What’s up, everybody?
Are you tuning in to The Challenge USA?
On CBS well.
Tune in to me, Tyson Apostle, as I break down each and every episode with my co-host a milieu de Meyer.
I’m also a contestant on the show which gives you all The Insider scoop am illya.
How stoked are you to do this Tyson?
I’m freaking excited.
I cannot wait to sit my butt down every single week to watch the show.
Then come here, and recap it with you on the ringer reality TV podcast.
Today we begin with a letter from a listener.
This is Samantha from Vermont quote.
I think I have an idea for your show.
It seems like a lot of countries are falling apart.
Recently, England, Italy, in Sri Lanka have just gotten messy and unstable politically is there something going on?
Other than all the obvious?
The world is just a mess.
Hope, this helps good luck, Samantha.
End quote, folks, Samantha is really on to something here.
Actually, if anything, she was downplaying, the messy state of the world.
In that letter, we can start with the obvious.
There is a big bloody awful war between Russia and Ukraine, which has hugely disruptive global trade, especially in Commodities, like wheat, oil, natural gas.
Its fed a global inflationary crisis, Then he gets to slightly less obvious which is that it’s caused an energy crisis throughout Europe, which could certainly use electricity to power air conditioning.
Considering that the southern half of that continent is on fire and the northern half.
The continent is basically one giant swath of 100 degree temperatures this week and this energy and climate crisis has compounded all sorts of political chaos.
The UK’s prime minister, Boris Johnson is out Italy’s Prime Minister Mario.
Draghi has resigned note the conversation, you’re about to hear actually, And in between Mario draghi offering to resign.
And then actually resigning.
This is how Dynamic the resignation situation is with European leadership at the moment.
But that’s just the tip of the iceberg.
When it comes to Global instability, there are Tremors in China as the world’s second largest economy.
Fumbles through its brain-dead covid 0 policy, it’s bizarre, Crackdown on Tech a housing crisis, in Sri Lanka crowd, stormed the capital, after an economic crisis, brought that country to its knees in Japan.
Can a former prime minister was just assassinated in turkey and El Salvador inflation and in kooky Economic Policy, LED both countries to the brink Samantha’s.
Dead-on The world is a mess.
Today’s guest is Ian, bremmer.
Ian is a political scientist.
He’s the founder of Eurasia group and g0 media.
And he’s the author of several books, including his latest the New York Times, bestseller the power of Crisis.
Ian, in this episode takes me on a geopolitical catastrophe tour through Europe’s energy Market to China’s demographics to El Salvador’s Bitcoin experiment, to Sri, Lanka has everything.
And in the end, we consider the meaning of this.
In economic history in geopolitical history.
Why this feels like the true end of an era and the beginning of something else?
I’m Derrick Thompson.
This is plain English.
Welcome to the podcast.
Earth could be with you.
So I feel like we’re seeing these scattered nervous.
Breakdowns around the world and I’d love you to help me understand and unpack some of them.
And then after we do a tour of this sort of global mess, I think maybe We can pick out a couple themes that we’re seeing.
Because while it’s conceivable, that every unhappy country is unhappy in its own way.
I think that some of these scattered political economy, nervous breakdowns are actually connected and that there is an underlying theme Here.
I completely agree with that.
So we’re on the right track.
Let’s start with your up.
Maybe a good place to start.
Here is the news that has some American Travelers cheering and some American multinational companies.
Worried, which is that the euro is plunging.
If you’re an American Family by a pool and grease, the spanakopita is cheat.
This is bad news.
If you’re trying to sell stuff to Greece and it seems to reflect bad news about the entire continent.
So why is the Euro crashing?
And why does it matter?
Let’s back up, has been cheap for a long time.
Even within the Eurozone, Greece has been its own trouble point, but and I just felt like repeating that because I was so excited about You getting right into local flavor but the Europeans are when you have this kind of global instability and volatility you get a flight to Quality you don’t, you haven’t, you know what they say risk on and risk-off behavior.
People are engaging in risk-off Behavior.
They are more concerned about ensuring that their money is safe and less concerned about how big of a return the necessarily getting.
And in that environment, the United States dollar and the US has an economy becomes much more attractive writ, large Europe, is more vulnerable, particularly because with a war going on, on the European continent, this is remember, I mean, we had a peace dividend for 30 years when the Soviet Union collapsed, there was a view that the Europeans no longer had to spend on defense and instead, Could focus on social contract and democracy and rule of law and, you know, all sorts of things that make European societies attractive, but not really focusing on defending themselves.
Well I mean now not only are they going to have to devote an enormous amount of money towards spending and building up the defense capabilities that ignored for 30 years but also they are physically cutting off Russia.
Ah, from the the G7, the advanced industrial democracies the economy.
Now it’s true.
The Americans are sanctioning to but we had virtually no trade and investment ties to Russia when the Russian oligarchs are getting hit.
You know, where do you think they were summary?
It was mostly, you know, on the Spanish coast and on the Riviera, and how many of them have, you know, sort of massive have mansions in London.
They were talking on EU but Europe, but still, this is a big hit.
Then there’s also, of course, the direct trade, the agricultural trade trade and particularly the energy, export and the energy export, I mean, to the United States, there was a marginal amount of oil from Russia coming to the u.s.
It was irrelevant to the US economy.
If the Russians completely cut off energy to Europe, or if the Europeans cut it off from Russia, you’re looking at an immediate contraction of probably Three percent of the entire Eurozone, right?
And so even though that hasn’t happened in entirety and Toto, there have been major disruptions already.
There have been significant sanctions already and if the Russians know that the Europeans are trying to diversify away from Russia as fast as humanly possible, if your Putin are you going to sit there and wait until the Russian to the Europeans, cut you off?
Or you going to take some of that leverage when winter is coming and you can cause Pain and you can maybe get something for it, politically, you can get anger on the European streets against European leaders have that have been calling for sanctions against Russia.
And Putin is not stupid.
He may be in temperate, but any any May lack judgment but he nonetheless understands where his leverages.
So, all of those things are playing into a Euro that has lost a significant amount of Confidence from investors around the world over the last four months.
And I’m not the sort of person who believes in Karma, but there is something at a sort of geopolitical level, that is karmic about this, the Europeans making this deal with the devil, or this deal with an autocrat in terms of their dependence, on Russia for energy and then waiting until the moment that Russia invades Ukraine and say up, no, we suddenly going to take a moral stand.
We’re going, we’re going to cut you off exposing themselves to this level of blowback from Russia.
Which as you just said, could according to the IMF cause a recession as deep.
A percent of GDP for the entire EU.
It’s really remarkable looking across EU statistics, just how bad things are.
It was just reported this morning.
That Eurozone consumer confidence, plunged to its lowest level on record.
Energy prices obviously are absolutely ghastly right now.
Which sucks if, you know, for AC units, temperatures over 100 degrees and much of the continent, that’s really difficult.
I want to ask how this connects to the political headlines that we’ve seen in the last few weeks.
So the prime minister’s Of the UK and Italy, both recently announced their plans to step down Boris, Johnson, and Mario draghi will see if they do draghi and Italy is walk back.
His announcement to to resign.
There’s lots of fear in Germany about a major recession, how much of these sort of political instability that’s happening in Europe and the UK right now.
Do you think is primarily about inflation and energy versus about something that’s just locally strange about those political institutions?
I think that in the case of the UK, it really has been the domestic scandals that are the and they’ve been so many of them.
I mean Boris Johnson has just had a shambolic period of leadership.
He was the one of course that drove brexit.
It has been a dog’s breakfast in terms of implementation as well as the impact its had on the UK economy on.
Aber outflows on Capital, outflows greater inflation in the UK than in the EU challenges with trade access.
I mean, all of these things are deeply problematic for the UK.
And then Boris Johnson has just been caught in lie after lie after lie and unlike in the United States and the United Kingdom that actually matters employee.
So I mean he’s gone and he’s not coming back and in relatively short order will have a new prime minister in the case of Italy there, Question that the economic challenges have made it harder.
I mean, that is why you saw a willingness of the right wing in Italy to challenge.
Mario draghi for economic reforms.
He’s been trying to push through and he then said okay well if you don’t have confidence find out and he said I will come back but only if you are prepared to completely support the policy that I’ve been driving and we’ll see if they do.
But I mean, Mario draghi is, I mean, he’s a fantastic leader.
He is unique in Italian governance.
In terms of The credibility has across the Eurozone and globally, but he is leading a very, very diverse group of parties in governance.
And he’s not going to be there for much longer anyway.
My best he gets another year and then Italy is back to very, very messy repetitive, you know, sort of year, after year, after year, different governments that can’t do great.
Extremely unstable economy.
I was just looking at the IMF which came out with worst-case GDP scenarios of Russia shuts down the gas supply, to all of Europe of all the countries that I saw that would suffer from this.
You know, Frances economy would project you declined by 1% Hollen declining by 2% Germany, declining by 3%, no one touched Italy, a projected decline of 6% which so you’re looking at political leadership above an economy.
That is Audibly fragile to what might be coming down the pike, just one professional and dependence.
Where France isn’t and perhaps isn’t in large part because you mentioned before, isn’t this karmic?
Not for friends.
Because France actually gets the vast majority of their electricity from domestic nuclear production.
Now, they have problems right now because 50% of their nuclear reactors are offline for maintenance, or for corrosion, which is a huge problem.
There have been demonstrations and macrons own As lost popularity because of that.
But it’s not karmic because the dependence on the Russians.
As you say, a lot of these economies have shown that they have the ability to fail in their own unique way.
One More Country That I want to hit in Europe before we travel, several thousand miles to the East Germany.
There’s a lot of here in Germany of a major recession.
I’ve read a couple analysts saying that they’re very concerned that the situation in Germany.
Could turn very, very - very soon.
What are you seeing out of Germany that people should pay attention to?
It’s about Gasps, and it’s about winter coming.
And the fact is the disruptions that you’ve already seen from Russia to Germany.
In terms of gas has meant that they haven’t been able to fill their reserves to the levels required.
That would give them some buffer if they get shut down in the winter.
Now, I will tell you the Germans are very aware of the challenges that they have.
They weren’t under Markel, they are today and they are doing everything they can, if there’s a lever that they can pull.
To reduce their dependence increase their resilience.
They are pulling it, they will be there diversifying where their natural gas comes from their signing deals with Qatar.
They’re getting some support from the United States.
Reconsidering their position on nuclear as well.
It seems you don’t know how strong heavy is reconsider.
I think they’ll probably extend the life of three existing nuclear plants as a consequence of that, you never would have gotten that from the greens before.
They’re taking greater member measures on efficiency.
They’re, you know, they’re trying to reduce Zeus industrial usage.
But also from those companies that have more energy than they need, they’re trying to paint them.
A significant amount to have them reallocated to the industrial companies like BASF and Siemens that desperately needed can transition.
They’re moving gas to oil and companies where that’s possible literature and, and they’re increasing their, their renewable energy, use and infrastructure.
They’re doing all of this.
It’s not enough and it’s not fast enough as well.
It’s not fast enough.
I mean, Again, with by 2024, the Germans won’t need Russian gas and more.
So I mean, from a Russian perspective, this is a disaster because all of their infrastructure, all of their trade had been oriented right towards the west.
And it is going to be cut off and it’s never going to come back and they’re, you know, they’re their assets have been frozen and it’s a big problem for them.
But in the near term, that’s a long-term issue in the near term.
The Russians are minting money because Energy prices are high, and the Europeans using in part.
Ukrainian pipe are actually funding the Russian invasion on Ukraine.
I don’t want to be mr.
Sunny side up here but there are a lot of very cold nights and very hot summers coming for constant.
So Europe between now and 2020 for or the mid-2020s, when they’ll establish a little bit more energy Independence, but can you see a scenario where say 10 years from now?
We look back at the russian-ukrainian war as an extraordinary inflection point, when it comes to the decarbonizing of the Grid in Europe.
Maybe also the u.s. fingers and toes crossed.
And this moment when people got religion in Europe and realized exactly how much they would have to build to stop relying on a crazy autocrats, the East and start building their own infrastructure.
First of all, the Europeans were already ahead of the rest of the world in terms of decarbonization, in terms of moving towards Renewables, and this is further stimulating that.
Now in the near-term, the Germans are going to use more coal than they were last year.
So there is going to be that Blip.
But 10 years out, 20 years out.
Yes, this moves them faster but for the developing world’s, it does not.
And, you know, there’s or the developing world as you probably know.
India has vastly increased their oil purchases from Russia at a 30% discount.
The the Chinese have increased, they would increase it by a lot only by a little because their economy is not growing very much.
They don’t have the same level of demand that they would have expected.
But still it’s increasing.
And I would argue that actually from the developing, Perspective.
The Russia Ukraine war doesn’t help you one bit in terms that is so I had not put that together.
Honestly, I, I knew about China and India, basically buying the bulk of the oil that Russia was in selling to Europe in the west and I was optimistic about the carbonization prospects within Europe, but I didn’t put that together that you’re totally right and the parts of the world that are growing fastest that are most populous.
This might not be a positive inflection point at all.
That’s very in.
Hindi is expansion of oil purchasing from Russia since the war started is 2000%.
I mean, it’s from a low base but they’re now getting as much oil from Russia, as the Chinese are and their Net Zero plan.
When carbon emissions, go to zero in India, 2070 and they have literally no plan on how they’re going to get there.
This is the most populous country in the world.
Let’s go to the second, most populous country in the world, which is China.
We just got a report out of China and economic statistics and China are always This with a grain of salt but youth joblessness is up to 19 percent.
That’s a record.
Shanghai is GDP last quarter collapsed, no surprise.
The government put everybody under house, arrest to stop the spread of covid.
You cannot have an economy when no one’s allowed to go outside.
June home sales in China, felt 23 percent annually, you’ve talked about a blooming banking crisis.
In rural China, I mean, we haven’t seen this.
Like China has been growing so fast for most of the last 25 years that It seems weird to ask this question, but is China going into a recession is China in a recession right now.
Remember China back in 2020 was the only G20 economy that actually grew in the teeth of the pandemic when everyone else was suffering, massively and rolling shutdowns, the Chinese lockdown in the first quarter hard by may, they were open.
They were at work.
There were at nightclubs and the only other major economy that group in the world, in 2020 was Vietnam, right?
So I mean, let’s all Also remember that they had their upside but they’re now suffering badly because as the pandemic change their policy didn’t change, and you can’t lock down effectively and track and Trace effectively.
When you’ve got a disease that is, as transmissible as measles, and especially when you have 80 year old plus population, that hasn’t been adequately vaccinated.
So China got complacent and now they’re suffering.
Now, the economic, the willingness of the Chinese to suffer economically to ensure, they do not Overwhelm their hospitals and have 125 million.
Chinese citizens dead is enormously high and, and they will do that in 2022 and 2023.
And if that means that you get two or three years of deeply, substandard growth, we could be looking at a to handle on growth, in China this year compared to the five point, five to six that was expected by the Chinese, the IMF, the beginning of the year before the Russian invasion.
And before zero covid became a massive problem.
My God, you know, that’s a very big deal.
It’s a big deal.
For the global economy it’s helping keep Energy, prices lower, by the way, I mean right now markets are being driven more on oil in the last few weeks on the basis of China under extra growth.
Then, then Russia Boy comes you just?
So and which I mean, you know, actually made the Biden trip to the Middle East, a little bit, less contentious, less problematic than it would have been if it had been a month.
Six months six weeks before with oil prices, gas prices are already coming down.
But you know if we’re looking At the challenges that the Chinese have 40 covid for reduced productivity with a population that is now shrinking.
According to the latest data from the Shanghai Academy of Sciences, which I found very startling.
This was this was not supposed to happen for 10, 15, 20 years, and actually, shrinking of the population.
So, this is, this is very worrying.
And we’re going to hit population.
Actually, in just a second.
Let me just, let me just jump in here because it’s such an interesting point.
I had not connected the The fears of Chinese recession as directly to the decline in oil prices, but of course that it’s an enormous source of demand for oil.
So as their prospects for growth declines, so, will the price of oil in the last year?
You mentioned this China’s pursued, a bunch of policies that strike me as very strange individually and borderline crazy in the aggregate.
You mention that?
They’re pursuing this extreme zero covid policy in a world with a variance.
Just keep getting more transmissible.
And we’re now, at measles level of transmissibility.
I’ve compared this before.
The podcast to like the covid 0 is already very hard policy.
This is already like trying to scale Mount Everest and doing covid. 0 with out, the MRNA vaccines is like, trying to scale Everest and saying we’re to do this without oxygen masks.
Like not only is it incredibly difficult but also you’re taking away your single best tool in order to approach it.
They don’t want their hospitals.
Filling up with seniors that are dying and have severe illness.
Of course, I wouldn’t want that for any country, I don’t want it for ours, but the single best tool that we have for reducing.
Fear illness for the elderly is mRNA vaccines which were developed in the west, so it might be a little bit of geopolitical competition there and antiviral drugs, like packs livid from Pfizer that has done a remarkable job in the US of Bringing Down the fatality rate.
So you have that incredibly strange policy and you can pound it with this bizarre, Crackdown on the consumer internet.
My friend Noah Smith has written a bit about this, but this is involved going against companies that were really some other Global Darlings like 10 cent.
Involved disappearing, several prominent Tech billionaires in a way.
That certainly can’t be good for encouraging other.
Smart people to move to China and start companies.
They’re like, why would I want to start a company somewhere where success carries that level of risk?
In the biggest picture here, I’ve made the table rather fall.
What does it say about China’s State capacity about its capacity for decision-making in Beijing?
That is pursuing such bizarre strategies, that are affecting their growth this way.
Well, I will say that the Chinese Communist party and its leadership is much more meritocratic and orientation than you see, from most authoritarian States.
I mean, in Russia, if you go and meet bureaucrats that our senior in various Ministries, they are some of the least capable you would see in any economy remotely close to that size.
It’s a disaster in China.
That’s not true.
These are people that are very capable.
They are well educated.
They Management experience.
They have been proven to succeed in lower level positions of executive Authority and that allows them to become promoted.
So I mean they do have human capacity inside the leadership of the party.
They are aware of a lot of the major economic challenges that they’re confronting right now, but they have a very different view of the trade-off of economic growth and productivity with political stability of the country.
So For example, one thing you didn’t mention in terms of China’s Crackdown on consumer internet, I thought you were going, there is they decided that they were going to not allow under 18 year old Chinese to be on video games for more than 2 hours a week and you don’t use them.
You lose them and first they had password systems but people were getting around them and then you had to input like your you know your national ID and then you’re bothering powering your brother, your sister, and then they use Biometrics and now it’s working.
Um, and I got to tell you, there are a lot of parents in the United States and in Europe that which the United States had that kind of political capacity.
Because I mean it is let’s face it, it’s not a productive way for young people to spend time.
It can create a lot of addiction, a lot of fun, we a lot of concerns of self and security and a lot of suicide and the Chinese have decided that they’re just going to take that on.
Now they’re doing that not caring.
That there are a number of big companies out there, both Chinese and American and Global but just aren’t going to have a market and trying anymore.
In China’s perspective is we don’t care.
We’re going to ensure that we are focusing on the people and, you know, they’re zero covid policies.
It’s like you only have 2% growth.
We don’t care.
You the Americans and Europeans have allowed a million Americans and Europeans that you tell us have died.
And in reality The Economist says it’s probably more like three to five million in both places.
So I mean, the Chinese look at that and they say you don’t value your elderly, you don’t value your SEC, you know, you, you you sheath that in the ideology of personal Liberties but in reality, it’s irresponsible and we, the Chinese are we do care now that argument goes only so far.
It is a real argument and I’m pushing it back because you didn’t offer any of it, but there is f the same side.
The fact that the Chinese have access to Western m, RNA vaccines and refused to license them and that is a crime against humanity environment, in my view.
I mean, literally I’m and I think it’s worth putting it at it.
Is, it is a, it’s a crime against the Chinese people and they also have absolutely in arbitrary and capricious ways gone after technology leaders in China because they have found them to be acting in ways that counter the Orthodoxy of I wished, she Jinping thought and they won’t tolerate it.
And if that means that the economy is not going to grow as fast and we’re not going to get as much Innovation.
So be it, they don’t care.
They prioritize these things differently, I will say that China is also at the same time.
Investing a ton of money into semiconductor development, a ton of money into national champions driving artificial intelligence applications for smart cities, a ton of money into Double Technologies for energy, like solar electric vehicles, and batteries.
And the supply chains that so much so that the Americans increasingly worried that the u.s. is going to fall behind in China, might become the post carbon energy superpower.
So there are competing narratives here and for all of the ways that the Chinese government desperately falls down, there are huge political dysfunctionality.
He’s in the United States as well, that you, and I could do a whole different part of.
It’s an absolutely fascinating balance.
A virtues, because the us, as you mentioned, has entirely different attitude about toward personal Liberty toward the concept of Freedom.
So, of course, Americans Value Health Americans, value, psychological health, and the happiness of our youth, but we don’t go to the extents of say, shutting down City like Shanghai for that amount of time with that level of draconian, Precision, for the purpose of preserving Health, we don’t go So to the extent of using biometric data to ensure that people under the age of 18, don’t get addicted to video games.
Your it’s a very interesting different balancing of Virtues and and I think I think it’s interesting to see it that way.
The last question I have for you about China is about demographics which you’ve already mentioned.
China is running all these experiments in the foreground.
You could say the consumer internet Crackdown is an experiment.
The biometric access to gaming is an experiment zero covid is an experimental.
And then in the background, the running the mother of all population experiments in 1990 China had four times as many children under 10 as people and over.
Sixty four times as many children under 10, is people over 60 by 2050 that ratio is expected to flip.
Exactly China is projected to have four times as many people over 60 as children under 10, this sort of demographic somersault has simply never been done before.
I think as a species, it’s a total inversion.
A population, boom, slamming into a fertility crash.
How worried are you about this potential demographic crash in China?
And the potentially it’s Ripple effects throughout the world.
I’m reasonably worried.
I also think it creates opportunities.
I mean, there’s no question that if you want a more sustainable planet, At the macro level, you don’t want to head fast towards 10 11, 12 billion people.
And you know, Africa’s population is still exploding and a significant contraction in China’s population will help to counterbalance that for Global sustainability, long term that does matter, right?
I mean, if you want to be at 1.5 tour 2 degrees Centigrade warming as opposed to 2.5 or three, you’re talking about the difference of hundreds of millions of of lives and you’re all talking about tens and tens and trillions of dollars and that matters.
So I mean China’s demographics do feature into that.
I also you know there’s a question it’s Japan is navigating and South Korea is navigating a population contraction pretty well but these are very wealthy countries that also have very robust social safety nets and I have relatively limited inequality in their populations China is going to have to navigate and even Sharp contraction of that population as a middle-income economy with much less of a social safety net, but with much more capacity to through technological surveillance and repression to offer carrots and sticks to induce behaviors in their population, that would facilitate more alignment with the government.
So they do have by virtue of that more of a buffer against political Ability.
Even as their economy starts to collapse or Shrink or flatten out depending on how you know sort of.
Do you think these scenarios are compared to the United States that has a very robust economy but has the completely imploding political system.
So it’s again a very different dynamic between the two countries going forward.
Now I do think that if you’re talking about the worst case that you saw from Shanghai which is That actually, the Chinese don’t max out in population, in 2028 which heretofore have been the expectation, but rather they maxed out last year and they contract and that contraction grows.
And it doesn’t matter that you’ve moved to a three child policy from a two-child policy for one child policy.
And, it’s gonna be very hard politically for them to open up to massive immigration culturally, they’ve been very opposed to it for a very long time.
All of those things, remain.
Then one thing I will tell you Is that there is no Chinese censure.
A second thing I will tell you is that it’s quite plausible that China never becomes the largest economy in the world.
I mean, they might normally for a period of time for a few years, but the idea that everyone had presumed that, you know, come 2028 2030 whenever it is, they become the largest economy and it’s off like a rocket and then they’re just going to literally dominate the global economy if they’re heading towards 500 million people, you know, within 100, which is, by the way, roughly where the United States is likely to be.
At that point, you were not talking about a China dominated global economy.
It’s not remotely close to being where we’re headed.
That’s such an interesting way of thinking about it.
I do you see that the people that you talk to whether and when they’re Americans and they look at the likely shrinking of the Chinese population and the fact that there will be no Chinese Century that there will be no long epic where China is the most Powerful country in the world.
Does it make them optimistic about the US?
Did the US will still be the, the big gorilla in the room that’s able to to dominate the global scene to have the largest consumer economy.
The people want to sell into or immigrants, want to move to, or is there a kind of fear that like that as China recognizes that they are sort of at the Twilight of their rise that they might start to act?
They might start to do things to, to reclaim the vision that they thought they were entitled to when people were talking about China as the inevitable King Kong of the world, like, is it, do you see it going either way?
Or do you have like a clear sense that that there’s One Direction it will go?
I think it depends so much on the leadership of the country.
I mean, you know, the level of risk acceptance of a Putin compared to Xi Jinping is significant and I think if she Asian ping had been occupying, the Kremlin back in February.
You wouldn’t have had all those troops streaming and to Kiev you instead would have probably had a decision to just go into the Don Bas and response to the claimed genocide against the Russian people, and they probably would have won that incrementalist, you know, sort of land.
Grab a very different kind of revisionism on the geopolitical stage so I don’t see she’s Jinping.
The kind of leader that suddenly going to roll the dice on an amphibious assault into Taiwan, that puts at risk.
The core semiconductor producer, not only for the United States, but for China to, you know, again risking the complete implosion of their economy and also Xi Jinping is leadership and Legacy, I think it’s very unlikely, he would do that but might he feel the same way in 5 or 10 years?
Time absent term limits.
If China’s economy is doing materially, A worse.
If major social unrest starts to become a significant issue or is the, is the dominance of a Chinese surveillance Society empowered by the technological sophistication of these companies that are aligned with the government in providing data to real-time data, to the Chinese government.
Does that allow the Chinese government to feel insulated from political instability?
I mean, you know, I remember reading Tom Friedman, 20 years ago, 15 years ago, Talking about demonstrations, in China and saying that this country is going to collapse because the people are going to be so angry.
Well, that just didn’t happen not even close.
And I mean, you know, they literally put a million uyghurs into concentration camps and you don’t see major demonstrations among the uyghurs that aren’t in concentration camps because they are existing in a pen Optical.
And so I think we shouldn’t underestimate the power of the Chinese state to ensure their political Call survival, even through what is likely to be a very deeply challenging economic period.
I’m looking at some of these countries that are suffering a bunch of different kinds of economic crisis.
Its name a few, we’ve got Sri Lanka, import dependent country, they ran up massive debt and just had enormous demonstrations at their Capital.
There’s turkey where inflation is soaring right.
Now, there’s El Salvador, which tried this weird thing with Bitcoin.
That might not even be worth going into to help sort of spring their economy.
But that hasn’t exactly worked is the price of that cryptocurrency is declined by 70%.
When you look at the problems that various countries are having it seems somewhat related to it seems to me Rising Global inflation.
Do you see these?
These kind of economic crisis is being tied together by some theme of 2022, economics, or to a certain extent.
Are we just seeing business as usual on the global scene that there are always countries that are rising and falling and crashing?
No it’s obviously a period of much.
Much greater volatility right now and the developing countries are shouldering a much greater level of that burden.
Now, part of that was the pandemic and the whipsaw lockdowns and then massive expansion of demand that led to supply chain challenges.
That got you a lot of inflation that we have right now.
Now, if you are a major consumer Commodities producing economy in that environment, you doing well, I mean the Saudis are swimming in cash right now and even though lebanon’s in a lot of trouble They have the grace of being close to a lot of countries that are making a lot of cash that our willingness provide them more large as Egypt.
Also largely looking like, they’ll be a better bail out for them because they’re going to get some of the crumbs that will come from, this explosion, in fiscal, balances, in the Gulf over the last several months.
But forestry Lanka, you know, or for a Peru, you know, for a Columbia.
I mean, these are, these are countries that are in our turkey is a countries that are in a lot of trouble.
And they’re in a lot of trouble.
Because, I mean, they had a really challenging to years of the pandemic where they had to dramatically expand their, their fiscal outlays, which means their indebtedness went way up.
They have to service that now, an increasing interest environment credit is getting more challenging for them and yet their populations are suffering greatly because you’ve got food and energy inflation.
On the street and this is how you get the Sri Lankan government which was one of the worst in terms of Economic mismanagement and Corruption.
They fall first but there will be others and lots of these countries are under an enormous amount of pressure right now.
Last part of the world that want to talk about, you’ve mentioned it before but I can’t let you go before.
I ask this question the Russian Ukraine war right now, it seems to me and followed it really, really closely for several months.
And then only somewhat.
Closely for the last few months to be a real stalemate in the donbas, a real stalemate in in eastern Ukraine.
And I can see one scenario in which presents Alinsky of Ukraine.
Essentially makes a determination that he can throw tens of thousands of people into the donbas.
But fundamentally, there’s not going to be a whole lot of movement, one way or the other.
And so maybe that’ll draw them to the negotiation table to find some kind of deal, or maybe this is a kind of Reg Warfare for the 21st century Outlook?
Where Ukraine doesn’t want to give up territory?
They’re too proud.
Putin is already put way too much on the line to draw back.
And it just continues like this death, after death after death, even though no one really moves the line of who’s controlling, what in eastern Ukraine.
Is there a particular outcome here that you consider more likely?
I think that what I’ve spent a lot of time on this issue over the course of my life.
And also I’ve met with a lot of ukrainians over the last few months.
And I mean, I will tell you that they feel as if they have, they are going through a genocide.
I mean that the Russians have attempted to wipe them off the map, the millions of refugees the hundreds of thousands of ukrainians that have been forced through filtration camps in Russia.
The tens of thousands of war crimes, the torture, the rapes, the killings of innocent civilians.
Not just of combatants.
I mean you have to understand that for forty, four million ukrainians, this issue will scar them as the most important of their entire lives.
And so the idea that they are somehow, then going to sit down and negotiate away a large part of their territory.
To the Russians who have a massive military and they fully expect, we’ll come back for another bite.
That ain’t happening.
So I don’t believe that you’re going to get any form of breakthrough.
Agreement in negotiations.
I agree with you that we’re heading towards for the near-term future.
Something that feels like a frozen conflict because the Russians haven’t done a general mobilization, they’re just going to run out of troops and ukrainians don’t have the capacity to seriously take a lot of territory back, so I’m Beyond whether the Russians can take all of the Don boss but whatever piece of the done boss.
They take plus the land bridge to Crimea, you know, plus you know, say her son and zaporizhia.
I mean these are territories that they will continue to occupy.
They’ve been utterly destroyed.
They’ve largely been denuded into populated of the ukrainians living there and the Russians will likely an ex them.
Once that happens, it is inconceivable to me that you can create a piece in the force.
Seeable future with Ukraine and it’s also inconceivable to me that Russia can be brought back into the community of Nations among the advanced industrial democracies.
So I mean Ukraine is a loser here of course, because of what they’ve had to go through.
But Russia’s and even bigger loser and it’s important to recognize right?
You cry, both losing lots of people.
Ukraine is very likely to lose land, at least some land, her son elements of the donbas, but you’re right in the larger, geopolitical picture, Ukraine, to a certain extent, Become significantly more folded into the European continent.
Into the EU economically integrated in a way that for Russia.
Exactly the opposite is true, more alienated politically more, alienated economically, and it’s not entirely clear to me though.
It answer this question.
It’s not entirely clear to me.
How Russia’s relationships with countries like Iran and China have evolved because of this conflict.
Have there been major changes in Russia, should have, you know?
Aang, what Anne Applebaum at the Atlantic, a sort of discussed to sort of, you know, the league of autocrats have his, they’re standing in that League changed dramatically.
Because of the last six months hasn’t changed dramatically the developing World across the board.
Whether autocratic or Democratic continues, large to do business with the Russians, the way they have and if Commodities are cheaper, they’ll buy more though I mentioned while India is buying a lot more oil from Russia, they are cutting some of their defense agreements with Russia because they understand that Russia won’t be able to provide spare.
Except Russia is going to have a real deficit of semiconductors.
They won’t have a manufacturing capability to losing a lot of talented labor.
And so, you know, Russia had been the second largest military exporter in the world after the United States that just won’t be true in three or five years time.
So that’s a problem.
But Russia’s relationship with China is a relationship of very unequal Partners.
Russia’s economy is about one-tenth that of China and China treats Russia that way.
So I mean, they’re happy to have access to cheaper stuff.
But the Chinese want to continue to head do business with the Europeans, the Americans, the Japanese, and the rest.
They these economies are very integrated and so the Chinese are not breaking Western sanctions on Russia.
They’re not providing direct military.
Support for the Russians.
The way the Iranians might be because the Iranian worldview and the Russian of the world view are virtually identical.
Both of these are Pariah Nations for the West that have been very, very heavily sanctioned basically severed from the G7 economies.
That’s not True at all for China and isn’t going to be.
So in that regard, I would say there are limitations to how close they’re going to get.
Last question for you is about the theme.
What is the theme that we’re talking about?
And if I’m taking the biggest picture the alien side view of the last 50 years I’d say the last half century was defined by a period of globalization reduction in poverty.
The emergence of a global middle class that was disproportionately Chinese, but With the pandemic with the Russian war, with the threat of China, becoming a little bit more authoritarian, valuing, a certain definition, as you put it of political stability over an expression of human Freedom, high levels of inflation.
Certainly the, for the next few years, we’ll see what happens for the rest of the decade various forms of populism.
Cropping up, something is changing.
We seem to be at some kind of inflection point for globalization.
Even if it isn’t totally obvious that global trade is, you know, absolutely falling off a cliff.
How would you characterize?
The era that we’re going through right now?
Yeah, I would say we’ve gone through after 50 years of globalization, being led by the United States and its allies.
You now have a period where globalization is adrift.
It is not being Unwound but it is adrift.
So the United States I mean you continue to see pockets of globalization and then you see these pockets of D globalization.
So I mean under Trump for example you had increased tariffs against the Chinese but you also have the phase one China trade deal.
You had increased tariffs against the Europeans, but you also had USMC a which is a more advanced trade deal than NAFTA was.
You had the u.s.
South Korea deal got done but you had increase tariffs on John Canada.
So I mean you know actually the net-net between the Trump Administration was you know they got out of TPP but they did some other stuff was probably maybe a little bit more.
Net globalization I would probably argue but not much and underbite and I see Little things.
You know, I mean I just saw a trip to Saudi Arabia which was, you know, trying to engage more with the Middle East.
I just you know after saying he wasn’t going to do that.
They can’t do Market access but they’re promoting an indo-pacific trade framework, which actually does create more alignment on common standards on climate, on technology, on data.
I mean, I saw the reduction in tariffs on steel and aluminum between the Americans.
And the Europeans I haven’t seen He much on that front with the Chinese.
So I mean this is not a story of D globalization globalization would be the United States ripping up deals with the United States.
Not just saying we want made in America but actually doing it right?
That’s not happening.
What’s happening is you went from 50 years of the US and allies driving more Market access more, global, economic integration, you know, more efficiency and and as a consequence Growing Global middle class to one where no one’s leading it.
No one steering it.
That’s what’s happening is globalization adrift, that’s where we are.
And if this is the u.s. no longer driving globalization, but allowing it to sort of flow in a drift manner, is the reason why we took our hands off the steering wheel so to speak, is it because of a kind of homegrown skepticism about how much globalization was really working out for The middle class of the Rust Belt, was it a sort of skepticism about disposition toward openness in the world?
This would have preference for America First.
This would aesthetic preference for America First rather than an openness to ideas outside of America.
What’s the motivation for Trump’s America?
First, and Biden’s foreign policy for the American middle class fundamentally speak to the same issue?
I mean, both both sides of the political Spectrum, understand.
That you’re not doing multilateral trade agreements in this environment.
Because the US has the highest level of inequality of any of the G7 economies.
Because for 50 years, you have the growth of an extraordinary, Global middle class, which a great thing and you had an agreat increase of wealth in the top level one percent.
But the United States at a macro level did very well shareholders did very well but that the middle class in the US and in France, and in the UK, and in so many wealthy countries around the world, basically got hollowed out and that’s how you got brexit and that’s how you get the United States.
Saying we no longer want to be the architect of global trade.
We don’t want to be the policeman for the world.
We don’t want to be even the cheerleader of global values.
That is a direct consequence, not of globalization failing, but of policymakers in advanced industrial, democracies refusing to take steps to redistribute wealth inside, their own countries on the basis of some of the inequality that was driven by.
Globalization in grammar.
Thank you so.
So much for flying around the world and explaining all this mess.
I really appreciate it.
And we’ll have you back very soon.
Have you lived here?
Thank you very much for listening.
Plain English is produced by Devon man.
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