1 00:00:04,840 --> 00:00:08,480 Speaker 1: In this episode of News World, What Went Wrong with Capitalism? 2 00:00:09,080 --> 00:00:12,600 Speaker 1: For a century, governments have expanded in just about every 3 00:00:12,680 --> 00:00:17,200 Speaker 1: measurable dimension, from spending to regulation and the scale of 4 00:00:17,239 --> 00:00:21,440 Speaker 1: financial rescues when the economy wobbles. The result is expensive 5 00:00:21,480 --> 00:00:25,840 Speaker 1: state guarantees for everyone, bailouts for the rich, entitlements for 6 00:00:25,880 --> 00:00:29,760 Speaker 1: the middle class, welfare for the poor. Governments from United 7 00:00:29,800 --> 00:00:32,760 Speaker 1: States to Europe and Japan have pumped so much money 8 00:00:32,800 --> 00:00:36,360 Speaker 1: into their economies that financial markets can no longer invest 9 00:00:36,440 --> 00:00:39,760 Speaker 1: all that capital efficiently. The first step to a cure 10 00:00:40,360 --> 00:00:43,919 Speaker 1: is a correct diagnosis of the problem. Capitalism has been 11 00:00:43,960 --> 00:00:48,920 Speaker 1: badly distorted by constant government intervention and the relentless spread 12 00:00:49,240 --> 00:00:52,720 Speaker 1: of a bailout culture. All of this is detailed in 13 00:00:52,720 --> 00:00:56,480 Speaker 1: the new book What Went Wrong with Capitalism? So I'm 14 00:00:56,520 --> 00:00:59,880 Speaker 1: really pleased to welcome my guest, Ruchair Sharma. He is 15 00:01:00,120 --> 00:01:04,240 Speaker 1: currently chairman of Rockefeller International and founder and chief investment 16 00:01:04,280 --> 00:01:10,000 Speaker 1: officer of Breakout Capital, an investment firm focused on emerging markets. 17 00:01:20,920 --> 00:01:23,240 Speaker 1: But Chier, Welcome and thank you for joining me on 18 00:01:23,319 --> 00:01:23,840 Speaker 1: news World. 19 00:01:24,600 --> 00:01:26,039 Speaker 2: Thanks Neil, great to do this with you. 20 00:01:27,000 --> 00:01:29,959 Speaker 1: By the way, Congratulations on the attention your book is getting. 21 00:01:30,360 --> 00:01:32,160 Speaker 1: I think it's going to have a big impact, and 22 00:01:32,200 --> 00:01:36,039 Speaker 1: I think you've certainly earned it. But I'm curious, how 23 00:01:36,080 --> 00:01:40,360 Speaker 1: did growing up in India shape how you saw capitalism 24 00:01:41,040 --> 00:01:41,640 Speaker 1: when Lute. 25 00:01:41,440 --> 00:01:43,520 Speaker 3: I grew up in India much in the nineteen eighties, 26 00:01:43,560 --> 00:01:46,920 Speaker 3: when India was still largely a socialist country. I was 27 00:01:47,000 --> 00:01:50,960 Speaker 3: fortunate enough to spend a few of those years in Singapore. 28 00:01:50,960 --> 00:01:52,840 Speaker 3: In fact, because even though I was born in India, 29 00:01:52,920 --> 00:01:56,680 Speaker 3: my father was in the Indian Navy and he got 30 00:01:56,760 --> 00:01:59,840 Speaker 3: posted to Singapore for about three years or so. That 31 00:02:00,280 --> 00:02:02,360 Speaker 3: was quite an eye opener for me. I was young 32 00:02:02,440 --> 00:02:05,960 Speaker 3: and very impressionable, but when I went to Singapore from India, 33 00:02:06,360 --> 00:02:09,080 Speaker 3: I saw that how that country was prospering in the 34 00:02:09,120 --> 00:02:13,040 Speaker 3: late nineteen eighties as its leader gave its people so 35 00:02:13,160 --> 00:02:16,679 Speaker 3: much more economic freedom that even though Singapore didn't have 36 00:02:16,760 --> 00:02:18,960 Speaker 3: that much political freedom back then, it gave its people 37 00:02:19,080 --> 00:02:22,119 Speaker 3: a lot more economic freedom, a lot more than the 38 00:02:22,160 --> 00:02:23,880 Speaker 3: Indian policymakers were doing. 39 00:02:23,919 --> 00:02:25,040 Speaker 2: And I saw the big difference. 40 00:02:25,080 --> 00:02:28,640 Speaker 3: The Singapore and economy was booming and the Indian economy 41 00:02:28,760 --> 00:02:32,400 Speaker 3: was still in per capita income terms barely growing up 42 00:02:32,760 --> 00:02:35,800 Speaker 3: unto the nineteen eighties. So that's really sort of my 43 00:02:35,880 --> 00:02:39,160 Speaker 3: first introduction about the fact that how much giving people 44 00:02:39,240 --> 00:02:42,040 Speaker 3: economic freedom can make a big difference. Because India, as 45 00:02:42,080 --> 00:02:44,880 Speaker 3: you know, gave its people lots of political freedom after 46 00:02:44,919 --> 00:02:47,680 Speaker 3: its independence in nineteen forty seven, it just didn't give 47 00:02:47,800 --> 00:02:51,400 Speaker 3: its people enough economic freedom, and that process only began 48 00:02:51,919 --> 00:02:55,800 Speaker 3: post the nineteen eighties kind of era. And a big 49 00:02:55,880 --> 00:02:58,920 Speaker 3: role model in all of this was the United States. 50 00:02:58,919 --> 00:03:01,640 Speaker 3: The United States was seen obviously as the beacon of 51 00:03:02,160 --> 00:03:06,800 Speaker 3: economic freedom, the symbol of capitalism, and I was very 52 00:03:07,480 --> 00:03:10,800 Speaker 3: influenced by what was happening in the United States as well, 53 00:03:10,880 --> 00:03:15,120 Speaker 3: and very drawn to the capitalist system and the vitality 54 00:03:15,200 --> 00:03:18,880 Speaker 3: and the economic freedom that it gave, and that countries 55 00:03:18,919 --> 00:03:23,040 Speaker 3: like Singapore and other countries were emulating, and countries like India, 56 00:03:23,080 --> 00:03:26,480 Speaker 3: which for a while were more fascinated by the Soviet Union, 57 00:03:26,800 --> 00:03:29,960 Speaker 3: obviously came up well short of the likes of Singapore. 58 00:03:30,040 --> 00:03:33,560 Speaker 3: So I think that influence in my formative years when 59 00:03:33,560 --> 00:03:38,000 Speaker 3: I was a teenager and seeing the contrast between America 60 00:03:38,040 --> 00:03:42,200 Speaker 3: and India, or India and Singapore, that's what really formed 61 00:03:42,200 --> 00:03:44,960 Speaker 3: my impression and also gave me such faith in the 62 00:03:44,960 --> 00:03:48,160 Speaker 3: fact that giving people economic freedom and having a capitalist 63 00:03:48,560 --> 00:03:52,440 Speaker 3: economy is the best way to lift people out of poverty, 64 00:03:52,520 --> 00:03:55,800 Speaker 3: to give people the sense of opportunity and to create 65 00:03:56,080 --> 00:03:56,840 Speaker 3: wealth at the top. 66 00:03:57,680 --> 00:04:00,520 Speaker 1: What was your sense, So what was driving that changes 67 00:04:01,120 --> 00:04:04,160 Speaker 1: and to what extent it was driven by politics and 68 00:04:04,200 --> 00:04:07,480 Speaker 1: to what extent it was driven just by share entrepreneurial effort. 69 00:04:08,560 --> 00:04:11,960 Speaker 3: I think a combination that India always had great entrepreneur spirit, 70 00:04:12,120 --> 00:04:16,279 Speaker 3: but that was severely constrained in India under what then 71 00:04:16,480 --> 00:04:19,400 Speaker 3: was called the license raj, where you know that businesses 72 00:04:19,440 --> 00:04:22,200 Speaker 3: and entrepreneurs were tied up in so many licenses and 73 00:04:22,240 --> 00:04:25,640 Speaker 3: regulations that it could never allow them to flower. And 74 00:04:25,720 --> 00:04:28,000 Speaker 3: then you had the event where the country literally ran 75 00:04:28,040 --> 00:04:31,280 Speaker 3: out of money. The country literally went bankrupt in early 76 00:04:31,360 --> 00:04:32,320 Speaker 3: nineteen ninety one. 77 00:04:32,839 --> 00:04:35,960 Speaker 2: And the best time and the country carries out economic. 78 00:04:35,680 --> 00:04:38,719 Speaker 3: Reforms, unfortunately, is when it has its back to the 79 00:04:38,760 --> 00:04:40,599 Speaker 3: wall and it has run out of other people's money 80 00:04:40,600 --> 00:04:43,960 Speaker 3: to spend. So that's when the government began or was 81 00:04:44,000 --> 00:04:46,599 Speaker 3: forced to in a way to liberalize, to open up 82 00:04:46,640 --> 00:04:50,599 Speaker 3: its economy, and the Indian economy after sort of losing 83 00:04:50,720 --> 00:04:53,680 Speaker 3: share in the global economy for much of its first 84 00:04:53,880 --> 00:04:57,560 Speaker 3: thirty five years of independence, after that you began to 85 00:04:57,560 --> 00:05:00,479 Speaker 3: see a big takeoff in the Indian economy. 86 00:05:00,520 --> 00:05:02,200 Speaker 2: And something which even China did. 87 00:05:02,279 --> 00:05:04,160 Speaker 3: As you know that we often think of China as 88 00:05:04,160 --> 00:05:07,080 Speaker 3: this communist state and today we think of China as 89 00:05:07,120 --> 00:05:10,840 Speaker 3: a very statistic country. But China did exactly the same thing, 90 00:05:10,880 --> 00:05:14,000 Speaker 3: which I think is somewhat misunderstood. That Chinese growth was 91 00:05:14,080 --> 00:05:17,479 Speaker 3: driven with the government starting from a very restrictive position 92 00:05:17,560 --> 00:05:20,440 Speaker 3: and in the economy to giving its people much more 93 00:05:20,440 --> 00:05:24,120 Speaker 3: economic freedom, property rights, and other rights, and the Chinese 94 00:05:24,160 --> 00:05:27,760 Speaker 3: economy did spectacularly well. China, by some measures, gave its 95 00:05:27,800 --> 00:05:30,720 Speaker 3: people much more economic freedom than even India did for 96 00:05:30,760 --> 00:05:33,120 Speaker 3: the last thirty to forty years under Jijing Pink came 97 00:05:33,160 --> 00:05:36,280 Speaker 3: to power, so that model really seemed to be the 98 00:05:36,279 --> 00:05:39,480 Speaker 3: way that the world was going to benefit much more 99 00:05:39,520 --> 00:05:42,360 Speaker 3: economic freedom to its people. And I think that that's 100 00:05:42,400 --> 00:05:45,440 Speaker 3: also what got people to think in America and in 101 00:05:45,440 --> 00:05:48,719 Speaker 3: the West that market forces were in the ascendant, which 102 00:05:48,760 --> 00:05:52,600 Speaker 3: is that these countries were adopting market policies and prospering 103 00:05:52,640 --> 00:05:55,400 Speaker 3: and globalization was taking off, and so a lot of 104 00:05:55,440 --> 00:05:58,240 Speaker 3: people thought that this is the new liberal era and 105 00:05:58,560 --> 00:05:59,560 Speaker 3: these countries are. 106 00:05:59,400 --> 00:06:01,480 Speaker 2: Doing so well, and that's what's happening. 107 00:06:01,520 --> 00:06:04,440 Speaker 3: But what I think was missed in this was that 108 00:06:04,520 --> 00:06:08,640 Speaker 3: While that was happening, the countries in the western world 109 00:06:09,040 --> 00:06:11,960 Speaker 3: America and even more so Europe started moving in the 110 00:06:11,960 --> 00:06:15,320 Speaker 3: opposite direction. They were moving away from a limited role 111 00:06:15,360 --> 00:06:18,480 Speaker 3: of government to a much more expansive role of government. 112 00:06:18,880 --> 00:06:22,040 Speaker 3: And by the time the pandemic hit in twenty twenty one, 113 00:06:22,160 --> 00:06:25,159 Speaker 3: the lockdown, I think was shaped by this government's hubris 114 00:06:25,279 --> 00:06:27,720 Speaker 3: that we can lock people down and just give them 115 00:06:27,720 --> 00:06:29,760 Speaker 3: money to sit at home and everything will be fine. 116 00:06:30,240 --> 00:06:33,640 Speaker 3: And secondly, I think the fact that the pandemic was 117 00:06:33,960 --> 00:06:36,360 Speaker 3: the amount of stimulus that was put and the kind 118 00:06:36,400 --> 00:06:40,159 Speaker 3: of intervention that was done in the pandemic just brought 119 00:06:40,200 --> 00:06:42,760 Speaker 3: for me to the four that wow, that this is 120 00:06:42,800 --> 00:06:46,080 Speaker 3: how much we have moved where now we think that 121 00:06:46,120 --> 00:06:49,200 Speaker 3: capitalism can be entirely run by the government by keeping 122 00:06:49,200 --> 00:06:53,039 Speaker 3: people shut at home and the damage that's likely to cause. 123 00:06:53,080 --> 00:06:55,800 Speaker 3: So that's when this book idea is shaped up. And 124 00:06:56,120 --> 00:06:58,000 Speaker 3: as I say in the book, this is very much 125 00:06:58,000 --> 00:06:59,279 Speaker 3: a pandemic baby. 126 00:07:00,120 --> 00:07:03,320 Speaker 1: Unusual background, I mean, right out of high school you 127 00:07:03,440 --> 00:07:07,719 Speaker 1: began writing for the leading financial paper in India, writing 128 00:07:07,720 --> 00:07:10,080 Speaker 1: a column and global markets. When how do you get 129 00:07:10,120 --> 00:07:12,320 Speaker 1: a job like that at seventeen years of age? 130 00:07:13,160 --> 00:07:15,600 Speaker 3: Because at that age, nobody else wanted to write about it. 131 00:07:15,600 --> 00:07:18,360 Speaker 3: India was still a relatively closed economy, and I guess 132 00:07:18,400 --> 00:07:20,760 Speaker 3: I was just fortunate that at a very early age 133 00:07:20,800 --> 00:07:23,560 Speaker 3: I knew exactly what I wanted to do, and I 134 00:07:23,680 --> 00:07:26,200 Speaker 3: just happened to sort of, you know, stumble upon a 135 00:07:26,240 --> 00:07:30,840 Speaker 3: lot of economic and financial literature which naturally attracted me. 136 00:07:31,000 --> 00:07:33,760 Speaker 3: So that's when I decided that what I really want 137 00:07:33,800 --> 00:07:36,720 Speaker 3: to do now is to write on economics. And I 138 00:07:36,760 --> 00:07:39,800 Speaker 3: was quite clear at an early age that eventually I 139 00:07:39,840 --> 00:07:41,960 Speaker 3: want to also learn how to make money with it. 140 00:07:42,000 --> 00:07:44,640 Speaker 3: But at the age of seventeen, I couldn't relieve people 141 00:07:44,640 --> 00:07:46,760 Speaker 3: of their wealth. So the next best thing to do 142 00:07:46,920 --> 00:07:49,600 Speaker 3: was to write about it. And because nobody else was 143 00:07:49,640 --> 00:07:52,600 Speaker 3: writing about it, because it was not considered cool at 144 00:07:52,600 --> 00:07:54,600 Speaker 3: that point in time to be writing about global stuff. 145 00:07:54,640 --> 00:07:57,200 Speaker 3: It was considered marginal, almost as India was a largely 146 00:07:57,240 --> 00:08:01,000 Speaker 3: closed economy, I started to write about it, and that's 147 00:08:01,080 --> 00:08:03,280 Speaker 3: what set me up then to come to the United 148 00:08:03,320 --> 00:08:05,360 Speaker 3: States eventually and follow my dream. 149 00:08:05,400 --> 00:08:05,560 Speaker 2: Here. 150 00:08:06,160 --> 00:08:09,920 Speaker 1: You went from being a journalist to spending twenty five 151 00:08:10,000 --> 00:08:13,800 Speaker 1: years at Morgan Stanley, where you're head of Emerging Markets 152 00:08:13,800 --> 00:08:16,640 Speaker 1: and chief global strategist. I mean that must have given 153 00:08:16,720 --> 00:08:18,800 Speaker 1: you a very different view of the world. 154 00:08:19,880 --> 00:08:20,120 Speaker 2: Yeah. 155 00:08:20,120 --> 00:08:21,960 Speaker 3: So I was never a full time journalist, but as 156 00:08:22,000 --> 00:08:24,240 Speaker 3: I said that, when I was in college, since I 157 00:08:24,240 --> 00:08:26,800 Speaker 3: couldn't get anyone to give me that money to manage, 158 00:08:26,920 --> 00:08:30,560 Speaker 3: I would write regularly and that eventually caught the attention 159 00:08:30,880 --> 00:08:32,680 Speaker 3: I was coming to my PhD in fact in the 160 00:08:32,760 --> 00:08:35,640 Speaker 3: United States, and that my columns caught the attention of 161 00:08:35,679 --> 00:08:37,760 Speaker 3: some of the top people at Morgan Stanley because they 162 00:08:37,800 --> 00:08:40,440 Speaker 3: also had a presence in India. And I got a 163 00:08:40,480 --> 00:08:43,679 Speaker 3: call as part of our interview process, and the offer 164 00:08:43,720 --> 00:08:45,120 Speaker 3: made to me was that do you want to make 165 00:08:45,200 --> 00:08:47,080 Speaker 3: money or do you want to study? Because I was 166 00:08:47,080 --> 00:08:48,520 Speaker 3: going to do my PhD, I said, I want to 167 00:08:48,520 --> 00:08:51,640 Speaker 3: make money. I give up my PhD ambition and I 168 00:08:51,760 --> 00:08:55,080 Speaker 3: joined Morgan Stanley and I started my career there. And yes, 169 00:08:55,160 --> 00:08:58,160 Speaker 3: it gave me an incredible amount of exposure because I 170 00:08:58,200 --> 00:09:01,559 Speaker 3: had baptism by fire. I saw the East Agent financial 171 00:09:01,600 --> 00:09:04,680 Speaker 3: crisis in ninety seven ninety eight. I was in Asia 172 00:09:04,840 --> 00:09:08,800 Speaker 3: covering that as an analyst and fund manager at Morgan Stanley, 173 00:09:09,080 --> 00:09:12,040 Speaker 3: and then I moved to New York in late two 174 00:09:12,040 --> 00:09:15,880 Speaker 3: thousand and two and it was the Heydays of globalization 175 00:09:16,160 --> 00:09:18,920 Speaker 3: and you know, like such faith in the American dream 176 00:09:19,000 --> 00:09:21,640 Speaker 3: that you could come here as an immigrant and like 177 00:09:21,679 --> 00:09:24,640 Speaker 3: you had no restriction to moving up and the upward 178 00:09:24,679 --> 00:09:29,320 Speaker 3: mobility that America offered was incredible. So and the other 179 00:09:29,360 --> 00:09:31,720 Speaker 3: sort of insight it gave me also was how Wall 180 00:09:31,760 --> 00:09:35,400 Speaker 3: Street functions, and you know, like what happens there. So therefore, 181 00:09:35,400 --> 00:09:38,360 Speaker 3: this book, as I say, is both an insider's account 182 00:09:38,480 --> 00:09:42,760 Speaker 3: and an outsider's account of how financial markets function, how 183 00:09:43,200 --> 00:09:46,360 Speaker 3: the global economy functions. Because at one level, I was 184 00:09:46,559 --> 00:09:49,720 Speaker 3: this outsider coming from India and a very middle class 185 00:09:49,760 --> 00:09:51,760 Speaker 3: background and pursuing my American dream. 186 00:09:52,080 --> 00:09:53,120 Speaker 2: On the other hand, I became. 187 00:09:52,960 --> 00:09:55,440 Speaker 3: An insider because I could see why working on Wall 188 00:09:55,480 --> 00:09:58,600 Speaker 3: Street that what do the easy money policies of the 189 00:09:58,640 --> 00:10:01,520 Speaker 3: Fed or how does the government meant intersect with the 190 00:10:01,559 --> 00:10:04,320 Speaker 3: economy and what are the consequences of all of that. 191 00:10:04,920 --> 00:10:07,199 Speaker 1: Well, you may have dropped out of a PhD program, 192 00:10:07,440 --> 00:10:10,080 Speaker 1: My hunch has you got more than a PhD education 193 00:10:10,840 --> 00:10:13,520 Speaker 1: working at Morgan Stanley because you were right in the 194 00:10:13,520 --> 00:10:15,120 Speaker 1: middle of all this information flow. 195 00:10:15,760 --> 00:10:16,240 Speaker 2: Exactly. 196 00:10:16,280 --> 00:10:18,760 Speaker 3: I think there's nothing like being as fortunate as that, 197 00:10:18,840 --> 00:10:20,920 Speaker 3: which is to sort of experience it as I said 198 00:10:21,080 --> 00:10:23,920 Speaker 3: it was baptism by fire because one of my first 199 00:10:24,040 --> 00:10:28,120 Speaker 3: assignments was covering the East Asian financial crisis, seeing what 200 00:10:28,559 --> 00:10:31,000 Speaker 3: can happen to countries that take on too much debt 201 00:10:31,240 --> 00:10:34,160 Speaker 3: over a short span of time, and then also seeing 202 00:10:34,160 --> 00:10:39,000 Speaker 3: how American capitalism worked and then got distorted over time, 203 00:10:39,160 --> 00:10:41,600 Speaker 3: just having a ringside view. And I think that it 204 00:10:41,640 --> 00:10:44,160 Speaker 3: was a fascinating experience to see that over twenty five 205 00:10:44,240 --> 00:10:45,840 Speaker 3: years and to still track it. 206 00:11:03,040 --> 00:11:04,679 Speaker 1: Well, if when you stick with India for a second, 207 00:11:05,000 --> 00:11:07,520 Speaker 1: were you at all surprised by the recent national election 208 00:11:08,160 --> 00:11:09,280 Speaker 1: in India. 209 00:11:09,720 --> 00:11:13,040 Speaker 3: Well, I can frankly say no, because what happens is 210 00:11:13,160 --> 00:11:15,880 Speaker 3: that after the results had declared, everyone likes to say 211 00:11:15,920 --> 00:11:18,040 Speaker 3: in some way I knew this would happen, or I 212 00:11:18,120 --> 00:11:20,840 Speaker 3: knew that would happen, but luck But I had written 213 00:11:20,880 --> 00:11:23,679 Speaker 3: a column with the Financial Times, with whom I'm a columnist, 214 00:11:24,080 --> 00:11:26,600 Speaker 3: saying that how there is no movie wave in India. 215 00:11:26,679 --> 00:11:28,200 Speaker 3: And the only reason I was able to do that, 216 00:11:28,240 --> 00:11:31,040 Speaker 3: I think is that I've formed a group in India 217 00:11:31,120 --> 00:11:35,679 Speaker 3: with about twenty of us, all writers and analysts deeply 218 00:11:35,720 --> 00:11:38,439 Speaker 3: interested in the Indian election, and the twenty of us 219 00:11:38,559 --> 00:11:42,120 Speaker 3: travel every time there's a major election in India, national 220 00:11:42,240 --> 00:11:45,880 Speaker 3: or state to cover that election in India, and I 221 00:11:45,920 --> 00:11:48,480 Speaker 3: had been in India in the early part of May 222 00:11:49,000 --> 00:11:52,120 Speaker 3: for my thirty second election trip in India that I 223 00:11:52,120 --> 00:11:54,600 Speaker 3: had done over the last twenty five years. And when 224 00:11:54,600 --> 00:11:57,040 Speaker 3: the twenty of us traveled, we traveled coast to coast, 225 00:11:57,120 --> 00:12:01,160 Speaker 3: starting from the east to the west, over two thousand kilometers. 226 00:12:01,400 --> 00:12:04,360 Speaker 3: My sort of takeaway was the fact that there is 227 00:12:04,440 --> 00:12:07,800 Speaker 3: no way for the leader there. They're in the remode, 228 00:12:07,960 --> 00:12:11,880 Speaker 3: and instead this is Indian democracy functioning. That people are 229 00:12:12,000 --> 00:12:15,840 Speaker 3: just keen that there'd be some opposition, that they were 230 00:12:16,040 --> 00:12:18,840 Speaker 3: getting a bit fed up of the one sided narrative 231 00:12:18,880 --> 00:12:21,160 Speaker 3: coming out of India. So I think that this is 232 00:12:21,360 --> 00:12:23,720 Speaker 3: true democracy at work at a time, and there's so 233 00:12:23,800 --> 00:12:27,679 Speaker 3: much talk of democracy being in decline around the world, 234 00:12:28,040 --> 00:12:30,959 Speaker 3: I think that what Indias served up earlier this month 235 00:12:31,480 --> 00:12:33,360 Speaker 3: was such an encouraging. 236 00:12:32,880 --> 00:12:35,520 Speaker 2: Sign for all of us who are. 237 00:12:35,360 --> 00:12:39,240 Speaker 3: Great ambassadors or great believers in democracy around the world. 238 00:12:39,920 --> 00:12:43,120 Speaker 1: You've had, in a sense since the early nineteen eighties, 239 00:12:43,760 --> 00:12:48,719 Speaker 1: both a economic liberalization in India and the development of 240 00:12:48,760 --> 00:12:52,439 Speaker 1: a very robust political system with a lot of competition 241 00:12:52,600 --> 00:12:56,400 Speaker 1: within a great point framework. At the same time, it 242 00:12:56,480 --> 00:12:59,280 Speaker 1: seems to me, since you came to America that we've 243 00:12:59,320 --> 00:13:02,560 Speaker 1: seen a real decline both in our belief in the 244 00:13:02,600 --> 00:13:05,160 Speaker 1: economy and our belief in the government. I mean, how 245 00:13:05,200 --> 00:13:07,559 Speaker 1: do you measure that exactly? 246 00:13:07,600 --> 00:13:09,720 Speaker 3: So I think that's what really got me sort of 247 00:13:09,960 --> 00:13:12,160 Speaker 3: started on this book project with as they said that 248 00:13:12,520 --> 00:13:16,040 Speaker 3: in the pandemic, the government's response in terms of both 249 00:13:16,080 --> 00:13:21,160 Speaker 3: the severe lockdowns and then using stimulus in an indiscriminate 250 00:13:21,240 --> 00:13:25,760 Speaker 3: way to paper over the lockdowns in a way I think, 251 00:13:25,840 --> 00:13:27,960 Speaker 3: you know, like it's something which got me really alarmed. 252 00:13:28,240 --> 00:13:30,160 Speaker 3: And then I looked at some of the data coming 253 00:13:30,160 --> 00:13:32,480 Speaker 3: out at that same point in time from the polling data, 254 00:13:32,840 --> 00:13:35,760 Speaker 3: and that had me really concerned. The fact that most 255 00:13:35,800 --> 00:13:39,480 Speaker 3: young Americans, particularly Democrats like you know, by a pretty 256 00:13:39,480 --> 00:13:43,400 Speaker 3: significant majority, would be telling the pollsters that they would 257 00:13:43,480 --> 00:13:47,480 Speaker 3: rather have socialism over capitalism. That's like such a telling 258 00:13:47,559 --> 00:13:51,480 Speaker 3: statement that here is this country which is synonymous with capitalism, 259 00:13:51,920 --> 00:13:55,120 Speaker 3: and we have these young people in America saying to 260 00:13:55,200 --> 00:13:59,640 Speaker 3: us that they would rather have socialism over capitalism, and 261 00:14:00,080 --> 00:14:02,840 Speaker 3: the other polling data all kept backing it up. The 262 00:14:02,880 --> 00:14:06,160 Speaker 3: fact that today in America, only thirty five percent of 263 00:14:06,320 --> 00:14:09,040 Speaker 3: Americans feel that they can be better off in their parents. 264 00:14:09,559 --> 00:14:12,080 Speaker 3: Very different from fifty odd years ago when seventy to 265 00:14:12,120 --> 00:14:14,840 Speaker 3: eighty percent of Americans felt that they could be better 266 00:14:14,880 --> 00:14:17,920 Speaker 3: off than their parents. The fact that faith and government, 267 00:14:17,960 --> 00:14:20,240 Speaker 3: as you pointed out, is close to a record low, 268 00:14:20,880 --> 00:14:24,640 Speaker 3: and that most independence even in this country, forget Republicans 269 00:14:24,720 --> 00:14:27,360 Speaker 3: or Democrats, most independents in this country who don't have 270 00:14:27,400 --> 00:14:31,240 Speaker 3: any partisan angle, they think that the economy is headed 271 00:14:31,280 --> 00:14:34,520 Speaker 3: in the wrong direction. All that data, and that data 272 00:14:34,840 --> 00:14:37,320 Speaker 3: continues even today, even though we have fully recovered from 273 00:14:37,320 --> 00:14:39,280 Speaker 3: the pandemic as far as the economy is concerned. In 274 00:14:39,320 --> 00:14:42,240 Speaker 3: some way, the fact that that data all keeps pointing 275 00:14:42,280 --> 00:14:45,800 Speaker 3: in this grim direction is really what sort of led 276 00:14:45,840 --> 00:14:48,960 Speaker 3: to his book, because it's really a deep investigation what happened. 277 00:14:49,160 --> 00:14:52,400 Speaker 3: How did so many Americans lose faith in capitalism? Why 278 00:14:52,440 --> 00:14:54,600 Speaker 3: do so many Americans feel that they cannot be better 279 00:14:54,640 --> 00:14:57,360 Speaker 3: off than their parents? So this book is in many 280 00:14:57,440 --> 00:15:01,320 Speaker 3: ways an examination of that that what happened and what 281 00:15:01,600 --> 00:15:04,600 Speaker 3: really caused this, and how do we get out of here? 282 00:15:05,040 --> 00:15:10,200 Speaker 1: From your perspective, prior to Roosevelt in the nineteen thirty 283 00:15:10,240 --> 00:15:13,680 Speaker 1: two election, we had really been outside of big wars 284 00:15:14,240 --> 00:15:18,320 Speaker 1: a country of very limited federal government, and then under 285 00:15:18,440 --> 00:15:21,960 Speaker 1: Roosevelt that began to change, and under Lyndon Johnson had 286 00:15:22,000 --> 00:15:26,000 Speaker 1: changed even more, and then under Obama and Obiden we 287 00:15:26,080 --> 00:15:28,400 Speaker 1: have really become a country with a much bigger government 288 00:15:29,040 --> 00:15:32,240 Speaker 1: than any of the founding fathers expected. Do you think 289 00:15:32,280 --> 00:15:36,200 Speaker 1: on balance that that approach has worked or has that 290 00:15:36,240 --> 00:15:41,480 Speaker 1: increased the economic and political problems of the American people? 291 00:15:42,560 --> 00:15:46,200 Speaker 3: Well, I think that it's definitely increased the problems of 292 00:15:46,200 --> 00:15:49,720 Speaker 3: this people, as evidence by the fact that even though 293 00:15:49,720 --> 00:15:52,720 Speaker 3: the role of government has expanded, and the role of 294 00:15:52,760 --> 00:15:55,440 Speaker 3: government has expanded in a multifaceted way. It's not just 295 00:15:55,480 --> 00:15:59,400 Speaker 3: government spending as a share of GDP, it's the regulatory regime, 296 00:15:59,480 --> 00:16:03,240 Speaker 3: the bill culture, the micromanagement of the business cycle, the 297 00:16:03,280 --> 00:16:08,640 Speaker 3: size of the bureaucratic state. They've all expanded consistently over time. 298 00:16:08,800 --> 00:16:11,480 Speaker 3: And I think that the fact that we are spending 299 00:16:11,520 --> 00:16:14,320 Speaker 3: all this money and the government's getting more involved, and 300 00:16:14,360 --> 00:16:18,480 Speaker 3: what's the result been so far? The faith in government 301 00:16:18,560 --> 00:16:20,920 Speaker 3: is at a record low. Two. 302 00:16:21,040 --> 00:16:22,880 Speaker 2: We have had much greater. 303 00:16:22,760 --> 00:16:27,040 Speaker 3: Increase in inequality in favor of the entrenched and the 304 00:16:27,080 --> 00:16:30,160 Speaker 3: top one percent, if not the top ten percent. And 305 00:16:30,360 --> 00:16:32,360 Speaker 3: also I think that this is something which is much 306 00:16:32,440 --> 00:16:35,120 Speaker 3: less spoken about. Over the last thirty to forty years, 307 00:16:35,160 --> 00:16:38,640 Speaker 3: we've seen a big decline in productivity. That productivity growth 308 00:16:38,680 --> 00:16:42,920 Speaker 3: has fallen significantly in America and even more so in Europe, 309 00:16:42,920 --> 00:16:46,120 Speaker 3: which is even more status than America. Productivity growth has 310 00:16:46,120 --> 00:16:49,080 Speaker 3: fallen significantly over the last thirty to forty years. And 311 00:16:49,120 --> 00:16:52,320 Speaker 3: as you know, the single most important determinant of economic 312 00:16:52,320 --> 00:16:56,280 Speaker 3: growth is productivity growth. So productivity growth is falling, then 313 00:16:56,400 --> 00:17:00,400 Speaker 3: there's just less of the pie around for people to from. 314 00:17:00,440 --> 00:17:04,480 Speaker 3: And that is a serious problem for most Americans. 315 00:17:04,880 --> 00:17:07,439 Speaker 1: From your perspective, do you think that's reversible or do 316 00:17:07,480 --> 00:17:11,800 Speaker 1: you think that we're inevitably now trapped into a system 317 00:17:11,840 --> 00:17:15,200 Speaker 1: of limited economic growth and government control. 318 00:17:16,119 --> 00:17:18,800 Speaker 3: Well, unfortunately, I think that if I go back again 319 00:17:18,840 --> 00:17:20,880 Speaker 3: to my experience of India, that when do countries really 320 00:17:20,960 --> 00:17:23,600 Speaker 3: change or even in the last ten twenty years, which 321 00:17:23,680 --> 00:17:27,320 Speaker 3: countries have truly changed their path, Countries only changed their 322 00:17:27,359 --> 00:17:30,760 Speaker 3: path when there is a very apparent crisis. Until there 323 00:17:30,800 --> 00:17:33,280 Speaker 3: is a very apparent crisis, even though the problems are 324 00:17:33,359 --> 00:17:36,679 Speaker 3: quite insidious out here, I think that most people you know, 325 00:17:36,840 --> 00:17:39,560 Speaker 3: just carry on the same path. Okay, that's how it is. 326 00:17:39,640 --> 00:17:42,600 Speaker 3: So we just keep going down that path, and policymakers 327 00:17:42,680 --> 00:17:45,840 Speaker 3: keep on doing what they have done. The natural sort 328 00:17:45,840 --> 00:17:49,280 Speaker 3: of response is status cooism, because they don't think that 329 00:17:49,320 --> 00:17:52,560 Speaker 3: they have much incentive to carry out any big radical change. 330 00:17:52,600 --> 00:17:55,119 Speaker 2: So I think that that's the big concern for me. 331 00:17:55,600 --> 00:17:57,639 Speaker 3: But the idea of this book is not to sound 332 00:17:57,640 --> 00:18:00,159 Speaker 3: all gloom that this is the path we're on. As 333 00:18:00,160 --> 00:18:02,680 Speaker 3: I said, the first step to occur is to let's 334 00:18:02,680 --> 00:18:05,840 Speaker 3: diagnose the problem, because today my big concern is that 335 00:18:06,359 --> 00:18:10,080 Speaker 3: most solutions involve even more government intervention. But the government 336 00:18:10,080 --> 00:18:12,960 Speaker 3: needs to intervene this the government needs to break down 337 00:18:13,000 --> 00:18:16,439 Speaker 3: companies or intervene more in this sector or that sector. 338 00:18:16,800 --> 00:18:18,959 Speaker 3: And I'm trying to sort of say, but that's what 339 00:18:19,040 --> 00:18:21,239 Speaker 3: got us in the mess in the first place. So 340 00:18:21,560 --> 00:18:24,000 Speaker 3: let's at least diagnose the problem correctly. And then I 341 00:18:24,000 --> 00:18:26,399 Speaker 3: do have a whole chapter in the book speaking about 342 00:18:26,600 --> 00:18:30,360 Speaker 3: where capitalism is still working, leading with countries like Switzerland, 343 00:18:30,640 --> 00:18:33,119 Speaker 3: which is the richest country in the world today and 344 00:18:33,200 --> 00:18:35,200 Speaker 3: also one of the top ten happiest. 345 00:18:34,760 --> 00:18:37,080 Speaker 2: Countries in the world. What's working there. 346 00:18:37,359 --> 00:18:39,560 Speaker 3: The size of government is much smaller than any other 347 00:18:39,600 --> 00:18:43,040 Speaker 3: European country, and even the United States, their regulatory environment 348 00:18:43,160 --> 00:18:46,439 Speaker 3: is a lot friendlier, their small and medium sized business 349 00:18:46,440 --> 00:18:49,280 Speaker 3: creation is a lot more robust than that of America. 350 00:18:49,800 --> 00:18:51,800 Speaker 1: We have to expand on that for a second, because 351 00:18:52,320 --> 00:18:56,800 Speaker 1: historically Americans thought of Switzerland as being much more socialist 352 00:18:56,800 --> 00:18:57,560 Speaker 1: than we are. 353 00:18:58,119 --> 00:19:00,800 Speaker 3: Exactly, but I think that most people will confuse that 354 00:19:00,840 --> 00:19:03,040 Speaker 3: with the entire European continent, and in Europe that are 355 00:19:03,080 --> 00:19:05,480 Speaker 3: many models which are working. So I think that most 356 00:19:05,520 --> 00:19:08,080 Speaker 3: people in America think which as socialists tend to think 357 00:19:08,160 --> 00:19:10,680 Speaker 3: of the Nordic countries, Sweden is I think one of 358 00:19:10,720 --> 00:19:13,320 Speaker 3: their favorite countries that they speak about, and as they 359 00:19:13,400 --> 00:19:16,600 Speaker 3: show in the book, that we have to understand what 360 00:19:17,000 --> 00:19:20,159 Speaker 3: Sweden did and where Sweden is today. 361 00:19:20,520 --> 00:19:22,040 Speaker 2: Sweden was one. 362 00:19:21,840 --> 00:19:24,680 Speaker 3: Of the most socialist countries at one point in time, 363 00:19:25,040 --> 00:19:27,600 Speaker 3: but even Sweden had a big economic crisis if you 364 00:19:27,640 --> 00:19:31,120 Speaker 3: recall in the early nineteen nineties, and after Sweden had that, 365 00:19:31,440 --> 00:19:34,760 Speaker 3: Sweden has been reversing course. Sweden has cut back its 366 00:19:34,800 --> 00:19:38,240 Speaker 3: government spending as a share of GDP. Sweden has also 367 00:19:38,280 --> 00:19:42,600 Speaker 3: been running fiscal surpluses for many of the last twenty 368 00:19:42,640 --> 00:19:45,240 Speaker 3: five years or so. So I think people have to 369 00:19:45,359 --> 00:19:48,040 Speaker 3: cherry pick the details that suit them and they see 370 00:19:48,040 --> 00:19:51,680 Speaker 3: a static picture that, oh, these Nordic countries still spend 371 00:19:51,760 --> 00:19:54,280 Speaker 3: a lot more than we do, and they're happier than 372 00:19:54,320 --> 00:19:56,520 Speaker 3: we are. But I think they overlook the fact that 373 00:19:56,600 --> 00:19:59,480 Speaker 3: they also got into trouble because of overspending. 374 00:19:59,680 --> 00:20:00,800 Speaker 2: They have course corrected. 375 00:20:00,800 --> 00:20:04,960 Speaker 3: They're running budget surpluses or close to budget surpluses now, 376 00:20:05,040 --> 00:20:07,800 Speaker 3: and so it's very different. Switzerland, I feel, just falls 377 00:20:07,840 --> 00:20:09,920 Speaker 3: between the crack. A lot of people just sort of say, 378 00:20:10,200 --> 00:20:13,399 Speaker 3: who cares about Switzerland. It's too small. No, it's among 379 00:20:13,400 --> 00:20:16,080 Speaker 3: the world's pretty largest economies, a bigger size, I think 380 00:20:16,080 --> 00:20:17,200 Speaker 3: than even Sweden today. 381 00:20:17,480 --> 00:20:19,160 Speaker 2: So let's look at the relevant examples. 382 00:20:19,200 --> 00:20:21,800 Speaker 3: There are many stories in Europe, not just one story 383 00:20:22,160 --> 00:20:24,359 Speaker 3: with lots of layers. In Switzerland, I think is a 384 00:20:24,440 --> 00:20:27,399 Speaker 3: very different case than Sweden. And Sweden, which is also 385 00:20:27,480 --> 00:20:31,159 Speaker 3: a favorite of the liberal economists, is a country that 386 00:20:31,240 --> 00:20:34,520 Speaker 3: reformed and was forced to cut back it's endless states 387 00:20:34,520 --> 00:20:36,920 Speaker 3: spending and start to run budget surpluses. 388 00:20:36,960 --> 00:20:38,400 Speaker 2: We are very far from that situation. 389 00:20:55,359 --> 00:20:58,639 Speaker 1: You also mention that one of the major challenges for 390 00:20:58,760 --> 00:21:03,280 Speaker 1: modern capitalism is that governments are increasingly ill equipped to 391 00:21:03,400 --> 00:21:07,080 Speaker 1: keep up with the accelerating pace of technological change. I 392 00:21:07,320 --> 00:21:09,359 Speaker 1: was preteicularus to this, as I just had lunch with 393 00:21:09,400 --> 00:21:13,040 Speaker 1: an expert on a large scale computing and artificial intelligence 394 00:21:13,080 --> 00:21:18,680 Speaker 1: and a variety of things involving communications, and the scale 395 00:21:18,760 --> 00:21:22,520 Speaker 1: of change coming down the road across the board, from 396 00:21:22,560 --> 00:21:28,640 Speaker 1: space to artificial intelligence to biology. It's astonishing. And yet 397 00:21:28,720 --> 00:21:30,880 Speaker 1: your point, which I think is right, is that these 398 00:21:31,000 --> 00:21:36,199 Speaker 1: large bureaucracies are both hostile through regulation and find it 399 00:21:36,280 --> 00:21:39,879 Speaker 1: extraordinarily difficult to adapt because of the very nature of 400 00:21:39,920 --> 00:21:43,119 Speaker 1: bureaucratic behavior. What's the long term solution to that? 401 00:21:43,960 --> 00:21:44,640 Speaker 2: Yeah, I think that. 402 00:21:44,560 --> 00:21:46,399 Speaker 3: You know, we need to redesign the state for the 403 00:21:46,440 --> 00:21:49,360 Speaker 3: twenty first century. The problem today with the government is 404 00:21:49,720 --> 00:21:52,760 Speaker 3: that it just keeps on taking more and more responsibilities, 405 00:21:53,119 --> 00:21:57,280 Speaker 3: including on legacy things, without knowing that how do you 406 00:21:57,359 --> 00:22:01,000 Speaker 3: prioritize like for example. Therefore, I've been so against this 407 00:22:01,160 --> 00:22:04,760 Speaker 3: Biden's Industrial policy for one, which is that this is 408 00:22:04,760 --> 00:22:07,200 Speaker 3: the kind of stuff that countries followed in the sixties 409 00:22:07,200 --> 00:22:09,960 Speaker 3: and seventies. It worked in a couple of instances. In 410 00:22:10,000 --> 00:22:12,679 Speaker 3: most instances, it did not work. So why are we 411 00:22:12,760 --> 00:22:16,280 Speaker 3: following policies from the past which have a very selective 412 00:22:16,359 --> 00:22:19,920 Speaker 3: history of working, if at all. And that in today's 413 00:22:19,960 --> 00:22:22,000 Speaker 3: day and age, we need to put our resources more 414 00:22:22,320 --> 00:22:25,560 Speaker 3: towards the more effective use of technology, towards more effective 415 00:22:25,600 --> 00:22:29,240 Speaker 3: distribution of welfare benefits. And as I said, there are 416 00:22:29,280 --> 00:22:32,320 Speaker 3: countries like Singapore, which I go back to, where the 417 00:22:32,359 --> 00:22:36,760 Speaker 3: state is very modern, very technologically adept. The other country 418 00:22:36,800 --> 00:22:39,080 Speaker 3: I speak about in my book a Lot is Taiwan 419 00:22:39,160 --> 00:22:41,879 Speaker 3: in that same chapter of where Capitalism is Working. And 420 00:22:41,920 --> 00:22:44,560 Speaker 3: in Taiwan's case, their states spending as a share of 421 00:22:44,600 --> 00:22:47,840 Speaker 3: GDP is nearly half that of America, just twenty percent 422 00:22:47,960 --> 00:22:51,200 Speaker 3: or so. And yet Taiwan was widely praised in terms 423 00:22:51,200 --> 00:22:54,080 Speaker 3: of how it dealt with the pandemic because how efficient 424 00:22:54,160 --> 00:22:57,440 Speaker 3: it takes savvy the state was. So the whole point 425 00:22:57,520 --> 00:22:59,520 Speaker 3: being that you can deal with a lot of the 426 00:22:59,560 --> 00:23:03,200 Speaker 3: problem you have if the state is right size and 427 00:23:03,240 --> 00:23:05,960 Speaker 3: the state's priorities are correct. But if you overload the 428 00:23:06,000 --> 00:23:09,960 Speaker 3: state with far too many responsibilities, some dating back to 429 00:23:10,000 --> 00:23:12,439 Speaker 3: the fifties and sixties and some sort of you know, 430 00:23:12,480 --> 00:23:16,960 Speaker 3: like adopting outdated policies, the state will be suboptimal in 431 00:23:17,040 --> 00:23:19,320 Speaker 3: delivering anything. And I think that that's where it is, 432 00:23:19,359 --> 00:23:22,320 Speaker 3: which is that the state's doing a lot, and yet 433 00:23:22,400 --> 00:23:24,800 Speaker 3: each thing is like so inefficient. I mean, you know, 434 00:23:24,880 --> 00:23:26,560 Speaker 3: just at a personal level, I hear this all the 435 00:23:26,600 --> 00:23:29,440 Speaker 3: time that you know, for example, we have the TSA now, 436 00:23:29,440 --> 00:23:31,720 Speaker 3: which is one of the biggest employers in government and 437 00:23:31,960 --> 00:23:35,840 Speaker 3: government bureaucracy something new, and yet the experience at the 438 00:23:35,880 --> 00:23:38,040 Speaker 3: airports or any of those things is about as bad 439 00:23:38,080 --> 00:23:40,600 Speaker 3: as it's ever been, right because we've got so many 440 00:23:40,640 --> 00:23:43,960 Speaker 3: people doing that. I think the numbers are there, about 441 00:23:43,960 --> 00:23:46,640 Speaker 3: fifteen percent of the regulatory staff is in the TSA. 442 00:23:47,200 --> 00:23:49,479 Speaker 3: They have what sixty thousand employees and stuff like that. 443 00:23:49,560 --> 00:23:51,639 Speaker 3: It's just crazy in terms of you know, what the 444 00:23:51,640 --> 00:23:54,080 Speaker 3: government is expected to do and like you know what 445 00:23:54,119 --> 00:23:56,280 Speaker 3: the results are. So I think that just you know, 446 00:23:56,359 --> 00:23:59,200 Speaker 3: like the fact that the bureaucracy has grown so much, 447 00:23:59,280 --> 00:24:01,840 Speaker 3: their budgets learn so much, you know, Like is the 448 00:24:01,840 --> 00:24:03,800 Speaker 3: fact that this is not a state were building for 449 00:24:03,840 --> 00:24:06,959 Speaker 3: the twenty first century when technology should be allowing us 450 00:24:07,000 --> 00:24:08,480 Speaker 3: to do a lot more with lot less. 451 00:24:09,080 --> 00:24:10,800 Speaker 1: Part of the theme I've been trying to work on 452 00:24:11,560 --> 00:24:16,119 Speaker 1: is instead of figuring out how to artificial intelligence to 453 00:24:16,200 --> 00:24:18,840 Speaker 1: the current bureaucracy, so we ought to be asking ourselves, 454 00:24:19,320 --> 00:24:23,440 Speaker 1: in an age of massive capabilities, how should we be 455 00:24:23,520 --> 00:24:28,320 Speaker 1: reshaping government in order to achieve better outcomes at lower 456 00:24:28,359 --> 00:24:32,560 Speaker 1: cost with greater effectiveness, which is very different than asking 457 00:24:32,600 --> 00:24:36,399 Speaker 1: how you could apply artificial intelligence to improving marginally the 458 00:24:36,440 --> 00:24:37,119 Speaker 1: current system. 459 00:24:37,920 --> 00:24:40,000 Speaker 2: Absolutely correct, Yes, absolutely correct. 460 00:24:40,040 --> 00:24:42,399 Speaker 3: So the concept I speak about in the book is 461 00:24:42,440 --> 00:24:44,880 Speaker 3: a term which has been used I think a bit 462 00:24:44,920 --> 00:24:47,760 Speaker 3: in a few circles. It's called quoalit crisis, which is 463 00:24:47,760 --> 00:24:49,920 Speaker 3: that when you're dealing with multiple crises at the same 464 00:24:49,920 --> 00:24:53,520 Speaker 3: point in time, then how does the government prioritize right 465 00:24:53,560 --> 00:24:55,800 Speaker 3: in terms of what to do and in terms of 466 00:24:55,840 --> 00:24:57,919 Speaker 3: the fact that what tools you know, what should we 467 00:24:57,960 --> 00:25:01,600 Speaker 3: be due to prioritizing things that the government should be doing. 468 00:25:02,000 --> 00:25:04,040 Speaker 3: And so I think that that's like a section that 469 00:25:04,119 --> 00:25:06,080 Speaker 3: I think that you'll find very relevant. 470 00:25:06,240 --> 00:25:08,239 Speaker 1: And maybe your next book is to try to think 471 00:25:08,320 --> 00:25:11,040 Speaker 1: in a positive way about the shape of the government 472 00:25:11,119 --> 00:25:13,760 Speaker 1: we should have rather than the government we do have. 473 00:25:14,280 --> 00:25:14,919 Speaker 2: Yes, I do have. 474 00:25:14,960 --> 00:25:17,720 Speaker 3: A last chapter gets into that, which is that the 475 00:25:17,720 --> 00:25:19,760 Speaker 3: only way out is through is how I've titled it, 476 00:25:20,040 --> 00:25:21,399 Speaker 3: and the last chapter gets at that. 477 00:25:21,560 --> 00:25:24,200 Speaker 2: But as I said, the unfortunate thing new it is the. 478 00:25:24,119 --> 00:25:27,080 Speaker 3: Fact that until and unless you have a crisis, which 479 00:25:27,119 --> 00:25:30,680 Speaker 3: forces everyone's attention to address it. People rarely do that 480 00:25:30,800 --> 00:25:33,119 Speaker 3: until then they keep on doing what they're doing, or 481 00:25:33,160 --> 00:25:35,359 Speaker 3: doubling down. I mean, we are currently doubling down on 482 00:25:35,400 --> 00:25:38,640 Speaker 3: our debt and deficits compared to what we used to have. 483 00:25:38,760 --> 00:25:40,919 Speaker 3: I mean, there was a point in time when in 484 00:25:40,960 --> 00:25:44,040 Speaker 3: the late nineties when we briefly ran surpluses. But the 485 00:25:44,080 --> 00:25:47,320 Speaker 3: last fifty years we've run a budget surplus for only 486 00:25:47,359 --> 00:25:50,480 Speaker 3: five or the last fifty. In the preceding two hundred years, 487 00:25:50,480 --> 00:25:53,400 Speaker 3: we ran a budget surplus for almost all the time, 488 00:25:53,480 --> 00:25:56,200 Speaker 3: except in the middle of a war or a depression, 489 00:25:56,480 --> 00:25:59,320 Speaker 3: and then we thought that, Okay, running a budget deficits, fine, 490 00:25:59,320 --> 00:26:00,240 Speaker 3: it's investing. 491 00:25:59,920 --> 00:26:00,600 Speaker 2: In the future. 492 00:26:01,240 --> 00:26:03,119 Speaker 3: That used to be about three percent of GDP for 493 00:26:03,160 --> 00:26:05,320 Speaker 3: much of the last twenty years. Now we're running a 494 00:26:05,400 --> 00:26:07,879 Speaker 3: number which is six to seven percent of GDP in 495 00:26:08,000 --> 00:26:09,960 Speaker 3: terms of that. So we're just like, listen, as long 496 00:26:09,960 --> 00:26:11,880 Speaker 3: as there's no crisis, keep at it. 497 00:26:12,680 --> 00:26:16,480 Speaker 1: Well, I have to say that with some immodesty, that 498 00:26:16,760 --> 00:26:18,840 Speaker 1: I'm very proud of the fact that the only four 499 00:26:19,440 --> 00:26:22,919 Speaker 1: consecutive balanced budgets in your lifetime were launched when I 500 00:26:22,960 --> 00:26:23,480 Speaker 1: was speaker. 501 00:26:24,119 --> 00:26:26,080 Speaker 2: Yes, I've pointed it out in the book. 502 00:26:27,480 --> 00:26:31,119 Speaker 1: If you could wave a magic wand and balance the 503 00:26:31,160 --> 00:26:33,199 Speaker 1: federal budget. What would you do? 504 00:26:33,960 --> 00:26:36,440 Speaker 3: It has to start with getting spending under control, because 505 00:26:36,440 --> 00:26:38,399 Speaker 3: I said that spending the share of the economy has 506 00:26:38,440 --> 00:26:41,399 Speaker 3: gone from three percent of GDP one hundred years ago 507 00:26:41,720 --> 00:26:44,080 Speaker 3: to nearly forty percent of GDP. Now, we need to 508 00:26:44,080 --> 00:26:46,800 Speaker 3: slow that down in terms of that. So I think 509 00:26:46,840 --> 00:26:49,399 Speaker 3: that balancing the budget the first step has to be 510 00:26:49,720 --> 00:26:53,080 Speaker 3: getting spending under control, and obviously entitlement reforms stuff which 511 00:26:53,119 --> 00:26:56,080 Speaker 3: seems to be off the political agenda across the isle. 512 00:26:56,160 --> 00:27:00,840 Speaker 1: Today you have a very interesting and very front cover, 513 00:27:01,480 --> 00:27:05,080 Speaker 1: and you have four presidents, and you have a red 514 00:27:05,160 --> 00:27:08,359 Speaker 1: line through all four. Explain the cover. I mean, I 515 00:27:08,359 --> 00:27:10,680 Speaker 1: think it's a fascinating cover that's going to get a 516 00:27:10,720 --> 00:27:11,280 Speaker 1: lot of attention. 517 00:27:12,000 --> 00:27:12,240 Speaker 2: Yeah. 518 00:27:12,280 --> 00:27:16,399 Speaker 3: So the cover really has the four presidents beginning with FDR, Nixon, Reagan, 519 00:27:16,440 --> 00:27:16,960 Speaker 3: and Biden. 520 00:27:17,600 --> 00:27:18,840 Speaker 2: And my point is. 521 00:27:18,760 --> 00:27:22,000 Speaker 3: That this expansion in government that's taken place which has 522 00:27:22,040 --> 00:27:28,119 Speaker 3: distorted capitalism, has happened throughout history. It started with FDR 523 00:27:28,200 --> 00:27:30,679 Speaker 3: and has been doubled down by Biden. And for me, 524 00:27:30,760 --> 00:27:33,199 Speaker 3: the most surprising thing was that even Reagan, such an 525 00:27:33,320 --> 00:27:36,359 Speaker 3: iconic figure someone I grew up idolizing, but when you 526 00:27:36,400 --> 00:27:39,680 Speaker 3: look at the data that even under him, government spending 527 00:27:39,680 --> 00:27:42,120 Speaker 3: as a share of the economy kept on going up. 528 00:27:42,280 --> 00:27:45,000 Speaker 3: He cut taxes, but really couldn't do much about getting 529 00:27:45,040 --> 00:27:47,439 Speaker 3: spending under control. And similarly, if you look at the 530 00:27:47,480 --> 00:27:50,639 Speaker 3: number of regulations, even those went up under Reagan. So 531 00:27:50,680 --> 00:27:53,639 Speaker 3: my point was that many things that we thought Reagan 532 00:27:53,760 --> 00:27:55,919 Speaker 3: was great at, and you know, he was such a 533 00:27:55,920 --> 00:28:00,560 Speaker 3: great communicator, his speeches and his rhetoric was so refreshing 534 00:28:00,600 --> 00:28:02,959 Speaker 3: at that point in time, but if you look at 535 00:28:02,960 --> 00:28:06,920 Speaker 3: the actual track record, there was no real small government 536 00:28:07,040 --> 00:28:10,040 Speaker 3: revolution under in him. So the cover just captures the 537 00:28:10,040 --> 00:28:12,440 Speaker 3: fact that no matter who's been an office, virtually the 538 00:28:12,480 --> 00:28:16,520 Speaker 3: last hundred years, we've had this steady expansion of the state, 539 00:28:16,840 --> 00:28:20,160 Speaker 3: and we've got into a position now where the damage 540 00:28:20,200 --> 00:28:21,960 Speaker 3: being done by that is incredible. 541 00:28:21,960 --> 00:28:23,160 Speaker 2: You could argue that one hundred. 542 00:28:23,000 --> 00:28:25,760 Speaker 3: Years ago the state was too small, we needed some 543 00:28:25,840 --> 00:28:28,600 Speaker 3: welfared and stuff, But now we're at a stage where 544 00:28:28,600 --> 00:28:32,520 Speaker 3: the state has just expanded and encroached, and it's there 545 00:28:32,560 --> 00:28:34,720 Speaker 3: in every part of our life without us even being 546 00:28:34,720 --> 00:28:38,560 Speaker 3: fully conscious of it. The fact that America introduces three 547 00:28:38,720 --> 00:28:42,360 Speaker 3: thousand new regulations a year over the last twenty years 548 00:28:42,720 --> 00:28:46,480 Speaker 3: and they've withdrawn twenty regulations in total over the last 549 00:28:46,520 --> 00:28:48,960 Speaker 3: twenty years. What are we doing here in terms of 550 00:28:49,000 --> 00:28:52,680 Speaker 3: because by doing that, we are stifling small and medium 551 00:28:52,680 --> 00:28:56,840 Speaker 3: sized businesses and giving an undue advantage to the entrenched 552 00:28:57,200 --> 00:29:00,440 Speaker 3: and the big businesses who can both afford to comply 553 00:29:00,560 --> 00:29:04,360 Speaker 3: with these regulations and also write these regulations given their 554 00:29:04,440 --> 00:29:06,160 Speaker 3: incredible lobbying part in Washington. 555 00:29:06,680 --> 00:29:09,200 Speaker 1: Rouchair, I want to thank you for joining me. Your 556 00:29:09,200 --> 00:29:12,880 Speaker 1: new book, What Went Wrong with Capitalism is available now 557 00:29:12,880 --> 00:29:16,200 Speaker 1: on Amazon and in bookstores everywhere. I think it's a 558 00:29:16,280 --> 00:29:19,360 Speaker 1: must read book for lawmakers on Capitol Hill as we 559 00:29:19,480 --> 00:29:22,880 Speaker 1: continue conversations about how to get back to a strong 560 00:29:22,960 --> 00:29:26,840 Speaker 1: economic growth and a balanced budget. And I really appreciate 561 00:29:26,880 --> 00:29:28,400 Speaker 1: your sharing these ideas with us. 562 00:29:28,920 --> 00:29:30,920 Speaker 2: Thank you, newt I really enjoy chatting with you. 563 00:29:36,080 --> 00:29:38,479 Speaker 1: Thank you to my guest Routschier Charman. You can get 564 00:29:38,520 --> 00:29:41,120 Speaker 1: a link to buy his new book, What Went Wrong 565 00:29:41,160 --> 00:29:45,280 Speaker 1: with Capitalism on our show page at newsworld dot com. 566 00:29:45,440 --> 00:29:49,720 Speaker 1: Newtsworld is produced by GANGUA three sixty and iHeartMedia. Our 567 00:29:49,720 --> 00:29:54,360 Speaker 1: executive producer is Guernsey Sloan and our researcher is Rachel Peterson. 568 00:29:54,920 --> 00:29:58,080 Speaker 1: The artwork for the show was created by Steve Penley. 569 00:29:58,760 --> 00:30:01,800 Speaker 1: Special thanks that him had Ganglish three sixty. If you've 570 00:30:01,840 --> 00:30:04,680 Speaker 1: been enjoying Newtsworld, I hope you'll go to Apple Podcast 571 00:30:05,080 --> 00:30:07,880 Speaker 1: and both rate us with five stars and give us 572 00:30:07,880 --> 00:30:10,560 Speaker 1: a review so others can learn what it's all about. 573 00:30:11,400 --> 00:30:14,320 Speaker 1: Right now, listeners of Newtsworld can sign up for my 574 00:30:14,440 --> 00:30:19,560 Speaker 1: three freeweekly columns at gingwishwree sixty dot com slash newsletter 575 00:30:20,080 --> 00:30:22,520 Speaker 1: I'm nut gingrich. This is Newtsworld.