Gary Gerstle

Welcome to The Puck, Venture Capital and Beyond, a show that examines the changing landscape of our world. Before we dive in, a quick word about who I am and why we're here. I'm Jim Bier, corporate lawyer and restructuring professional. I've spent the last two decades helping companies navigate their toughest transitions. And about eight years ago, I found myself having fascinating conversations with clients and friends about everything from venture capital to the broader shifts happening in our economy and society.

Those discussions were simply too good, so the puck was born. Now while we started on venture capital, hence the podcast name, the Puck Venture Capital and Beyond, We've naturally evolved to focus more on the and beyond portion of the title. Today, we explore how business intersects with the bigger forces shaping our world. I still run my restructuring practice by day, but now I get to host these conversations by night. It has become one of the most rewarding parts of my life.

Today's guest continues that tradition. If you're really rich in this country, you pay a higher share of your income and taxes, and you recognize that the less fortunate should be expected to pay less. But who is going to arrange that kind of politics in America? I think if people are gonna be asked to accept pain for a better future, there has to be a sense that this pain is being shared. On today's episode of The Puck, I talked with Gary Gerstel, an author, professor, and historian who focuses on contemporary history and political orders.

This is an idea he helped define back in the nineteen eighties and his most recent book, The Rise and Fall of the Neoliberal Order lays out for readers a longer term look at political consensus and asks the question, what is a political order? We have a great discussion about this over the next hour. Gary podcast. Thank you for having me. So I'd love you to share a little bit about your background and also how you came to write your most recent book, The Rise and Fall of the Neoliberal Order, America and the World in the Free Market.

Well, I'm a historian of The United States, forty years of teaching at multiple universities in The US, And, ten years ago, I got an offer to teach at the University of Cambridge, England. And I said, why not? Let's do something adventurous at at my age. And I went to England, spent ten years at the University of Cambridge teaching American history there and teaching American history as a foreign subject. By that, I mean, I was teaching it to British students for whom, you know, they have a lot of knowledge of mass culture, but they don't really know much about The United States beyond mass culture.

So it was a really interesting experience for me to render American history legible for people living outside The United States. I have been gravitating toward contemporary history. By that, I mean the last fifty years. That's not where I started, but, I got really interested in that. And then I had the experience of going through Brexit and Trump in the same year, 2016, Brexit in June, Trump in November.

And neither of those events could I explain or understand. And the book, The Rise and Fall of the Neoliberal Order, America and the World During the Free Market Era, was an effort to make sense of these earthquakes in US and British politics. I didn't write about Britain in the book, but Brexit and Trump are certainly at the same moment, a kind of populist uprising against full of anger, full of rage, wanting to direct countries, the voters who voted for Trump and Brexit wanting to direct their countries in, into a different direction. And the book became an effort to understand that. Most of the book is not about Trump.

It begins actually in the nineteen thirties and forties, with a different political order, the rise and fall of the New Deal order, as a way of preparing the story for the rise and fall of the neoliberal order. But the heart of the book is is really from the 1970s to 2020, and it really is a history of our time, and it's an effort to understand the circumstances that made possible the shocks of 2016, and then in an effort to understand in a very preliminary way what these shocks meant going forward for The United States and the world. What I brought to that project was the concept of political order, which is an idea I developed a quarter century before 2016. In 1989, I co edited a book with Steve Fraser called The Rise and Fall of the New Politics and Society in America from 1930 to 1980. And the concept of political order is meant to break out of the two, four, six year fixation that Americans have on political change, our consciousness is driven by, quite naturally, by the election cycles.

The idea of political order is that not all developments in American politics can be understood within those two, four, and six year cycles. Some developments take much longer to come to fruition, and then they dominate for a long period of time. And the rise and fall of the New Deal order, Steve Fraser and I had argued that there were core principles of the New Deal, especially with regard to political economy, that dominated American politics from the 1930s through the 1970s. The most important principle was that capitalism left to itself was too chaotic, too injurious, too much a maldistributor of wealth, too much a denial of opportunity to be left to its own devices, and that in order for capitalism to succeed, it had to be managed by a strong government in the public interest. And we charted in that book the rise and fall of this political order, and I became interested in telling a similar story about a political order organized around the theme of neoliberalism.

Neoliberalism meaning release capitalism from its regulatory constraints, let its animal spirits soar. That's the best way toward wealth, opportunity, affluence, possibility. That's the Ronald Reagan story. And so I undertook in the rise and fall of the neoliberal order to tell the story of how this very different political order arose from the crisis of the nineteen seventies and the and the collapse of the New Deal order, and its core principle with regard to political economy was just opposite of the New Deal order. If the New Deal order sought to manage capitalism in the public interest, the neoliberal order sought to release capitalism from its regulatory constraints and let it flourish without limitation.

And the book that I wrote tells a story of the rise of that political order and then its crack up following the financial crash of two thousand eight, two thousand nine. The key element of the political order is when an opposition party feels that the dominant principle of political economy is so powerful that they have no alternative but to acquiesce to it. And so when I tell the story of the New Deal Order, I focus on Dwight d Eisenhower, the first Republican to be elected in twenty years, 1952. And the big question for him is, is he going to accept the big government that the New Deal had established, or is he gonna be a good Republican and roll it back? He accepts the New Deal pretty much lock, stock, and and barrel.

And the parallel case in the nineteen nineties when Bill Clinton becomes the first president Democratic president, not twenty years, but sixteen years since Jimmy Jimmy Carter to win election, is he gonna roll back the Reagan revolution, or is he gonna acquiesce to it? And the story I tell is it's not a familiar story, but I think it's the accurate story, is that he acquiesces to the principles of the Reagan revolution and becomes, in some respects, even more of a deregulator than Reagan had been, orchestrating, legislation that frees the Internet revolution from any serious form of government regulation, deregulating Wall Street, rolling back the welfare state. We could go on with his deregulatory, impulses. And once Clinton and the Democratic party was on board as when Eisenhower was on board with the New Deal in the fifties, this signifies that a political movement has gone from being a political movement to being a political order, having the capacity to order political life across party lines because the idea the core idea of that order has become so accepted, so dominant that politicians see no alternative but to be supportive of it if they want to come into power.

So what I'm hearing you say is that we had this period that came out of a crisis because there was a great depression and a stock market crash that led to the new deal order. And then we had the sixties and the seventies and the crisis of inflation and the lack of faith in government because, among other things, by the Vietnam War that led to the, quote, Reagan revolution. And now it feels like we're in some kind of transition period where we've kind of lost faith in everything. We haven't had a, quote, lasting crisis yet, although maybe we're dancing around one with COVID and polarization and so forth. But how do you, from a historical perspective, describe the period we're in now?

It's a period of volatility without political order is the way to to describe the current moment. Neither party being able to establish its power continuously from election cycle to election cycle. And, of course, we're nowhere near either Biden or or Trump having such command of the core principles of governing the economy so that it compels the opposition party to come aboard. So we are in a a period of volatility, which is a period of transition. We are moving towards something other than the neoliberal order, but what that is going to be is not yet established.

You are right to focus on economic crisis as the trigger for the collapse of old orders and the rise of new ones. So the Great Depression brings the New Deal into being. The Great Recession of the nineteen seventies brings the Reagan revolution and neoliberalism into into power, and, it's it's Vietnam. It's inflation. It's also a fundamental the beginnings of a fundamental reordering of the of the global economy in the early seventies, you had oil suppliers in The Middle East saying we are no longer gonna be controlled by Anglo American oil companies who decide how much oil they want to extract from the ground and at what price they're gonna sell it.

The Saudis begin to say, this is our oil, and we're gonna determine the price and how much we extract. And the over the Arab Israeli war of nineteen seventy three, this becomes a flashpoint. And for a time, Saudis just cut off their oil to the West because the West is resupplying Israel in its fight with its enemies. And this signals a, a reorientation of the global economy where the resource producers of the global South begin to challenge the power of the global North. At the same time, the period of unchallenged American economic hegemony of of the world coming out of World War two ends.

The US was the only industrialized country with its industrial plant intact at the end of World War two, so it enjoyed an incredible period of unrivaled power. It had no serious challengers. Well, the 1970s are when electronics from Japan began appearing in American stores, and Japanese and German cars began appearing, and suddenly the unassailable dominance of American industry is challenged. And so this generates a profound economic crisis, which generates the neoliberal order. The neoliberal order itself fractures in the great global financial crash of two thousand eight, two thousand nine.

If you wanna find a point of trigger that cracks the authority of the neoliberal order, that is it. And the decade after that, you have the rise of Trump on the right and the rise of Bernie Sanders on the left, the the second most successful socialist in all of American history. And as different as those two men were, they share two things, New York roots and a certain brashness that went with it, and abandoning both cases the worship of free markets as being the road to prosperity, economic development. They are they were in the language of the time protectionists, meaning we should be able to protect our markets and determine the what kind of trade we're gonna have with our trading partners. And if you were a protectionist in the heyday of the neoliberal order, you had no chance of being elected president because the dominant view was you had to open the entire world to free trade.

And both these men in 2016 begin to talk about it's more important to protect the jobs of American workers than to open the world to free trade. And I even talk in my book. I talk about a speech that Trump gave to steelworkers in Western Pennsylvania in 2016. And you could slot Bernie if I if I read that speech to you and I asked you who gave this speech, Donald Trump or Bernie Sanders, you wouldn't be able to tell because they were making similar points. So the abandonment of the worship of the market, the abandonment of free trade, the abandonment of creating a globalized world where everything could move without barriers, people, goods, capital, information, We're in the throes of a major, major, transition to something else.

It's very significant in this regard that the tariffs that Trump put in place on China, Biden did not remove One of the principal economic goals of the new Trump administration is to increase tariffs, on all sorts of trading partners and, and on all sorts of goods. This would have been unimaginable during the neoliberal heyday. So we are clearly moving in a in a new and different direction, but it's also the case that it's taking much longer this time than it took in the nineteen seventies for a new political order to establish itself. So in the took the 1970s and eighties for the Republican revolution, the Reagan revolution to happen approximately twenty years. Well, we're almost now twenty years out from the great financial crash of two thousand eight, 2009, and we're nowhere near seeing a new political order establish itself.

So as I look at the current moment, I see a much more extended period of volatility, uncertainty, and lack of clarity about exactly where we are going. I think in four years, we'll have a much better sense. But we have to grapple with the fact that we have a volatility in our politics that political orders have a way of resolving. But until a political order establishes itself, that volatility can't be resolved and becomes a a source of discourse and a and a problem for politics in its own right. So, Gary, when you look at that twenty year period, the sixties and the seventies that brought us Reagan, it was like government can do no wrong after World War two, so to speak, and then now government can do no right, Reagan.

Right? Then we go, you know, business can do no wrong, and now we're in this kind of, as you say, this in between period. Is part of the challenge here that we've tried both. Right? We tried government can solve everything, business can solve everything, and now we're back to this point of, well, it's not quite that black or white, and we now have to redefine and come up with more of a balanced approach?

I think that would be one way of of thinking about, of thinking about it. It's unclear, as I said, exactly where we're going. I would say Biden was trying to affect that kind of balanced approach because he was using government power to direct industry, but in the form of incentives and subsidies rather than mandates. You must do this. You must do that, which is an effort to chart a middle way.

It's unclear where Trump is gonna take things because there are two visions cohabiting in the Republican Party, and one of them is to restore a kind of neoliberalism. You see this in Elon Musk and his influence on the administration, new government agency that's going to cut $2,000,000,000,000 from the government budget, for the year, allegedly. This is an extreme form of deregulation that is being imagined, and this is an effort even though Reagan is not invoked, it it's, an effort to bring back the spirit of Reagan. One of the key figures in the Reagan years and beyond was a man by the name of Grover Norquist who headed up a taxpayers' institute, and he had a favorite line, which I love because it's unforgettable. Said he wanted to shrink the federal government to the point where you could drown it in a bathtub.

And, you know, there are elements of in the in the Trump coalition now that want to do that, but there's another group that does not want to do that and recognizes that govern that that wants an industrial policy run by the government to ensure that economic activities and investments benefit Main Street rather than Wall Street. And one of the people who has articulated this was JD Vance in his acceptance speech to the Republican convention. He clearly said, we wanna put Main Street over Wall Street. We want to create circumstances where people can have good jobs. And if that means the government has to direct the economy in various ways, that's acceptable.

And he has allies in the form of Josh Hawley, senator from Missouri, Tom Cotton, Arkansas, Marco Rubio to a a certain extent. And I think we're gonna see a battle within the Trump administration over which of these sides is going to win out. And once we see which is going to be the victor, we will have a sense of whether the pendulum swings back to a kind of free market economy, at least domestically, or whether a third way is going to be pursued and whether it's gonna be achieved. What worries me, however, about the period of volatility we're going through is that many people perceive that democratic government can't get things done anymore, right? I've been focusing on volatility and uncertainty viewed from a different angle.

People might ask, Well, how come our governmental institutions can't find a way forward after all these years? And I think what we're seeing in The U. S. And also internationally is a decline in the in the in confidence in the ability of government institutions to solve problems. And by government institutions, I mean legislative institutions, Congress, Westminster, Bundestag in Germany, National Assembly in France.

And in the midst of this declining confidence in government and the declining confidence in government is most intense among the young, and who can blame them if your political memory extends only back to 2001, say, the, a declining confidence in the ability of governments to to govern. What we're seeing is a growing affection, for this for strong man politics, which are not necessarily democratic politics. But if we look at the leaders with authoritarian tendencies, and I include Trump in that, and who else would I include? Orban in in Hungary, Erdogan in Turkey, Putin in Russia, Netanyahu in Israel, Xi in China, Modi in India, Bolsonaro in Brazil. I mean, you see the global scope of strong men rising saying, we're gonna cut out some of these democratic niceties so that we can get things done and we can solve problems.

What we're seeing, and this is can't be understood within the pendulum metaphor, is this declining confidence in the ability of democratic institutions to get things done, which raises the possibility of whether in the twenty first century we are, in a sense, moving out of a democratic era that has dominated the world since the nineteen forties and maybe moving into a different set of way ways of governing society. We cannot exclude that possibility from the world's present and future. And, Gary, I'm concerned and scared by the same issues you raise, and and I guess that leads me to a question. When I was a poli sci minor in college, I remember thinking democracies only really work in a crisis, That big decisions only get made in a crisis. That Lincoln, it required a crisis.

With Roosevelt, it required a crisis. I mean, Roosevelt tried to pack the court. He was elected four terms, to four terms. I mean, he basically was a virtual dictator. Lincoln suspended habeas corpus.

I mean, as a historian, is it true that big things happen in democracies when there's a crisis? That's not to say, by the way, that we can't do it another way, but to frame the issue, to understand where we are today, is that one of the inherent challenges that democracies have faced? Can democracies get things done only in a crisis? In a governing system as decentralized as the American system is, and, this is separation of powers in the federal government and, of course, the division of powers between the central government and the states, It's certainly true that it's hard to get big things done, and the opportunity to get big things done usually come in small windows of time. And that window opens up, and then it quite rapidly closes.

So, in a sense, in torsing that view of yours. However, the you're right that both Lincoln and Roosevelt took on many powers to themselves, Lincoln in wartime and Roosevelt even before wartime, but they were also committed to reinvigorating the democratic process after the war ended or after the crisis ended. And I think you have to regard The United States as leading a renaissance of democracy in the world coming out of World War II. What is maybe different about this period of time that we're living through is, first, has the window to change things already in a sense closed? Because we've had two crises in the last twenty years.

The first is the two thousand eight, two thousand nine financial crisis. And the second, of course, is COVID, which was an immense, not just it was not just a pandemic crisis. It was a major, major economic crisis. And one can say that arguably governments have not seized the same opportunities they had earlier to set things on a new path. Now the people who support Trump say, okay.

We've got him reelected. We've got both houses of Congress. This is our moment. They clearly have a plan, so it may be happening. But I'm still struck by the extended period of time in which democracies have failed to respond to crises by putting in place a new set of policies that chart a very clear way forward.

And what may be hanging over a lot of this, something we haven't mentioned it yet, is the climate crisis, which is not susceptible to a quick fix. And we have to ask, can democracies, given all the different constituencies, can they ever all get on the same page to deal effectively with the climate crisis? And part of the climate crisis may be asking people in some respects to live with less. And if you say democracies only thrive in crisis, I would also say democracies arguably only thrive when people have a perception that they are improving life year to year, election cycle to election cycle. The era of democratic success in the global North and The United States and Europe was an era of great economic development and and affluence, and we don't have that confidence yet that we can restore that level of affluence and opportunity in our society.

And one of the questions we have to ask is how effectively can democracies function when democracies are asking of their citizens to do with less today than they had yesterday. And it's not clear democracies can get the governing majorities to do that, and that may account for some of the volatility we're experiencing. Well, and I think that ties into one of my concerns, which is that both parties since 2007, 2008, and 2009 have run our deficit up over $20,000,000,000,000 And it's because nobody's been able to make the tough financial decisions. And to me, when everybody talks about the middle class angst and what's going on, I think that we've been gaslighting the American people because we've had asset inflation for twenty years. Health care more than doubled.

Housing more than doubled. College more than doubled. Now we've got inflation everywhere, and the middle class is once again very, very angry and hurt. And I think, ultimately, from a historical perspective, if you're gonna ask people to compromise and try to deal with some of the wealth inequality, you've got to give people reason for hope and fairness. And I don't think we're having, though, that dialogue in a way that allows people to sense what's in it for me to compromise.

I would I would agree with that. And, I think the Biden administration had a plan for restructuring American economic life so as to extend more opportunities to ordinary people, and their plan may still pay off. But their plan was to invest, invest, invest in infrastructure, in the green energy transition, reshoring of manufacturing. The plans are so grand and cost so much money that it's gonna take a while for our understanding of what the actual yield is gonna be to to manifest itself. It certainly has not manifested itself yet, and that's one of the reasons why Harris was not elected in the recent election.

So but I I I agree with you that there's a lot of anger out there in the electorate, much of it focused on two issues, which are connected in a way, inflation on the one hand and immigration on the other. And the two are connected because inflation, every time I go to the grocery store, Americans are saying the price of eggs has gone up another 5%, and the perception is that immigrants are taking jobs from Americans and keeping and and keeping wages low. But it's not simply those two issues. I think there's a profound distrust and a profound lack of hope and optimism in the future of America. And when that feeling manifests itself, the reflex among voters is to say, throw the bums out, throw the Democrats out because they haven't delivered and too much suffering is going on.

And I hear promises about the economic turnaround that is that is that is occurring, but I have not seen it yet in my own life. And I guess, Gary, my question to you is, is that an accurate perception? Meaning, are we being gaslit by algorithms in an inappropriate way, or are there real challenges that, for instance, came out of globalization and the world is flat where we raised up 2,000,000,000 people, but we sold our middle class a little short because we ship so many jobs overseas. I mean, is it a communication issue where we really have to have us get back on track, or is are these problems that we really can't deal with? Well, I think they are they are problems that we that we can deal with.

I think the roots of this lie in the promises of neoliberalism that neoliberalism couldn't keep. The neoliberal creed said open the world to trade, open the the world to free movement of people, open the world to comparative advantage, every nation using what it does best to contribute. This will be the path toward economic development, economic affluence. And those who supported these policies acknowledged from the start that inequality would increase under these circumstances, that more money proportionally would go to the very rich than would go to the poor. But the neo the neoliberals also argued that inequality wouldn't matter because all boats would rise, that those who were poor would be better off tomorrow than they are today, and so they wouldn't really care that the rich were making proportionally more because life would be improving for everyone.

That turned out to be a fantasy, and opening the world to trade meant that whole districts of American manufacturing life collapsed, and the areas in which these people were living were left to rot, and then were struck by unemployment, despair, and then the opioid epidemic. Something happened in America in the second decade of the twenty first century that had never happened to an advanced industrial society before. Life expectancy reversed itself for middle aged white men. There's no other area. There's no other group in the world that went went through this.

What this meant is that if you were a middle aged white American in 2010, your life expectancy was less than it had been in the 1990s, and these were deaths stemming from alcoholism, drug abuse, gunplay, suicide. These two economists, Angus Deaton and Anne Case, wrote a book called Deaths of Despair. And these districts that had Deaths of Despair became Trump country, and they also became Bernie Sanders country because they were directly addressing the needs of these people. And this is where what Trump called American carnage was was actually happening. And this is why there was so much revolt against neoliberal politics, global free trade, deepening distrust of global elites, deepening distrust of governments in America seen as being the handmaidens of global elites.

This is what led to the populist explosion in The US and in so many other parts of the world in the second decade of the twentieth century. So the hurt was real. The damage was real. The distress was real, and it it is what has generated tremendous political anger and volatility. And, the question is, who's got a plan that is going to get us out of this hole, and are the voters gonna have enough patience to allow one of these plans to succeed?

And here, the four year election cycle for the presidency does not serve us well. Even six years would be better than four years because the campaign starts so early and they carry on for so long, and the discussion is in campaign mode for so long that a serious assessment of what's going on sometimes cannot be possible. Biden did many good things in his his presidency. He took on too much deficit ultimately. But if you're president in 2021 and you're figuring, am I gonna undershoot the recovery, or am I gonna overshoot it?

You can understand why his advisers told him to overshoot it. He his his economic administration brought inflation down, achieved levels of economic growth that are no longer thought possible in mature industrial economies, unemployment rate incredibly low, and and they are cooling off the economy without what was expected to happen, plunging the American economy into recession. So there are a lot of good things. Whatever you think about whatever you think, and you're probably more critical of Biden than I am, whatever you think about that, his management of the economy, I would say, does not deserve a 37% approval rating. And this is one of the benefits of living outside The US.

Within The US, he has given an f for managing the economy. In Europe and in China right now, the success of the American economy coming out of COVID is the envy of the world. And here we come across this extraordinary disjuncture between perceptions in America and perceptions abroad. And this is where you mentioned gaslighting before or misrepresentation. Here is where the constant churn of the electoral cycle in The US, I think, inhibits a more deliberative rational discussion about what is actually happening.

Now with Trump, he promises a lot of things for the ordinary working man, but the latest calculation that I saw of the wealth of his cabinet appointments or appointments in the cabinet and beyond, since Elon Musk is not part of the cabinet, 340 their their combined wealth is $344,000,000,000. That's quite that's quite a figure. Are these the people who are going to help ordinary Americans? Not if Jesus was right. Gary, let me but let me ask you a question.

You know, you said that I would be more critical of Biden. I I look at it a little differently historically. When the housing crisis took place, it started here. And I remember thinking to myself, Wow, we're having this crisis, but the rest of the world's not. And then the whole world had a housing crisis.

And I'm like, Wait a minute. How can this be? It doesn't make any sense. And they called it global synchronized recession. I I think, candidly, we're headed for the exact same thing.

I I think this time it started in China. I I think that we are the world's currency, and there's been a flock to the dollar in buying our T bills because people need our T bills as collateral. And so Japan and China have been getting out of our T bills recently. They bought them to the extent they need them as collateral. Gold has gone crazy.

The gold to copper ratio is at the greatest extreme that it's been in, meaning people aren't buying copper because the economies are slow, but they're buying gold because they're afraid of inflation. We're gonna have a debt crisis here. Both Larry Summers and Jay Powell said it's unsustainable. So, yes, we're the envy of the world because we're the last to, quote, have to deal with our debt because we're the world's currency. But crypto would not be where it's at today if people had faith in the dollar.

Hemingway said, how do you go bankrupt slowly and then all at once? Mhmm. So I I think if you're looking at this from a historical perspective, I don't think the o seven, o eight, o nine recession was really fixed. I think that we just paper it over with printing a lot of money. And so these fundamental issues in terms of how do we really fix our middle class and how do we have more balance and perceived fairness, I don't think we've yet come to grips with those issues.

I'm curious, from your perspective, historically, does any of that resonate? Well, I think we we certainly have not fixed the issue. Right? And we have not fixed the debt. I think there was different thinking during the COVID years that that debt was not the problem many had long thought it to be.

The people making that argument are now in in recession and have less influence and less less authority. And I the I I think that, yes, the long term, the there has to be a better balance of expenditures and revenues. And is there a government capable of in The United States of of implementing that? I look at the Trump administration, and I don't see they're not particularly concerned about the debt. And, I don't see a solution in in the offing.

And if you're looking for historical historical precedents for this, it is true that our ability to manage economic crisis is much more advanced than it was earlier a hundred years ago. In the nineteen thirties, the Federal Reserve had been around for, I don't know, fifteen, eighteen years, didn't have a clue as to what to do and made all the wrong moves. And we were fortunate, during the financial crash of two thousand and eight, 2009 that Ben Bernanke was on board, who had made his career studying the Great Depression and its causes. And the calamity and the apocalypse, which I can hear sort of in the whispers of your commentary, we were close to that then, very close to that then. And people on the inside of the financial community spoke of an a financial armageddon, an eighteen day period in September and October 2008 when it really looked like the entire financial system of the world was going to seize up and cease to work.

If that had happened, it would have made the great depression of the thirties look like a a fender bender. Those are probably the eighteen most dangerous days of the world since the Cuban Missile Crisis. Thirteen days in October sixty two and eighteen days in September, October 2008. And we were fortunate that someone like Ben Bernanke Bernanke understood was what was at stake and was able with his allies to get us through that moment of crisis. But you're right in the sense that the underlying issues have not been resolved since then in terms of the the debt.

Of course, it was enormously, I like hypotheticals, where would we be absent the COVID crisis of twenty twenty? The American economy was on a much better path in the second half of the decade of the twentieth century, which benefited Trump a lot. And it's clear that the emergence that the COVID was, first and foremost, not an economic emergency, but in order to save lives, it became an economic emergency and introduced all kinds of distortions into the into our economy. And we're still trying to get ourselves out of that even though we don't adequately refer to, you know, the circumstances that COVID has has thrust us into. My worry is that some of the people around Trump have ideas that entail a great deal of risk and may not be carefully thought out and may lead America not to a situation of of a better fiscal state, but that will deepen the crisis.

And there's also, among some of his advisers, an enormous appetite for risk and and a belief that the only way to a better future is by, in a sense, stimulating a new crisis that will finally allow America to reengineer itself as it has to be reengineered. This this belief is present among elements of the Trump faithful and the Trump administration. I think one has to be really careful with that mindset because when you break something, even something that's already even if you acknowledge that what you're breaking is already damaged, If you break it, there's no guarantee we're gonna be able to put it together in a better way. And listen, I remember as a, again, young person being told, you know, when there was an economic crisis, Europe got Hitler and Mussolini, and we got Roosevelt. And can you imagine what it would have been like had we gotten somebody else?

So I it does scare me that we are heading in this direction where neither party has figured this out and that we are headed to this. You're right. I do I do feel like we're headed for a day of reckoning because at least my understanding of history going back all the way to Joseph and Pharaoh is that you save wheat in the good times and you eat it in the bad times. And that Keynes was a genius as well. You're in you you know, that you you definitely the government needs to step in and run deficits when business is not spending money.

What I've witnessed for the last twenty years is that we have run deficits since Clinton under good times. And therefore, there hasn't been, quote, unquote, share saving of the wheat for the bad times. And then COVID came along, and we were exposed. And so we spent all this money. We didn't have a rainy day fund like in California.

And so now we're we're really on this precipice. And so I hope we can avoid a crisis. I really do. I hope that Musk comes in, and they figure out a way to have a soft landing and and get us back in balance. But I think for the American people to make the sacrifice that you're talking about, I think there does have to be some pain.

And in the same way that it appeared to me, at least, that we were afraid of the communists, and therefore Eisenhower was able to keep some of the high taxes in place, and that the fear, the fear of communism kept business in check with labor, and that without something putting pressure on us, we're having a hard time making those tough decisions. I would agree with that. And the the fear that communism induced in The United States is a big part of the book that I wrote, and, America has a very dynamic and aggressive capitalist class that doesn't want anyone interfering with its prerogatives. And during the New Deal era, the fear of communism struck such fear into the hearts of America's business class because what communism was a worldwide movement. And wherever they established themselves, they said they were going to expropriate the capitalist class, turn corporate property into state property, and use it to benefit the masses, the proletariat.

And that's what happened when they came into power. If you wanna scare capitalists, that's the way to do it. And that inclined them to compromise with their adversaries in ways that they never otherwise would have done. Do you know the tax rate that Eisenhower is sent to two on the high highest marginal tax group in the nineteen fifties? Are you are you sitting down for this?

Are you ready to hear this? Well, I read your book, but I want you to tell our audience. 91% on the highest Right. Marginal group. This is when he rewrites the tax code.

This Republican president, this is this is what he's doing. And the one of the questions for our time is, who is gonna provide that constraint? It also the it it also generated a consensus between the Democratic and Republican parties about things that needed to be done. What external force is gonna provide that constraint on politics and lead us to a better place. Some people I always get asked, well, maybe China could do what the Soviet Union did, but that's a problematic argument because I would describe China not as a communist country that no longer has meaning.

They don't wanna revolutionize the world and expropriate they don't wanna expropriate Elon Musk, or they may wanna beat him in a in the race to build the best electric car and sell it around the world, but they don't wanna ex expropriate him. They're happy to to deal with capitalists. What what China remains is a Leninist has a Leninist ideology in the sense that the communist party runs everything in China, but it's not communist. And I don't think that I know that China is regarded as the great fear of the future, but I'm not sure it can serve the same function that the Soviet Union did. And if we are to ask ordinary Americans to accept pain, there has to be some sense of equality of sacrifice, And that's what the New Deal delivered in the nineteen forties and fifties.

If you're really rich in this country, you pay a higher share of your income in taxes, and you recognize that the less fortunate should be expected to to pay less. But who who is going to arrange that kind of politics in America? I don't see there are elements of the Democratic Party who wanna do that. Steve Bannon himself during the first Trump's first term urged Trump to put a 44% tax on the highest marginal, tax group, and Trump ultimately refused to support that. But I think if people are gonna be asked to accept pain for a better future, there has to be a sense that this pain is being shared.

And I think the administration that Trump has put together is not gonna be very successful in convincing people that the pain is being shared. It's he's a he's a transactional president who tends to make deals and reward people who are loyal to him. I do not see him right now as being capable of arranging a regime built on equality of sacrifice, and that's a real problem for our politics. And so, Gary, you you mentioned an external motivating factor, and you talk about it not being China, which, you know, let let's go with that for a second. And let's look at the fact that China and the rest of the world is having its own economic challenges with debt right now.

What about if we're all in this kind of world where there is too much debt and there does need to be some kind of shared sacrifice? From a historical perspective, have you seen people come together more out of some kind of shared challenge or love, not UFOs, but but something else that can could could motivate us other than an external threat like China? Historically, it's it's hard to find that. There have been transnational movements that have been very effective at achieving certain aims. If you think of the abolition of slavery in the nineteenth century, this was a global movement uniting antislavery folks, abolitionists from multiple different countries.

The labor movement in the late nineteenth and early twentieth century was transnational. But the the key institutions for promoting both democracy and equality have been the national legislatures. They have been Congress. They have been Westminster. They have been the National Assembly in France.

They have been the Bundestag in Germany, and we do not have a form of world government or international government that could supplant that. One could argue, given the global nature of the debt crisis, given the global nature of the climate crisis, that we desperately need a world government to solve these problems. But the only world government that we have is in something called the United Nations, and no one has confidence that that institution can govern the world, even the people who support the United Nations. So I don't see I think this is and this is part of the dilemma that we face, that these global problems are there are national legislatures trying to solve these global problems, but frequently the global nature of the problems exceeds their ability to address them and solve them. So we have in the global world in which we are living, We have institutions that arguably are not adequate to the task, and one dominant political response to that has been to deglobalize the world and to have nations retreat into their borders.

This is part of what Trump has been urging, America first, protectionism, much much more nationalist policy internationally. And we can see the world breaking into different blocks, and we can imagine a new world order emerging in the next twenty or thirty years where it will know the world will no will no longer be governed by America, but will be governed by a concert of four or five powerful nations. And part of what's motivating that is not just that the benefits of a globalized world that neoliberalism had promised that it hasn't yielded the requisite results, but it may also be a recognition that we do not have a better instrument of government than the national legislature, and we have to find some way to reempower that to do its work. The challenge that that retreat has to confront is that the ecommerce companies and the social media companies are these world behemoths now that no national legislature has succeeded in getting under control. And what I would consider to be the most promising model for global governance is the EU.

And what I mean by that is, you know, if you can imagine an enormously successful EU, The United States Of Europe, for example, giving power to the a central European parliament that would rival the power that congress has, that's not gonna happen, and the EU is suffering from its own democracy deficit. So even under the what we might consider to be the most favorable circumstances for developing a government that is more global in nature, we see what we we could say is the most promising experiment in that coming up short and not a model that can be duplicated, not a model that people are eager eager to duplicate elsewhere in the world. Well, trying to end on on an optimistic note, from a historical perspective, we had the League of Nations. We had the United Nations. And a historical perspective, at least the world seems to be somewhat obsessed with the Middle East.

We had the first and second temple, and some people were talking about the third temple. Is it possible that we, we as a world, will come together and form a third world kind of governing body that does even better than the United Nations next time so that we do have a mechanism to deal with global pandemics, global warming, global wealth inequality. From a historical perspective, do you think we're heading in that direction? I would rephrase the question somewhat is what would a more effective form of global government than the United Nations look like? It would look something like the EU, nation states giving real power to but what what the EU the EU is not even doing this.

The United Nations survived. The League of Nations did not. One might think that there'll be a third form of global government that will be better than the United Nations in a way that the United Nations was better than the League of Nations. But I don't I I don't see that right now. I don't I don't see an effective body of global government emerging from the current state of things.

I think things are actually moving in a different direction, restoring the sovereignty of states and the primacy of states. And I think the future lies more in a concert of powers that find a way to get along with each other, keep the peace, and achieve solutions to global problems through negotiations with each other rather than an international parliament. That seems to me a more likely outcome of the current moment that we're in. In terms of ending on a positive note, on a hopeful note, I think, democracy is irrepressible. People want control over their lives so that even if it is defeated in various places, it it will reemerge.

And then we just have to have we have to recognize that history moves sometimes in longer waves. And as much goodwill and as much agency that as we think we have at this moment, we may be in living in a longer wave that where that agency and goodwill will not be sufficient. But then some of the tectonic plates may shift economically, politically, and then suddenly goodwill and and agency may matter a lot more. And so I think it's very important to as we think of this current moment, this is a very vexing moment in the history of The United States and of the world, but we would be, selling ourselves short to think that this is the last moment and that this is the last condition. History is full of surprises, and we'll be surprised in the future by certain developments that we cannot currently anticipate.

That's the definition of surprise, and some of those surprises will be good. I have confidence that that will be the case. We just have to have a little patience and more of a longer term perspective that, the turn toward a better future make is can't be orchestrated each presidential cycle. It's not the best way of measuring progress in the world. There are deeper forces that structure our lives and limit what we can do, and then there are moments of of crisis that make the reorganization of the world and our lives much more possible.

And there will be a time when that moment reaches us again. Do you think, like, Teddy Roosevelt, for instance, you know, came in and was able, as an elite, essentially, to change things by going after the monopolies and so forth. And that sometimes, I'm not saying that Trump will do it, but he has the opportunity to do it to kinda go after some of the big businesses and stuff. And that maybe without a crisis, I know in the upswing, Robert Putnam talks about and they got mad at me when I said it took a crisis, World War two. They said, no.

No. The upswing took place absent a crisis. And I'd I'd love for that to be the case. Well, what you say about Teddy Roosevelt is very interesting in this sense. Sometimes what meaningful change has has taken is for a portion of the elite to break from the elite and to join forces with popular forces in American society.

I would wish Trump to read about Teddy Roosevelt and understand the opportunity he has to do that because there are moments where he promises that kind of future. But at the end of the day, I think he's too involved with himself, his family, his fortune, his own power to be able to see himself in that way. But, historically, big changes have often happened when a portion of an elite and a privileged group in society says, we are not going to act in the interests of our elite first foremost. We're not gonna sacrifice everything in our lives, but we owe to our country and to humanity to join with popular forces from below to bring into existence a different way of living. So that's one way of thinking about what has to happen for the future to grow brighter.

Well, it's a lovely way to end. And and that that's one of the things we've tried to do on the pocket otherwise is is reach out to those that have had much given to them, so to speak. And and that for people to recognize that this is the worst country in the world to look at the alternatives and that we are an amazing multicultural democracy and that it's worth fighting for. But but it is gonna require leadership and sacrifice. Absolutely.

Absolutely. Gary, this was listen. Keep doing what you're doing. You're you're you're a breath of fresh air. Your writing is amazing.

I am super, super grateful for you taking this time with us today. Well, thank you for the opportunity to talk with you. We talked about a lot of important issues that confront us, America, and the world. So I appreciate you giving me the opportunity to talk about these things with you. Thank you, Gary.

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