The Fate of the West

Transcript

Trevor Burrus: Welcome to Free Thoughts. I’m Trevor Burrus.

Aaron Powell: And I’m Aaron Powell.

Trevor Burrus: Joining us today is Bill Emmott, Editor in Chief of The Economist from 1993 to 2006 and currently, chairman of an educational charity, The Wake-​Up Foundation. His new book is The Fate of the West: The Battle to Save the World’s Most Successful Political Idea. Welcome to Free Thoughts, Bill.

Bill Emmott: Great to be with you.

Trevor Burrus: What is the West, obviously, the [00:00:30] central character in this book, what is the West as you conceive of it?

Bill Emmott: The West as I conceive of it is any country that follows a liberal, open model of society and social organization and that protects that openness with a form of political equality, which we call liberal democracy, but is the open equal citizenship that the Greeks talked about thousands of years ago, isonomia, an [00:01:00] equal political voice, political rights. It’s a liberal model, but it’s not geographical. It’s not cultural. It’s about a balance between openness and equality in my opinion.

Trevor Burrus: Now that definitely includes some place like Japan. Would it include Hong Kong?

Bill Emmott: It would not include Hong Kong because Hong Kong doesn’t have political equality. It has the rule of law, but it doesn’t have political equality because it’s not a proper [00:01:30] democracy. Despite the one country, two systems structure of China, it’s nevertheless under Chinese control so, I wouldn’t consider it part of the West, but I would include Taiwan. I would include South Korea and I certainly would include Japan.

Aaron Powell: You write that “a feeling of decline has set in in the western heartlands of the US, Europe and Japan.” What do you see as the source of that feeling?

Bill Emmott: [00:02:00] I think that the principal source of that feeling is economic failure or economic disappointment, let’s call it that. Economic disappointment since the 2008 financial crisis most spectacularly, but actually also in the decade before then. Economic disappointment and failure in the form of high unemployment, in the form of increasing inequality, in the form of declining real incomes for a very, very large proportion of [00:02:30] the population and, therefore, a big sense that the good times might be over, that the times when each generation of children could be expected by their parents to do better, to have more opportunities, to hopefully be wealthier, but at least have more freedom and more freedom of choice, the suspicion that that might be at an end is what I consider to be that feeling of decline.

I don’t see it, [00:03:00] therefore, as a relative issue caused by the rise of China or of other emerging economies. I don’t think that most citizens of the West think of their position in the world or their own life prospects as being in some sense relative to that of a country far away like China. Maybe geopolitically, strategic thinkers may think in that way, but most ordinary people don’t. I think ordinary people [00:03:30] think about the economic prospects, their social status, the prospects for their children, the sort of opportunities they’re going to have. I think that really in an accelerating way after the financial crisis of 2008, the sense has taken hold that perhaps an era might be over. Now I believe that sense can be wrong, should be wrong, must be wrong, but nevertheless, that it is there I think is undoubted.

Aaron Powell: That’s something I’ve been curious [00:04:00] about because this decline and the stagnant incomes, the high unemployment, it’s not evenly distributed in the US or Europe. There are certainly categories of people in the US say who were doing quite well. It’s the working classes that seem to be largely in decline and I’m curious, when we say that it didn’t used to be this way and so pre- [00:04:30] financial crisis and going back a little bit before that that these people were doing quite well, but was this an anomalous thing? Does this sense of decline to some extent depend on over-​reading the history of the success of the working class? The Western ideal has been around for a long time, but the time period during which a working class person so a person of relatively low education, relatively low skills could be comfortably middle class [00:05:00] is itself fairly recent.

Bill Emmott: I don’t think really a matter only of the working class. I think that it’s a matter of a very large part of the population both in the United States and in the UK. It’s clearly not a question of the top 5 or 10% and certainly not the top 1%, but I think that any definition of the working class is really something that’s really quite a small group of [00:05:30] people, particularly these days with manufacturing down to 9, 10% of employment on both sides of the Atlantic, at least in Britain, France and America. I think that this situation of declining incomes applies I’m afraid to a much wider group of the population than could be described as the working class.

Now where I agree with you is to say that I think expectations are part of the issue, that expectations [00:06:00] are high and that some of the issue is about a disappointment of expectations and of things that people have taken for granted, that we’ve all taken for granted as being if you like immutable parts of modern life. Where I also agree with you is that I think it’s really only in the post-​war era in which this sense of widespread adoption of an open and [00:06:30] equal society, of widespread adoption of open trade, of open markets and of relatively limited government has taken hold and that has spread to more and more countries around the world only in that post-​1945 or early 1950 period.

In historical terms, it’s quite a limited amount of time. It’s really … I’m 60 years old, it’s my parents’ generation [00:07:00] in the latter half of their lives, but it’s not my grandparents’ generation. So it is a relatively short period, but that the bulk of the British population have seen declining real incomes in the last 10 years is true. It’s not a working class issue. It’s also not a working class issue only in the United States.

Trevor Burrus: Was 2008 a particularly bad financial crisis or putting [00:07:30] these countries in a particularly uniquely bad, historically bad situation that would require such a response as we’re seeing or we would expect this kind of response for the illiberalism that is creeping around? Because, for example, I was thinking about for your own country of Great Britain, the ’70s were pretty bad there, especially with … The ’70s were bad here, too of course, but ’70s were pretty bad in England and that created a situation for [00:08:00] calling for Margaret Thatcher. That didn’t create a situation for calling for a Donald Trump or Marine Le Pen type figures. Is there something unique about how the financial crisis in 2008 was either worse or the way it was bad?

Bill Emmott: I think that the financial crisis of 2008 was certainly worse. It was the worst financial crisis for 80 years. It was distributed very widely across Europe and North America. It led [00:08:30] to or required an enormous response by government, both in terms of fiscal policy and in terms of monetary policy. That really drained resources from everything else. I think that it was both the direct hit of that financial crisis, which really has really hurt people on both sides of the Atlantic, but also the fact that with public budget deficits [00:09:00] to 7, 8, 9, 10% of GDP, with public debts jumping from 30, 40% of GDP up to 100% of GDP and above, the resources were really drained away from almost all other activities.

Whether they are health care, education, job adjustment assistance, you name it, resources are being pulled away from it so that some of the longer term trends that [00:09:30] we were certainly all experiencing like the effect of technology on altering distribution of income, the effect of technology on displacing some working class jobs, the effect of an aging society, particularly in Europe and Japan, on the balance of resources and of the burdens it has been putting on healthcare systems, these things would’ve been there anyway. [00:10:00] We would’ve been worrying about slow growth anyway. We would’ve been worrying about the difficulty of dealing with these subjects anyway, but suddenly, all resources were drained away because everything had to be used to prevent a new Great Depression and now we’ve been in a fiscal consolidation period of where politics has gone strongly against the use of fiscal policy in a stimulative manner [00:10:30] at least until very recently. That may be rightly or wrongly, but it does mean that policy bandwidth has been basically taken away from other issues and I think that is a large part of the legacy of the financial crisis.

In addition, I would just add one other important legacy and I think crucial in the political response and that is the sense that the financial crisis showed a disproportionate influence over public policy for Wall Street, for the banking [00:11:00] sector, for finance, for the city, for the European banks in Germany and in France that has fed into a belief that “the system is rigged,” that it’s not just billionaires who are able to donate money to political campaigns and get a disproportionate income, but also that public policy is distorted by these groups and that the response after the financial crisis in many countries exhibited injustice.

[00:11:30] I think that this has discredited liberalism to some degree, but also, it has made the “system,” political system in particular appear especially unfair, which has then opened up the path for populist ideas that are about addressing perceived weaknesses in the system, which include access to foreigners, immigration, [00:12:00] include openness to trade because that displaces jobs allegedly, and because of the disproportionate power of some blocks of interest, corporate groups and oligarchs supposedly and so forth, that also feeds into really a William Jennings brand type populism that is now exhibited on your side of the Atlantic by Donald Trump [00:12:30] and on my side by Marine Le Pen and Nigel Farage.

Aaron Powell: Why is the response that? If you’re looking around at the kind of global liberal order that existed in say the 1990s and early 2000s, and you think that it’s rigged and that it’s rigged against you, and I mean we certainly, the Cato Institute have spent a lot of our time pointing out all the ways that it is [00:13:00] rigged by interest groups and people in power and corporatism and so on and so forth, but those are all legitimate complaints and they have hurt people economically, that’s legitimate, but then why is the response not to unrig the system like okay, let’s figure out how to give big banks or big corporations less power or let’s figure out how to make [00:13:30] it so the government’s not rigging things in certain people’s favor? That would be one response, but the one that seems to dominate with La Pen and Trump is instead what we need to do then is now radically rig it in my favor instead so we need to direct all the policies at propping up the group that feels itself most hurt by-

Trevor Burrus: America First.

Aaron Powell: Yes. Why do we drift in that direction [00:14:00] as opposed to the better one for all of just let’s de-​rig the system?

Bill Emmott: I think, first of all, countries have varied a lot in the way in which they’ve drifted since this crisis. We often comment in Europe about how surprising it is that two countries that were worst hit by the financial crisis, Spain and Ireland, have actually had relatively weak populist responses, both have had some populist reactions and a movement in this direction, but they haven’t [00:14:30] actually been strong enough to get in or even near government. So then you have to ask yourself why in America Trump and why in France did La Pen get a third of the vote? She didn’t win, but she got a third of the vote in the presidential election, more than a third of the vote.

I think one answer is a decade has passed and patience has sort of been stretched in that decade. The first response was [00:15:00] as it were a relatively orthodox set of responses and 10 years later, we see a resort to more extreme recipes if you like. One should say also that Barack Obama was perhaps the first populist leader, although a populist leader of a different sort maybe in response to the Iraq war more than the financial crisis since he coincided with the financial crisis rather than following it, [00:15:30] but he might be considered to have been something of a first America reaction to some of the longterm issues that we’ve said. His council of economic advisors highlighted a lot of the issues that the Cato Institute also highlights about consolidation of power, about rigidities in the labor market, of effective licensing, of state level and all of those things that have rigged the system in certain ways, [00:16:00] but he failed to get anything through Congress. Why did he fail to get it through Congress? I would say probably because of the overwhelming effect of the financial crisis and that that sucked out all bandwidth from what he could do and maybe there were other failings of course.

In addition, I think that governments on both sides of the Atlantic shied away at first from doing anything very radical about the banks because they needed banks to carry on lending. They were afraid that the harder they [00:16:30] hit the banks, the more that they reacted to the abuses that we’d seen, the worst would be the recession. So I think that there was a definite reluctance to really point the finger where responsibility should’ve been pointed. That was true in many countries. It was certainly true in European countries as well through the Euro crisis where governments connived really in helping banks conceal the [00:17:00] reality of their situation of the sins that they’ve done and, therefore, were not willing to really take radical measures.

Now 10 years later, I think, and I would agree with you and the Cato Institute, that the time is ripe now for more radical measures of the sort that you’ve described and that I would describe. For the moment, the politics has gone in the opposite direction in your country at least. In France, potentially, it has gone in a liberalizing and [00:17:30] decongesting direction, but we await to see whether President Macron can really deliver.

Trevor Burrus: Going into France and Western Europe and I think less so for the UK, but it struck me for many years, especially as I’ve been traveling around Europe, starting my travels 15 or so years ago every couple years that there’s a trade off that Europeans tend to make and you write about this in the book. They’re more likely to make I think than Americans where they trade off for stability over dynamism, especially when [00:18:00] it comes to their daily economic life, their daily, their working life.

So, for example, you write about the kind of labor policies that are constraining the ability of people to get fired for example. We had this problem, this problem is really bad in France where it’s nearly impossible to get fired so it’s very difficult to hire people because the cost is so high. There’s a lot of these things that the workers vote in that end up hurting them and make a very low growth [weight 00:18:26], very non-​dynamic economy and I often say that if you’re looking for … [00:18:30] And this, of course, has little to do with the financial crisis. You have a fairly stagnant Spain and fairly stagnant … Especially France. Greece, of course, is a different problem, but if you compare the level of public employment, that’s another issue we see where there’s a ton of people working for the government and then the level of youth unemployment, those are two really good indicators of when an economy is kind of circling the drain or just not going to grow much at all, unless we can remove some of these strictures [00:19:00] that they tend to choose in Western Europe.

Bill Emmott: No, I agree with you and I think that many of those damaging restrictions really were a response to the crisis of the 1970s, the one that you rightly and accurately described as being a precursor of this one in Italy and France. These very strong labor protections were introduced in the 1970s and in fact essentially to buy off at [00:19:30] that stage rebellious revolting trade unions and really a wider part of the population, whether it was the 1968 generation in universities and after or actually just massive strikes taking place in that time. They bought it off in what seemed temptingly attractive way, but has become more and more damaging as time has gone on. I cite in the book a general fact, which is that until [00:20:00] the 1980s, mid-​1980s, unemployment in Western Europe had since 1950 always been lower than in the United States. In the 1980s, it overtook the United States and it just stayed higher than the United States ever since and those labor laws are the reason essentially.

Trevor Burrus: It basically seems like-

Bill Emmott: Now we now see an effort to try to reform them finally. Spain has done it quite substantially, but in the depths of a financial crisis and, therefore, [00:20:30] it’s going to take time to see the effects of it, but it has done it. France now has to begin to do it. Sweden did it in the 1990s and has liberalized its labor system rather dramatically compared with the extremely rigid system that was there before. It can be done, but it’s certainly tough to do it and I think a major part of what we’re going to see played out over the next 10 years is the question of which countries [00:21:00] in Europe can actually succeed in modernizing their labor system in order to achieve the dynamism that they used to have?

Japan, by the way, has some degree gone through the same thing, but it has dealt with its rigidity in its labor system by creating a larger and larger pool of very unprotected and very discriminated against workers [00:21:30] who are now 40% of the labor force. It’s got an extremely divided labor system now. We’ve all faced up to this, but I would agree with you, some have certainly dealt with it better than others.

Trevor Burrus: Because the youth unemployment rate in some of these countries, I haven’t looked at it recently. A few years ago, I did look at Spain’s and I think for 18 to 34, it was almost 50%. That seems incredibly concerning in terms of the … Does the books [00:22:00] right now, how much pensions are going to cost in the future, but if we’re not having young people being able to work in these countries because the labor market restrictions, this could be a very long, slow and painful decline that actually may not look terribly different than Greece than what happened in Greece at the end.

Bill Emmott: I think that you’re absolutely right, that it is very concerning so I think that issue is going to be a crucial one in Europe. I think in Spain, we probably should accept that they have made very [00:22:30] considerable reforms to the labor market and we’re probably in a lagged effect of the financial crisis still, though our youth unemployment has fallen quite substantially from its peaks, but it’s still ridiculously high. In Italy, it’s very, very high, again, because of the rigid labor system and that is not being improved. So I think this is going to be the battleground over which Europe [00:23:00] now has to fight.

Macron ran in his campaign by not proposing Anglo Saxon or Anglo American labor reforms, but rather Scandinavian style labor reforms because they sound kinder and they sound more reassuring. Now he has to prove that he can actually delivery on those and do what the Scandinavians have done, which is provide a [00:23:30] very effective combination of greater flexibility with government assistance, very substantial assistance in adjustment at times of recession and of job displacement. That’s the flexibility and the security, what they call flex-​security, that’s what he promises to do in France. Now he has to deliver on it.

Aaron Powell: What does that look like in practice compared to the way that it’s handled in the US and UK?

Bill Emmott: Compared with the US, it really essentially means spending a serious [00:24:00] amount of money rather than a derisory amount of money. US spending on job adjustment assistance is really very tiny by OECD standards and, of course, you have a very, very large so it’s extremely difficult to have a focused and concentrated way of doing it I guess. Whereas in small country like Denmark or in Sweden, they devote considerable resources to that [00:24:30] kind of retraining and job adjustment assistance, helped perhaps by the fact that they are all part of a broader European economy that in most periods, but not very recently, has allowed trade and economic dynamism to be imported even when they were in their own bad times. So they’ve had some benefit of, if you like, the scale effects of the European Union. That is not so [00:25:00] true today because of the long Euro sovereign debt crisis, but it’s really about that concentration of greater resources.

Trevor Burrus: Do democracies tend to put off problems? It seems that the kind of adjustments you mentioned that will have to occur in Europe will affect a lot of people who vote and they will be told, for example, we’re going to make it easier to fire you, which I think if I remember correctly, Sarkozy [00:25:30] tried to do in France, which was one of the things that created some riots in the streets if I remember correctly. Those reforms are pretty unpopular usually, unless there’s some pain to be had. Democracies, because of the way politicians react to voters, they tend to put off the debt. They put things off onto their children and if the politicians don’t have to deal with it, they won’t, but as we talk about here at Cato, a lot of the time, the fiscal reality of say the pension obligations and the elderly population [00:26:00] in Japan for example, which I believe in the next few years will have one centenarian for every newborn child in Japan, which is an astounding fact that this is going to be a really hard reckoning and the democracy simply will not deal with it until it’s a crisis.

Bill Emmott: I think that democracies do two things. One is that they certainly try to put things off until after the electoral cycle, of course. So does everybody by the way. I think dictatorships do that as well, [00:26:30] but nevertheless, it’s clearly a particular problem of the electoral cycle, but secondly, the problem of democracies is that an entitlement once given is extremely hard to take away because every receiver of that entitlement, whether it is a farm subsidy or corporate welfare or a social security entitlement or Medicaid or you name it, every receiver of it has a vote and they feel desperately angry at any thought that it will be taken away so that we have [00:27:00] a particular rigidity built into our systems in the way in which handouts go out there and then, are extremely hard to dismantle and reverse as you say absent a crisis or absent some very helpful form of trade-​offs as happened famously with the Reagan tax reform, but that’s happens only once in a blue moon.

So it is tough I think and we in democracies [00:27:30] have got to try to push harder on some of these trade-​offs. I think Margaret Thatcher did it very well in Britain in the 1980s, really bulldozing her way through a lot of entitlements and a lot of privileges, and we’ve got to see some leadership of that sort coming through in other European countries and, hopefully, in the United States as well.

Aaron Powell: Populism even in Western countries is nothing new. There’s always been people who agitated [00:28:00] for these kinds of anti-​open society policies, anti-​trade, anti-​open markets, but they just seem a lot more powerful than they used to be. Were they empowered by the financial crisis? Do you think more people have just joined to those movements because of this feeling of decline? Why does it seem like [00:28:30] the elites have lost the level of control over the conversation that we used to have that’s then enabled these movements to be far more successful than they used to be because it’s … Trump won in the US, but he won with a minority of the vote. He powered through the primary system, but it was … The past it feels like elites could’ve kept that stuff in check and they can’t anymore. [00:29:00] Is that a more universal thing than just this instance and if so, why?

Bill Emmott: I think that you don’t really need more than the biggest financial catastrophe in 80 years, that risk producing, a repeat of the Great Depression of the 1930s. You don’t need much more than that to explain why populism has done well in the last 10 years. Populism is an ever present factor. It has been around for hundreds of years. [00:29:30] It is a response to stress and response to perceived failure and the elites, if the elites are described as the governments and mainstream political parties deliver the financial crisis and then deliver the slowest economic recovery from that slump that had been seen in the post war era, one that coincided with declining real incomes for the average person and that in your country has coincided with the big decline [00:30:00] in labor force participation and particularly of prime age working males.

So I think that there is a populist response and that there is a market politically for populism should not be seen as at all surprising. The question is why haven’t established parties been able to respond in more effective ways and deliver better goods, better prospects, and thereby win some [00:30:30] more of these votes? I suppose the real answer is why haven’t they managed to win all of these votes since populists have in fact only been elected in a very small set of countries? Most obviously your own, the United States, but they haven’t been elected actually to government directly in Britain. They haven’t been elected in France. They haven’t been elected in Spain. They haven’t been elected in Germany. They haven’t been elected in the Netherlands. They’ve obtained a foothold in power [00:31:00] in a few countries like Finland and Austria and other countries, but where they are in most countries is as a large pressure group at around 25 to 30% of the voters rather than a majority.

I think that the United States outcome in last November has to be seen as being a prospect of a series of accidents, but the fact that is the [00:31:30] political system of the United States was as it were in a state that was susceptible to such accidents and such a series of accidents. I think, by the way, the same can be said of Britain’s decision to leave the European Union. That was an accident waiting to happen because we’d never really had popular support on a widespread basis for our membership with the European Union since 1973 when we joined and that at any time when a referendum had been held, there would’ve been [00:32:00] a serious possibility that voters would vote [on balance 00:32:05] to leave.

The question is why was a referendum held in 2016? The reason for that was a series of political accidents that led to a government feeling obliged to do so. It wasn’t because of a massive demand from public opinion for a referendum. So I think in our democracies we are capable of having these accidents, but then [00:32:30] once a decision is made like Brexit, once an administration is elected as with the Trump administration, then consequences develop and can lead to the situation spiraling in a new way, in a new direction of course. In Britain, by the way, we are really … Although we have a lot of rhetoric about wanting to be an open global nation, actually, there’s quite a lot of protectionism being talked about and I’d say it’s an open question [00:33:00] as to really whether the outcome of this decision to leave the European Union will be towards a still open society or whether it will actually lead to Britain becoming more protectionist.

Trevor Burrus: Is inequality a problem or more specifically, I guess is it a problem, is it part of this problem? Is it contributing to this decline of the West or liberalism?

Bill Emmott: The way I think about inequality is that it’s not a problem arithmetically or depending on a [00:33:30] particular measurement on the Gini coefficient, but it is a problem if in so far as it gives rise to a widespread sense of injustice and dissatisfaction with the political system as a whole. So it has to be correlated with a grievance about injustice, with a sense that barriers have been raised to social mobility, that inequality is producing entrenched advantage, that [00:34:00] you’re much likelier to be able to get your children into a good college if you are very wealthy rather than not, that you are liable to have a big influence over public policy if you are Google and you’re contributing to a lot of Congressional races rather than being an ordinary Joe. I think it’s that sense of grievance about the system and the sense [00:34:30] that advantages are going to become entrenched and become permanent. That is the problem with inequality.

Trevor Burrus: You write a lot about the differential voice in politics by the wealthy, but then, you also write about things like pensioners and the political blocks we’ve already discussed. Does it really seem like the wealthy have a disproportionate voice when you look at the large welfare state that we have. I hear this conversation a lot, “It’s clear that the wealthy get their way in society,” but even in America [00:35:00] we have a very generous welfare state. We [haven’t 00:35:03] been increasing minimum wage, but we haven’t been only passing policies that “benefit the rich,” we’ve been passing … And the same thing is true in other countries. Doesn’t there a lot of impact from the voice of the voters and the ones who work for the government and the ones who want those employment restrictions kept in place as we discussed, that seems to have a really big impact too and maybe more than the wealthy?

Bill Emmott: No, I wouldn’t single out only the wealthy. I don’t in the book either. I think that interest [00:35:30] groups in one of the way in which Mancur Olson described them in the Rise and Decline of Nations and in his previous works about interest group politics and the dynamics of them are the problem. They set up as great big roadblocks to a sense of equality and to the smooth functioning of the market and of the smooth functioning of the democracy and that it’s those that need to be cleared away from time to time. [00:36:00] The wealthy are among them, however, because they are an interest group. They are an interest group that wants their taxes reduced at every instance.

Trevor Burrus: Not all of them.

Bill Emmott: Even though that’s because they, of course, pay a large proportion of taxes because they are the wealthy, but there is never a time when a tax cut for the wealthy is not a desirable call far as they’re concerned of course. The same with as it were corporate wealth, the [00:36:30] monopoly position that big companies have that give them the ability also to influence public policy over whether or not they should be regulated and whether or not they should be subject to antitrust investigations and so forth. It’s that form of advantage for the wealthy that I’m talking about. I’m not being Marxist about this.

Trevor Burrus: There are a lot of people who are wealthy in America. I think the last I checked, this changes periodically, but there are more millionaire [00:37:00] Democrats, more billionaire Republicans and the millionaire Democrats may be okay with raising their taxes. You seem to think that the positions of the wealthy are fairly monolithic.

Bill Emmott: I’m sure they’re not. I don’t think the positions of any lot of individuals are monolithic. I think certainly in your two-​party system, the Democrats have a lot of wealthy people supporting them and indeed one of the reasons why Hillary Clinton was not supported more than she was [00:37:30] appears to have been the fact that she was considered to be both highly wealthy, but also tied to very wealthy donors and very powerful Wall Street financial institutions. Now clearly, she did win the popular vote, but she didn’t win enough to win the presidency. We’re talking about tipping points here rather than [mega 00:37:51] influences, but that was the issue on the Democratic side as well between Bernie Sanders and Hillary Clinton.

Trevor Burrus: Good point, good point. I want [00:38:00] to talk about some of the prescriptions that you have in the last chapter of the book, some of the ones that I thought were pretty interesting. The first one is “Openness is all, but not everything has to be open all the time.” Can you explain what that means?

Bill Emmott: What I mean is that while openness is absolutely the important virtue of our societies in stimulating growth, competition, new ideas, all of the ingredients of our progress, [00:38:30] I don’t think that it is as it were a theological requirement that everything has to be open. In particular, I think the capital flows require some regulation. Now that doesn’t mean I want to go back to the old days of exchange controls and of restrictions on the amount of money that we can carry abroad when we’re traveling, but I do think that we should not be theological about complete openness [00:39:00] to flows of the most speculative capital and theological about allowing very highly speculative capital to be unsupervised and not subject to forms of regulation and particularly reporting requirements. I think that some adjustment of openness on capital is required and indeed a breaking up of some of the big banks in my belief is required.

On immigration, I think it’s a [00:39:30] subtler point that I’m trying to make, which is that while I am actually very much in favor of open borders and open immigration, I recognize that politically, the citizens of a nation state have the right to have a view about who should be entitled to come and live in their country, who they should share their political rights with and that it is not democratically legitimate to have a debate about the volume of immigration and indeed the nature of immigration. [00:40:00] I don’t think that we as liberals, as libertarians can have an absolutely principled position on immigration. I would argue always in any debate for more immigration rather than less, but I recognize that there’s some contradiction between that and the belief that everyone is created equal and is able to have [00:40:30] an equal voice in the public policy decisions of any given country.

Aaron Powell: You write that “Equality is all, but it isn’t all about money.” What do you mean by that?

Bill Emmott: What I mean by that is that I don’t think that we should have a target for the distribution of income, saying that we need to take from the rich and give to the poor simply for the sake of it, but rather that what’s really at issue with equality is a sense of justice, a sense of [00:41:00] social mobility, of equality of political influence and political voice, and that inequality can get so out of hand, in particular when it gets tangled up with interest group politics and the way that we’ve discussed in this conversation. It will need and can require some government intervention, particularly investment in ladders of equality to [00:41:30] redress as it were natural outcome of the democratic and economic markets that inequality is something that from time to time, but not always, public policy has a legitimate reason to at least lean against some of the extremes of inequality.

Trevor Burrus: One of my favorites is “A boring consistency is a fine goal for economic growth.” It’s a good phrase.

Bill Emmott: There [00:42:00] I’m arguing against the miracle [mongers 00:42:03] among populists who say that what we’re going to get is 4% annual growth forever because I think that going for really rapid growth usually leads to policy mistakes that then produces a boom and bust cycle, which ends up on average with [you 00:42:22] suffering. I believe that a consistent growth depending on the capacity of the economy of 1. [00:42:30] 5, 2%, 2.5% depending on the demographics and the productive capacity of the economy is the sort of thing that a government should target rather than miraculous escapes from previous stagnation into new illusory periods of magnificent growth.

Trevor Burrus: You defend free speech, which over here on this side of the Atlantic is [00:43:00] pretty hot topic with our college campuses. We’ve discussed on a few episodes of Free Thoughts. I’m not sure what the freedom of speech discussion is currently in Great Britain, but you write that “Freedom of speech is a vital bridge between openness and equality, not a trade-​off between them.”

Bill Emmott: The debate on college campuses is also very active here in Britain and some of the same syndromes of seeking to choke off discussion for [00:43:30] political correctness reasons have also been something of a virus that has gone around British universities and that really needs to be argued against in my view, but also, I think that the open debate, including an open scrutiny of what are the facts and what is truth and what are the bases of our discussions are the essential groundwork for being able to run an open [00:44:00] society in a way that is not socially divisive, that leads to groups accepting the trade-​offs that need to be made and accepting the sacrifices that they may seem at one stage or another to be making. Free speech, free information is an important lubricant of that in my view.

Aaron Powell: Are you optimistic that we can right this ship or I guess at the very least, stop dismantling it and throwing pieces overboard as we [00:44:30] sail along?

Bill Emmott: I am optimistic. I believe that because we are open, democratic societies, we have the capacity to correct our mistakes and we have an evolutionary strength that allows us to make mistakes, to injure ourselves, but then to adapt to new circumstances and I believe that is what we’re doing. I think that we can damage some of the structures of international law and treaties and alliances that have helped to protect [00:45:00] our international system and we can make life easier in how we behave for some of our un-​open and illiberal let’s call them rivals around the world, which of course, I mean China and Russia, but in the end I believe that we will be back, that we will be able to restore much of our or some of our dynamism and that we actually still have a lot of things going for us. We just need to pay real attention [00:45:30] to where our problems have arisen from and form a consensus, which institutions, fine institutions like the Cato Institute attribute a lot to doing, form a consensus about what needs to be done.

Trevor Burrus: Thanks for listening. This episode of Free Thoughts was produced by Tess Terrible and Evan Banks. To learn more, visit us on the web at www​.lib​er​tar​i​an​ism​.org.