WEBVTT - Interview With Richard Haass: Masters in Business (Audio) 0:00:00.040 --> 0:00:03.280 Brought to you by B A. S F. We create Chemistry. 0:00:06.640 --> 0:00:10.960 This is Masters in Business with Barry Ridholds on Bloomberg Radio. 0:00:11.480 --> 0:00:14.400 This week on the podcast, I have a very special guest. 0:00:14.760 --> 0:00:18.200 His name is Dr Richard hass He is the President 0:00:18.480 --> 0:00:21.599 of the Council on Foreign Relations, where he has served 0:00:21.640 --> 0:00:24.759 for the past fourteen years. I thought it would be 0:00:24.800 --> 0:00:28.600 a great idea to get Dr hass in because, more 0:00:28.760 --> 0:00:30.960 than any time in the past, I don't know how 0:00:31.000 --> 0:00:36.840 many years UH, international events are driving UH not only 0:00:36.920 --> 0:00:39.920 the debate, but but the headlines and policies that we 0:00:40.000 --> 0:00:43.720 see everywhere, whether it's the Brexit vote in the UK, 0:00:44.880 --> 0:00:49.280 whether it's things like Middle East issues and isis UH 0:00:49.320 --> 0:00:54.960 and and the Iran nuclear deal, what's happening in China 0:00:55.080 --> 0:00:58.720 with the South China, see what's happening in Russia. Even 0:00:58.760 --> 0:01:03.000 even normalizing relations with Cuba are are significant events. And 0:01:03.120 --> 0:01:06.240 these are all outside of the US borders. I can't 0:01:06.280 --> 0:01:11.280 ever recall a time in recent history where overseas events 0:01:11.280 --> 0:01:14.760 have been more significant, more important to both the global 0:01:14.800 --> 0:01:20.160 economy and to international relations. I think you'll find Professor 0:01:20.200 --> 0:01:23.320 hass or Doctor hass Uh. He has taught at the 0:01:23.400 --> 0:01:27.839 Kennedy school. Uh, quite fascinating. He is about as knowledgeable 0:01:27.920 --> 0:01:32.280 a person as you'll ever hear. He began in Democratic 0:01:32.680 --> 0:01:37.319 Senator Claiborne Pell's office. He also served in both Bush 0:01:37.360 --> 0:01:42.600 White Houses. He's nonpartisan. Uh. He he very much has 0:01:42.640 --> 0:01:47.119 a fairly moderate and centrist view. He's he's an extremely 0:01:48.240 --> 0:01:51.760 rational and logical guy. And and a lot of what 0:01:51.840 --> 0:01:54.440 he says, uh, and a lot of the discussion that 0:01:54.440 --> 0:01:58.080 took place today, uh, really very much is just if 0:01:58.120 --> 0:02:00.640 you were to stop and and do a d historical 0:02:00.800 --> 0:02:04.920 dive into each of these subjects, they would inform your 0:02:04.960 --> 0:02:09.480 perspective and very much drive your decision making in a 0:02:09.520 --> 0:02:16.799 certain direction. Uh. That is consistent on both a cultural, diplomatic, 0:02:17.000 --> 0:02:21.559 and global basis. I found his conversation to be completely refreshing, 0:02:22.080 --> 0:02:26.119 uh and quite fascinating. For those of you who are 0:02:26.240 --> 0:02:28.240 aware of what goes on the world, you know what 0:02:28.280 --> 0:02:32.000 an expert hass is. And for those of you who 0:02:32.040 --> 0:02:35.520 are not very well informed about the state of the 0:02:35.520 --> 0:02:38.920 global affairs, this is going to be a crash course 0:02:39.320 --> 0:02:42.800 in international relations. I found it to be an absolutely 0:02:42.880 --> 0:02:47.400 brilliant and fascinating conversation. So, with no further ado, my 0:02:47.560 --> 0:02:55.040 conversation with Dr Richard Hass. This is Masters in Business 0:02:55.120 --> 0:02:59.840 with Barry Ridholes on Bloomberg Radio. My special guest today 0:02:59.880 --> 0:03:03.000 is Richard Hass. He is the President of the Council 0:03:03.360 --> 0:03:06.720 of Foreign Relations, a position he has held for the 0:03:06.800 --> 0:03:11.440 past fourteen years. UH fascinating career in government as a 0:03:11.560 --> 0:03:14.560 legislative aid in the Senate in the Department of Defense. 0:03:14.600 --> 0:03:19.120 In the State Department, he was awarded the Presidential Citizens 0:03:19.160 --> 0:03:23.880 Medal for his contributions during the US Operation Desert Shield. 0:03:23.919 --> 0:03:27.840 In one. He has been a special advisor to both 0:03:28.400 --> 0:03:32.840 President George H. W. Bush Uh in the National Security Council, 0:03:32.960 --> 0:03:36.880 as well as President George W. Bush in the Department 0:03:36.920 --> 0:03:41.040 of State, where he served as principal advisor to Secretary 0:03:41.040 --> 0:03:46.920 of State Colin Powell. Richard Hass, Welcome to Blomberg. I 0:03:47.160 --> 0:03:50.360 left out half of your CV. It's it's way too long. 0:03:50.640 --> 0:03:53.640 You are the author or editor of a dozen books. 0:03:54.440 --> 0:03:57.480 Perhaps the one I'm our our listeners might be most 0:03:57.480 --> 0:04:00.840 familiar with is the Reluctant Share of the United States 0:04:00.880 --> 0:04:02.920 after the Cold War, and you have a new book 0:04:02.960 --> 0:04:08.000 coming out in January. World in Disarray, American Foreign Policy 0:04:08.120 --> 0:04:11.360 and the Crisis of the Old Order. I am confident 0:04:11.720 --> 0:04:14.840 that a lot of the questions and topics we discussed 0:04:14.840 --> 0:04:18.000 today are covered in the book. But but let's jump 0:04:18.720 --> 0:04:23.919 right into your early career. So you leave was it Oxford? 0:04:23.920 --> 0:04:25.760 Did I get that right? Yes? You leave Oxford with 0:04:25.760 --> 0:04:29.920 a masters and a PhD and pretty much start as 0:04:30.200 --> 0:04:32.960 a Senatorial aid. Is that right? That was your first 0:04:33.400 --> 0:04:35.719 first job, and then you end up in the State 0:04:35.760 --> 0:04:38.440 Department and the Department of Defense. How did all that 0:04:38.440 --> 0:04:42.800 come about? Well after Oxford? Actually, during Oxford, I spent 0:04:42.880 --> 0:04:46.159 a year splitting between my masters and my doctorate, working 0:04:46.200 --> 0:04:49.400 in the Senate as an aid on the Senate Foreign 0:04:49.400 --> 0:04:52.240 Relations Committee to Senator Claiborne Pell, who was a Democrat 0:04:52.320 --> 0:04:55.840 from Rhode Island. I really just wanted some experience. I'd 0:04:55.839 --> 0:04:58.400 been an academic and wanted to see how the sausage 0:04:58.440 --> 0:05:01.320 was made, and I got the chance. After that, I 0:05:01.360 --> 0:05:04.120 then spent a couple of years working at a think 0:05:04.120 --> 0:05:07.159 tank in London, the place called the Institute for Strategic Studies, 0:05:07.480 --> 0:05:11.800 essentially doing a post doc. And then after some conference, 0:05:11.839 --> 0:05:14.480 I spoke at a few people who are working at 0:05:14.480 --> 0:05:16.680 the Pentagon said hey, would you come and work with 0:05:16.760 --> 0:05:20.640 us at the Department of Defense. So I said, great, 0:05:21.040 --> 0:05:23.760 and so I went and worked at the Pentagon. It 0:05:23.800 --> 0:05:26.760 was a fantastic opportunity because about less than six months 0:05:26.800 --> 0:05:29.760 after I got there, in seventy nine, you had two 0:05:30.040 --> 0:05:33.920 big historical events. You had the Soviet invasion of Afghanistan 0:05:34.960 --> 0:05:37.800 and you had the revolution in Iran. And I was 0:05:37.839 --> 0:05:40.320 assigned with a very small group of people to plan 0:05:40.520 --> 0:05:43.240 for what would the United States do in that part 0:05:43.240 --> 0:05:45.680 of the world, because we had very few capabilities, very 0:05:45.720 --> 0:05:49.200 few plans. And suddenly I was thrown at this in 0:05:49.200 --> 0:05:51.720 part because I had written my doctoral dissertation on this 0:05:51.800 --> 0:05:53.560 part of the world, on the Middle East, on the 0:05:53.600 --> 0:05:55.640 Middle East, on the Persian Gulf. What what was the 0:05:55.720 --> 0:05:59.200 name of your doctoral dissertation? Filling the Vacuum? And it 0:05:59.279 --> 0:06:02.360 was essentially the American reactions what was called the British 0:06:02.400 --> 0:06:06.320 East of Suez withdrawal, meaning the meaning for for listeners 0:06:06.360 --> 0:06:08.840 who may not be historians of that part of the world. 0:06:09.600 --> 0:06:13.160 When the Brits were were occupying most of the Middle East, 0:06:13.200 --> 0:06:16.560 at a certain point, they pretty much drew random some 0:06:16.560 --> 0:06:19.640 people have called them random borders on their way out 0:06:19.800 --> 0:06:26.680 and and really left the political and diplomatic borders uh 0:06:26.839 --> 0:06:30.359 we see today to some degree as a cause of 0:06:30.360 --> 0:06:32.840 some friction between some of these states. Well after World 0:06:32.839 --> 0:06:34.600 War One, which is what you're alluding to, there was 0:06:34.720 --> 0:06:38.880 the British and French ministers and their subordinates essentially did 0:06:38.920 --> 0:06:41.039 draw the map a lot of which is the contemporary 0:06:41.040 --> 0:06:44.200 Middle East. I was really focusing on the Persian Gulf 0:06:45.040 --> 0:06:48.840 and where the Brits stayed longer, and they left essentially 0:06:48.839 --> 0:06:53.000 in the early late sixties early early seventies. But soon 0:06:53.040 --> 0:06:56.440 afterwards again you had these major tests with the twin 0:06:56.520 --> 0:07:01.520 crises of Afghanistan and Iran, and I was lucky enough 0:07:01.600 --> 0:07:04.040 or unlucky enough to be one of those who was 0:07:04.160 --> 0:07:06.400 asked essentially to plan for it. So I had an 0:07:06.440 --> 0:07:10.920 amazing early experience in the depending on indeed what's now 0:07:11.040 --> 0:07:14.320 Central Command, the force which has fought several of the wars, 0:07:14.320 --> 0:07:17.000 including the Gulf War, the Rock arn All that I 0:07:17.040 --> 0:07:19.280 was involved in the creation of that force, So I 0:07:19.720 --> 0:07:20.880 know it was a little bit of being in the 0:07:20.960 --> 0:07:23.360 right or wrong place at the right time. And then 0:07:23.400 --> 0:07:27.560 after that, after the Carter administration ended, I was put 0:07:27.600 --> 0:07:31.600 on the transition team for the State Department for the 0:07:31.640 --> 0:07:34.040 Reagan administration and went over to the Reagan State work. 0:07:34.160 --> 0:07:38.000 You started as a Democrat under sand lerpel you you 0:07:38.040 --> 0:07:41.160 are now in the Department Defense under Carter, and then 0:07:41.200 --> 0:07:44.160 you're part of the transition team for the Reagan White House. Right, 0:07:44.160 --> 0:07:46.720 And it wasn't that I was a political chameleon. I 0:07:46.800 --> 0:07:50.920 was essentially a political at the time. I think I 0:07:50.960 --> 0:07:54.640 was probably a registered independent at the time. At some 0:07:54.680 --> 0:07:57.640 point I became a registered Republican. And even now I 0:07:57.760 --> 0:08:00.720 run a skip ahead of several decade. I run a 0:08:00.800 --> 0:08:06.120 nonpartisan institution. I don't feel particularly partisan in in my bones, 0:08:06.240 --> 0:08:09.000 and I'd like to think maybe it's naive that there's 0:08:09.040 --> 0:08:11.840 a place in American politics, say within the forty yard lines, 0:08:12.600 --> 0:08:17.000 where what you might create, where conservative or moderate Democrats 0:08:17.080 --> 0:08:20.760 and moderate Republicans can find common cause. And if we 0:08:20.800 --> 0:08:23.920 can't we if we can't have that center, then I 0:08:23.960 --> 0:08:26.280 think we as a society are in serious trouble. The 0:08:26.600 --> 0:08:30.720 fascinating thing is I totally agree with you. I think 0:08:30.800 --> 0:08:35.280 the fascinating schism is that most of the public, or 0:08:35.320 --> 0:08:38.320 a lot of the public, lives in between the forty 0:08:38.400 --> 0:08:41.520 yard line, so to speak. But everyone in DC seems 0:08:41.520 --> 0:08:43.360 to be in their respective end zones. But there's a 0:08:43.400 --> 0:08:45.960 reason for that. There's a principle that you see in 0:08:45.960 --> 0:08:49.760 the literature of political science called intensity, and the whole 0:08:49.800 --> 0:08:52.640 idea of intensity is what matters in American politics and 0:08:52.720 --> 0:08:56.800 early in democratic politics more broadly, is not absolute numbers, 0:08:57.160 --> 0:09:00.680 but it's the intensity with which political participan pence bring 0:09:00.720 --> 0:09:04.280 to the process, whether it's voting or money or time. 0:09:04.679 --> 0:09:07.760 So what this means of small numbers of people with 0:09:07.880 --> 0:09:12.080 great intensity could overwhelm large numbers of people who have 0:09:12.160 --> 0:09:16.720 virtually no intensity. It's the reason, for example, of Americans 0:09:16.760 --> 0:09:20.360 may favor background checks, but the n r A wins 0:09:20.559 --> 0:09:25.200 the gun control debate. That's an intensity issue. I'm Barry Ridhults. 0:09:25.400 --> 0:09:28.680 You're listening to Masters in Business on Bloomberg Radio. My 0:09:28.800 --> 0:09:31.960 special guest today is Richard hass He is the President 0:09:32.320 --> 0:09:35.840 of the Council on Foreign Relations. Not too long ago 0:09:36.080 --> 0:09:40.400 we had the big UK vote to leave the EU. 0:09:40.559 --> 0:09:44.160 I think a lot of people were surprised by by 0:09:44.360 --> 0:09:47.160 the outcome of that. So let's start out, and I 0:09:47.200 --> 0:09:50.280 know you are intensely familiar with the region because of 0:09:50.320 --> 0:09:53.560 all the work you've done in Northern Ireland. Let's let's 0:09:53.600 --> 0:09:58.040 start out very simply. Why was the Leave campaign victorious 0:09:59.320 --> 0:10:02.120 in part peak US. It was a referendum on the 0:10:02.280 --> 0:10:04.599 status quo, and people who were, for one reason or 0:10:04.640 --> 0:10:08.240 another unhappy or disaffected or angry or worried about the 0:10:08.240 --> 0:10:13.120 future vented and supported the LEA vote. A lot of 0:10:13.120 --> 0:10:16.440 them were not particularly well informed exactly what would be 0:10:16.480 --> 0:10:19.200 the precise consequences. So I think it was something of 0:10:19.240 --> 0:10:22.360 a protest vote, and it was very hard for the 0:10:22.400 --> 0:10:25.000 remain camp to make a persuasive case. What were they 0:10:25.000 --> 0:10:28.280 were supposed to say? Well, things aren't perfect, but it's 0:10:28.320 --> 0:10:31.520 better to stay than it is to leave. That that's 0:10:31.559 --> 0:10:34.680 the case. That doesn't tend to get people out of 0:10:34.679 --> 0:10:39.320 their seats, much less to to to vote. So you 0:10:39.440 --> 0:10:42.600 had an anemic showing on the remain side, and you 0:10:42.679 --> 0:10:47.040 had an impassioned, if uninformed, uh turnout on the Leave side. 0:10:47.080 --> 0:10:49.120 And the rest, as they say, is history. You know. 0:10:49.320 --> 0:10:54.160 In investing in the markets, um enthusiastic ignorance is not 0:10:54.200 --> 0:10:57.000 a good way to make money, but apparently in politics 0:10:57.040 --> 0:10:59.920 it's a successful strategy. Well, except there's an awful lot 0:10:59.920 --> 0:11:03.760 of voters remorse and a lot of people afterwards. I think, indeed, 0:11:03.760 --> 0:11:06.840 if the referendum were to be repeated, it would go 0:11:06.960 --> 0:11:10.560 down in flames and if there is. There were some 0:11:10.640 --> 0:11:14.840 people who seemed genuinely surprised that this wasn't just a 0:11:14.840 --> 0:11:18.240 a pole, This was a policy vote with real consequences, 0:11:18.320 --> 0:11:22.040 and even though technically Parliament disposes, this was advisory. It's 0:11:22.080 --> 0:11:26.400 extremely difficult for British politicians to simply say never never mind. 0:11:26.440 --> 0:11:29.840 So so one way or another, bregsit in some form 0:11:30.240 --> 0:11:33.040 is likely to happened, I would say, and I'm prepared 0:11:33.040 --> 0:11:35.760 now to be called an elitist. To me, it's a 0:11:35.800 --> 0:11:38.560 real sign that you want not to be deciding major, 0:11:38.640 --> 0:11:42.040 major matters of public policy through referendum. That's why the 0:11:42.080 --> 0:11:45.600 founders of the American political system created something called the Congress, 0:11:45.640 --> 0:11:48.319 created something called an executive. The whole idea was to 0:11:48.360 --> 0:11:51.960 have representative government rather than direct democracy. And I think 0:11:52.000 --> 0:11:54.480 what we've seen in Britain is a very expensive lesson 0:11:54.880 --> 0:11:58.240 of what happens if you have direct rather than representative democracy. 0:11:58.800 --> 0:12:02.680 It's quite fascinating. Your background is such that you spend 0:12:02.720 --> 0:12:06.959 a lot of time negotiating and helping UH Northern Ireland 0:12:07.640 --> 0:12:12.000 UH broker a series of treaties with h the UK. 0:12:13.000 --> 0:12:19.559 Scotland recently voted to stay with the UK. UH part 0:12:19.640 --> 0:12:22.800 of the reason was the membership in EU. Is it 0:12:22.880 --> 0:12:26.400 possible that we're gonna see Scotland and Northern Ireland, both 0:12:26.440 --> 0:12:30.160 of whom were strong Remain supporters, say hey, you know, 0:12:30.360 --> 0:12:33.880 there's the benefits of being in the UK are less 0:12:33.920 --> 0:12:36.920 than being in the EU where we're gone from the 0:12:36.920 --> 0:12:39.120 Brits and we're going to join the continent. Or is 0:12:39.120 --> 0:12:43.040 that just wishful thinking. It's quite possible. What will depend 0:12:43.080 --> 0:12:45.520 What it will depend on more than anything, is if 0:12:45.559 --> 0:12:48.840 the British government goes ahead with Brexit, the new government 0:12:48.880 --> 0:12:52.679 under the new Prime Minister, Theresa May, and if depending 0:12:52.720 --> 0:12:56.440 on the terms there's there's Brexit and Brexit and this 0:12:56.559 --> 0:13:00.360 is this is totally uncharted waters, so we don't know 0:13:00.480 --> 0:13:03.760 what would be what will be the details potentially a 0:13:03.800 --> 0:13:09.720 new relationship between a post EU UK and in Europe. 0:13:10.040 --> 0:13:13.280 But depending upon the details, it's quite possible that you'll 0:13:13.320 --> 0:13:15.480 have a second Scottish referendum and in this time, if 0:13:15.480 --> 0:13:17.760 there is one, it would pass because people would vote 0:13:17.800 --> 0:13:20.360 to stay in Europe. And I believe there's a decent 0:13:20.440 --> 0:13:22.400 chance you will have a so called border pole in 0:13:22.440 --> 0:13:25.679 Northern Ireland in which people would vote to to join 0:13:25.760 --> 0:13:28.960 Ireland so I think that Brexit one of the many 0:13:29.000 --> 0:13:32.320 reasons I opposed. It has the potential to lead to 0:13:32.360 --> 0:13:36.640 the dissolution of the United Kingdom. And beyond that, it 0:13:36.760 --> 0:13:41.440 has the potential to tremendously increased centrifugal forces within Europe. 0:13:41.520 --> 0:13:43.560 And I just say, for those who aren't familiar with it, 0:13:44.440 --> 0:13:47.040 Europe is one of the great historic accomplishments of the 0:13:47.120 --> 0:13:50.400 last three quarters of a century. Twice in the twentieth century, 0:13:50.800 --> 0:13:53.600 Europe was the venue for great wars, for the two 0:13:53.600 --> 0:13:56.439 World Wars. The whole idea after World War Two is 0:13:56.480 --> 0:13:59.439 two so knit together, Europe and France and Germany in particular, 0:13:59.760 --> 0:14:02.920 that war would become unthinkable. We ought not to take 0:14:02.960 --> 0:14:05.560 that for granted. And I'm worried if bregsit goes ahead, 0:14:05.880 --> 0:14:09.000 depending again on the details, it could have knock on 0:14:09.080 --> 0:14:12.400 effects throughout Europe. That that makes a lot of sense. 0:14:12.480 --> 0:14:17.680 So so, given negotiations um that you undertook in in 0:14:18.320 --> 0:14:23.400 Ireland's um, if you were advising either the Northern Irish 0:14:23.480 --> 0:14:26.000 or the Scots, what sort of And I don't want 0:14:26.000 --> 0:14:30.680 to use the term elite in a negative way. Instead 0:14:30.680 --> 0:14:33.320 of saying elite is um, let's let's say educated and 0:14:33.440 --> 0:14:38.240 informed UH policy pronouncinations. What how would you advise them 0:14:38.240 --> 0:14:41.240 today given the most recent Well, I would I would 0:14:41.240 --> 0:14:45.040 wait and see what the details are whether bregsit goes forward. 0:14:45.040 --> 0:14:47.400 If so, what are the details? Assume it goes forward, 0:14:47.640 --> 0:14:50.960 So let me digress. Assume it goes forward. Are the 0:14:51.000 --> 0:14:53.320 Brits going to get a better deal with the EU 0:14:53.520 --> 0:14:55.760 or a worse deal when they're not part of it? 0:14:55.840 --> 0:14:58.880 I'm not ducking the question, the honest answers. Nobody knows, 0:14:58.920 --> 0:15:01.240 because there's a debate with in Brussels whether to give 0:15:01.280 --> 0:15:03.880 them a better deal or not too because a lot 0:15:03.880 --> 0:15:06.040 of people in Brussels feared that to give the British 0:15:06.080 --> 0:15:10.080 a better deal would create a precedent and suddenly twenty 0:15:10.160 --> 0:15:13.040 seven other governments may want their own, their own better deal. 0:15:13.080 --> 0:15:15.840 So it has to be from a game theory perspective, 0:15:15.880 --> 0:15:19.160 it has to be a worse deal than they previously had. Well, 0:15:19.160 --> 0:15:22.000 it could be a deal that would require less of 0:15:22.040 --> 0:15:24.320 them but would also give less less to them. And 0:15:24.320 --> 0:15:26.800 the real question is whether net net they would come 0:15:26.800 --> 0:15:28.480 off better. And I think if you're sitting in Northern 0:15:28.520 --> 0:15:31.160 Ireland or you're sitting in Scotland, you then have to 0:15:31.160 --> 0:15:33.920 make the calculation, are you better off in a post 0:15:34.000 --> 0:15:38.520 EU UK or you better off going out on on 0:15:38.560 --> 0:15:40.760 your own? And I think that will literally be the debate, 0:15:40.840 --> 0:15:45.400 certainly in Scotland and potentially in Belfast and beyond. So 0:15:45.560 --> 0:15:48.080 let's talk a little bit about um the stakes here. 0:15:48.120 --> 0:15:52.840 You mentioned or I mentioned an uninformed electorate. How truly 0:15:52.960 --> 0:15:56.360 uninformed were the people who were casting votes there? Uh? 0:15:56.400 --> 0:15:58.880 Did they actually know they were voting for policy? Did 0:15:58.880 --> 0:16:01.880 they think this was a poll? There? There have been 0:16:02.040 --> 0:16:07.040 some suggestions that while the Remain camp was not as 0:16:07.120 --> 0:16:10.600 crystal squeaky clean and transparent as they should have been, 0:16:11.200 --> 0:16:16.160 the Leave campaign was industrial level fabrication. How did that 0:16:16.280 --> 0:16:19.560 impact the actual I may steal that phrase, I like 0:16:19.640 --> 0:16:23.600 that industrial level there's a there's a I'll send you 0:16:23.640 --> 0:16:27.480 the link to the Scottish or Irish professor who who 0:16:27.840 --> 0:16:31.320 I'm paraphrasing him, But but that was that was his 0:16:31.400 --> 0:16:33.440 Two things. I think there's two things to say. One 0:16:33.640 --> 0:16:36.920 is that, or maybe even more than that, one is 0:16:36.920 --> 0:16:39.280 that there there were poles that came out beforehand which 0:16:39.320 --> 0:16:43.840 suggested that the factual basis, shall we say, was incomplete. 0:16:44.040 --> 0:16:47.240 People just in many cases didn't quite understand what the 0:16:47.280 --> 0:16:50.320 relationship was between Britain and the EU and so far. 0:16:50.400 --> 0:16:55.640 Second of all, there was industrial misrepresentation of the facts 0:16:55.680 --> 0:17:00.800 about the flow of money, about consequences, about immigration issues. 0:17:01.400 --> 0:17:04.000 So now it's a little bit like the hangover what 0:17:04.119 --> 0:17:06.160 you have as a as a country that went out 0:17:06.200 --> 0:17:08.639 a bit on a political binge and now has to 0:17:08.720 --> 0:17:12.359 deal with the with the consequences. And again it reinforces 0:17:12.400 --> 0:17:16.120 my instincts that you don't want to decide major issues 0:17:16.520 --> 0:17:19.959 in a democracy this way. So two other questions about 0:17:20.040 --> 0:17:22.800 Brexit that that I would be remiss if I didn't ask. 0:17:23.480 --> 0:17:27.560 Brexit seemed to be quite the surprise to too, not 0:17:27.640 --> 0:17:32.000 only the financial houses and and bookmakers, but lots of people. 0:17:32.920 --> 0:17:37.440 What other European surprises might be lurking out there. Well, 0:17:37.440 --> 0:17:39.280 it's not the first surprise we've had in Europe in 0:17:39.320 --> 0:17:41.720 the last two or three years. We had Russia and Ukraine, 0:17:42.440 --> 0:17:45.640 which how we say, was an unfortunate surprise. We had 0:17:45.680 --> 0:17:49.080 the massive flow of immigrants from Syria and the Middle 0:17:49.160 --> 0:17:52.320 East to Europe. We then had terrorism. So this, in 0:17:52.359 --> 0:17:54.240 some ways, if you added up, is at least the 0:17:54.280 --> 0:17:56.720 fourth surprise in the last two to three years. And 0:17:56.760 --> 0:17:59.880 that and what's so surprising about this is that you're 0:18:00.160 --> 0:18:02.159 for decades was the part of the world with the 0:18:02.200 --> 0:18:06.040 fewest surprises. It seemed to be the most state and predictable. 0:18:06.520 --> 0:18:08.600 But I would think going forward you could uh. We 0:18:08.640 --> 0:18:11.240 still don't know what's going to happen with Brexit. We 0:18:11.280 --> 0:18:13.640 don't know whether the countries may decide to do their 0:18:13.680 --> 0:18:16.720 own versions of of of of an exit. We could 0:18:16.760 --> 0:18:19.920 have problems once again in Greece on the financial side, 0:18:20.000 --> 0:18:22.840 or with some other country. In um, Italy and southern 0:18:22.840 --> 0:18:24.960 and in southern Europe. You know that from what it 0:18:25.080 --> 0:18:28.840 is um you do. Unfortunately, you can imagine without a 0:18:28.840 --> 0:18:33.399 hell of a lot of imagination, another terrorist problem in 0:18:33.480 --> 0:18:38.199 any number of countries. There's uncertainty about Russian intentions, not 0:18:38.320 --> 0:18:40.280 only in eastern Ukraine, but with some of the other 0:18:40.560 --> 0:18:44.520 small states that that border it. So I had all 0:18:44.520 --> 0:18:47.439 this up, and again I'm struck by if we had 0:18:47.440 --> 0:18:50.679 had this conversation three years ago, we never would have 0:18:50.680 --> 0:18:54.800 talked about Europe Old Europe boring nothing going on there, 0:18:54.840 --> 0:18:59.439 And suddenly Europe is you sense it's in play. And 0:18:59.440 --> 0:19:01.600 one of the less since I draw from that is 0:19:02.640 --> 0:19:05.440 it's more difficult to have assumptions. Now it's more difficult 0:19:05.440 --> 0:19:09.000 to have a sense of the givens. There's a sense 0:19:09.040 --> 0:19:12.720 of greater not just speed of change, but breadth of change. 0:19:12.760 --> 0:19:15.439 And I just went three years ago. I didn't have 0:19:15.480 --> 0:19:18.360 the imagination, I'll be honest with you, to see a lot, 0:19:18.600 --> 0:19:21.000 to see this coming. You know, I was just in 0:19:21.080 --> 0:19:24.200 Europe for a conference and I was astonished at how 0:19:25.400 --> 0:19:29.479 really soft the Greek economy is when you're on the street. 0:19:30.000 --> 0:19:34.439 And then in Italy, Southern Italy is is better than Greece. 0:19:34.840 --> 0:19:37.160 But Rome is like New York City. Rome is booming. 0:19:37.200 --> 0:19:39.240 It is I don't know if it's a tourist town 0:19:39.359 --> 0:19:41.640 or what I mean. We know it's a tourist town. 0:19:41.680 --> 0:19:45.320 But when you look at Rome, it is a hopping city, 0:19:45.400 --> 0:19:50.320 a very very economically active city. Makes you makes me 0:19:50.400 --> 0:19:54.640 think twice about how Italy is broken into different halfs 0:19:54.720 --> 0:19:56.680 and and why part of it is doing so well 0:19:56.720 --> 0:19:58.639 and part of it isn't right. What you have in 0:19:58.680 --> 0:20:03.080 Europe then is increased inequality. You have high levels of 0:20:03.720 --> 0:20:08.880 unemployment and underemployment. You have demographic distributions that aren't even 0:20:09.359 --> 0:20:12.280 in terms of wealth and unemployment, and you sense there's 0:20:12.280 --> 0:20:14.399 a lot of fault lines in Europe. Far right and 0:20:14.440 --> 0:20:18.040 far left policy parties both could come to the four 0:20:18.080 --> 0:20:20.639 year U asked before about surprises. That's another part of it. 0:20:20.720 --> 0:20:23.720 So Europe at one and the same time, there's elements 0:20:23.720 --> 0:20:27.280 of boom and there's real elements of fragility. And as 0:20:27.280 --> 0:20:31.320 long as we're discussing Brexit, people have tried to draw 0:20:31.720 --> 0:20:35.560 parallels between the Brexit vote any either the Sanders or 0:20:35.640 --> 0:20:40.160 Trump candidacy. Um, do you see any parallels between the two, 0:20:40.160 --> 0:20:43.000 and is it possible in the United States we end 0:20:43.080 --> 0:20:47.159 up with a Brexit like surprise? The short answer is absolutely, 0:20:47.200 --> 0:20:49.280 I see parallels. What you see on both sides of 0:20:49.320 --> 0:20:54.400 the Atlantic is widespread pushback, even rejection of important aspects 0:20:54.400 --> 0:20:59.760 of globalization, whether it's immigration or or free trade uh 0:21:00.040 --> 0:21:03.800 or or other issues. And I take the Brexit vote 0:21:03.880 --> 0:21:06.840 is something of a wake up calling shot across the bow. 0:21:07.440 --> 0:21:09.920 So much absolutely that we don't have a direct equivalent 0:21:10.000 --> 0:21:12.560 to Brexit. But again, what it shows me is that, 0:21:12.880 --> 0:21:16.399 for example, historical support for free trade agreements is just 0:21:16.600 --> 0:21:19.320 not there. What you have right now sitting in the Congress, 0:21:19.720 --> 0:21:23.320 a major trade agreement, the t PP, the Trans Pacific Partnership, 0:21:23.359 --> 0:21:25.639 involves the United States and countries and I think it's 0:21:25.680 --> 0:21:29.760 eleven other countries make up around the world economy. Right 0:21:29.800 --> 0:21:33.920 now that trade agreement is parked, I'm not sure under 0:21:33.920 --> 0:21:39.639 what circumstances it could muster the necessary UH support. And 0:21:39.760 --> 0:21:42.639 what this tells me is that here's one of the 0:21:42.640 --> 0:21:47.440 basics free trade used to be bipartisan support Democrats, Republicans 0:21:47.560 --> 0:21:49.960 and so forth. That at the moment you'd have to 0:21:50.000 --> 0:21:53.480 say not just a the juries out, but the forces 0:21:53.480 --> 0:21:57.040 are probably stronger against it than in favor of Well 0:21:57.040 --> 0:22:00.640 that that that's one of the American parallel els to bruit. 0:22:00.720 --> 0:22:03.720 I'm Barry Ridhults. You're listening to Masters in Business on 0:22:03.760 --> 0:22:07.560 Bloomberg Radio. My special guest today is Richard hass He 0:22:07.840 --> 0:22:11.120 is the President of the Council on Form Relations, where 0:22:11.160 --> 0:22:14.520 he has served for the past fourteen years. Prior to that, 0:22:14.600 --> 0:22:17.760 he has an extensive resume both in the Department of 0:22:17.840 --> 0:22:20.280 State and the Department of Defense, as well as the 0:22:20.320 --> 0:22:22.919 White House in US Senate, and is the author of 0:22:22.960 --> 0:22:27.600 twelve books on foreign relations. Let's jump right into the 0:22:27.720 --> 0:22:34.119 conversation about trade and globalization. How important is globalization to 0:22:34.200 --> 0:22:37.920 the modern economy? And I include not just wealth creation, 0:22:38.119 --> 0:22:42.920 but but job creation. Well, the answer is it's it's central. 0:22:43.480 --> 0:22:46.200 Think about it this way. We have what three million 0:22:46.240 --> 0:22:49.359 people in the United States. That's out of a world 0:22:49.359 --> 0:22:54.520 of roughly seven billion, that's four we're what twenty odd 0:22:54.560 --> 0:22:59.240 percent of the world's GDP. Another way of saying, a 0:22:59.320 --> 0:23:02.359 world g D palies outside the United States. So if 0:23:02.400 --> 0:23:05.159 we are going to sell a lot of what it 0:23:05.240 --> 0:23:08.960 is we we do has to be outside the borders 0:23:09.040 --> 0:23:11.560 of our our own country with just not a large 0:23:11.640 --> 0:23:15.280 enough market to be self sufficient. So so given that perspective, 0:23:15.320 --> 0:23:17.800 and I know it's obvious to folks like you and me, 0:23:18.320 --> 0:23:23.320 why is there so much opposition to trade? One way 0:23:23.359 --> 0:23:26.199 to answer it is that trade on occasion does cost jobs, 0:23:26.680 --> 0:23:31.720 and whether it's cheaper labor elsewhere or people produce better products. 0:23:31.840 --> 0:23:33.600 In the area of cars was a reality for a 0:23:33.640 --> 0:23:37.960 long time, so trade displaces. What I think also happens, though, 0:23:38.320 --> 0:23:40.679 is that trade is blamed for things it gets scapegoaded. 0:23:41.160 --> 0:23:43.880 So the biggest source of displacement in jobs of job 0:23:44.240 --> 0:23:48.680 elimination is not trade, it's technology. It's productivity increases, which, 0:23:48.680 --> 0:23:51.280