676. Has America Lost the Plot?

26:27I was talking to someone the other night about when Americans started buying German cars after World War II, how long it took. There was the same thing for Japanese products. And now we consider German and Japan two of our very, very, very best friends and allies. So reputations of countries certainly change, but it takes a good amount of time. If you were to look at the Middle East, the major players, what do you see that landscape looking like way down the road, 10, 20, 50 years? I think that if Saudi Arabia plays its cards right and allows itself 10, 15 years of modernization and development, it could emerge as a very, very powerful country.

27:13Just because, you know, it's the only one that has size and wealth. It has enough people and it is enough of a landmass and can field enough of an army. And, you know, it can be a kind of multidimensional power. The problem with the UAE, which is extremely high tech and smart and sophisticated, is just too small to be a global power of any kind. And the same is true of Qatar. Kuwait is also tiny in comparison. So it's really the Saudis who have that capacity. I think Iran is going to continue to be completely dysfunctional. Don't forget that the Islamic Republic is not just Islamic, it's also sort of socialist.

27:49So it's been very, very badly run. When you look at per capita GDP, Iran was probably ahead of Saudi Arabia when the Shah was removed. And Iran is now way behind all these countries. We always hear that the majority of Iranians don't want the theocracy and they want a more normalized state. What do you know about that sentiment now? And do you think there's enough sentiment to lead to an internal change, a regime change by some form other than war? I think this is a very good but very complicated question. And I'll begin by saying I don't know. And it's very hard to know. Most of the people who say these things confidently have not been to Iran in 45 years.

28:32Much of the Iranian diaspora are like the white Russians after the Russian Revolution. They're imagining an Iran that may have existed in 1977. But what I'll say is I've been to Tehran, and the regime is clearly very unpopular among the people in Tehran, educated, young, westernized. When you talk to older people, even in Tehran, I wasn't allowed to leave Tehran. When you talk to older people, more religious people, there is more support for the regime. And I'll point out one thing, which is in neighboring Iraq, which holds free elections, a large part of the Shia population votes for religious parties because the Shia do believe in the fusing of religious and political authority.

29:17So it's not inconceivable that there is some part of Iran, the older, the more rural, the more religious, who have some deference and respect for the idea of mullahs in politics. So, I mean, if I were to put a number, I would guess maybe 65 % of the country hates the regime, but 35 % has some degree of support. I will say this one thing, which I'm pretty sure are traveling around the world. Nobody likes being bombed by foreigners. Nobody likes being bombed by the United States, the superpower of the world. So whatever the situation was three months ago, I think that the regime has more support now, because it's an act of disloyalty to the nation, not to support a regime that is being bombed by Americans and Israelis.

30:02The central mistake of American foreign policies from 1945 has been to misunderstand nationalism and to not understand that you may have very good ideas for what should happen in that country, but no country likes being bombed into enlightenment. Coming up after the break, given the war with Iran, why haven't oil prices spiked even more than they have? Also, is the U.S. making its own Brexit? And will Trump, too, go down in history as the great grifter administration? The scale of what he's doing and the nakedness, the openness with which it's happening is breathtaking. I'm Stephen Dubner. This is Freakonomics Radio.

30:46We'll be right back.

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32:41Fareed Zakaria's most recent book is called Age of Revolutions, Progress and Backlash from 1600 to the Present. So he takes a long view of geopolitics. I asked him to summarize U.S. foreign policy over recent history and what it will take to break some bad foreign policy habits. The U.S. has to find a way to transform, amend, reform, and stabilize the international order that it created after 1945. I think what people forget is that the international order we created after 1945 is pretty much unique. It's the first time in human history that you have had this 80-year period with no great power wars where you have allowed a single open international system economically to flourish and expand as communism finally collapsed.

33:33It has allowed poor countries to grow on a scale that they've never been able to grow before. It has allowed for the introduction of concerns about human rights. It's allowed for the introduction of foreign aid, all these things which really were never part and parcel of the international system before. So I think it's a pretty unusual, extraordinary international arrangement that Franklin Roosevelt conceived, Harry Truman and Eisenhower built. What we have to understand, however, is it's been 80 years. There's been a lot of change. Other countries want to be more involved. They want to be more powerful.

34:10It has to have that ability, that flexibility. But we shouldn't be trying to do what Trump is trying to do, which is basically abandon it and let it collapse. Because what will follow will be most likely the law of the jungle, which is what you've had for most of human history. So I would say that the intelligent reform, amendment, and repair of this international system so that it makes sense for other countries. Now, by the way, it does, right? China, for all its desire to, quote, unquote, replace the United States, has grown rich and powerful under this very international system. And it is aware of that, which is why it is not trying to tear it down.

34:50It's actually the second largest supporter of the United Nations now, right? Which is amazing when you think about where Mao's China was only 40 years ago. It was a rogue revolutionary power. So what we need to do is to make sure that we stabilize a system that has been profoundly good for the United States, made us the pivot of the world, but also been very good for others. Do you think nationalism on average is beating out globalization at the moment or it's just interrupted it? Oh, not at all. I think that the reports of the death of globalization are vastly exaggerated. Look at it this way.

35:27So Trump has, as a result of his nationalism, taken the United States and gone from being the most free trade country in the advanced industrial world to the most protectionist country in the advanced industrial world. We now have the highest tariffs of any advanced industrial country. However, if you look at the rest of the world, what they are doing is more free trade, not less. The European Union's response to Trump tariffs was to lower tariffs between Europe and Latin America, lower tariffs between Europe and India. Canada's response to American protectionism has been to lower the tariffs between China and Canada, between Europe and Canada, between India and Canada.

36:06Some of these deals haven't been finalized. But what you see is the rest of the world trying to kind of re-globalize in a different way. Some of them are being wary of too much dependence on China, but what do they do when they think they're too dependent on China? They go to Vietnam, India, Mexico. Last I checked, those were still foreign countries, right? So it's a very interesting re-globalization. And if you look at the strength of the global economy, the ability to withstand COVID, the ability to withstand this oil shock, which is the largest energy shock in the history of the world, it is because of globalization.

36:41It's because you can shift sources of production so easily. So I think you're seeing actually the resilience of globalization these days. Are you surprised the oil shock hasn't been even steeper than it's been? Yes. And I think part of it is that markets are very sanguine and maybe they will be right, but maybe they will be wrong. If you look at two things, one, it's this point about the resilience of globalization. There was a lot of things people were able to do to quickly compensate for the loss of oil coming out of the Gulf. There was a lot of slack in the market. There was a lot of oil out there in supplies in various ways.

37:17that's all running short. And the way you can see it is, it's a little technical, but important. The numbers that you hear when people talk about what the price of oil is, is usually futures contracts. In other words, it is contracts for the future purchase of oil, and that's at about $100,$105 a barrel. The actual price of oil, the price at which a barrel of oil is being bought in Asia today is$120,$125 a barrel. So either this crisis is going to blow over and everything is going to get much easier, or what will happen is the traded price will become closer to the real price. And if it goes to$125, then you certainly have a recession in many, many, many parts of Asia.

38:02You probably don't have a recession in the US, but you have a substantial slowdown of the economy. And more importantly, the Fed will be completely unable to lower rates in a scenario like that. But additionally, the U.S. has been producing a lot more oil and gas over the last 10, 12, 15 years generally. But the export numbers from the U.S. in the last couple months have just spiked through the roof, yes? And that's the globalization. That is when you can't get your oil out of the Middle East, there are other places you can get it. The U.S., Venezuela, Nigeria. And that's all very real. But it's important to understand the fact that we produce oil means we don't have a shortage of oil, but the price is a global price.

38:44So we and the average American suffers as much the increase in price of oil as anybody else. The people who benefit are four American companies. I'm exaggerating, maybe 40 American companies, but the oil producers. But the fact that Exxon is making more money doesn't mean that the average American is doing better. Can you explain why our federal government allows sitting politicians to freely trade stocks and companies over whom they have obvious influence and non-public information? It's insane. The broader point to make is most people don't realize this. We have the oldest constitutional system in the world, and that's a glory.

39:24And we are going to celebrate the Declaration of Independence. It's 250th birthday, but it's also 250 years old. And it's an ancient Tudor polity and a constitutional arrangement. And it has many, many gaps and many, many weak spots. One of them, for example, is in most Western democracies today, the investigative judicial function, the Department of Justice, is set apart from and independent of the prime minister or president. Whereas in the American system, the attorney general is appointed by and serves at the pleasure of the president. That's not true in almost every European country. And so we have things like that.

40:04And one of these is we don't have enough laws that are kind of anti-corruption laws in various forms. But the whole nature of our system allows for this kind of institutionalized corruption. Look at the president's stock account, which is mind-boggling. I mean, his 3 ,700 trades. And in his case, it's so naked again that he literally will go visit a company, buy its stock, and then put out a tweet saying this is a hot company and putting the stock market ticker of the company there. The level of self-dealing and grifting, let's call it, in the Trump administration is astonishing to a lot of people, included many people who voted for him.

40:44What do you make of it? I'm especially curious if you see parallels to other leaders in recent or ancient history. I think in today's world, the only comparison I can think of in terms of the scale of the dollars involved is probably Putin. I was talking to an Indian friend who's in government, and he was saying none of the things Trump is doing would be possible in India anymore. There was a time when India was very corrupt, and there's still a lot of corruption, but both the scale of what he's doing and the nakedness, the openness with which it's happening is breathtaking. And I think you'd have to search far and wide to find a place where you could do something like that.

41:25If you think about this latest IRS deal, where the IRS is forever banned from auditing, not just Trump, but his whole family. Or if you think about the$2 billion investment plus the$500 million investment that the UAE government makes in Trump's basically, the Trump-Witkoff cyber venture world financial. And then literally a few weeks later, they are granted the coveted license to be able to buy NVIDIA chips and have a big data server, which many countries in the world were vying for. I think there's very, very few examples of this. To me, the really interesting question is why it's not causing outrage.

42:05But even with his base, there is an interesting answer there that for a whole part of America that has not benefited that much from the last 30 years of enormous growth and prosperity. they look at the last 30 or 40 years that in many ways could be described as the rise of meritocracy and the rise of markets and the rise of a certain kind of fair system that was anybody could come from anywhere. And if they somehow did well on Wall Street or did well in Silicon Valley, they became rich. There's a whole segment of America that looks at that and says, you know what? I don't know about all that. It just feels fixed to me because it looks like somehow you guys all get into these fancy colleges.

42:49Somehow you guys all get fast-tracked for these fancy jobs. Somehow you guys all end up with IPOs. I'm not saying it's right or wrong, but I'm saying there's a very powerful feeling among the have-nots, that the haves have gotten to where they have through a lot of connections and self-dealing and internal promoting. And as a result, they look at it and say, the system's fixed and corrupt anyway. Trump is doing it openly, nakedly. In a sense, it's worse, but we don't care. Everyone was doing it. And that feeling, I think, is what, in a strange way, has allowed Trump to get away with what otherwise is a staggeringly open level of corruption.

43:31Putting Trump himself and his family aside for a moment, do you feel the U.S. is in, let's call it a secular decline? No. I think that the astonishing thing about the United States, and I often try to explain this to my European friends, is it's a country of enormous variety, variation. It's a ragged country, by which I mean, yes, the subways look dirty and the highways look like they've got too many potholes on them. And yes, we have no high-speed rail. And yet, look at the AI, look at the technology companies in general, look at the cutting edge of biotech, look at pharma. The U.S. is at the same time the most advanced country in the world by far and the country with the worst infant mortality statistics in the developed world.

44:19You have to be able to understand that contradiction. The simplest number I can give you is the U.S.'s percentage share of world GDP in 1980, when Ronald Reagan was inaugurated, was 25 percent. Since then, you have had the massive rise of the rest, as I call it, the emerging markets. China gone from essentially 0 % of global GDP to 15 % roughly. India has gone to, I think, 3 % or 4%. All this massive shift in power. Do you know what the US's percentage share of world GDP today is? I'm guessing 25%. 25%. We have managed to maintain our market share. And the reason is there are enormous parts of the US that are incredibly productive.

45:03And in general, we are a much more supple, flexible economy. I mean, the things that Trump often rails against, the fact that we have let manufacturing decline so that we could let services and technology and all that boom. That's the flip side. But as a result, the U.S. is astonishingly productive, astonishingly advanced in many areas. It does, however, have that feature that there are many measures by which it is among the worst, if not the worst, in the advanced industrial world. So considering there's been so much chaos, considering there's been so much, let's call it, anti-democratic action at the federal level, considering that Trump and his family administration have self-dealt a lot, you still say the U.S.

45:44isn't in secular decline. Walk me through, in your mind, not the fantasy version that you would like to happen, perhaps, but the real version that you think will happen politically for this country. I can't give you a pure prediction because so much of it depends on what human beings do. There's human agency here. So I'll give you what is my hopeful prediction, but not entirely divorced from reality. So Trump's very unpopular, which tells you that probably he will lose the midterms or there will be some setback. And probably I would, again, this is hopeful prediction, probably MAGA does not get reelected in 2028.

46:23And there is some kind of pendulum swing away from it. And I think a lot depends on how big it is, because that will determine how much people interpret it as a repudiation of MAGA. On the other hand, the Democratic Party is not winning any approval rating wars either. No, it isn't. But on the generic ballot, it's doing much better. It's leading by a lot. So let's assume that there is some repudiation which allows for some tightening of ethics laws. One of the things we've realized is there's just too much leeway in the executive power for corruption and abuse of authority. And that probably, as with post-Watergate reforms, you need another round of these reforms.

47:03Meanwhile, the US economy continues to do what it's doing very well. I think China, while very powerful and extraordinarily impressive, has its own problems. It has demographic collapse. It has huge debt problems. There is too much government direction of the economy, which will have its own shortfalls. So you look at that and you say, who's the competition, right? Japan is in total demographic decline. Europe has turned into a museum. India is still too small to be a viable competitor. So the U.S. remains the least dirty shirt in the laundry pile. And I think we continue in exactly this kind of chaotic fashion.

47:45John Kenneth Galbraith said in the Affluence Society, which was published in the early 1960s, I think. He said the mark of the United States is private affluence and public squalor. And you know what? I mean, if it was true in the early 1960s, maybe people are hoping for a transformation, but we'll always be this ragged, uneven country. But I don't see a collapse. I think that for that to happen, you'd need a lot more to go a lot worse. Galbraith was not just a well-regarded economist. He was also one of the most realistic, especially when it came to predicting the future. The only function of economic forecasting, he once said, is to make astrology look respectable.

48:26I'm Stephen Dubner. This is Freakonomics Radio. We will be right back to finish up our conversation with Fareed Zakaria.

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51:06Let's talk about American electoral politics for just one minute. It doesn't take a lot to be dissatisfied with the current electoral political system in the U.S. Most people are pretty dissatisfied with many, many elements of it. The way that primaries drive the races, the way that Congress has standstills in partisan friction and so on. So there have been many, many, many versions of gentle reform. What about a more radical reform? What do you think of the ancient Athenian model of sortition, which is a form of democracy with representatives chosen by lottery? This is how we choose our jurors today.

51:43I've always thought of this idea as a crazy old idea, like how would that possibly work? But I actually sat on a jury recently, Farine, and I was really moved and impressed with how 12 people who didn't know each other and probably wouldn't spend any time together outside of the jury room came together with a common cause, and they weren't specialists. They weren't chosen for their expertise in any area that the jury was engaging in. They were just chosen because they happened to live in a place where they were required to serve jury duty. And the idea being that rather than electing people who managed to win an election because of their personality or money or background, you're choosing actual representatives.

52:23I know that sounds crazy, probably even to a political scientist like you, but I'm curious to know what you think of it. No, I'm actually a big supporter of the idea theoretically, and I'll tell you why. It solves one of the core existential problems of political science or of governance, which is the people who want to exercise power over you are by definition broken people. The ones you don't want exercising power. Same for co-op boards, by the way, in New York City. Exactly, exactly. And the more complicated and messy and expensive the political process becomes, the more it becomes subject to virulent personal attacks, right?

53:08So how do you solve that problem? Which is, there's a huge what economists would call selection bias problem. But as you say, the ancient Greeks had this system, which is you randomly pick people and you let them run it. Now, there are issues of what would it mean to run something? What would it mean to have that political power? because there's a lot of very technical stuff that happens in government. And you'd need probably a much more activated civil service than we now have. Exactly. And so you'd have to have some combination of political control, but also administrative efficiency. Now, let's assume that that radical change will never happen.

53:43Are there pieces of that idea that you see as possible amendments to the way that we run our elections now? I think the primary system is frankly a very bad idea. It is unique to America. Most people don't realize this. You're going to give the people the choice at the election, but the party itself should be able to make its own internal choice as to who it wants to choose. And the problem with leaving it to democracy as the primary process does is that in those kind of democratic contests, 80 % of people don't participate. So you're getting the rule of the most fanatical, most obsessed, most ideological, often richest members of the public, totally non-representative.

54:26And if you think about what the old system was that is often caricatured, the people call it the smoke-filled rooms, right? Which is the ultimate negative thing you can say nowadays is to imply that there were cigarettes involved anywhere. I think they were cigars. It's okay. And what were these smoke-filled rooms? They were filled with mayors and aldermen and senators and congressmen and governors. In other words, the people who chose the candidates were themselves elected officials who had a lot of experience getting elected by the general public, not just by the Democrats, not just by the Republicans, but in general elections.

55:01And so they had a tendency to try to find viable candidates for the center. Now, when you have the extreme fringe on the left and the extreme fringe on the right, choosing through a primary system, and when you have social media, so if the primary voter is 10 % of the Republican Party or 10 % of the Democratic Party and the most extreme. The people active on Twitter are 10 % of that 10%. It's the most crazy people sitting in their mom's basements firing away angry tweets. So the whole system is geared towards the extreme rather than the center. I would abolish the primary system entirely. I would do something about money in politics, and I would end redistricting.

55:41And I think that those three things are all perfectly within the realm of possibility. Economists now have enough data to measure a lot of the downstream effects of Brexit for Britain. And they're not very good, as you could imagine. But rather than being just political conversation, they're actually empirical arguments. Those same economists say that when you look at the Trump presidency and what it's doing to our standing in the global economy, that it's going to take a while. It's going to take five or 10 years before the effects can at least be fully measured the way that the Brexit effects have been measured.

56:15When that time comes, what do you think those effects look like? So I think it's going to be not nearly as bad as Brexit. The U.S. economy is much stronger, more resilient. First of all, most important thing to remember, we are not a trading economy. One of the reasons that Trump's crazy tariffs, and I'm totally opposed to them, one of the reasons they haven't had that much negative effect on the U.S. economy is the American economy is a domestic economy. I mean, in the Brexit case, it was just like insane. Like 40 % of British exports went to the European Union and they said, let's make this much more expensive and complicated and put lots of barriers.

56:53So the second piece is the Trump administration has been very pro-business in a regulatory sense. And I think that the left tends to forget how important that is. There's a huge boost to businesses to be able to depreciate plant and machinery and investments fast. It's a huge boon to business to have licenses happen fast for the SEC to take its foot off the brake as much as it has. Now, there are dangers, obviously. Things can blow up. But for the most part, you just look at something like housing, right? Why is it that Texas is able to both build many, many, many more houses, but also build much more green technology than New York or California?

57:33It's because it has a lower regulatory burden and a faster regulatory process. So all of that is really important. And the thing I worry about, the ticking time bomb for the United States is Trump has turned out to be somebody who, like many Republicans before him, talks a good game about the debt and deficit when he's campaigning and actually runs it up massively when in office. We are now running deficits that are in the 6%, 7 % of GDP, and it's going to go up to eight and nine as the baby boomers retire. We've only run these kinds of deficits during World War II. I mean, it was really 1942, 43, 44, maybe three years.

58:15So we have never seen this kind of spending. There was that one short spike during COVID spending. That was like World War II spending, but briefly. Exactly. But then that spending came down very fast. And I worry that it's happening at the very same time that we have been abusing the power of the dollar at a time when the Chinese are trying to figure out, can they make the renminbi more of a reserve currency? The Europeans are asking themselves, can we find an alternative to the swift payment system so the US can't impose these secondary sanctions on us at the time that crypto and stable coins may become some kind of a challenge?

58:56So you're running these crazy deficits that require the rest of the world to buy enormous amounts of your debt. And yet, you're making it so that your currency may not be as secure. And I don't think it's going to be replaced anytime soon, but we don't have that much experience with these things. Is it possible that the dollar is not replaced, but there's some competition that comes from a combination of those things, the renminbi, stablecoin, things like that? Who knows? It's a very dangerous bet to assume that everybody else is going to fumble and stumble and we will be able to run deficits of the kind that no superpower has ever run.

59:36When you look historically, do you find that great powers tend to decline mostly because of internal or external forces? It's usually a combination in the sense that historically it has been external forces that bankrupt you internally. Look at Britain. Britain was trying to fight two world wars and run a global empire, and the costs of all that eventually just bankrupted the country. If you look before that and you look at France and the Habsburgs, almost always it's been external expansionism, which has ultimately a huge price internally and often involving debt and things like that. I guess compared to those countries, the U.S.

1:00:18is still relatively small scale when it comes to foreign invasion, colonialism, etc. Correct, correct. As a percentage of GDP in some cases, particularly if you go back to the Habsburgs and the French, in those days the state was a night watchman state. So it wasn't spending money on Social Security and Medicare. It basically was spending on wars. But what worries me is Neil Ferguson has this line that if a country becomes a great power, starts spending more on interest payments on its debt than on its defense budget, it doesn't stay a great power for long. And he says, if you look back in history, there's no exceptions to that rule.

1:00:53Well, the United States has begun to spend more on interest payments on its debt than it has on its defense budget. How can you best explain why the U.S. economy has remained so dominant and dynamic for such a long time? There are other countries that invent things. There are other countries that do very well in some sectors and sometimes export them. But if you look at them as engines of prosperity for their populations and for shareholders and so on, the U.S. is really unparalleled. I think there are three broad factors. One is enormous natural advantages. The United States, geographically, is built to be rich, by which I mean it has the most fertile agricultural land in the world.

1:01:38But that agricultural land sits right next to these extraordinary navigable waterways, the Mississippi River, the St. Lawrence River system. When you look at the coastline of the United States, it has, I believe, three of the best deep water ports in the world. There's extraordinary forests. There's extraordinary natural resources, oil. We sort of have everything, and people sometimes forget this. There was a very, very good book by Peter Zehan called The Accidental Superpower, which makes this point very powerfully. I think that's one bucket. The second is we have, broadly speaking, the most market-friendly system of any large economy.

1:02:19Probably Singapore and Switzerland are better, but of any large economy, which tends to have a political tendency toward a certain kind of statism and anti-market forces, we are probably the best. And I think the third is immigration, because what immigration does is it gives you, and I mean historic immigration over the last 250 years, it gives you people who have an insatiable drive for success. I often, when talking to businessmen, when I make the point about immigration, I tell them all, you've all been incredibly successful. Now, let me ask you, put up your hands those of you who think your children are as driven to succeed as you are.

1:02:58I have literally never had a hand go up. And the reason is children rationally react to the circumstances that they are in. The poor person in Mexico who's crossing the Mexican border on pain of death so that they can come and wash your dishes, that person has drive. And we've had that for 250 years. You talk about selection bias. Those are people who wanted to be somewhere more than the others around them or found a way to get there. Exactly. And then the high-end part is the particularly dramatic part. We think that America's lead in the sciences is some kind of natural God-given thing. Well, it happened, if you think about it historically, it's a very unusual recent thing.

1:03:38In 1933, Germany had won more Nobel Prizes in science than Britain and the United States put together. But what happens after 1933 is Europe gets consumed in the conflagration of World War II. All the smart Europeans, particularly the smart European Jews, who were an absolutely central part of the scientific revolution in Europe, moved to the United States. And the state in the U.S. after World War II starts funding science on a massive scale inspired by the Manhattan Project. Those are all completely unusual circumstances. And that's what produced the U.S. dominance. And by the way, you might notice all three of those forces are waning.

1:04:20We now have a real competitor in China in the way that we didn't because Europe had been destroyed. We don't have the exodus of Jews. And if you can add to it, the Indians and the Chinese in the 60s and 70s, that is slowing because of the immigration crackdowns. And finally, the government is cutting spending on basic science. So that's a part that in the long term, that worries me a lot. Last question. Tell me something, anything that you, Fareed Zakaria, believed for a long time to be true, but realized that you were wrong. Something important that you changed your mind about? Oh, probably the central one in terms of my worldview is, I thought that as China liberalized its economy, it would liberalize its politics.

1:05:05And the reason I thought that is it's been true for every country in the world, really. One of the few iron laws of political science is that as countries become richer, not counting oil-rich states, once they get past$7 ,000 per capita GDP, they're almost all democracies. In fact, there's almost no case of democratic regression. Why did that happen? I think because two things. One, China is unusual in that it has a political system that is so—it's not a dictatorship in the conventional sense of the word. The Communist Party is so deeply infiltrated into the entire society. And secondly, human agency, the Chinese watched the collapse of the Soviet Union and they said, we're not going to let this happen to us.

1:05:48Xi Jinping's absolutely clear in his writings and his speeches, he says that when the Soviet Union opened up its economy and opened up its political system, at the same time, what they ended up doing was causing chaos and a collapse. And so the implication is we'll open up our economic system, but carefully and in a modulated way, and we will not open up our political system. And so far, they've been able to pull it off. Do you think Xi is happy that the U.S. has gone to war with Iran? Oh, he has to be. This is a godsend for the Chinese. First of all, it takes the focus off Asia. It means the United States military is now running down its stock.

1:06:27So at a very simple technical level, we lack the capacity to deter and to respond to any kind of attack. That means Taiwan is looking a little bit easier every day or? Right. And that's not just the sheer issue of arms. It's also you've used up political capital, diplomatic capital and all that. And I think because it hasn't turned out well, it will have that effect of making America more gun shy about these kind of things. This Iran war is, I cannot think of a geopolitical mistake that the US has made that has been so consequential because Iraq was very expensive, but it didn't have this spillover where look at what Iran has done.

1:07:07It has redounded massively to the benefit of Putin and against the Ukrainians. So the war that we cared about that is kind of system threatening actually is making things worse. It's hurt all our closest Asian allies like Japan, like South Korea, like Taiwan, who desperately need stable and low-priced energy. It's hurt the core of our alliance with Europe, which is also facing massive new energy bills. It's discredited us because we did it in a way that was completely illegal. We didn't even bother to go to the UN. And then it has rehabilitated the Iranians who were in bad shape before this. I think it's very hard to find an event that has had as many costs for the U.S.

1:07:51with as few benefits.

1:07:59You are the best political science professor I never had. I learn so much from you every time, and I really appreciate your taking the time. And I also appreciate the hours upon hours that you're spending reading and talking to people that have so much information to deliver. It's a great bounty for us. So thank you. You're very kind, Stephen. It's always a huge pleasure to come on the show.

1:08:22That again was Fareed Zakaria. His CNN show is GPS, Global Public Square. My thanks to him and all of you who sent in questions. Let me know what you thought of this episode or if you have any ideas for future episodes. Our email is radio at Freakonomics.com. Also, if you are catching World Cup fever and you need a smart companion to make your way through the maze of sport and politics and fandom, check out the new podcast, Soccernomics. It is based on the book of the same name by Simon Cooper and Stefan Shemansky. The podcast features both of them as well as Ashish Malhotra. You can get it wherever you get your podcasts.

1:09:00And coming up next time here on Freakonomics Radio, we get back to our series on games and we ask a very simple question. Can backgammon save the world? That's next time. Until then, take care of yourself. And if you can, someone else too.

1:09:38Delvin Abawaji, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Ilaria Montenicourt, Mandy Gorenstein, and Tao Jacobs. One name you didn't just hear for the first time in about nine years is Zach Lipinski. Zach produced dozens of Freakonomics Radio episodes, some of our very best, and now he is going off to be a novelist. I'd like to thank him for being a great producer, colleague, and friend. We will miss him, but he does plan to do some freelance work for us. I hope he does. Thanks for everything, Zach. Our theme song is Mr. Fortune by the Hitchhikers, and our composer is Luis Guerra. As always, thanks for listening.

1:10:22Oh, I did just want to ask you, did you know Ted Turner? I met him once in an elevator in Atlanta, and he said to me, I love your show. Very Ted Turner.

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