1913 good value for go i have to pull the punch bowl. [laughter] [applause] [inaudible conversations]

>> how many are from the boston area? have any of outside of boston? capitalist? how many people think they will invest in asia? [laughter] that's why you came. so you have two very distinguished authors here and individuals will introduce the briefly and then we will get back into the background in the conversation.

and going to college at trinity then later did a number things the journalistic area started his own magazine worked at the washington post for many years is still a columnist and for his writing since he won the pulitzer prize now the robinson professor of public affairs at george mason and this is in addition to writing books. and to his right he lives in singapore and flew it all for this event more or less. [applause] he grew up in many places around the world and is a

graduate of georgetown university and then the phd at the london school of economics and has written many books of global affairs and now gives strategic advice and that to esquire magazine said not too long ago he is one of the 75 most important people in the 21t century. we'll see if he can live up to that at some point. [laughter] your book has an exciting title. kit american capitalism survive. the answer is. >> sure. [laughter] it will survive but whether it will continue to be the richest country and have the

most vibrant and innovative economy the last social and political institutions is not a given. >> your book does point out we have a lot of challenges social mobility issues and things like that. why are there not riots in the street why aren't as people upset as you think they should be? >> but they word have experienced the ruthless and equal and unfair capitalism that we have. is not bad enough first of all. but the election of donald trump that they are pretty unhappy and they are willing to lash out.

so that's a good indication we are not too far. >> what type of capitalism do you like better? >> i think swedish capitalism is a little bit better. more than european. a little more humane and economic security. and i have as many financial crisis and they don't start as many. >> very high taxes. people now moved to avoid them. >> they used to but the story you are telling is really 30 years old when they did. and then they realized when the tennis player moved to monaco they reduce them. the tax burden is about 50 percent hours - - ours is

about 35 percent but for one thing they get their healthcare which is almost 18 percent of our economy. 9 percent of that is private. nine-point of that 15 percent could be accounted for by health care they also have free childcare mostly free education including higher education so they get more for that and they seem to like that. not that we have to do the same but that's where the politics and culture take them. >> so they have the highest happiness index. >> ours is pretty low for the industrialized countries if you factor in that we are richer so now talking about

asia it was the center of the world. >> if you think about where we are 50 percent of global gdp. and then if you think about the growth rate. >> how do you take that over as a dominant economic power in the world xp making with the rise of european colonialism but there are two episodes that i look at not only in world history but how they think of those episodes. the way that being dynasty and the indian ocean is africa.

and that then with portugal looking at the indian ocean space but and just how successful how they have been and then the ottomans and how that motivated the europeans without routes to asia so that enabled the rise of the left or that they should not retreat from their now political commercial extension and also that they cannot be divided and conquered. as a product of great ingenuity. >> the tpp has been a good

thing in asia? that is everything with economic growth and over the last 30 years that process of the union now with the rise of the tpp, all of these acronyms that we see unfolding in real time in asia but for us it would have been an enormous opportunity and already every day we can see the data of america corporate declining market share in asia. and our exports may fall as a result of the trade war canada, mexico, japan australia new zealand all actively joined the tpp which eats away at america market

share and then we would be left out as a trade with more other asian. in the delta initiative is a continuation of what is happening over the last 25 or 30 years in terms of the resurrection from the precolonial world. asians had much more to do with each other. particularly i have been watching this over the last 20 years they are in by investing in highways and pipeline and now the digital silk road with five g and optical cables it is the infrastructural networking that china has committed hundreds of millions of dollars. >> to your definition of asia. >> as a student of geography there is only one definition

our kids always will learn the wrong thing like asia there is actually a constant call eurasia but the asian two thirds of it with the mediterranean sea and the red sea through the sea of japan russia and singapore and india is asia. there is no dispute about what is asia but over the last 16 or 20 years we have been focused on it as just china that represents all of asia and actually it is only one third of the asian population only half of the gdp and now other countries are going back. unless middle east turkey, israel geographically they are in asia.

>> in your book we make the 1970s as a great time because people were happier. >> first of all i would say the seventies was a transition. but during the 1970s for a whole variety of reasons and as a result of that and as a reaction japan look like they would be taken over like germany and we really pulled up our socks he made capitalism leader and leader and it worked and then to become the most competitive country in the world. the 1970s now it was a pretty

good worker thong - - time for workers but the 19 fifties and sixties was that golden arroz. >> and then reagan took over with the concept of shareholder but now the business roundtable said what do you think about the business roundtable statement? >> the pendulum swung from a real regard to shareholders to due to my tree guard and now the pendulum is swinging back. and the leaders of the biggest companies in the country understood they have gone too

far. they would like a more balanced approach not like the seventies but from the fifties. >> and income inequality what do you attribute the growing income inequality? >> technology, trade, a deregulation. [laughter] there is a natural tendency of winner take all. the top lawyers today get paid much more than people slightly below them and also the top companies make huge profits. with almost as good products.

but not all because of government. obviously they play a role but with the 19 fifties and sixties the chief executive probably had the power over the board of directors to pay himself huge fees. they would not have been socially acceptable. to say don't do that that makes us look bad and they did not do it in those days. >> people were happier in the fifties? >> yes. with their satisfaction of life in their economic

situation and they were. but they had formica countertops. >> but they were white. that minorities were disenfranchised. >> yes. but that doesn't necessarily mean they weren't happy they had more vibrant communities they have they have today. that was built around their church and their communities and happiness they get richer until incomes of about 70000 then money and happiness those lines start to cross but they were because they had economic security that's the market fundamentalists don't understand they put a very

high value to economic security. we have a much less secure economy for middle class and working class to make some say economic security and happiness with their financial situation is exactly twice of what you have so with politics you say that the political contribution system is skewered to all the people and makes the economic system off? >> there are things we can do and should do on the policy side to make capitalism more palatable to people. but we can't do any of those until we change the political money situation. >> how? constitutional amendment requires constitutional convention or two thirds of

each house. is that realistic quick. >> i think so if you think having a democratic congress at a debit craddick congress at the same time is realistic. there is a lot of support for an amendment that would allow a reasonable restriction on political money. everybody says they will vote for that constitutional amendment. raise your hand. there is broad support for that idea. [laughter] >> people that come to book festivals may not be the cross-section. they are older and richer and more liberal and live in washington dc. >> that polling has been done and there is broad support by the way politicians of both parties are against it because they have mastered the current system. they are happy.

we have to force it on them. >> is there any constitutional amendment you would recommend? >> know. just that one. [laughter] >> any legislation congress could pass to bring us closer? >> there is some boring stuff like antitrust. i think we should have a modest 3000-dollar per person universal basic income in the united states. [applause] that would replace some of the programs i wouldn't call it universal basic income but a dividend but that with required universal service during your life for three years you have to pay for that. >> where does the money come from we have a debt already. >> part of that is a liberty existing programs and part of

that would raise money on people like me and you through taxes. [laughter] >> i think democrats should stop talking about how to give middle-class tax cuts. that's not what they want they want good services and child care and good education. they don't need a tax cut. they don't want to tax cut and i'm a democrat and i know you used to be. [laughter] i wish they would stop playing the tax cut gave. no tax cuts. [applause] >> maybe if i ran for congress here. >> the social security system is almost bankrupt. >> it is not insolvent over a long period of time it could be made solvent very easily.

you could very slowly raise the age and second subject all income to payroll tax instead of only up to 225,000. [applause] what about the leader of china quick. >> i would distinguish between him and putin they do have bureaucratic traditions that go back 4000 years with that oligarchy authoritarian community. even with two leaders who appear they could rule for life it is two very different systems although the president of china can rule he doesn't

have term limits by president xi and that which portfolio is more important so i can imagine a scenario where president xi steps down maybe only after one more term. >> he is in his second term now. he would do one more which is unprecedented but it is a finite. they are people around him that he could choose. >> do they want a tariff or trade agreement with the united states quick. >> one of the hardest things to know is what the chinese people think other than what is mediated. >> i do have general laois - - generalizations in the book without trying to capture the people that if i had to the fact is china's largest trading partner in the second

is european. we are the third most important trading partner and now that volume is going down. we should be selling them more oil and gas and soybeans but instead we are selling them les less. >> it's better to have one bad not that it is so disruptive. >> explain what's going on in hong kong now. they are sending troops? >> technically they are there but do they release them onto the streets? they might if you want to know the answer without knowing what will happen tomorrow is the death by a thousand cuts strategy that began 21 years ago. few people realize is that part of the agreement of the

handover that it was on the order between one and 200 chinese families would be allowed to move to hong kong every day. if you take 20 years multiplied the bottom line is there is more than 1 million mainland chinese in addition to those that were there before so they are too divided policies. clearly there is that even those that we know and love they have different passports and our hong kong british link. there is that identity but given the proximity. >> in the 1970s with the demographics are the worst in the world.

>> just as an aside it was wrong to believe japan was incapable it doesn't mean we are wrong as the major competitor but when it comes to japan, yes there is demographic decline, however we need a new conversation about japan that isn't based that the population is decreasing. of that technological society that is a synthesis of no other place in the world like restaurants and hotels and so on so there has never been in the history of japan 2 million

people living on the four main japanese islands. you have koreans and vietnamese and literally millions and growing but we would definitely think not think of japan as immigrant society but they are drastically changing their policy with the labor shortage. >> what about north korea? will kim jong il survive quick. >> i do think there will be. there - - there already has been underway. >> i thank you go through stages of creating the condominium. generally they agree on what they want to happen between them they have a lot more support from north korea than we do they may kickoff or

amplify a dynami dynamic. >> but not these love letters ascending to the president. [laughter] >> that this is a place that is already colonized by china and korea and they are strong in extracting the resources using the agricultural labor force. >> with the north korean government being in - - overthrown internally? will india grow at a faster pace than china quick. >> the thing that is surprising that india and china have in common with the very different political system as they both lie about their numbers.

so you don't know what to believe burke about the more you look at it the more you have to rely but that is the unfortunate concept of the chaotic democratic place. they have unemployment, automation labor productivity and of course climate change and that's not a big structural problem. >> you won a pulitzer prize for your commentary of the financial crisis. do you see any similarities now? do you think we are headed there again quick. >> yes. there is some similarity i do think we are headed into one that is not so big. the previous had a lot to do with consumer debt mortgages and cars and college loans i think this is mostly in the business sector.

there is a lot of debt that has been taken out not all of it has been productively used and if there is a slowdown. >> starting when? [laughter] >> actually our basic economy is in pretty good shape. there is a divergence between the financial sector in the real economy and if you look at all the recent recessions since 1987 that have been caused by a the financial market it is not the normal ups and downs of the industrial economy that we have in the fifties and sixties that were rooted in recession. it starts in finance then that tends to bring down. >> so who was the greatest hero? been burning key?

paulson, tim diner, president bush, congress who helped us get out of the mess? i think hank paulson. because it was a lot harder for republicans treasury secretary in the bush administration who had been at goldman sachs to get the country to agree to something very unpalatable. you had to prevent the meltdown that caused the problem in order to prevent a worse outcome for everybody else. >> many people will today they are capitalists why is that so sensitive quick. >> i don't know. i see it in my students at george mason but it conjures up a moral distaste that goes

to the ruthlessness and inequality and unfairness that they see. but they are not socialist. first of all they don't really know what it is. [laughter] but they are not for the government controlling everything and owning everything. certainly not for that. i ask them how many want to work for government cracks we would be unhappy to know that nobody puts their hand up would you like to work for big business? nobody puts their hand up who wants to work at goldman sachs? may be one person so what do you want to do? don't ask that. [laughter] they want to work at

ngos, startups which is not part of capitalism. [laughter] >> it's not that they want to get rich but they think those kind of companies don't have the moral issues on them. >> how long have you been teaching their? to make eight years are they different now quick. >> not much. >> is this on the exam? [laughter] the. >> i tend not to give exams and grades are like sex the more you worry and focus the less likely you will perform. that is from observation. [laughter] not experience. >> the most popular export from china is the panda bear we have two in the zoo here.

why are the pandas used by the chinese as tools of diplomacy? >> it is actually supply and demand just like we try to save the northern white rhino right now there is an effort to breed pandas. [laughter] but the exact origins i think is just a reminder but a lot of chinese use symbolism and you have to differentiate. the rhetoric is the reality which is much more capitalist than anything else.

>> talk about australia. is that part of asia quick. >> not tectonic leave i very much is geographically if you think of their economy as well and they realize that they are desperate to diverse if i their experts to other sectors of the economy like education and health care and real estate today they are the largest net per capita with high net worth individuals because they have that transparent immigration policy by train loads of chinese that are buying real estate. under the age of 30 or 35 there is a much faster growth rate in asia of the population so it is becoming asian in many ways. >> why does the chinese government want to build islands in the south china sea? for tourism? [laughter]

>> yes if you fly the f-16. the island fortifications go back to the fact there is a legal gray area there are islands that have passed control over centuries and china was to use the fact there is no clear demarcation to simply build in the water once a dredge sand and put airstrips there then they basically control that you can never get them through arbitration to give it back so now they are on an island building spree and how others are trying to claim whatever they can vietnam is doing it and eventually they will have a de facto settlement even though it is a disagreement. >> vietnam is amazing one of the first countries more than 15 years ago i wrote very

positive things about its incredible potential. even i underestimated it you can see with 100 million peopl people, they remain incoherent not like the mega cities like jakarta with those 25 million people this is a disciplined country that was very hard working with the high-tech supply with samsung and lots of others. >> with that trade disagreement companies are moving their manufacturing out of china. >> it is happening that i want us to get back correctly to

say that trade wars what caused america to shift. wrong. china's leaders arrive before the trade war japan was shifting ten years ago way before the trade war. that is only accelerating what was already happening. >> what about russia is that an asian power quick. >> geographically it is very much asia it is a resource provider it is more relevant but doesn't mean it is as influential. they view that as a resource base like timber and agriculture so russia now has during the obama administration actually there was tenet and putin said we pivoted a long time ago in russia has constant diplomacy with china according to the

index that they maintain a country's compliance with the initiative and pressure ranks number one pretty much whatever title once they allow that to transit goods through your country then russia does it. >> all these things that have built by china it is said there is a lot of debt that has accrued but they don't give these roads they finance them but they have to be paid back with a walk away quick. >> if there is a wide spectrum. there are write-downs and projects that never see the light of day just like white elephants and there are those that are so big and they will reverse the debt and then they will switch as to pump up

interest rates are to punish them or all of the above. >> pakistan india nuclear? >> know. for a better word this is something where they moved away preemptively to de facto saddle they were already entitled. >> does pakistan government know that osama bin laden was living there quick. >> it depends what you mean by government. >> i have money to invest in asia. >> this is purely hypothetical. >> what should i invest in first and then avoid. >> you would invest in asset classes because now they are all supply chains. you could look at e-commerce conglomerates that are headquartered in singapore but operating everywhere so you would look at manufacturing

and production and healthcare and financial services. you would invest in those things and not any country but the region. >> where are you investing? >> i live in singapore. >> that is pretty prosperous and happy place. >> not always. >> even superficially it had a rough start and it was ejected against its own will in the sixties very good government and low corruption. >> who is the most popular

president in asia quick. >> he still very popular the most cultural figure in asia and and structural changes in legislative changes and there are lefties who think imo was but i disagree with elizabeth warren on almost everything. >> you are against the wealth tax?

>> so i'm not that radical. the chances of us are not improving antitrust and that is pretty low. but it is pretty clear what people want. >> why should somebody buy this book and then read them after you told him what's in it? [laughter]

and me grabbed onto very good ideas but equality and opportunity that if we become more fair the economy will shrink. we had those ideas that were widely accepted and where they are not right. >> with the pulitzer prize we use surprise or did you say i deserve it. [laughter] >> an individual nominated me. anybody can nominate anybody. it with the editors of the washington post they were surprised. >> what did you say quick. >> i didn't say anything. [laughter] i didn't need to. >> why should somebody go by

this book quick. >> we've only only scratch the surface for one reason but if you want to understand what 5 billion people think and what they are doing right now to put it bluntly they don't care what we think about them there's a lot of learning we have to do as americans about the vast majority of the world populatio population. >> how long did it take you to write this book quick. >> a couple of years. >>. >> a got a false start but once i stopped at the coworker that i went pretty fast. >> thank you very much. [applause] [inaudible conversations]

>> thank you ter