,679 --> 00:13:21,640 Speaker 1: and writer As Vogel, called Japan has number one uh. 159 00:13:21,679 --> 00:13:24,520 Speaker 1: And there was the talk that, well, Japan is going 160 00:13:24,559 --> 00:13:29,080 Speaker 1: to outstrip the US as the dominant industrial power of 161 00:13:29,120 --> 00:13:36,160 Speaker 1: the world. That American strategic thinkers, the formers of statecraft, said, 162 00:13:36,800 --> 00:13:42,040 Speaker 1: no way, anyway, Japan is under our security umbrella. Ours 163 00:13:42,360 --> 00:13:45,600 Speaker 1: Japan depends on US, and no way Japan is going 164 00:13:45,640 --> 00:13:48,920 Speaker 1: to take our semiconductor industry. No way it's going to 165 00:13:49,440 --> 00:13:52,680 Speaker 1: take our steel industry. No way it's going to take 166 00:13:52,720 --> 00:13:56,400 Speaker 1: our auto companies down. We're going to stop that. And 167 00:13:56,640 --> 00:14:00,800 Speaker 1: all through the eighties, the US, which has a lot 168 00:14:00,840 --> 00:14:05,640 Speaker 1: of leverage on Japan, first put in so called voluntary 169 00:14:05,760 --> 00:14:12,840 Speaker 1: export restraints, and then in eighty six James Baker uh 170 00:14:13,040 --> 00:14:19,560 Speaker 1: engineered is Treasury Secretary engineered a sharp appreciation of the 171 00:14:19,760 --> 00:14:26,800 Speaker 1: end really undermining Japan's export competitiveness. And in nineteen to 172 00:14:28,440 --> 00:14:33,280 Speaker 1: the Japanese financial bubble burst and Japan went into the 173 00:14:33,360 --> 00:14:39,440 Speaker 1: doldrums for twenty years, not a profound crisis, but definitely 174 00:14:39,520 --> 00:14:44,200 Speaker 1: hinto the doldrums. And that whole idea of Japan overtaking 175 00:14:44,280 --> 00:14:48,800 Speaker 1: US was gone. And I would say, in my interpretation, 176 00:14:49,120 --> 00:14:55,400 Speaker 1: vanquished by active high level US state craft. So is 177 00:14:55,440 --> 00:14:59,360 Speaker 1: there a template there for the current situation. I think 178 00:14:59,440 --> 00:15:03,240 Speaker 1: we're walking the same game plan play out right now, 179 00:15:04,400 --> 00:15:06,960 Speaker 1: and I see it in a number of ways. The 180 00:15:07,080 --> 00:15:11,840 Speaker 1: US is saying no to China's exports, trying to block 181 00:15:11,960 --> 00:15:16,040 Speaker 1: the way. And then if the yuan the redmand b 182 00:15:16,600 --> 00:15:22,080 Speaker 1: starts to depreciate, they scream currency manipulation, currency manipulation, and 183 00:15:22,120 --> 00:15:28,239 Speaker 1: the Chinese right now lean against appreciation, partly because they 184 00:15:28,240 --> 00:15:31,960 Speaker 1: want to avoid the charge of manipulating the currency. To me, 185 00:15:32,120 --> 00:15:35,040 Speaker 1: this is all a game. What do you mean manipulating 186 00:15:35,040 --> 00:15:37,320 Speaker 1: the currency? You start a trade war, you put on 187 00:15:37,400 --> 00:15:40,200 Speaker 1: export barriers. Of course the currency is going to depreciate, 188 00:15:40,920 --> 00:15:45,880 Speaker 1: But the US goal is to slow the Chinese economy, 189 00:15:45,920 --> 00:15:49,720 Speaker 1: to break the export led growth model, and ultimately to 190 00:15:49,840 --> 00:15:54,360 Speaker 1: stop China's rise. And this I think is not just 191 00:15:54,520 --> 00:15:58,880 Speaker 1: an innocent surmise. This is pretty explicit, and I think 192 00:15:58,880 --> 00:16:04,880 Speaker 1: it's pretty clear from the Trump administration foreign policy documents 193 00:16:04,920 --> 00:16:10,560 Speaker 1: that China is really accused of all sorts of nefarious things, 194 00:16:10,720 --> 00:16:18,280 Speaker 1: which are gross exaggerations, vulgar exaggerations in certain contexts, definitely 195 00:16:18,640 --> 00:16:25,720 Speaker 1: trying to provoke the sense of crisis and use America's 196 00:16:25,840 --> 00:16:32,320 Speaker 1: policy instruments to hurt the Chinese economy. I doubt that 197 00:16:32,400 --> 00:16:35,880 Speaker 1: this is going to work in the end. I think 198 00:16:35,960 --> 00:16:40,800 Speaker 1: it's very regrettable and very dangerous. But the US is 199 00:16:41,480 --> 00:16:46,040 Speaker 1: thinking probably strategically in a sense, not just Trump's whims 200 00:16:46,440 --> 00:16:49,640 Speaker 1: while We're gonna pull off Europe because they depend on 201 00:16:49,760 --> 00:16:53,480 Speaker 1: us for security, and so it's going to be the 202 00:16:53,600 --> 00:16:57,240 Speaker 1: US and Europe. We're gonna block China from gaining new technology. 203 00:16:57,840 --> 00:17:01,240 Speaker 1: Russia's kind of ambivalent in all of this. India is 204 00:17:01,280 --> 00:17:03,960 Speaker 1: going to be on side, So we're progressively going to 205 00:17:04,119 --> 00:17:09,080 Speaker 1: isolate China. That's the idea. I think it's fatuous. I 206 00:17:09,119 --> 00:17:12,600 Speaker 1: think it's dangerous, and it is the kind of actions 207 00:17:12,680 --> 00:17:19,280 Speaker 1: that lead to a spiral of arms race and eventually 208 00:17:20,000 --> 00:17:25,919 Speaker 1: potentially hot conflict because Chinese not just hardliners now, but 209 00:17:26,359 --> 00:17:31,159 Speaker 1: mainstream annalists are saying and it's completely understandable the US 210 00:17:31,359 --> 00:17:35,760 Speaker 1: is trying to break us. A lot of contemporary commentary 211 00:17:36,119 --> 00:17:40,000 Speaker 1: links American retreat in Asia to say, disputes about the 212 00:17:40,040 --> 00:17:44,440 Speaker 1: South China Sea or withdrawal from the Trans Pacific partnership. 213 00:17:45,280 --> 00:17:49,240 Speaker 1: In the book, Jeff, you reach back much further to one, 214 00:17:49,840 --> 00:17:53,320 Speaker 1: the year before Nixon's visit to China, what happened in 215 00:17:53,440 --> 00:17:58,720 Speaker 1: nine one that sets the scene for today. Well, one 216 00:17:58,760 --> 00:18:03,600 Speaker 1: thing that happened in nineteen seventy one is that the 217 00:18:03,600 --> 00:18:10,640 Speaker 1: world order dramatically changed when the US unilaterally ended the 218 00:18:10,680 --> 00:18:14,320 Speaker 1: financial system that had governed from the end of the 219 00:18:14,359 --> 00:18:20,040 Speaker 1: World War two and Nixon unilaterally broke the bond of 220 00:18:20,520 --> 00:18:25,160 Speaker 1: the dollar and gold. That set off many different things, 221 00:18:25,200 --> 00:18:30,000 Speaker 1: including eventually the rise of the Euro. We also had 222 00:18:30,359 --> 00:18:34,440 Speaker 1: then the opening to China, and that was a strategic 223 00:18:34,800 --> 00:18:39,320 Speaker 1: move of the US to try to get a flanking 224 00:18:39,400 --> 00:18:43,840 Speaker 1: maneuver against our adversary, the Soviet Union, by beginning and 225 00:18:43,920 --> 00:18:48,280 Speaker 1: opening to China, and the idea there was will let 226 00:18:48,359 --> 00:18:55,000 Speaker 1: China into the system to outflank our main foe. In fact, 227 00:18:56,320 --> 00:19:01,480 Speaker 1: that moment really did start to lee to a transformation 228 00:19:01,560 --> 00:19:07,280 Speaker 1: that dramatically accelerated in nineteen seventy eight when Mao died 229 00:19:07,320 --> 00:19:09,920 Speaker 1: in seventy six and then Don chaw Pin came to 230 00:19:10,000 --> 00:19:15,680 Speaker 1: power opened the Chinese economy to market forces and to 231 00:19:16,119 --> 00:19:22,480 Speaker 1: globalization itself. The US normalized relations with China. China's rise 232 00:19:22,640 --> 00:19:26,280 Speaker 1: was seen to be to the US advantage. At the time. 233 00:19:26,800 --> 00:19:29,600 Speaker 1: We always describe it as well playing by the rules 234 00:19:29,600 --> 00:19:32,720 Speaker 1: in an open system. But what's happening now is that 235 00:19:33,040 --> 00:19:37,040 Speaker 1: open system from the point of view of those who 236 00:19:37,119 --> 00:19:40,040 Speaker 1: think that the job of the US is to remain 237 00:19:40,280 --> 00:19:44,920 Speaker 1: on top no matter what. Boomerang, because it opened the 238 00:19:44,960 --> 00:19:51,760 Speaker 1: way for China to regain economic strength, and again, nothing 239 00:19:51,840 --> 00:19:56,320 Speaker 1: like our standard of living, because China is still a 240 00:19:56,440 --> 00:19:59,760 Speaker 1: fraction of America's standard of living, but because it's so 241 00:19:59,800 --> 00:20:03,600 Speaker 1: much bigger in population to reach the scale of the 242 00:20:03,720 --> 00:20:09,320 Speaker 1: US economy in the aggregate. Jeff, one more economic theme 243 00:20:09,400 --> 00:20:13,639 Speaker 1: that you address is that there is a populist cycle, 244 00:20:13,760 --> 00:20:17,159 Speaker 1: not just a business cycle, but a populist cycle, you know, 245 00:20:17,200 --> 00:20:21,960 Speaker 1: that can run in countries that turn inward with their policies. 246 00:20:22,000 --> 00:20:26,240 Speaker 1: Can you talk about how how this concept relates to 247 00:20:27,040 --> 00:20:32,399 Speaker 1: Donald Trump's America First policies and and the protectionist turn 248 00:20:32,760 --> 00:20:39,480 Speaker 1: that he's taking Right first. I think it's not right 249 00:20:39,560 --> 00:20:45,440 Speaker 1: to say that America First is isolationist, America first is unilateralist. 250 00:20:45,880 --> 00:20:50,880 Speaker 1: The idea of America First is the notion I'm out 251 00:20:50,920 --> 00:20:55,840 Speaker 1: for the United States. Rules are a hindrance to freedom 252 00:20:55,880 --> 00:21:00,000 Speaker 1: of maneuver. I don't believe in international rules. I believe 253 00:21:00,040 --> 00:21:03,240 Speaker 1: than the art of the deal. So we're not going 254 00:21:03,320 --> 00:21:09,439 Speaker 1: to be trapped by rules. We are sovereign and we 255 00:21:09,560 --> 00:21:13,960 Speaker 1: can act as we want. That's America first. One of 256 00:21:14,000 --> 00:21:21,000 Speaker 1: those ideas is that protection can be to America's benefit. 257 00:21:21,520 --> 00:21:26,280 Speaker 1: There are different parts of the argument. Apparently, one is 258 00:21:26,400 --> 00:21:31,240 Speaker 1: will protect our manufacturing. That's a kind of straight, simple 259 00:21:31,280 --> 00:21:36,080 Speaker 1: minded economics. The other is will break China's rise. That's 260 00:21:36,119 --> 00:21:45,280 Speaker 1: more international statecraft geopolitics. Populism is a bit different, but 261 00:21:45,760 --> 00:21:52,840 Speaker 1: part of the Trump package. Populism is really short term 262 00:21:52,880 --> 00:21:57,199 Speaker 1: appeal to your base by spending money you don't really have. 263 00:21:58,160 --> 00:22:04,480 Speaker 1: And I have watched these populous cycles repeatedly in Latin America. 264 00:22:04,720 --> 00:22:10,600 Speaker 1: I started my career in Latin America watching countries in bankruptcy, 265 00:22:10,680 --> 00:22:15,359 Speaker 1: in debt crisis, in hyper inflation, and typically there had 266 00:22:15,400 --> 00:22:19,240 Speaker 1: been a strong strong man like a Juan Perone or 267 00:22:19,520 --> 00:22:24,439 Speaker 1: a n Ugo Chavez in Venezuela, and they wanted to 268 00:22:25,560 --> 00:22:31,640 Speaker 1: appeal to the masses, and so they spent wildly, and 269 00:22:31,800 --> 00:22:34,840 Speaker 1: everything was fine because you get a bit of a 270 00:22:34,960 --> 00:22:39,040 Speaker 1: kinesie and aggregate demand boom at the beginning, and your 271 00:22:39,560 --> 00:22:43,840 Speaker 1: currency remains stable because you still have reserves and Eventually 272 00:22:44,400 --> 00:22:48,160 Speaker 1: you run out of cash and you start borrowing because 273 00:22:48,200 --> 00:22:51,320 Speaker 1: you still have some borrowing capacity. And then eventually you 274 00:22:51,400 --> 00:22:53,719 Speaker 1: hit the wall on what you can borrow, and then 275 00:22:53,760 --> 00:22:56,639 Speaker 1: all hell breaks loose, and typically you end up with 276 00:22:56,720 --> 00:23:00,520 Speaker 1: hyper inflation, which is Venezuela's case now. And I can 277 00:23:00,520 --> 00:23:03,480 Speaker 1: tell you it is not easy to bankrup Venezuela. It's 278 00:23:03,480 --> 00:23:07,439 Speaker 1: a very rich country. It took Chavez and Maduro a 279 00:23:07,560 --> 00:23:13,000 Speaker 1: generation of mismanagement to end up in hyper inflation. So 280 00:23:13,119 --> 00:23:16,639 Speaker 1: what is Trump doing. Trump's whole career has been borrow 281 00:23:16,680 --> 00:23:20,960 Speaker 1: other people's money, put it into a corporate shell, take 282 00:23:21,080 --> 00:23:25,000 Speaker 1: some of it out for the family, bankrupt the shell, 283 00:23:25,960 --> 00:23:30,320 Speaker 1: leave the creditors high and dry, and keep at least 284 00:23:30,320 --> 00:23:33,280 Speaker 1: some measure of private wealth. And he's made a career 285 00:23:33,680 --> 00:23:35,720 Speaker 1: out of doing this. He's just doing it with my 286 00:23:35,840 --> 00:23:39,480 Speaker 1: money right now, and your money and other America's money 287 00:23:39,520 --> 00:23:43,919 Speaker 1: because his ideas he doesn't want to give away money 288 00:23:43,960 --> 00:23:47,959 Speaker 1: to poor people like maybe Perrone or Chavez did. He 289 00:23:48,000 --> 00:23:50,959 Speaker 1: wants to give tax cuts for the rich. Uh, And 290 00:23:51,080 --> 00:23:54,439 Speaker 1: so we had a two trillion dollar tax cut. The 291 00:23:54,520 --> 00:24:00,199 Speaker 1: Republicans are apparently wanting to do it again, despite the 292 00:24:00,240 --> 00:24:03,240 Speaker 1: fact that we're running a one trillion dollar a year 293 00:24:03,480 --> 00:24:08,119 Speaker 1: budget deficit. You get into a cycle, and Trump is 294 00:24:08,160 --> 00:24:11,080 Speaker 1: doing what he's done all his life, which is using 295 00:24:11,119 --> 00:24:16,199 Speaker 1: other people's money to bolster probably his personal fortune, but 296 00:24:16,240 --> 00:24:19,720 Speaker 1: at least his political fortunes right now. But it's such 297 00:24:19,720 --> 00:24:23,440 Speaker 1: a short term game, and it's really expensive, and if 298 00:24:23,480 --> 00:24:27,560 Speaker 1: it goes on for very long, which obviously depends on 299 00:24:27,560 --> 00:24:32,720 Speaker 1: our electoral cycle among other things, it becomes incredibly destructive. 300 00:24:33,119 --> 00:24:37,240 Speaker 1: Jeffrey Sex, thank you for joining Benchmark. It's a pleasure 301 00:24:37,280 --> 00:24:40,800 Speaker 1: to be with you. The book is a new foreign 302 00:24:40,840 --> 00:24:49,679 Speaker 1: policy beyond American Exceptionalism, published October second. Benchmark will be 303 00:24:49,720 --> 00:24:52,080 Speaker 1: back next week. Until then, you can find us on 304 00:24:52,080 --> 00:24:55,440 Speaker 1: the Bloomberg Terminal, Bloomberg dot com, or Bloomberg app, as 305 00:24:55,480 --> 00:24:59,639 Speaker 1: well as podcast destinations such as Apple Podcasts, Spotify, Flora 306 00:24:59,720 --> 00:25:02,080 Speaker 1: where for you listen. We'd love it if you took 307 00:25:02,080 --> 00:25:04,600 Speaker 1: the time to rate and review the show so more 308 00:25:04,640 --> 00:25:07,639 Speaker 1: listeners can find us. And you can find us on Twitter. 309 00:25:08,040 --> 00:25:13,600 Speaker 1: Follow me at Scott Landman Dan You're at Moss Underscore Pico, 310 00:25:14,280 --> 00:25:17,960 Speaker 1: and our guest Jeffrey Sachs is at j E F 311 00:25:17,960 --> 00:25:22,600 Speaker 1: F D S A c pH S. Benchmark is produced 312 00:25:22,640 --> 00:25:26,639 Speaker 1: by topor foreheads. The head of Bloomberg Podcasts is Francesca Leafy. 313 00:25:27,080 --> 00:25:28,920 Speaker 1: Thanks for listening, See you next time.