BONUS: Sir Niall Ferguson on Trump vs Nixon

0:00I do think there is a striking resemblance in the geopolitical challenge that President Trump faces and the one that President Nixon faced. But the critical point is that the roles have changed. China is now the senior partner, and Russia is clearly the junior partner in what's sometimes called the axis of authoritarians. In 1969, the Soviet Union and China were basically at war, or close to war. And it was quite easy, in fact, for the Nixon administration to exploit that, to send Nixon to Beijing to establish a new relationship with China. This is not an option today because China and Russia are closer together than perhaps at any time in their history.

0:42And those in the Trump administration who think that they can somehow woo Putin away from Xi or maybe woo Xi away from Putin, I think are bound to be disappointed. Welcome to the Master Investor podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the world, giving you, our listeners, the edge. I'm here still with Sunil Ferguson, who returns for a bonus episode where we will explore the comparisons that are being made between President Trump and President Nixon. There's nobody better, Sunil, to have this extra bonus discussion with.

1:20But we also have another aide to lead to this discussion, who also knew Nixon pretty well. and that's my late father, David Frost, who of course did some famous interviews in 1977. To tee off and just give us a taster for why some people compare the two, here is a famous clip from the Frost-Nixon interviews in 1977. In the Houston plan, it's stated very clearly, use of this technique is clearly illegal, it amounts to burglary. Why did you approve a plan that included an element like that, that was clearly illegal. Yes, well, burglary is the word, but another way to put it is that you get the information that you need.

2:05There are some actions that have to be covert. By covert, let me put it this way. Or in this case, illegal. Well, let me say that it is legal in my view. So what in a sense you're saying is that there are certain situations, and the Houston plan or that part of it was one of them, where the president can decide that it's in the best interest of the nation or something and do something illegal. Well, when the president does it, that means that it is not illegal. By definition. Exactly. It is a heart-stopping clip, which I've seen a thousand times, but it always strikes me. I mean, there's just a quick cheeky comparison between the two there.

2:55There is. I feel sure that President Trump would be nodding in agreement with Richard Nixon where he sat here watching the clip with us. Of course, it's not true. The president is not above the law. And of course, Richard Nixon's downfall illustrated that. And so I think what's interesting about that famous clip is the nervous, uneasy Richard Nixon trying to find his way out of the trap that your father set for him with the burglary word. I mean, if you've authorized a burglary and you're authorizing a crime and the president doesn't have that power. Of course, Vladimir Putin has that power and Xi Jinping has that power.

3:45The president of an authoritarian regime has the power to approve any crime. But that's not the case in a constitutional republic like the United States. So one of the other comparisons and stuff that I think is overlooked that doesn't come up that much is that, of course, President Nixon pulled America off the gold standard in the early 70s and imposed tariffs on the rest of the world. I mean, in that sense, fairly similar. 1971, the summer of 1971, was the summer of the Nixon shock when Richard Nixon actually inflicted two shocks on American allies. The first was in July when he announced that he was going to go to China and meet Mao Zedong.

4:30That came as a huge shock, especially to the Japanese as well as the Taiwanese and the South Koreans. And then the second shock was in August, and that's the one you alluded to, There was no gold standard, but there was a legacy, the Bretton Woods system, of the gold standard, which connected the dollar to gold. That link was broken in August 1971. So the dollar weakened not only relative to gold, but relative to other currencies in the wake of that. At the same time, Nixon imposed a 10 % tariff across the board on all imports into the United States. So I've been arguing for a while that to understand Trump 2025, you need to understand Nixon 1971.

5:14And it works quite well, firstly, because they knew one another. Fascinatingly, one of the first people to spot Donald Trump's political potential was Pat Nixon back when the couple met the young Donald Trump in New York in the early 1980s. And there's a fascinating correspondence between Nixon and Trump where Nixon says at one point, Pat saw you on TV last night and thinks you have a big future in politics. Well, they knew a bit about politics than Nixon's, didn't they? I didn't know that. I mean, the second thing about this parallel that works well is that I think in many ways Trump sees the world rather as Nixon did, a world in which the United States can't do everything.

5:57It doesn't have limitless resources. And its allies are kind of freeloaders, especially the Europeans, but also to some extent the Asians. So I think there's something quite Nixonian about Trump's strategy. And that's been missed by most commentators who want to draw wild analogies with, oh, I don't know, Hitler or Julius Caesar. So this leads, of course, to people wondering, very similar tariffs on the world, anti-free trade type mindset. I want to play this next clip to you, which you won't have seen because nobody's seen this. Dad obviously did 28 hours with Nixon, which meant there was a lot left on the cutting room floor, including some of his long answers on economic policy, which didn't make the cut for the final program which aired.

6:38This is Nixon talking about whether the UK should or shouldn't have joined the European economic community as it was back then. I think it's quite interesting of his overall take on free trade. I'm not sure that the common market is a good thing for Britain at this time from a business standpoint. I'm not sure that the common market may be a potentially dangerous competitor to the United States or not. But of this I am sure. I believe that for Europe to get together, to cooperate economically and culturally, and on any other basis, that every area in which you can develop cooperation in the so-called peaceful vistas, this means that the possibility of continuing to cooperate in security will grow.

7:50I want Europe to be strong, united, and prosperous. And I think that's good for America. And incidentally, if the common market does become, as I'm sure it will, as it becomes more united and the barriers go down, and the uncompetitive companies go out of business. If it does become more competitive, so be it. Then it makes the United States become more competitive too. Our businesses have got to do better. And who's going to benefit? Well, I'll tell you, that's most of us, the consumers, here in Europe and around the world. I mean, that's a clip, obviously, that's, as I said, never aired. What's your reaction to that?

8:36I mean, he's actually much more traditionally right of center free trade in that clip. It's very interesting to listen to Richard Nixon on Europe because his administration supported British entry into what was then often called the common market. For Nixon to become skeptical about whether that was in Britain's interests just as soon after as 1975 is very interesting. and one wonders what had prompted that. The other thing that's striking to me is that he says he wants Europe to become more integrated and therefore to become stronger, even if that means it's a competitor with the United States.

9:19I was thinking that President Trump's recent speech to the United Nations General Assembly had some similar qualities to it. He said, I want Europe to be prosperous, but you're ruining Europe with immigration and green energy policies that are ultimately harmful. So rather like Richard Nixon, Donald Trump has a view of the world, which is that Europe should stand on its own two feet, and it shouldn't have to rely on the United States. In fact, it's desirable that it should be economically prosperous so that it doesn't depend on the US for its security so much. This is a good example of the ways in which their thinking lines up.

9:59I think Trump has been more hostile to the European Union in his time. But of course, the European Union today is a radically different thing from the European economic communities back in the mid 1970s when Nixon was in power. And then just finally, to continue this comparison on perhaps the most important topic, and you've talked about this before, I mean, whether or not Nixon's approach to China is sort of what Trump is pursuing towards Russia, that you think we actually want to peel them back from becoming closer friends and therefore soften our stance on a country that otherwise could be seen as an adversary.

10:37Do you think that's the motivation for Trump being soft on Russia? And more importantly than that, is it going to work? Well, I do think there is a striking resemblance in the geopolitical challenge that President Trump faces and the one that President Nixon faced. Triangular diplomacy was an expression from the early 1970s referred to the relationship between the United States, then the Soviet Union, we'd now say Russia, and China. And it's that triangle that still preoccupies policymakers in Washington, to say nothing of some of the other problems they have to grapple with, notably the Middle East, which is as big a problem today as it was back in 1973.

11:15But the critical point is that the roles have changed. China is now the senior partner, and Russia is clearly the junior partner in what's sometimes called the axis of authoritarians. In 1969, the Soviet Union and China were basically at war or close to war. And it was quite easy, in fact, for the Nixon administration to exploit that, to send Nixon to Beijing to establish a new relationship with China. This is not an option today because China and Russia are closer together than perhaps at any time in their history. Xi Jinping and Vladimir Putin see one another more often than any two world leaders.

11:54And those in the Trump administration who think that they can somehow woo Putin away from Xi or maybe woo Xi away from Putin, I think, are bound to be disappointed. But that's certainly what they tried to do when they got Putin to come to Alaska. They tried to cut some new deal with him over Ukraine, but it failed because the Russians turned up and clearly weren't sincere about Trump's peacemaking efforts. So now I think it's so long Putin, hello Xi Jinping, Trump is going to make the same play. He's going to meet with Xi Jinping. Perhaps there's going to be a summit in Beijing next year. My hunch is that that might go further than the peace feelers towards Russia because there's a deal to be done with Xi Jinping, a deal over Taiwan and a deal over semiconductors.

12:40So I think that's where we're going. I think Trump is going to end up in Beijing just as Nixon ended up in Beijing in 1972. And Trump is going to milk that for all it's worth on TV as well as on social media, just the way that Nixon milked his visit in 1972 on what was then terrestrial networks. Well, I'm afraid on Sky News, we'll probably be giving him the airtime that he wants from that. I have no doubt. Sunil, honestly, there's nobody in the world I would have rather reflected on those fascinating topics with more. I really do appreciate it. And you have part two of Kissinger is coming out when?

13:15I very much hope to publish that book in the next 12 to 18 months. Well, I can't think of a more complicated thing to have to plow through. So that's very fast, all things considered. And we look forward to that immensely. And once again, thank you so much for joining us here on the Master Investor Podcast. It's been a pleasure, Wilfred. So Neil Ferguson with us there as a reminder, not that there was any investment discussions in that part of the podcast, that nothing you've heard on the Master Investor Podcast should be considered direct financial advice. Next week, we'll be speaking to Dan Moorhead, the crypto hedge fund manager.

13:50Make sure to tune in for that. And if you've enjoyed the conversation, please do subscribe and leave us a five-star review. The Master Investor Podcast is produced by Paradine Productions and Master Investor Podcast Limited in association with Birdline Media. If you've enjoyed the podcast, please do subscribe on YouTube or click follow on your podcast platform and then you'll be automatically notified each time a new episode drops. Once again, our thanks to Sunil. Thank you.