The Post Democracy Era with Parag Khanna

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1:33Hello, I'm Anthony Scaramucci, and this is Open Book, where I talk to some of the brightest minds about everything surrounding the written word. That's everything. That's from authors and historians to figures in entertainment, political activists, and of course, Wall Street. Before we dive in, make sure to follow or subscribe wherever you get your podcasts. And don't forget to leave a review. Good or bad, I want to hear from you. I want to hear whether you're enjoying it or where we can improve. And I can take the hits. So let me know. If you don't like something, say it straight. Now let's get into it.

2:17This week, we have a returning guest on Open Book, Parag Khanna. His periodic table of states lays out what really makes a nation successful. And it's not just democracy. It's about stability, smart policy, and using technology to stay ahead. We'll get into what countries can learn from each other, how the blockchain could shake up governance, and whether technocrats might be running the show in the future. It's a sharp look at what makes a country thrive. So let's dive into it with technocrat Parag Khanna.

2:58Hello and welcome to Open Book. I am your host, Anthony Scaramucci. Our guest is a repeat offender. His name is Parag Khanna. He's a geopolitical expert and author. We're going to discuss today a meta piece of his called The Periodic Table of States, which hopefully at some point he's going to turn into a book. It's great to have you back. Now, last time you were with us, we talked about MOVE, how mass migration will shape the world. But today you want to tell us about the periodic table of states. So tell us what that is, actually. What is a periodic table of states? Makes me nervous, by the way, because I wasn't so great in 12th grade chemistry.

3:39I was going to say, evidently you weren't. But I wasn't going to call you out, but you just kind of confessed right up front. Right, yeah. I wasn't really that good at that. Great. First of all, you really should have been doing chemistry in like ninth or 10th grade. So that was like a red flag right there when you alluded to 12th grade. Yeah, well, no, honors chemistry was in 10th grade, and I elected out of that because I have self-awareness parable. Okay, so you're just really trying to expose my diminutive intellectual status, which is fine. My viewers and listeners know that what you see is what you get.

4:13All right, but you tell us what we need to know. And what is a periodic table of states, by the way? It's a great title. Tell us what we need to know. Hey, everyone. It's Anthony Scaramucci here with some straight talk. Let me tell you, we've got 85 % of our viewers who haven't hit the subscribe button yet. What's up with that? It hurts. Listen, I've made my career by going all in. Right now, only 15 % of our viewers are part of our subscribed family. So please take action. This helps us book more amazing guests. Hit subscribe, join our community, and let's turn these numbers upside down. Now back to the show.

4:46So yeah, we actually went out of our way to not overly torture the analogy, but it is an idea that was germinating in my mind. And I explicitly called for 20 years ago when I wrote my first book. I said the states of the world should be organized into a periodic table like the periodic table of elements. And we would measure them according to their strength, their stateness, meaning their cohesion, and their overall stability. And I left that kind of on the table for like two decades. And I finally got back around to it. We put our team together. Bottom line, the periodic table of states is just a better way of classifying countries of the world than what we typically have like on the market.

5:28You've got your rankings of strength where you always see the U.S. and China, number one, number two, kind of obvious, no points for that. Pretty boring, actually. And they use very conventional metrics. You've seen it all before. Number of soldiers at arms, size of the country, population, GDP, you know, the usual stuff. We added to that. We're like, what about your industrial capacity? What about your net international investment position? What about your debt to GDP ratio? So a whole lot of characteristics that in this century are very relevant to the strength of a state. The second bucket is stateness, and that corrects for the weaknesses of most products out there that basically say it's all about how democratic you are, right?

6:11Procedural democracy, how many elections you have, transparency, free and fair elections, rule of law, independent judiciary, and so on. What really matters today, and you and I know this from our travels around the world, is that democracy is not enough. You should be measuring the stateness, the cohesion, the state capacity, the quality of institutions, their efficacy and all those other things. You should be looking at internal characteristics like inequality, median income. And then we bring in a whole bunch of novel data sets that really weren't available before, like climate resilience, food security, energy security, AI readiness.

6:53And these kinds of data sets have only been around for a couple of years. And let's face it, Anthony, you know, again, you and I are travelers. We go around the world. We visit countries and we kick the tires. And we know that what really makes a country stable is not just did the economists rate you a country that is a top tier democracy or not. Right. Where, again, it's always going to be New Zealand and Finland that are number one and two. Whereas what you really want to know for the 200 countries of the world is what's their inequality? How good are their institutions? Do they have energy security, food security, AI, climate resistance, all those other things.

7:29So anyway, we took these buckets, put it all together, created like a meta index, normalized the data, percentile rankings, scored everything, created a dashboard. And the result is what we call stability. And this is the final key point. What does a country want, Anthony? Do they want to be more democratic for the sake of it? Do they want to be like America? Do they just want strength? No, every country wants to be more stable. You'll never have any disagreement about that, will you? They want stability. They want resilience. So we think we've created the first overarching ranking of countries that really gets at what matters.

8:03So I want to ask a philosophical question because there's a lot of debate going on right now in our society about these topics. There's a gentleman by the name of Curtis Yarvin. He's a philosopher out on the West Coast. He believes that democracy is obsolete and we need a monarchy. His acolytes include Elon Musk, Peter Thiel and J.D. Vance. There's others of us, myself included, that believe that while democracy is imperfect, it's a necessary ingredient to good governance, long term stability. And the diffusion, the wisdom of the crowd usually prevents you from doing outrageous things if you have to be somewhere in the middle and moderate your views.

8:43Where do you stand on that? What makes for a more stable government? Again, Caesar Augustus ran Rome for 60 years, fairly stable, benevolent dictator in the eyes of many. Is a benevolent dictatorship better than a democracy or where do you stand on it? There is fortunately a happy medium. We have 5 ,000 years of recorded political history, generally the history of empires. And you cited Rome. Most empires historically have not been democracies. Obviously, authoritarianism and monarchy are more the historical norm. America is an empire, as is China. That's not to say that it was foreordained that we would see some kind of, some will call it a degeneration, into the kind of political system that we seem to be evolving into right now.

9:35But to get to the point, the optimal political system is not monarchy for the sake of saying that democracy, quote unquote, doesn't work. The lessons of these thousands of years of political history, in fact, if you amalgamate the best practices that you can glean from studying empire, successful states, large and small, is that you really do want to have a very strong executive branch. Yes, but you do want to have mechanisms of constant feedback from the people and democratic elections are among them. But given the technological tools we have available today, you would actually want to have much more rapid feedback loops through canvassing the public on specific issues, not just waiting for elections every few years.

10:23So, again, a strong executive and a democratic system in which you're gathering the voice of the people are not at all incompatible. But that executive branch, to go into more detail, in the model that I constructed in a previous book called Technocracy in America, you didn't have a single president. What you actually had was a central executive committee. And I borrowed that actually from the most democratic country in the world, Switzerland. Right. Switzerland, as you know, doesn't have one president per se. It just has a rotating chair of a central executive council. It works for them and it works for us.

11:00It could work for us. It ensures that you have representation among a broad cross-section of political parties, for example. And there's many other ways in which I think that technocracy, which is a term that obviously should be favored by the Silicon Valley elite that you're referencing, given its origins, but modernized to reflect using data to improve governance and having a system of government that does not in any way, shape or form rely on any one person. I think that's the fatal flaw. And as you know, Anthony, over the past decades, we've descended into the kind of savior complex mentality where whether you favor the Democratic candidate or the Republican candidate, you always hold that person to somehow be the savior.

11:45If you are in the situation where you have to ask that question or have that view, Anthony, you're already in very big trouble because the most stable countries in the world, according to our index, in fact, like Switzerland, let's take Germany right next door. They can go months with a hung parliament and not even having a government per se in the sense of the arrangement of parties to select the leadership and still function very, very well. I obviously worry that we would not be able to do that. And that makes us less stable. You know, I'm I'm I'm a big believer in being practical. I think you are, too.

12:25When I read your stuff, I get I guess, is it impractical? impractical. Is it impractical to push more democracy? Did the United States make a mistake in the early 2000s where they said, okay, we're going to invade Iraq and we're going to promote democracy or we're going to do these certain things to promote democracy? Is it just that democracy works in certain areas of the world like Switzerland, but doesn't work in certain areas of the world culturally? Or, you know, in other words, I felt like we were democratic imperialists in some ways, and it frankly didn't work. So do I have that wrong? Or what do you think?

13:10No, I mean, democracy can flourish everywhere. As you know, I've focused a lot on Asia and my work, and there are more people living in democracies and democratic societies in Asia than any other region of the world, right? So it's not necessarily a culturally particular thing. It's all about sequencing and sequencing is by far the most important word for us to genuinely answer your question. First, you must have stability, right? Law and order, or as Lee Kuan Yew used to say, order before law, right? So order, then law, state building, a sufficient degree of development and coherence in the society such that everyone is going to participate freely, fairly, equally.

13:52So you must get through the law order and law phase, the state building phase, and then you have the democratic practice. And remember what democracy fundamentally is. Yes, it is cultural and we can wax philosophical about that. But in day-to-day reality, it is a method of selection for leaders. And unless you have those conditions of stability, you are not going to successfully translate your democratic practice into good governance. And for political scientists like me, good governance is the highest virtue, not democracy for the sake of it. And again, one of the things we do in this index is that because you can score, because you score countries highly based upon the quality of their governance, not only if they're democratic, you allow for places like Singapore and the UAE and a variety of other countries that, quite frankly, are being admired everywhere today.

14:48As people in the West, in America in particular, wake up to the fact that we should emulate those systems, you make place for looking at ways in which democracy is either conditioned or managed or modified in ways that actually lead to good governance. And again, Anthony, it's like this is the kind of stuff that people have been studying for decades, and they've long since come to the conclusion that democracy is not enough, you need better governance. The conclusion that experts have come to is not, to go back to your previous question, it is not, oh, yes, democracy is not enough, therefore we should cancel democracy and restore monarchy.

15:27You have to have a pretty shallow understanding of the philosophy and the mechanics of modern society and governance to come to a conclusion like that, because it is well within our grasp to be more effective as a government and to have better governance without shelving democracy. I get asked all the time because some people think that because I'm so technocratic and talk about governance and de-emphasize democracy. We need more technocrats, Parag. I want technocrats to run a lot of things, by the way. Bring it on. So that's what I'm here for, baby. So, you know, so people will say that, oh, you know, I favor, you know, authoritarian regimes.

16:10But then when push comes to shove and people say, well, what's your silver bullet? You know, Anthony, one of my silver bullets is universal mandatory voting from the age of 16 up, right? You want to have a more legitimate democracy? Do that, right? So I am a rabidly pro-democratic practice. Like Australia, by the way. Australia is that, right? Australia has it, Belgium, a whole bunch of countries, right? So let's get that up. Let's legislate that. Let's make it up a holiday too, for God's sake, right? Let's do all those things. Then you'll have a better democracy, but you still won't necessarily have better governance.

16:45For that, you actually need to not dismantle the state. You need to make the state more effective. And again, smart countries don't talk about big government versus small government. It's always about smart government.

17:25For more details. The spirit of innovation is deeply ingrained in America. And Google is helping Americans innovate in ways both big and small. From improving emergency response times to protecting against cyber attacks, local, state, and federal governments are innovating with Google AI. This is a new era of American innovation. Find out more at g.co slash American Innovation. Okay. You say something about state capacity versus size of country. So explain that to people. When you're doing your evaluation of different states, what is the difference and what's the definitions? So state capacity generally is understood as all of the resources that the federal government or other branches of government have at their disposal to actually execute on policy.

18:22Right. So it's the proverbial collecting the trash, distributing payments, Social Security, Medicare tax collection as well, public services and so on, state capacity. It also obviously includes, you know, military, police and other kinds of resources. So hard and soft resources within the country. Some used to there used to be a strong correlation between the share of tax revenue collected by the state and GDP. Right. Or the tax revenue is a share of the budget. And that would correlate to capacity. That's that's sort of, you know, decoupled a little bit. But we do see that smaller countries that rank high in democracy or governance, right, whether it is Norway or whether it is Singapore and the UAE, are the most highly effective states today.

19:09Now, of course, you could say, oh, right, it's so much easier to run a small country than a big country, right? But what we're seeing is that, you know, there are large, large-ish countries that are starting to do a better job, or there are existing large countries like Japan and Germany that rank very high in state capacity. So we break out those indicators and what a country like America or a country like Brazil or other very populous countries could learn is to say, well, what are the elements of effective governance and state capacity where we are weak and other large countries are strong?

19:43Right. And you might say, well, we need to merge certain institutions. Right. Or we need to spend less money on bureaucracy or bring in more revenue and taxes or those kinds of things. Right. So and again, I think technology disrupts this conversation in the past. It was always such obvious and banal correlations between how much you spend and what effectiveness you have. But today, and this is where I think the overall theme around using technology for efficiency is on the right track, even if it's being executed in a kind of move fast and break things fashion, is that you can be a lot leaner with tech than, you know, we could be in the past.

20:23okay good stuff i think it's i think it's a i think it's a brilliant exposition of where we are um you're uh you got some crypto friendly regimes in there okay you like crypto you know you know who the crypto friendly regimes are i like i like blockchain as a mode of having secure and devolved services i like blockchain as a way of promoting peer-to-peer capitalism. And as a proponent of peer-to-peer capitalism, crypto fits into my sort of schema and my philosophical priorities in that way. To the extent it enables that and creates greater liquidity and efficiency, I'm all for that. So that's what I really want to see happen.

21:08And that's how you speak to the common man, because the common man has to deal with the frustrations of opening up a bank account and cashing checks. And these kinds of just almost humiliating indignities that still plague daily life. And even for people of means who have to deal with that, it's quite frankly sickening, you know, and no modern society should have to deal with that anymore. So if blockchain and crypto together are the way in which we do that, that's what I want to see. You look at the world and this is going to be part of our future one way or the other. It's going to evolve and it'll probably be different than we're all guessing at this moment.

21:43But you look at it and say it's going to be part of our future. And not only that, Cross-border payments on a retail level, wholesale level, between governments and central banks, absolutely. Yes, there's geopolitical motivations accelerating that, but it is a good unto itself that should be pursued. And by the way, as you know, one of the most important things we can do to unlock global growth is to reduce the friction in global migration, right? And also to make that secure. And I think that having your divorcing mobility from nationality is a major objective of mine. And if we can put passports on a blockchain, right, and if people can safely and securely share the personal data that is necessary to be allowed to cross borders and travel and deliver services and be consumers in other countries, that's where, as you know, a major, major source of future growth is going to come from.

22:37So again, a real world application. Yeah, a real world application that's going to make a big difference. Okay, so I've got five words for you, like I do at the end of every one of my podcasts. Damn, I forgot about this. You've got the five words. See, this is like, we get a lot of good feedback on the five words. Yeah, no doubt. Because they're going to catch me off guard now. I'm going to say the word trade. You say what? Protectionism. Well, that's what it's become. Yeah, unfortunately. You didn't say free. You said protectionism. OK, I say the word development. You say what? Growth. Migration.

23:18Freedom. Stability.

23:24Governance. OK, what about the word democracy?

23:32Enfranchisement. OK, but I was worried you were going to say obsolete. Is it obsolete? No, no, absolutely not. It is. It is more within our capability than ever before to actually achieve genuine democracy, not just in spirit, not just on paper, but in reality. And again, you know, it's a theme I've been working on for a long time. If we simply denigrate category, you know, sort of and classify countries based upon ideological viewpoints, you would come to the conclusion that a whole swath of countries, including, again, places like Singapore, where I live, that are canvassing the people 24 hours a day.

24:14Yeah, their point of view on every possible topic from the cost of living to education, immigration and implementing those policies. Right. You would be mistaken. So the ground reality, the ground truth. Right. Of countries is that democracy is practiced in many different ways, that it is a fundamental pillar of legitimacy. But, you know, let me just put it in terms that everyone can relate to. There's inputs and there's outputs. Input legitimacy and output legitimacy. Democracy is crucial for your input legitimacy. But governance, or to put it even colloquially for us New Yorkers, getting shit done is crucial for your output legitimacy.

24:52And no respectful, respectable society, no society where the people believe their system is legitimate doesn't have a good balance between the inputs and the outputs.

25:06100%. It's so well stated. I'm going to give you the last word. What are we doing next? Are we going to write? We're going to turn this into a book? What are we doing? If I didn't have two other books backlog, but so I'll give a shout out to Foreign Policy Magazine, which has worked with me tirelessly for the last few months to produce the periodic table of states and to release it in a super cool interactive format that people will see online. A book version of this would be called The Stability of Nations. I do need to Google whether or not someone's already done a book with that title. But if it's not taken, I will be sufficiently motivated on that basis alone to write the book, The Stability of Nations.