Henry Olsen

Welcome to the Puck Venture Capital and Beyond, the show that examines the changing landscape of our world. We'll have candid conversations with VCs, entrepreneurs, and thought leaders grappling with our current challenges and providing solutions to key problems we face as a nation. I'm Jim Beer, president of CMG advisors. This podcast brings change makers to the table to discover the inner workings behind their decision making strategies and ultimately how they got to where they are today. I am very worried about global debt.

I was worried about it ten years ago. It's like every investor in the world has not read their history books, which is to say that when governments that hold the power over currency and the gun get into trouble, they use currency control or the gun to get out of trouble. Today in the Puck, I sit down with Henry Olsen, a a senior fellow with the Ethics and Public Policy Center, who also serves as an opinion columnist for the Washington Post. We talk about his insights on how the populist challenges are upending the American political order and the impact these challenges pose for The US and the global political environment. It's a fascinating conversation, so let's get to it.

Henry Olsen, welcome to the puck. We are excited to have you here today. For those people who aren't as familiar with your background as I am, can you tell our listeners a little bit about your background and and your focus and where you write and what you study and even mention your podcast? Yeah. Sure.

Well, all of the above. There you go. I write for The Washington Post as a columnist. I, also write sporadically for National Review online and submit essays to The Spectator. I have written in the past for The New York Times, The Guardian, The Los Angeles Times, The Wall Street Journal, as well as other long longer, more nerdy publications.

I have a focus on global politics with a particular eye towards America and a particular eye towards populism. What's causing it? Where is it going? And how will the ruling elements of Western societies, which tend to be not dissimilar, where are they going to go? Are they going to be able to adapt?

Or is this, as I suggested in one recent essay, are we in the twenty first century where the late nineteenth century consensus was in the early twentieth century, holding on but ready to be swamped by social democracy? That leads me kind of kinda where I wanted to jump in because you do identify demographic trends and you were early on in catching the kind of populist trends of the decade that that led to the rise of Trumpism, and you did not find that surprising. So where did you kind of first get a sense of these changing attitudes and and what did you notice? Well, I first started to get a sense of the changing attitudes during the 02/2010 period is that I learned I realized relatively quickly that as Obamacare was becoming controversial and president Obama's popularity was sinking that it was very much a white working class phenomenon. And so I really dove into that in America.

And then I started to see similar things elsewhere. You know, that the twenty ten British election, David Cameron won. But the most telling thing was not the conservative victory, but it was the collapse of labor and the working class seats. It was a harbinger of Brexit. And I remember talking at an American Enterprise Institute event two or three days afterwards, and I noted this and said, look at the swings against labor in Hartlepool and Sedgefield.

And the guy next to me, who was a political analyst on television, said that's Tony Blair's and his chief spinmeister, Lord Mandelson, seats. Well, who holds them right now? The Tories. Because it didn't matter that they were labor. The shift was underway.

And then the more I looked, the more I saw. And it was it's now, should be playing, but people continue to not quite see how widespread it is and how deep this movement is. It's far from America, and political entrepreneurs around the world are trying to figure out how to harness it. Well, and if you talk about, I've been a little bit about the shift in the late twentieth century to kinda where we are now, how does that all come together? Well, the late twentieth century is the point at which the West, meaning the victorious powers in the Cold War, the, America and its close allies in Western And Central Europe and in Asia, had pretty much reached a consensus on a host of things.

It had reached a consensus on the use of force overseas. It had reached a consensus on what's known as the Washington Consensus, which is to say free trade, globalization, demilitarization, transforming the developed countries from building things to thinking things. You know, that's the knowledge based economy. And on social issues, it was generally benignly moving away from the traditional religious consensus towards some sort of secularism. And that was pretty much the center left and the center right.

This was a time when the center left parties proclaimed they had they were part of the third way, not socialist but not conservative, and you had Bush republicanism and similar movements in Europe and elsewhere. And what's happened in the twenty years since then is that on virtually every scale, virtually every front, that consensus has failed. It's failed to deliver in its own countries widespread rapid growth. There are people who are growing and doing extremely well, probably most of the listeners to this podcast. But if you're not in the knowledge economy and you don't have a college degree and preferably a postgraduate degree, you're either stagnating or falling behind.

It's created a global superpower that is now threatening the West itself, and that's, the communist controlled Chinese party. Twenty years ago, the consensus said, oh, don't worry about the fact the communists are still there. Economic growth will mean they will democratize. Well, let's see how well that stood up. The idea that you could control the economy nicely through monetary policy collapsed in the two thousand and eight financial crisis.

We call it the great recession. Everywhere else, it's called the great financial crisis. And then we just saw the mishandling of COVID, which is, shutting down economies and pumping money in to keep consumption up when there was nothing to consume because the economies were being shut down that created a global glut of money, which is fueling global inflation. Every failure is laid at the elite consensus. And then you, you know, add that to social changes, which for many are too far, too fast, and things like Russia or Iran, a seeming belief that nontemperate autocrats will act temporally and want to curry favor with democracies has collapsed in Gaza and in Ukraine.

So it's very hard to see where this consensus has done what it set out to do twenty five years ago, and populism is the revolt against that consensus. So we've got these challenges out there that, as you said, populism is the response, so to speak. If you talk about kind of the social democrats versus liberal democrats and how the parties have responded to this, can you explain the differences for our listeners so they understand? Sure. It used to be in the old consensus that politics in most developed countries fell neatly on a left right axis.

And well educated holders of property and people with good incomes were on the right, and people who were working class or super educated, there was always kind of the university class, but they were the tail, not the dog in the nineteen eighties, were on the left. And cultural issues were not as much in play, and everyone was united. Again, in the Cold War, they may have disagreed on the role of confrontation versus negotiation, but that too fell on a predictable left right axis. The right was more willing to confront. The left wanted more negotiation.

So what's happened now is that that's completely fallen by the wayside because the people who used to vote for the left are being not economically served and often have cultural concerns that used to be shared in their parties, but no are now openly disdained or driven out of those parties. And they don't see the old right as their answer, but they don't see the left as their answer either. You have, divisions on culture that also divide the coalitions. A lot of these upscale, economically upscale, center right, preferring voters on economics are center left on culture. We just saw this Australia voted on something called The Voice, which was they were going to give indigenous Australians Aboriginals and Torres Strait Islanders is the official term that they use a voice to parliament, which was very vague and unspecific.

Every upscale area in the country supported it, many supporting it with a higher vote than they gave the left wing in the last election. Every blue collar area, regardless of ethnicity, voted against it. In some cases, half of the people who voted for the Labour Party in the last election voted against this. It is the single biggest class break in the West since Brexit or since Trump, and it happened on Saturday. This is the sort of thing that's roiling our politics everywhere, and that's why you can no longer say what's left and what's right with clarity because the categories are all blending and mixing.

And it's much better to say, are you populist or are you consensus? Or as I said it in an essay about six years ago, are you on the ins, which is, say, the existing structure is sound, we may or may not need some reform, Or are you on the outs, which is say the existing consensus is broken, it needs substantial change? So just so we have a complete picture, can you also take a little bit of time and explain the difference about the emergence of the new right and and what that means as opposed to what it used to mean? Yeah. Well, the new right back in the eighties was what's now the old right.

That the new right, if you were following politics, when I was young in the seventies and eighties, were the anti government conservatives. They were the people who were also the what became the religious right, and this was the alliance that formed the conservative movement. And there was a they also tended to be more hawkish on the Soviet Union. And so if you were looking at politics in 1978, the new right would be the coalition that brought Ronald Reagan to power. Today, the new right is the coalition that is forming, that is trying to temper or move away from any of those elements, in some ways, hearkening back to older conservative traditions.

They tend to be more interventionist in the economy. They tend to want higher welfare state spending on people. They tend to want more control or intervention in trade. They are very willing to control or regulate big tech to correct perceived externalities and problems. The new right tends to be less willing to confront American adversaries overseas.

They out they bring in a reticence that was not part of the Reagan coalition. The Reagan coalition tended not to use the military as much as people might think, but they wanted a strong one and very much wanted to confront rather than negotiate the Soviet Union. The new right tends to wanna negotiate rather than confront. And, again, with any nascent movement, there's differences and there's nuances, but that's the tendency. It also tends to be strongly socially conservative, but often socially conservative in the nonreligious way, you know, which is say that this is a group whose social conservatism is as much about family and community as it is about abortion or gay rights.

I don't think there are very many people in New Right who talk very much or care very much about homosexuality, things that were in dispute between the right and the left ten or fifteen years ago. They care a lot about questions of community and parental rights and nationalism and patriotism, which was less a matter of political dispute fifteen years ago. And if we're trying to look at kind of how we got here, how do you think the Republican party got in this situation? Well, all center right parties are dealing with this. You know, in proportional representation systems in Europe, they're losing vote share to parties that form up to be coherent and consistent.

In systems like ours or Britain's with two parties that are pretty established and a electoral system that doesn't encourage minorities to foster and grow, which, you know, if you're a proportional representation system, you know, you can get a couple of percent and then grow next time. And systems like we have, you tend to just die out if you don't immediately succeed. They have entered two party politics. You know? And so what's happened with the Republican party is that pretty much nobody in any faction saw this coming.

You know? I was writing in the early two thousand tens talking about stuff like this, and, basically, it was patting me on the head and sending me home to eat my biscuits. And so what you had was Donald Trump, who probably by instinct, although there were plenty of data out there to point in this direction, I wrote a lot about it, came down that escalator and was the perfect mirror for the disappointed blue collar voter. He was somebody who wanted action rather than inaction. He was somebody who wanted intervention to help the working class rather than benign neglect and support of continued unequal growth in the American economy.

He was someone who was suspicious of foreign involvement, and he was somebody who was more patriotic than religious. This is like the perfect blue collar populist paradigm, and most blue collar populists in Europe have some mix of that. You know, some are a little more religious like in Italy or in Poland where the population is more religious, But this is what he was an early an early adopter, although there were people in Europe who were already doing this. And nobody in the Republican party saw it coming. They had no idea what their voter base wanted, and they had no idea what the swing voters wanted.

And Donald Trump brought millions of people into the Republican presidential primary who had never voted in the primary before. They may have voted Republican in the general election, but not in the primary. And he represented a large unrepresented group of base Republican voters, and that's how he swept 16 people aside. And since then, it's just steamrolled, you know, which is to say that more people who wouldn't have said they were Republican in the Ryan Romney days are now Republican, and people who used to say they were Republican them now say they're independent or Democrat, and that just entrenches the blue collar populist element within the Republican party. Picking up on that in terms of the frustration of the the working person, how do you see the two thousand and eight financial crisis playing into this?

Two thousand and eight financial crisis was a trigger for much of this around the world Because when economies collapse that way, what they tend what governments tend to do and what the elite consensus actually did was prevent working class people from going through poverty, but would not prevent people from losing their jobs or their homes, that the bailouts went to the financial institutions, not to the individuals. So, you know, when you think about there's two ways they could have shored up bank balance sheets. They can inject cash into the banks, or they could guarantee the loans that their borrowers took out. They chose to put money into the banks, and the borrowers went belly up. You take a look at employment in The United States.

You take a look at labor participation rates. This all plummets in 2008 and does not come back for a decade. You also had the very weak Bush period. If you take a look at I started I wrote about this in the middle of the Obama administration. If you take a look at recessions, before the Bush years, every recession, you would see the peak of income exceed the previous peak.

And that was not just true on a median. You would look at it every different way, by education group or by income quintile, and everybody did better until the Bush years when only the top did better. And that's when you saw seventeen years of median income stagnation, which was primarily borne by people below the median going down. And a lot again, this was happening in part because of what's now known as the China shock, that when you empower the greatest country in the world to become the manufacturing power of the world, you don't look too closely at how they're subsidizing their businesses to get there, you lose a lot of your capability. And millions of people were thrown out of work as factories shifted overseas, and that was partially behind what was going on in the Bush years.

And then you had the financial crash, which just turbocharged it. And it made people angry, and it made them convinced that the elites didn't care about them. You know? And this is in 2016, the twin revolts against the elites, the Trump revolt and the Republican party against the Bush era, which was their expression of the Republican side of the consensus, succeeded, and the Sanders of revolt against the Clinton side of the consensus barely lost. Had he had any appeal at all to black voters, he probably would have won, but that was what saved Hillary Clinton in 2016.

And and in other countries around the world, you can see the same thing. The two thousand eight financial crash triggers collapse in the working class and an embrace of radical politics. It's what fuels Brexit, and it's partially responsible for the rise in populism. In some countries, it's left wing populism. That in Ireland, the main populist, party is Sinn Fein, the former political wing of the Irish Republican Army, a terrorist group.

They embrace anti capitalist economics and nationalism, and they now lead the polls there because they have become what right wing populism is in most of the rest of the world, a working class discontent movement that puts nationalism and solidarity ahead of individualism and trade. So you talk a little bit about how the Republican party got there and and these other movements. What what about how do the Democrats fit into all this? Well, you know, the thing is that the Democrats have been both losers and the beneficiaries of this in the short term. They've been the beneficiaries of it because as the party where the consensus held and and Joe Biden continues to hold, that means that if you're a disappointed Republican who is part of the in group, the part that is not upset at the social changes in the country, who doesn't see anything wrong with the mid you know, the beginning of the century or turn of the century can Washington consensus just wants it tweaked a little bit.

But you look at a Biden led Democratic party, and you're very comfortable with that, that, which is why you have people like Bill Kristol, who are now ardent Democrats. Even if they don't adopt the phrase, they always endorse that side. But they've also been the losers of this because they are the ones who have lost the working class. You take a look at the two thousand and eight presidential election, and whole areas of the Midwest voted for Barack Obama, and they had been Democrat for decades, the Upper Peninsula Of Michigan, this group of manufacturing heavy working class counties in the Upper Mississippi that go through Wisconsin and Iowa and on the other side of Illinois. And look similar Elise Stefanik's district of Upstate New York voted for Obama.

And what happens in 2010 is they all vote against Democrats. And in 2016, they vote for Trump, and they have voted Republican in every election ever since. So what happens is this shift has not shifted the numbers very much. Democrats still have a slight edge in votes when it is populism, you know, represented by Trump versus an establishment consensus with a strong welfare state emphasis, represented by Joe Biden. But geographically, it has shifted.

They are noncompetitive in most of the Midwestern states. And where they are competitive, they're hanging on by the thread of their fingers. And it wouldn't take very much of a shift for the whole that whole area to become safely Republican. So the Democrats are a group that are beset well, it's their own populists. You know, when if you think about the progressives, what they essentially are is left populists.

They are people who believe that the Washington Consensus failed. Failed because it was too capitalist. It failed because it was insufficiently concerned with the environment, and they want radical change. So far, the Democratic establishment, unlike the Republican establishment, has held on, but it's not at all clear how long that's going to continue. They basically held on because Bernie Sanders was considered too radical and too old, but the next progressive champion could very well be considered less radical, certainly won't be 80, 70 years old, or have gone to Cuba and The Soviet Union during the Cold War, could easily be they could have their Trump moment in 2028 when Biden either has termed out or they're looking for somebody to take on the Republican president.

So that's one approach, right, which is that we have a new progressive that comes forward or we can have a new Republican that comes forward. But before we get there and as we're trying to navigate these things, it seems to me that both parties are debating the role of government on fiscal policy and on the economy. But then in The US, there's a huge part of our political identity that that's also resting on social issues. How do you see the parties or a new party coming forward? Otherwise, how do you see people navigating the relation between these ideals as they shift?

It's very unlikely there were that we will see a new party come forward unless one of the parties utterly collapses and won't join the other. And the reason why is the primary system, is that in the rest of the world, you don't have mass voter primaries who decide who carries the nomination. Some aspect of party insiders, whether they're the party bosses or paid members, as is the case in places like Canada, decide who bears that label. So outsiders can't really take over parties, which is why they create new parties. That's the only way to get into the marketplace.

Here, the outsiders take over the old parties and leave the brand name. You know, I like to characterize Donald Trump as akin to a hostile takeover of the Republican party. You know, the way I I've said it in speeches is that imagine if you're a hamburger entrepreneur and you've got an entirely new menu and so forth. In business, what you have to do is create your own brand and buy your own infrastructure and do your own marketing and slowly build market share. In politics, what you do is you go into a primary campaign and say, well, actually, this new hamburger is, is the McDonald's brand.

And if the McDonald's customers vote for you, you become McDonald's, and you inherit all of the McDonald's infrastructure. So who wouldn't do that? And that's what both parties are facing is hostile takeovers. Democrats at the presidential level have held on increasingly. At the congressional level, they're not.

And you see that trend slowly moving in that direction. And, of course, we've seen what's happened in the Republican party. So do you think there's room for somebody like a Teddy Roosevelt to come forward and and essentially reform one or the other party? That's the way I think it would have to go, which is somebody who is in tune with the mood of the electorate and can combine the new concerns with the old divisions. And in fact, if you take a look at American political history, that's how all of our change has happened, is that, you know, Thomas Jefferson did that, splitting the federalists and joining what he called in a private letter in eighteen o one, the soft federalists to his Republicans.

That's what Lincoln did, using slavery to take you know, the Democrats had been the number one party in America for sixty years, And but he creates a Republican party dividing the Democrats and uniting them to the core of the Whigs. That's what FDR does. And to a lesser extent, that's what Reagan does. So the thing is that you can't do this by directly attacking your party's base, which is one thing that a lot of people who would like to see a change happen is, you know, let's kick out the old guard. Well, great.

Now you're a minority in a different way because all in a two party system, all parties are big tent coalitions. The question is, does your tent fit more people than the other tent, and does it have some cohesion around it? So if you have somebody who does what these people do and understands how to tweak the old and offer a new solution to new problems that's broadly appealing, we could see another partisan realignment in this country. And I think that's actually what the country is begging for. It's begging for somebody and some party to consistently offer solutions to modern problems that are neither all progressive nor all conservative on the old left right spectrum.

Donald Trump could have been that person, but then he'd have to not be Donald Trump because that person would have to both be able to be a a sharp attack dog as well as being somebody who offers a positive vision and hope and can be a kinder and gentler person. All of the great leaders offered, you know, that. They could both attack and defend, be positive and negative, and Donald Trump is just incapable of that, so he can't build the coalition. When you look at what Kennedy is doing or what no labels is trying to do, and you look at people trying to build some kind of consensus out there, where where do you see that at this point? Is there any hope for somebody recapturing that kind of consensus before 2028?

No. Simply. No labels is essentially a attempt by the INSE to reestablish a vehicle for dominance in the face of populism. And as a result, it is. And doing it without actually answering the problems and questions that populism raises.

I liken no labels to the constitutional union party of eighteen sixty that as Lincoln was building his coalition, the Democrats split over slavery. You know, should you basically say it's not a moral issue or should say it's a positive good? You know, the southerners wanted to do say it was a positive good. The northerners wanted to say it wasn't a moral issue and the territory should vote for it. There was a fourth group called the Constitutional Union Party, which basically, as the country was dividing itself over slavery, said we shouldn't talk about slavery.

They had a one page platform that never even mentioned the word. And this is the modern no labels party. You can pull from right and you can pull from left. You can pull from Democrat. You can pull from Whig or in this day, Democrat and Republican.

But if you don't confront the problems that people are arguing about, you're not gonna get a new solution. You're gonna have the people left from the old consensus who simply remain with their head buried in the sand, and that's pretty much where no label says. You know, Robert f Kennedy junior, the thing to know about Kennedy is that he is right now the receptacle of disappointment with both parties. That 22% of people don't like Biden and Trump. Most of those, if you were to ask people right now, would say, yeah.

I'll vote for Robert Kennedy Junior. It's not because they know much about him or that they like him, but that, oh, I've heard of him, and he's not them. But you can't build anything on that. Right. And I think that the sort of politics of protests that he offers is not a majority solution.

It's one that can take people who are very angry and don't necessarily want to win or make a decision and hold on to them, but it's not one where you can grow and build a majority. You need to have a cohesive vision, not necessarily a ideological straight down the line. You need to have, as Lincoln said, a central idea from which all other ideas radiate and have something that you can coherently describe. And that's not where Robert F. Kennedy Jr.

Is. He has a wild, some left, some right, collection of enemies and pet issues, all of which coalesce around the idea that the establishment is wrong. But that's a tear down, not a build up. And you have to if you want to build the new majority, you have to be prepared to build up while you are tearing down. And when you look around at the world today, do you see anybody making progress in this area?

And and if so, how are they doing it? There are very few success stories. What we have is a lot of countries in transition. There were a couple of minor success stories earlier this decade with establishment figures who were reaching out and co opting some populist issues. But all of them because you can't just take an issue and run with it.

You actually have to have a new world view. Right. All of those ideas fail. You know? All of those leaders are either out of politics, leaving politics, or are are on the downward slide.

So what we have is an establishment worldwide that hasn't figured out how to create a new consensus that has sustained support. But we also don't have a populist that has figured out how to move beyond it's now pretty hard. 20 to 35% in most developed countries would be hard populist in a multiparty election, but they haven't figured out how to turn it into 35 or 40 on a consistent basis. And that's how you move in either be the dominant party in a PR system or become the dominant faction within one of the two major parties. They haven't figured out how to move from their beachhead to do a breakthrough and become the dominant, not simply a loud and significant minority.

They have not yet figured out how to become the dominating feature. I suspect that we're one elite failure away from somebody figuring out how to do that. That's why I talked about the multi front structure of the challenge to the West with respect to Israel. You screw up this war, or either bankrupt your countries or prolong it when they don't feel directly involved, you could easily see a populist leader using that to get that extra 10% of the vote and becoming the dominant feature in important countries, whether it's United States or Germany or France or United Kingdom or what have you. When you look at, you know, the twentieth century in a unipolar world and how it's changed and you look at, you know, foreign policy, where do you see the role of kind of China's system competing against the West system playing out?

Well, you know, the unipolar moment was the last decade of the twentieth century. There was no unipolarity before that. That. There was multipolarity or bipolarity. And right now, what we're seeing is a question whether we'll have bipolarity with stronger elements within the two sides, which is to say Western Europe was economically devastated by World War two, so they were not strong.

I mean, they were decent militaries, but they did not really have the weight to push back against The United States within that side of the bipolarity, and the Soviet Union was basically the only strong country within the communist side because China was huge, but it was backward, and all of the other countries were tiny, and they too had been devastated. So the question is, will we have a China led, nondemocratic alliance versus a US led democratic alliance? China can't dominate its alliance the way we dominated the American alliance because Russia is simply too big. Even though Russia has been weakened, it's simply too big to be utterly dominated by China. And then you have the question of, will the Europeans, who are much stronger economically, although not militarily, how comfortable will they feel in this?

Because, basically, the European elites would prefer not to confront China, but very much want to now confront Russia, whereas America's priorities are kind of reversed. We would like to confront Russia, but we have to confront China. And that raises the question of multipolarity. But for multipolarity to establish, you actually have to have power, which means the Europeans would have to be cohesive and have a military that matters, which would mean that India would not have to just have potential, but it would have to grow quickly enough and project military power so that it would be a real force to reckon with. Brazil could, play that role in this continent if it were you know, if Brazil suddenly figured out how to grow 7% a year and had a relatively stable government, It could be a mid range to low wealthy economy within twenty years, and its population is will be over 200,000,000 by that point.

Right. I think it's almost 200,000,000 now. It's a very big country. If it ever became wealthy, it could be a regional power with some global heft. And so that's not the world we live in yet, and part of the West's foreign policy has to be finding a way to not alienate these growing powers and bring them not as satraps into a uniform Western alliance, but rather avoid the real trap of multipolarity while ensuring that if it becomes a question of China versus America, that they would at least be neutral and preferably be on our side.

So we talk a lot about where the world is today, and one of the things we try to do at the Puck is kinda see where the world is going. And one of the things we haven't really touched on is worldwide debt, you know, not just in the West, but also in China and Japan, for instance. What role do you see if any debt plays in the next ten year cycle, so to speak? I am very worried about global debt. I was worried about it ten years ago, and it still amazes me that private capital will just pile into these government bonds of countries that increasingly don't have the growth to finance it.

It's like every investor in the world has not read their history books, you know, which is to say that when governments that hold the power over currency and the gun get into trouble, they use currency control or the gun to get out of trouble. And what does that mean? It means devaluation of the currency, or it means using, sovereign power to renegotiate the debts in some way. And China, you look take a look. One of the things I look at is when countries are growing, the share of the labor force that works in agriculture drops.

And some of that is people moving from farm to factory, and some of it is people simply coming into factories from non factory workplaces or they were idle before. So you take a look at The United States and pretty much from 1810 until 1980, we and it's really 1970. We have a pretty stable three, five, 7% drop in the share of labor force that goes to agriculture. As as recently as 1940, 20% of Americans lived on farms. But it took us 100, 150 to go from 80% or 90% in agriculture to 10% or less.

China has been moving 15% of its workforce out of agriculture each decade. You wanna know why property development is such a problem in China? Well, what's 15% of the Chinese workforce? It's about a 150,000,000 people. They've been build that's why they're building, is all of these people because they don't have huge population growth.

You know, some of it is they're taking people from elsewhere, but there's tens of millions of people who are moving from villages into cities. And where are they housed? They're housed in these huge sky rises. And what happens if if China just went back to the western norm, which is 5% of the workforce as opposed to 15% of the workforce? Well, that means they don't build 20,000,000 housing units a year.

And I suspect that that's what's going on with Evergrande is suddenly because the economy is slowing down, the motion's not happening, and all these things that they expected are not coming to pass. And what does that mean? It means an entire structure that the economy was built on collapses, and that means their government has to pick up that debt. That means periods of unemployment or underutilization, and countries that are hurting often lash out. So we shouldn't take this necessarily as a good thing, although, you know, in the long run, a weaker communist party is good for the West.

But rather, if they're looking at this as a challenge that is insoluble, there are other ways to try and rebuild your power base, and that could mean more rather than less adventurism in the years to come. Right. And then in terms of the Japanese debt and the Western powers debt relative to China, for instance, people talking about our deficit and the percentage of our deficit Jamie Dimon was talking about going to interest payments could become at a historical high. It sounds like you are concerned about debt. In terms of it playing out in The US, how do you see it playing out here?

Well, yeah. With respect to the West, the problem is, at some point, we basically added debt like there was no tomorrow during the teens and during COVID because interest rates were at a historic low. They're now returning not to historic highs or anything close to it, but they're returning to normal levels, which is to say, typically, in a five to thirty year bond situation, which is where the bulk of sovereign debt in The United States is issued, you demand as a borrower a return that's equal to the inflation rate plus a couple of percent. So if your inflation rate is 3%, you know, you would expect interest rates in the five to 7% range depending on how long your bond is for. Well, when that happens, you are suddenly having to tax yourself more simply to pay back the bonds.

You know, we now have, I think, $700,000,000,000 in net interest to the public, which is almost as large as the defense budget is larger than almost everything except for Medicare. And that's at an interest rate structure that is historically normal, not one where inflation picks up to five or 7%, so then you'd be seeing seven to 9% interest rates on your average yield. This is a huge problem for the West because if you use inflation to reduce that power, investment dries up, and you drive the holders of capital to hoard their capital. You know, of course, we've seen countries that use inflation to erode their debt, places like Argentina. They eventually collapse because, at the same time, they also don't create fiscal austerity.

You know, like, if what you wanted to do was use inflation to erode the power of the debt and, at the same time, impose fiscal austerity, basically impose a severe recession or depression on the country to create fiscal stability, and then you eased off on both. You could use it to get out of the crisis, but that's not what the West will do. And it can't abrogate the contract. So what it means is that, increasingly, what you're going to see is a West that is consumed with debt service, and that means underinvestment in public infrastructure. It means underinvestment in the military, or it means higher rates of taxation, which means underinvestment and consumption and lower economic growth.

Debt struck and we've seen this in Japan over the last twenty years is they allowed their public debt to balloon, and they've had a they're not a poor country, but they have had very little real economic growth for the last twenty years, and it's directly as a result of the public debt overhang. So it sounds like I mean, do you see the world continuing in this kind of direction with this insane polarization, or do you see things that are starting to happen that give you hope that things are starting to change or is it gonna take a crisis to actually shock us into starting to make material changes? Yeah. You know, I would like to say, gee, you know, people can change without crisis, but that's tended not to be the pattern in democratic history. You tend to need a crisis to delegitimize the old order and give rise to the new.

And there's many ways that crisis can come about. You know, for example, if The United States and Europe are so drawn in engagement in Israel and in Ukraine that it can't effectively respond to a Chinese grab of Taiwan, that would be lawful. It would destabilize the entire American alliance structure, but it would be much if that's the crisis that changes, that would be better for us than a depression and a worldwide bout of stagflation. Right. Yeah.

There's lots of ways to predict it, but the thing is that in order to adapt, you would have to really adapt. And what we have not seen anywhere in the Western world is an elite structure that is willing to say, fundamentally, we got it wrong or fundamentally, we need to change. You know, you did see that in Britain in the nineteenth century is that the aristocrats saw, unlike all of their almost all of their brothers and sisters on the continent and said, democracy is coming, and they accommodated themselves to the rise of democracy and manufacturing in a way that meant that Britain did not undergo radical revolution even though most of the countries on the continent did in some way or another. That is one of the very few examples of a elite that not only saw the need for change, but actually changed sufficiently that they were able to diffuse the potentially radical situation. What about when Teddy Roosevelt went after the trust and so forth and and we had kind of that progressive era?

Was that also a a movement towards change without a crisis? Yes. I think that's a good see, my interpretation of that is that that's basically an extension of the Lincolnian Republican Party adapting. But, yes, you know, Teddy Roosevelt and the trust busters, you know, again, you could have seen people who accommodated a new elite in the country and, consequently, a worsening of tensions between capital and labor. One of the reasons we don't have a socialist party in this country is because, you know, we have a social democratic lite party.

Basically, the Democratic party of Franklin Roosevelt is a low beer version of Christian democracy and social democracy in Europe. But we don't have demand for revolution in part because progressives reformed sufficiently to ensure that we were not going to have radicalism, and I think that is a good example that I should have brought up, and I'm glad that you did. Well, I yeah. I mean, I'm I'm trying to think about this area because, again, as you said, democracy typically has created a crisis to kind of get its act together. Even in college when I was studying poli sci, I remember thinking about the good news about democracy as you know that it generally works, but that for big changes to take place, it does seem historically that it's required a crisis.

And in that regard, by the way, what do you see as the role of social media in all this? You know, social media, like many technologies, has both good and bad elements. You know, the bad elements, I think, is that the medium discourages exposition of thought. It encourages the attack. It encourages the clever over the profound and the short over the medium size.

So in that sense, it's good at mobilization, but it's not good at persuasion. The other side, though, is not everyone uses social media in that way. Most people do not use social media for the Twitter wars. And it is a way is very good for politics because what it does is it eliminates the gatekeeper for information. Anybody with a phone or a computer can be somebody who is being involved in forming and shaping public opinion, which is the way it was for most of the American Republic until, you know, capital built itself.

So you had to have a radio station, or you had to have a television station, or you had to have a big newspaper to do that. So in that sense, it's a very democratizing force. And genuine democracy is messy because people have different opinions. But having that ability to organize and talk without having to get approval beforehand helps keep the lid on things because you don't have imagine if you had a world without social media. People may not organize in frustration as quickly, but they would probably explode in frustration more deeply when they coalesce because they will have been repressed indirectly.

There's no repression if you're involved in social media. You can get angry and so forth, but you can find people like you and not feel isolated pretty darn fast. And so in that sense, social media really helps keep democracies stable and peaceful even as some of its worst elements encourages intensity of opinion that's inconsistent with a genuine democracy. So as we're going through these, what I would say, times we're we're buckling up, what gives you optimism that we will get to a better place? What gives me optimism that we'll get to a better place is that the West is founded on a fundamental truth.

It's founded on fundamental truth of the equality of human beings. It's something that is unique in its derivation in the West. You know, it came to its intellectual and rhetorical expression in the West, but it is not at all limited to the West. And as a result, as long as it is advanced in a tolerant manner, you know, which is to say it doesn't become a Western religion that gets imposed on people, but as long as the fundamental equality of human beings and the differences that each you know, that we are one within a species, neither unity nor wholly individual. What it means is that we can offer hope to the world.

And you take a look at every other system, and every other system offers a degree of unity that can work within a narrow set. You know, it can work within an ethnos. It can work within a common religion, but it cannot govern outside of that except through force. So a Russian nationalism can govern Russians in a way that we might find unpalatable and that many Russians themselves find unpalatable, but it cannot govern ethnic minorities in the same way. A China that is essentially an expression of Chinese nationalism cannot treat other nations with respect because they do not hold them in respect.

They do not see equals. And so the West has a trump card in its back pocket, and that gives me hope. And it also gives me hope within our countries, which is, say, the the drive for dominance, whether that dominance is justified by religion or gender or skin color, is not, sadly to say, unusual in human beings or human history. Today, arguably, what we're seeing is a new priesthood of diplomas, but we know how to deal with the priesthood of diplomas. It's the same way we dealt with the priesthood.

It's the same way we dealt with the aristocrats, which is to say, you don't deserve power or control or unequal shares simply because you control access and levers of power. You have the ability you have to treat us as human beings too. And I think that's fundamentally something that, it is difficult over time for a democratic group to support a rule of a minority based on a caste or a privileged system because, fundamentally, people in in Western countries see themselves as equals, and they demand the respect and dignity that equality conveys. The thing is that a lot of the people that I talk to basically are saying to me, please tell me that I can avoid this cup. You know, this Jesus praying in the Garden Of Gethsemane for for Christians.

You know, father, let this cup pass from my lips. I'm sorry. This is here. There are these discontents. You can't wipe them out.

You can't disregard them. So deal with them, and deal with them in a way that sees the other as an adversary, not an enemy, somebody with rights, not somebody who should be treated as an other or a means with that, you know, to your end, and we'll get through it. As long as people keep those things in mind, we will get through it in one way or another because we have to solve these problems, and we have to solve them together. But what I would just say is don't think that the problems can be avoided. We have to deal with the economic dislocations caused by globalization.

We have to deal with the migration patterns that are being set off. We have to deal with the rise of autocratic powers who don't want to be amenable to persuasion. If you don't run away from the problem, you can solve the problem. Well said. Henry, I thoroughly enjoyed this, and I don't know what your feeling is, but I think it's gonna be a several year process as this builds up.

I I don't think this is gonna happen overnight. Oh, no. Change is coming, but I I think it's gonna take some time. Yeah. Might take a couple of decades to work out.

Again, crises can fuel rapid change, but no, I don't think we're anywhere close to the resolution of this. Yeah. Can I plug my podcast? Of course. Absolutely.

Tell us about your podcast. My podcast is Beyond the Polls. It is biweekly right now, but it will go weekly after Thanksgiving. And what we I do each episode is talk with the nation's leading journalists, political analysts, experts, and dissect this crazy thing called American politics. So if you're the sort of person who looks at what you see on television and says there's gotta be more to it, there is, and you can find it on my podcast.

Fantastic. Well, I I urge our listeners to check it out and I think that's a wonderful offer. Thank you. And it's free. That's even better.

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