1 00:00:17,440 --> 00:00:21,239 And we are back with another edition of the Federalist Radio Hour. I'm Matt 2 00:00:21,280 --> 00:00:26,600 Kittle, senior Elections correspondent at the Federalist and your experienced Shirpa on today's quest 3 00:00:26,640 --> 00:00:30,760 for Knowledge. As always, you can email the show at radio at the 4 00:00:30,839 --> 00:00:37,799 Federalist dot com, follow us on x at FDRLST, make sure to subscribe 5 00:00:37,840 --> 00:00:42,439 wherever you download your podcast, and of course to the premium version of our 6 00:00:42,439 --> 00:00:48,280 website as well. I'm joined today by Rusher Sharma, chairman of Rockefeller International 7 00:00:48,560 --> 00:00:54,679 and founder and chief investment officer of Breakout Capital, an investment firm focused on 8 00:00:54,840 --> 00:01:00,719 emerging markets. He's also the author of a compelling new book, Went Wrong 9 00:01:00,280 --> 00:01:04,760 with Capitalism. It's not a question, it's a statement of fact, of 10 00:01:06,040 --> 00:01:08,680 according to the author, and he joins us now in the Federalist Radio Hour. 11 00:01:10,000 --> 00:01:11,879 Thank you sir for being here. Thanks Matt, thanks for having me. 12 00:01:12,519 --> 00:01:15,280 This is an interesting book, and of course it just dropped this month, 13 00:01:15,319 --> 00:01:19,079 and I think it's already getting a great deal of buzz because well, 14 00:01:19,120 --> 00:01:25,319 I guess I want to start here. I think your theme it can be 15 00:01:25,400 --> 00:01:30,200 encapitalized in this if you will, among some other very very important points, 16 00:01:30,200 --> 00:01:37,079 but capitalism didn't fail, it was ruined. I guess the question I have 17 00:01:37,159 --> 00:01:41,840 to begin is, are we talking about capitalism now in the past tense from 18 00:01:41,959 --> 00:01:46,760 all that you note in this book, Yes, man, I think that 19 00:01:46,840 --> 00:01:52,439 the capitalism we have today is very distorted and very different from what anything the 20 00:01:52,560 --> 00:01:57,760 founders had in mind, because the capitalism today is one where risk seems to 21 00:01:57,799 --> 00:02:01,480 have been socialized. And that's what I document in the book, which is 22 00:02:01,519 --> 00:02:07,519 that it is this asymmetric form of capitalism where on the upside, everybody, 23 00:02:07,360 --> 00:02:13,800 everybody who is in gets to gain. On the downside, their risk seems 24 00:02:13,919 --> 00:02:19,280 socialized or protected because the government's always there to underwrite it. And what I 25 00:02:19,400 --> 00:02:23,800 do in this book is to show the progression of capitalism from its very raw 26 00:02:23,879 --> 00:02:28,639 form which existed right up until the nineteen twenties, and after that, how 27 00:02:28,680 --> 00:02:32,879 the progression began of more and more government involvement in the economy and the suite 28 00:02:32,960 --> 00:02:38,759 of government habits which has expanded over time to the extent today that the capitalism 29 00:02:38,800 --> 00:02:44,560 we have today is very distorted. And therefore the tagline on the book that 30 00:02:44,680 --> 00:02:47,080 capitalism did not fail, it was ruined. Because there are a lot of 31 00:02:47,080 --> 00:02:53,360 people today in America and across Western societies who are not happy with the economic 32 00:02:53,400 --> 00:02:58,800 outcome, They are feeling the fact that the system is almost rigged against them. 33 00:02:58,840 --> 00:03:01,560 They're only thirty five percent of Americans today who believe that they're going to 34 00:03:01,560 --> 00:03:06,520 be better off than their parents, compared to seventy to eighty percent that number 35 00:03:06,599 --> 00:03:08,879 used to be, let's say, fifty years ago. So I'd say there's 36 00:03:08,879 --> 00:03:14,960 been a big sort of change in the attitude or the way that Americans are 37 00:03:15,000 --> 00:03:20,159 feeling about economic mobility, about social mobility, all those are close to record 38 00:03:20,240 --> 00:03:23,639 lows. And I address in the book why are they feeling that way? 39 00:03:23,759 --> 00:03:29,840 What has happened? And that's really the main purpose of this book, which 40 00:03:29,879 --> 00:03:32,960 is that the first step to occure is to diagnose the problem correctly, and 41 00:03:34,000 --> 00:03:37,759 that's what I've tried to do. First step to a cure is always to 42 00:03:37,840 --> 00:03:43,840 recognize that you have a problem. Do we have policy makers who actually recognize 43 00:03:43,960 --> 00:03:46,439 we have a problem? People in authority? And as your book I think 44 00:03:46,479 --> 00:03:55,639 really outlines in I think an extremely successful way is are Americans now so trained 45 00:03:55,719 --> 00:04:01,639 to, as you note a century of expanding government in the distortion of financial 46 00:04:01,680 --> 00:04:09,639 markets? Are we so used to as Americans the government coming in with bailouts. 47 00:04:09,680 --> 00:04:13,039 I think about what happened, of course in the COVID era, which 48 00:04:13,199 --> 00:04:18,959 is exhibit A between corporate America and the average America, that the government is 49 00:04:19,079 --> 00:04:26,759 here to bail everybody out at any time, facing any level of resistance or 50 00:04:26,800 --> 00:04:31,160 trouble exactly, but as showing the book that this is not how America used 51 00:04:31,199 --> 00:04:34,680 to be. In fact, right up until the nineteen seventies, there was 52 00:04:34,759 --> 00:04:40,879 no culture of bailing out private sector companies in America. In the nineteen seventies, 53 00:04:40,920 --> 00:04:44,600 when the American government tried to do that in a couple of instances, 54 00:04:44,600 --> 00:04:50,040 there was a lot of pushback from from Washington policymakers there they would do that, 55 00:04:50,120 --> 00:04:54,680 and then you get the first big bailout in nineteen eighty four of Continental 56 00:04:55,040 --> 00:04:59,319 Illinois as the big first financial institution to be rescued. And after that it's 57 00:04:59,399 --> 00:05:04,240 become bigger and bigger with every single crisis, with the Savings Alone Crisis LTCM, 58 00:05:04,480 --> 00:05:09,920 after that, the two thousand and eight two thousand and nine financial crisis, 59 00:05:09,959 --> 00:05:15,319 and then last year when we had the Silicon Valley Bank which got into 60 00:05:15,360 --> 00:05:20,160 trouble, and there the bailout was almost preventive in nature that was a mid 61 00:05:20,199 --> 00:05:25,000 size bank, but I think that most people were, like, of the 62 00:05:25,040 --> 00:05:28,079 most policy makers, well, if you don't do this, we'll get another 63 00:05:28,079 --> 00:05:31,240 great depression. So that's really become the pattern now, which is that bailouts 64 00:05:31,240 --> 00:05:36,399 have become bigger and bigger, more preventive in nature, and also the feeling 65 00:05:36,439 --> 00:05:40,800 that a lot of the average Americans have that Okay, these guys keep getting 66 00:05:40,800 --> 00:05:44,040 bail bailed out, and what about me? Why don't I get bailed out 67 00:05:44,079 --> 00:05:46,839 of any trouble that I ran into on a daily basis. I think it's 68 00:05:46,879 --> 00:05:53,240 that sense of unfairness and iniquity, which is I think crept into the American 69 00:05:53,279 --> 00:05:59,199 psyche so too big to fail, which was the marching order, of course, 70 00:05:59,240 --> 00:06:05,240 it seemed in the late two thousands when we saw the Great Recession as 71 00:06:05,279 --> 00:06:11,519 it was billed, of course, in two thousand and seven, two thousand 72 00:06:11,560 --> 00:06:15,079 and eight, and the government's response to that. Having lived through the actual 73 00:06:15,199 --> 00:06:19,920 Great Recession, which was the early nineteen eighties in this country, where I 74 00:06:19,959 --> 00:06:26,879 remember factories in the Midwest where people would come out wearing sandwich boards with names 75 00:06:27,000 --> 00:06:32,040 of the hundreds who were laid off on a single day. That truly was 76 00:06:32,160 --> 00:06:38,959 a Great Recession. But you note that this actually goes back to the eighties. 77 00:06:39,439 --> 00:06:43,879 It seems to me that over the last forty plus years in this country 78 00:06:43,959 --> 00:06:48,160 this has been a bipartisan problem. Did it begin with a real true conservative 79 00:06:48,759 --> 00:06:57,879 in Ronald Reagan? How much did the Reagan administration play into this reshaping of 80 00:06:57,879 --> 00:07:02,600 American capitalism and where has had gone through each administration since. Yes, That's 81 00:07:02,600 --> 00:07:04,959 one of the big points I race in the book, which is the fact 82 00:07:05,040 --> 00:07:10,360 that what happened in the nineteen eighties, You know, in terms of the 83 00:07:10,360 --> 00:07:15,480 fact that so many people buying to this narrative in the nineteen eighties started some 84 00:07:15,680 --> 00:07:26,319 new liberal era where the governments went into retreat and then you had the unparalleled 85 00:07:26,759 --> 00:07:30,759 expansion in markets that took place. And I sort of addressed that that firstly, 86 00:07:30,759 --> 00:07:34,000 the argument of the government went into retreat in the nineteen eighties. Yeah, 87 00:07:34,040 --> 00:07:38,120 in terms of there was some slow down in the pace of government spending 88 00:07:39,279 --> 00:07:45,480 under Reagan, and he surely spoke very highly of free markets and being pro 89 00:07:45,560 --> 00:07:48,439 business. But as I show in the book that on many metrics, in 90 00:07:48,439 --> 00:07:55,120 fact, things kept expanding even under Reagan, whether it was the regulatory environment, 91 00:07:55,639 --> 00:07:58,680 whether it had to do with this culture of bailouts, which I said 92 00:07:59,000 --> 00:08:03,120 began with nineteen eighty four with Continental Illinois, and then you had the savings 93 00:08:03,120 --> 00:08:09,360 and loans crisis of the late nineteen eighties or early nineteen nineties, and then 94 00:08:09,399 --> 00:08:13,199 also the expansion in the role of the US Federal Reserve. A very key 95 00:08:13,240 --> 00:08:18,160 point happened in nineteen eighty seven under Alan Greenspan, which is the stock market 96 00:08:18,199 --> 00:08:24,519 crashed by twenty percent in one day after having been film disconnected from reality for 97 00:08:24,519 --> 00:08:28,920 a while, and then the FED chairman then decided to immediately intervene in the 98 00:08:28,959 --> 00:08:33,039 market by cutting interest rates again, thinking that if he did not racily the 99 00:08:33,039 --> 00:08:37,279 stock market, it could end up causing a big, great depression. There 100 00:08:37,320 --> 00:08:41,320 was very little economic impact from their twenty percent stock market crash at that point 101 00:08:41,360 --> 00:08:46,360 in time, but I think it totally changed the investor expectations because then they 102 00:08:46,360 --> 00:08:52,159 started to believe that that evident the market would go down, green Span or 103 00:08:52,200 --> 00:08:56,639 some person the FED would be there to rescue them. And that's what I 104 00:08:56,639 --> 00:09:03,000 think has led to this big increase in valuations that's taking place in the markets. 105 00:09:03,039 --> 00:09:07,600 And when valuations increase, it increases the wealth of the few people who 106 00:09:07,679 --> 00:09:13,279 owned those companies listed there, and you've had an explosion in a number of 107 00:09:13,320 --> 00:09:16,440 billionaires out there. So that was sort of this culture of easy money that 108 00:09:16,559 --> 00:09:20,000 set in, which is that not only could he get bailed out, but 109 00:09:20,039 --> 00:09:26,480 also that the FED would be there to protect the system at the slightest hint 110 00:09:26,600 --> 00:09:31,600 of any financial trouble. So it was that on the upside, everybody could 111 00:09:31,679 --> 00:09:35,960 benefit who was in the market, but on the downside they'd be perfectly protected 112 00:09:37,039 --> 00:09:41,279 by the Faith. So it's that big change which took place I think in 113 00:09:41,320 --> 00:09:46,279 the nineteen eighties, and this all happened at least technically with Ronald Reagan in 114 00:09:46,360 --> 00:09:50,320 office. Well sure, though, doesn't this go back farther. I mean, 115 00:09:50,519 --> 00:09:54,559 I certainly understand the big bailout of the bank in nineteen eighty four, 116 00:09:56,120 --> 00:10:00,279 We saw the savings and loan crisis, you know, all of that sort 117 00:10:00,320 --> 00:10:03,320 of thing, and federal intervention in that. But I mean, if you 118 00:10:03,399 --> 00:10:09,120 look back at the twentieth century, you see under Woodrow Wilson a massive expansion 119 00:10:09,120 --> 00:10:11,960 of government. Some of that was in the name of, you know, 120 00:10:13,480 --> 00:10:20,200 protecting against the you know, the fiercer forces of capitalism, so to speak. 121 00:10:20,360 --> 00:10:26,519 We certainly saw that with FDR in the Great Depression. Moving through the 122 00:10:26,559 --> 00:10:31,559 Great Depression, we saw that with Lyndon Baines Johnson just three examples, and 123 00:10:31,000 --> 00:10:37,240 you know Richard Nixon as well other Republicans joined in two Exactly, aren't are 124 00:10:37,440 --> 00:10:45,519 these aren't these footprints or these fingerprints going back to the massive expansion we saw 125 00:10:45,559 --> 00:10:48,840 in the early part of the twentieth century and through the twentieth century. Absolutely 126 00:10:48,919 --> 00:10:50,639 so, I think that you're right, which is that this has been a 127 00:10:50,639 --> 00:10:54,600 progression, right, which is the fact that we went from an approach right 128 00:10:54,679 --> 00:10:58,519 up unto the nineteen twenties where the government spending in the share of GDP was 129 00:10:58,679 --> 00:11:05,519 just and the approach of government was that we just delivered the mail and we 130 00:11:05,559 --> 00:11:11,120 do some basic services like protecting the country. Otherwise the government's role is minimal. 131 00:11:11,279 --> 00:11:15,639 That was the approach right up until the nineteen twenties. And then after 132 00:11:16,320 --> 00:11:20,720 you had the Great Depression, then you had the expansion of the welfare state, 133 00:11:20,080 --> 00:11:24,840 and then every decade, as I've shown in the book, you've had 134 00:11:24,919 --> 00:11:28,399 an expansion in the role of government which has taken place. But I think 135 00:11:28,480 --> 00:11:33,519 the narrative that most people have in their heads is the fact and which has 136 00:11:33,559 --> 00:11:39,360 been propelled a lot, i'd say by the left of center econalumus in media. 137 00:11:41,240 --> 00:11:46,000 Is that somehow in the nineteen eighties onwards, given Reagan's red trick and 138 00:11:46,679 --> 00:11:50,279 what Thatcher was doing in UK, that sort of marked a turning point where 139 00:11:50,799 --> 00:11:58,399 the governments went into retreat and the market forces went firmly on the ascendant and 140 00:11:58,600 --> 00:12:03,840 almost too much on the ascendant, and gobbled up a lot of the government 141 00:12:05,240 --> 00:12:09,240 and its influence. And sure, I think in the book quite convincingly that 142 00:12:09,240 --> 00:12:15,440 that just did not happen that on so many metrics, whether it's the bailout 143 00:12:15,480 --> 00:12:20,559 culture, spending as the share of the economy, it's the regulatory environment, 144 00:12:20,639 --> 00:12:26,279 the micromanagement of the economic cycle, the protection of the stock market. All 145 00:12:26,360 --> 00:12:31,240 these things happened in the nineteen eighties and continued to happen in a bigger and 146 00:12:31,279 --> 00:12:35,120 bigger way in the subsequent decades, and to the extent that we are now 147 00:12:35,240 --> 00:12:39,440 at a point where the role of government has become so big and there's some 148 00:12:39,480 --> 00:12:43,080 real consequences for this. I mean, the question people ask me, okay, 149 00:12:43,159 --> 00:12:48,000 so what the government's role has expanded so so much. So far, 150 00:12:48,039 --> 00:12:52,960 there's been no financial prices of the government. The government is still running massive 151 00:12:52,960 --> 00:12:56,720 budget deficits and debt levels are so high. So what And my point and 152 00:12:56,759 --> 00:13:01,159 response to that is that you've already had some very serious consequences of this one. 153 00:13:01,240 --> 00:13:05,879 Productivity growth has declined a lot over the last thirty to forty years. 154 00:13:05,879 --> 00:13:09,759 And the key to economic growth is productivity growth. If you don't have that, 155 00:13:09,200 --> 00:13:13,519 it's very hard to grow at the kind of rates that America, you 156 00:13:13,559 --> 00:13:16,360 know, could a spy to grow at. And the second thing, as 157 00:13:16,399 --> 00:13:20,600 I said, is a feeling that many Americans have that the system is written 158 00:13:20,639 --> 00:13:26,240 against them, that they don't have the economic and social mobility that was the 159 00:13:26,279 --> 00:13:33,240 hallmark of the American dream for many decades, if not centuries. So it's 160 00:13:33,360 --> 00:13:39,320 had that in city as corrosive effect on the economy. And the most telling 161 00:13:39,320 --> 00:13:43,679 statistic is the decline in productivity. The productivity growth over the last thirty to 162 00:13:43,759 --> 00:13:48,600 forty years in American r of the Western world has declined significantly, and that's 163 00:13:48,639 --> 00:13:52,960 contributing to lower per capita income growth and just generally in Americans being less well 164 00:13:54,000 --> 00:13:58,279 off than they would have otherwise been had it not been for this interference of 165 00:13:58,360 --> 00:14:07,440 government in the destructive fiber of the ecliomy. Did fed chair j Pal have 166 00:14:07,519 --> 00:14:11,759 a Freudian slip? Watched Out on Wall Street podcast with Chris Markowski. Every 167 00:14:11,840 --> 00:14:16,759 day Chris helps unpack the connection between politics and the economy and how it affects 168 00:14:16,840 --> 00:14:20,679 your wallet. How do we have read hot jobs numbers while the unemployment rate 169 00:14:20,759 --> 00:14:24,960 continues to rise? Jay Pall admits that payrolls are a bit overstated? Is 170 00:14:24,960 --> 00:14:28,440 he covering for Biden's failures? Whether it's happening in DC or down on Wall 171 00:14:28,480 --> 00:14:31,519 Street, it's affecting you financially. Be informed. Check out the Watchdout on 172 00:14:31,559 --> 00:14:35,080 Wall Street podcast with Chris Markowski on Apple, Spotify, or wherever you get 173 00:14:35,080 --> 00:14:41,639 your podcasts. Yeah, the so what question is a quite lazy question in 174 00:14:41,799 --> 00:14:50,759 my as I've reported on this America for a long time now, and yeah, 175 00:14:50,919 --> 00:14:54,799 I get it. It's well, at least you know, federal intervention 176 00:14:54,039 --> 00:15:01,080 has staved off depression or recession or economic ruin. You we heard over and 177 00:15:01,120 --> 00:15:03,600 over again during the so called Great Recession. It's what we heard again during 178 00:15:03,600 --> 00:15:09,679 the pandemic. But take a look at just how much that has cost all 179 00:15:09,720 --> 00:15:16,840 of us in terms of inflationary pressures that we all well know today that's affecting 180 00:15:18,080 --> 00:15:22,200 the same people who feel like the system is truly rigged against them, because 181 00:15:22,200 --> 00:15:26,559 in many ways it is. And one point that you note, and I 182 00:15:26,559 --> 00:15:28,960 think you go into in great detail. I know you've talked about this before, 183 00:15:30,000 --> 00:15:35,360 but you can see the evidence in the spirit of entrepreneurialism. Startups are 184 00:15:35,440 --> 00:15:41,080 down and down, as I understand it, quite significantly over the last couple 185 00:15:41,120 --> 00:15:45,919 of decades in this country exactly. So I think that that's the other consequence 186 00:15:45,960 --> 00:15:48,759 of that's grief that he brought that up, which is that we're keeping a 187 00:15:48,759 --> 00:15:56,440 lot of dead would alive by all these artificial support measures by the government intervention. 188 00:15:56,639 --> 00:15:58,279 So the number of startups right up unto the pandemic when you, of 189 00:15:58,320 --> 00:16:04,240 course, got some video the pandemic the twenty thirty year history of America, 190 00:16:04,279 --> 00:16:10,759 within the number of new companies being formed at startups declined in this country. 191 00:16:10,919 --> 00:16:15,639 And that happens because if you keep a lot of the deadwood alive, you 192 00:16:15,679 --> 00:16:18,279 know, like there's less space for new growth. And what do I mean 193 00:16:18,320 --> 00:16:22,919 by deadwood? I think it comes at two levels. One, as I 194 00:16:22,960 --> 00:16:26,799 have a whole section in the book about the zombification of capitalism. What I 195 00:16:26,840 --> 00:16:32,440 mean by that is that the number of zombie companies today in America as a 196 00:16:32,480 --> 00:16:37,279 share of the total is that it record high. Zombie companies are defined as 197 00:16:37,360 --> 00:16:44,720 companies that don't make enough profits to even cover their interest payments for three years 198 00:16:44,720 --> 00:16:47,799 in a row, so they're forced to keep going to the market to borrow. 199 00:16:47,840 --> 00:16:51,960 And as long as the interest rates are very low and you have very 200 00:16:52,000 --> 00:16:57,519 relaxed lending standards, those companies are able to keep borrowing from the market and 201 00:16:57,559 --> 00:17:02,759 stay alive. Now, the number of zombie companies in America back in the 202 00:17:02,840 --> 00:17:07,720 nineteen nineties used to be just two percent of the total number of listed companies. 203 00:17:07,079 --> 00:17:11,440 At that point in time, this term zombie companies was popularized in Japan, 204 00:17:11,680 --> 00:17:15,319 and a lot of the American media, through the New York Times and 205 00:17:15,359 --> 00:17:18,720 all, used to write articles mocking this phenomenon in Japan that that's the land 206 00:17:18,799 --> 00:17:23,599 of zombie companies. In this is America, and in American capitalism there is 207 00:17:23,799 --> 00:17:27,839 almost no room for such zombie companies. That was back in the nineteen nineties. 208 00:17:29,200 --> 00:17:33,240 Today, by some measures, twenty percent of the total number of companies 209 00:17:34,160 --> 00:17:38,680 listed in America can be classified as zombie companies. So that's all the deadwood 210 00:17:38,680 --> 00:17:42,319 which has been kept alive. And when you keep so much deadwood alive, 211 00:17:42,799 --> 00:17:48,640 you are keeping out new companies from entering. So you have this big squeeze 212 00:17:48,640 --> 00:17:52,039 in the middle which is happening of the great middle that at the bottom you 213 00:17:52,039 --> 00:17:56,480 have these zombie companies which are be kept alive, and at the top you 214 00:17:56,559 --> 00:18:00,000 have the formation of more and more polygopolies. The reason why you have the 215 00:18:00,000 --> 00:18:04,839 formation of more and more polygopolies as well is because you have a few companies 216 00:18:06,720 --> 00:18:11,559 you know, that are able to exploit regulation because regulation in general tends to 217 00:18:11,559 --> 00:18:15,480 be pro incumbent. And also the fact that when you have so much easy 218 00:18:15,519 --> 00:18:21,599 money, these companies are able to easily borrow or you know, have the 219 00:18:21,680 --> 00:18:26,279 kind of valuations where they're able to gobble up any new company that comes, 220 00:18:26,400 --> 00:18:30,920 or even prevent new companies from being formed who they deem as competition. So 221 00:18:30,960 --> 00:18:38,000 they have the muscle power to outregulate some of the smaller and mid sized companies 222 00:18:38,359 --> 00:18:45,240 and also the power to buy out new companies or even just prevent them from 223 00:18:45,279 --> 00:18:49,079 really growing much. So you've got this squeeze happening of small to medium sized 224 00:18:49,079 --> 00:18:56,920 businesses in this country. Because of this zombification of capitalism, and it comes 225 00:18:56,960 --> 00:19:03,920 down to the all notion of picking winners and losers. We've seen an explosion 226 00:19:04,000 --> 00:19:07,160 of that, not just at the federal level, but of course at state 227 00:19:07,200 --> 00:19:14,440 governments, where you have all these sorts of taxpayer funded incentives going to you 228 00:19:14,480 --> 00:19:18,160 know, make somebody the idea to make them a lot richer. The whole 229 00:19:18,160 --> 00:19:22,599 concept, of course, is to benefit the community, but ultimately we end 230 00:19:22,680 --> 00:19:30,039 up getting again a winners and losers mentality. You note that progressives are right 231 00:19:30,559 --> 00:19:38,200 in part when they mock modern capitalism as socialism for the rich. But let 232 00:19:38,200 --> 00:19:47,160 me ask you, this is modern capitalism in America today leaning more toward socialism 233 00:19:47,319 --> 00:19:51,400 like we see in Western Europe. Yes, so I think that, as 234 00:19:51,400 --> 00:19:53,839 I say in the book that you know, like often a lot of the 235 00:19:53,880 --> 00:19:59,759 American commentators say, you know, especially like who are defenders of the guide 236 00:19:59,759 --> 00:20:03,319 state? Is go that, yeah, you know, like so what America's 237 00:20:03,359 --> 00:20:06,279 got these problems? Look at Europe? How much better we you know, 238 00:20:06,319 --> 00:20:08,039 We're like, we're in Europe. And my point is that, yeah, 239 00:20:08,079 --> 00:20:12,400 Europe's the worst benchmark because capitalism is even more distorted than Europe, and we 240 00:20:12,400 --> 00:20:17,400 don't want to go down the European way. So Europe's in terms of their 241 00:20:17,440 --> 00:20:23,240 government spending, their regulatory environment, their general interference in the economy is much 242 00:20:23,319 --> 00:20:29,400 greater as far as Europe's concerned. The risks over Americas that we catched down 243 00:20:29,440 --> 00:20:33,039 to Europe, which is that so far America in the last couple of decades 244 00:20:33,079 --> 00:20:40,799 has been able to remain much higher compared to compare to compare to Europe. 245 00:20:41,000 --> 00:20:44,440 But I'd say that the risk is as we expand, and that our welfare 246 00:20:44,480 --> 00:20:48,640 state now also becomes almost as big as that of Europe, and we have 247 00:20:48,680 --> 00:20:52,079 the general socialization of risk, most gallingly for the rich. I'd say that 248 00:20:52,200 --> 00:20:56,000 America could go down the part of Europe and catch down to Europe. That's 249 00:20:56,039 --> 00:20:59,480 not a good situation to be in. So that's really what I'm trying to 250 00:20:59,519 --> 00:21:02,000 do in the book, which is that you know, as I said, 251 00:21:02,039 --> 00:21:04,519 the first step to a cur is to diagnose the problem, to show as 252 00:21:04,559 --> 00:21:08,960 to what's happened. And obviously America is the country that matters the most. 253 00:21:10,039 --> 00:21:15,519 It's the country most associated with capitalism, and the capitalist brand is damaged. 254 00:21:15,880 --> 00:21:18,920 I have a real concern. I came from India, which was largely a 255 00:21:18,920 --> 00:21:22,240 socialist country when I was growing up in India back in the nineteen eighties, 256 00:21:22,680 --> 00:21:26,880 and I don't want America to go down that way where, you know, 257 00:21:27,000 --> 00:21:30,000 like, and I think a lot of young Americans, and especially a lot 258 00:21:30,000 --> 00:21:33,519 of the young Democrats, who say they rather have socialism rather than capitalism, 259 00:21:33,960 --> 00:21:37,119 I'd say that, you know, like, I'd want to remind them one 260 00:21:37,200 --> 00:21:41,240 what socialism is all about. And two I think that also show that they 261 00:21:44,079 --> 00:21:48,559 vote against capitalism is because they currently think that we have capitalism. And my 262 00:21:48,680 --> 00:21:52,000 point is, no, we don't have true capitalism. Far from it. 263 00:21:52,039 --> 00:21:56,359 We have a very distorted form of capitalism and a lot of perverse consequences. 264 00:21:56,000 --> 00:22:00,599 We Shir Sharma, chairman of Rockefeller International, found under in Chief Investment Office 265 00:22:00,680 --> 00:22:06,200 or a Breakout capital an author of an intriguing new book, What Went Wrong 266 00:22:06,519 --> 00:22:15,359 with Capitalism? You know, you mentioned that you grew up in a massively 267 00:22:15,400 --> 00:22:21,519 populated country, obviously in India. That's an important point because I've heard the 268 00:22:21,680 --> 00:22:26,200 left and I've heard other economists who you know at least, say that they 269 00:22:26,240 --> 00:22:34,200 are not taking a political position that eventually America will become too populated to be 270 00:22:34,240 --> 00:22:37,920 a true capitalist country. And as you argue in your book, it's really 271 00:22:37,960 --> 00:22:45,400 not a true capitalist certainly not a Lasafer capitalist country now. But aren't we 272 00:22:45,599 --> 00:22:51,799 just heading there where some of the economists are and policymakers are leading us because 273 00:22:51,960 --> 00:23:02,079 their argument is we cannot be a capitalist nation and survive, right, I 274 00:23:02,079 --> 00:23:03,920 mean in terms of the fact that I'm not sure where the arguments coming from, 275 00:23:03,960 --> 00:23:07,720 because you know, like for years, America you know, like has 276 00:23:07,799 --> 00:23:14,039 had uh, you know, like had successful immigration for for a long you 277 00:23:14,039 --> 00:23:15,839 know, for decades. I mean like obviously we you know, like we 278 00:23:15,920 --> 00:23:19,960 gan't have immigration, which undermines the social fabric of the country. And the 279 00:23:21,000 --> 00:23:22,799 other argument I often here, which is that you know, like, uh, 280 00:23:23,480 --> 00:23:29,039 democracy and capitalism are not compatible. I mean I find that so ridiculous 281 00:23:29,039 --> 00:23:33,839 because again, America for centuries had both democracy and capitalism. Flower So I 282 00:23:33,880 --> 00:23:37,400 think the most important thing I find focus in the book is that we have 283 00:23:37,480 --> 00:23:44,079 to give people much more economic freedom. Economic freedom is what we really sort 284 00:23:44,079 --> 00:23:45,720 of you know, need to focus on. That's how America used to be. 285 00:23:47,400 --> 00:23:52,480 But America's rankings on the economic freedom have slipped considerably in the last few 286 00:23:52,559 --> 00:23:56,799 years that we for for decades or even centuries, been consistently rank in the 287 00:23:56,799 --> 00:24:00,920 top five countries in the world for we getomically free. Our ranking is slip 288 00:24:02,000 --> 00:24:04,480 to number twenty five now. And in the book, I have an entire 289 00:24:04,559 --> 00:24:10,680 chatter which speaks about the fact that where this capitalism is still working. I 290 00:24:10,839 --> 00:24:15,839 start with Switzerland, which is the world's richest country and also one of the 291 00:24:15,880 --> 00:24:18,599 world's happiest countries, which you know, sort of has done very well in 292 00:24:18,680 --> 00:24:23,359 terms of giving people economic freedom, limiting the role of government, and also 293 00:24:23,519 --> 00:24:29,799 the fact that it's got a lot of you know, like it seems to 294 00:24:29,799 --> 00:24:33,160 strike to write talents between having the right amount of regulation and yet not being 295 00:24:33,200 --> 00:24:37,160 too intrusive. And then I, you know, cite country like Taiwan and 296 00:24:37,240 --> 00:24:41,559 Vietnam, which are not as rich as we are here in America, but 297 00:24:41,640 --> 00:24:44,880 at least they're moving in the right direction. I mean, Vietnam is still 298 00:24:44,880 --> 00:24:48,759 a very poor country, but when but by giving people more economic freedom in 299 00:24:48,799 --> 00:24:55,359 the last couple of decades, it's fast moving up the the ink curve and 300 00:24:55,440 --> 00:24:59,160 getting less poorer. And then you have a country like Taiwan, which is 301 00:24:59,160 --> 00:25:03,279 a great study here because in Taiwan, government spending in the share of GDP 302 00:25:03,599 --> 00:25:11,079 is like around twenty percent, half that of America, and yet you know, 303 00:25:11,279 --> 00:25:15,400 it seems to manage the state very well. It was widely lauded in 304 00:25:15,480 --> 00:25:22,000 the twenty twenty pandemic as being this model country for how efficiently the state handled 305 00:25:22,000 --> 00:25:26,440 the pandemic. So it's a great example. You don't have to throw so 306 00:25:26,519 --> 00:25:30,440 much money at the problem to get good results as long as you have an 307 00:25:30,880 --> 00:25:36,920 efficient state designed for the twenty first century, I think that it's like workable. 308 00:25:37,880 --> 00:25:41,680 But instead, the easiest solution we seem to find in America is that 309 00:25:41,720 --> 00:25:45,720 whenever you're in trouble or sorry or whatever, there's any sort of you know, 310 00:25:47,680 --> 00:25:51,200 kind of issue, you just throw more money at the problem. But 311 00:25:51,920 --> 00:25:56,400 that is not the way to deal with it, especially like how much money 312 00:25:56,400 --> 00:26:00,160 I'm going to keep throwing in. Who's there to be accountable for them and 313 00:26:00,240 --> 00:26:03,920 assess what the outcome is. Yeah, I want to get to that in 314 00:26:03,960 --> 00:26:07,960 just a moment, because there are obviously other consequences to this style of capitalism, 315 00:26:08,039 --> 00:26:12,799 if you will. But you had mentioned Vietnam, and I thought that 316 00:26:12,880 --> 00:26:18,920 was interesting because this is a country, of course that was torn apart by 317 00:26:18,000 --> 00:26:22,480 war for many years, but it was also torn apart for many years by 318 00:26:22,519 --> 00:26:29,720 communism. The extreme form of socialism. They seem to be learning what we 319 00:26:29,839 --> 00:26:33,960 seem to be forgetting. Is there truth to that statement, Yes, yes, 320 00:26:33,039 --> 00:26:36,759 I think that's very true. In fact, that's what you in China 321 00:26:36,839 --> 00:26:38,799 did, you know, like in terms of that China sort of gave it 322 00:26:38,839 --> 00:26:44,000 to people much more economic freedom. We here seem to believe that Chinese growth 323 00:26:44,160 --> 00:26:48,599 was state directed toward state capitalism. Yeah, But in China's case, what 324 00:26:48,640 --> 00:26:55,319 happened was they started from a point where the government was heavily controlled by the 325 00:26:55,359 --> 00:26:59,759 government, heavily controlled economy, and they gave their people much more economic freedom 326 00:26:59,799 --> 00:27:03,559 over time, and that's how the Chinese economy had this incredible miracle for thirty 327 00:27:03,599 --> 00:27:08,160 to forty years. And then of course it's been reversing that across in the 328 00:27:08,240 --> 00:27:15,680 last few years under jijingpain. But again Vietnam is taking off with China left 329 00:27:15,720 --> 00:27:18,960 off, which is the fact that you know, a China left that it's 330 00:27:18,960 --> 00:27:22,839 giving its people much more economic freedom and seeing huge gain the crew to the 331 00:27:22,880 --> 00:27:27,000 country. You note in your book, and you've said this, i think 332 00:27:27,279 --> 00:27:34,440 in some other interviews promoting it. This very important point, and it now 333 00:27:34,519 --> 00:27:41,119 more than ever is striking to me because I think the parallels are so tied 334 00:27:41,200 --> 00:27:47,839 together. You say, corporate bailouts are like our culture of pain management, 335 00:27:47,880 --> 00:27:52,920 and you were first specifically to opiate addiction. And I definitely see that, 336 00:27:53,160 --> 00:28:00,359 and I definitely saw that with the Stimmies as they were colloquial call all the 337 00:28:00,440 --> 00:28:06,519 stimulus checks that went out, the trillions of dollars that ultimately future generations will 338 00:28:06,559 --> 00:28:07,880 have to pay for, and we have to pay for now because there is 339 00:28:07,920 --> 00:28:15,680 a cost to that much debt in terms of basic American dream principles homeownership, 340 00:28:15,799 --> 00:28:21,720 business ownership, you know, doing better than your parents did. Those three 341 00:28:21,799 --> 00:28:26,400 things some up the American dream. But if you wouldn't mind expound upon this 342 00:28:26,920 --> 00:28:34,319 culture of economic culture, policy wise, of pain mitigation. Yes, I 343 00:28:34,319 --> 00:28:38,079 think that's exactly what's happened. That when you look at the opid crisis, 344 00:28:38,119 --> 00:28:41,960 we know that a lot of the opid crisis has to do in the fact 345 00:28:41,000 --> 00:28:47,400 that we prescribe drugs or give drugs at this you know, at the slightest 346 00:28:47,440 --> 00:28:49,279 hint of any pain, which sort of you know, got people to be 347 00:28:49,319 --> 00:28:55,920 addicted to drugs. And now on the economic cycle front, you know we 348 00:28:56,000 --> 00:29:00,000 have gone to a similar kind of approach, which is the slightest hint of 349 00:29:00,039 --> 00:29:04,440 trouble, we have to give the economy some stimulus, because if you don't 350 00:29:04,440 --> 00:29:08,400 do that, then the pain is like insufferable. So the extended economy is 351 00:29:08,440 --> 00:29:12,759 not got fooked to that kind of stibulus becau, which is more debt or 352 00:29:12,880 --> 00:29:18,960 just general for the government to be there to soothe air, like any pain 353 00:29:18,000 --> 00:29:23,960 that anyone suffers from. So then we have to also face the consequences Like 354 00:29:25,200 --> 00:29:27,880 that are all said, so like all the enormous side effects of this, 355 00:29:29,000 --> 00:29:36,599 which is lower productivity, lower number of startups coming up, and just the 356 00:29:36,599 --> 00:29:44,559 economy losing its natural resilience to deal with it even the slightest crisis, which 357 00:29:44,599 --> 00:29:48,319 makes the whole system feel more fragile and brittle. That Okay, one day 358 00:29:48,400 --> 00:29:52,240 something falls between the cracks, like it briefly did in two thousand and two 359 00:29:52,279 --> 00:29:56,079 thousand and nine, the whole system could come crumbling down because the fragility of 360 00:29:56,119 --> 00:30:00,200 the system has increased so much, because it is a loss its natural ability 361 00:30:00,599 --> 00:30:06,599 to find anything, you know, with the government always there to inject stibilus 362 00:30:06,599 --> 00:30:12,559 and bailouts to protect the downside. I think you've described this in our conversation 363 00:30:14,200 --> 00:30:18,920 in overarchingly but let me ask you specifically, what are some of the most 364 00:30:18,079 --> 00:30:25,799 detrimental policies on the modern creating modern day capitalism spoke, so to speak, 365 00:30:25,799 --> 00:30:30,759 in America, the most detrimental policies from the federal government, from the Fed 366 00:30:30,440 --> 00:30:38,039 to economic policy in general today, And what are some of the worst policies 367 00:30:38,079 --> 00:30:42,160 that we've had on the books for a long time contributing to the ruin of 368 00:30:42,200 --> 00:30:48,200 capitalism. I'd say that the most goal example for me, have a number 369 00:30:48,200 --> 00:30:51,240 of regulations we have in the economy today, which is that for the last 370 00:30:51,240 --> 00:30:55,240 twenty years, the number of new regulations we've been adding, like to the 371 00:30:55,279 --> 00:31:00,519 economy just keep going up with extent that we've been adding nearly three new regulations 372 00:31:00,559 --> 00:31:06,240 in the Federal Register for the last twenty years, on average three thousand a 373 00:31:06,319 --> 00:31:10,599 year. The total level of regulations we have withdrawn over the last twenty years 374 00:31:10,799 --> 00:31:15,480 has been twenty in total, you know, and that really hurts small and 375 00:31:15,519 --> 00:31:22,480 mid sized businesses because the cost of doing new business in America has gone up 376 00:31:22,519 --> 00:31:27,160 significantly given the amount of regulations you have to comply with, and regulation by 377 00:31:27,200 --> 00:31:33,000 definition tends to be pro incumbent. And also, you know, like in 378 00:31:33,079 --> 00:31:38,160 terms of pro big business because the big companies are able to afford the cost 379 00:31:38,240 --> 00:31:42,400 of these regulations much more, and also they're able to have their lobbyist in 380 00:31:42,519 --> 00:31:48,680 Washington to influence the way that all these laws are withen So, I think 381 00:31:48,680 --> 00:31:55,240 that that is a very important point here, which is that the regulatory cost 382 00:31:55,599 --> 00:31:59,079 and burden has gone up enormously, and this has to do with the small 383 00:31:59,119 --> 00:32:02,599 and mid sized business owners. I know from personal experience that today, if 384 00:32:02,599 --> 00:32:07,119 you want to set up a new investment fund, the cost of doing so 385 00:32:07,720 --> 00:32:12,920 is ten times larger than it was twenty years ago. So the incentive is 386 00:32:12,960 --> 00:32:15,880 therefore to remain at a large firm that can absorb all these costs. And 387 00:32:15,920 --> 00:32:21,359 the large firms keep growing larger because the cost of a new person to survive 388 00:32:22,000 --> 00:32:27,880 has gone up that much and become that higher. And also it shows up 389 00:32:27,880 --> 00:32:30,920 on the everyday life as well. That I've got some data that I pulled 390 00:32:30,960 --> 00:32:36,799 in the book from other sources to show that the average American today at work 391 00:32:37,200 --> 00:32:42,920 spends nearly sixteen percent of their time dealing with legal compliance and other regulatory and 392 00:32:43,359 --> 00:32:49,559 Red Taperson, sixteen percent of the daily work life goes in that. Now, 393 00:32:49,599 --> 00:32:55,359 that's such a big task for any business or any employee to deal with, 394 00:32:55,680 --> 00:32:59,960 So that I think is something which we need to again be aware of 395 00:33:00,440 --> 00:33:02,200 that. Listen, there's a cost to this and that was my thing that 396 00:33:02,279 --> 00:33:06,799 you know, the under President Trump that he started off by saying that he's 397 00:33:06,799 --> 00:33:10,160 going to diregulate, but at the end, the number of regulations that sprouted 398 00:33:10,200 --> 00:33:14,720 even under him were incredible, which is that there were more than three thousand 399 00:33:14,759 --> 00:33:21,839 new regulations coming through the same average as Saunder Obama or his predecessors. Interesting 400 00:33:21,880 --> 00:33:27,160 you note sixteen percent of our working day is wasted in trying to go through 401 00:33:27,440 --> 00:33:31,680 the hoops and hurdles of course of regulation, and another forty percent or more 402 00:33:32,079 --> 00:33:37,839 is spent on our smartphones trying to get away from more work in America today, 403 00:33:37,240 --> 00:33:42,039 it seems, which is another pacifier that we could talk about for a 404 00:33:42,960 --> 00:33:46,799 different time. What do you think the FED specifically, what do you think 405 00:33:46,799 --> 00:33:54,160 about the FED and its position on interest rates right now? How as you 406 00:33:54,240 --> 00:34:00,319 look at how are they handling it? And obviously FED dictates a lot of 407 00:34:00,319 --> 00:34:06,279 what's going on in American economic policy today. Yeah, you are. My 408 00:34:06,720 --> 00:34:12,039 main criticism of the FED has been that it's too narrowly focused on consumer price 409 00:34:12,079 --> 00:34:17,239 inflation, which is that just looks at consumer prices and not at the general 410 00:34:19,000 --> 00:34:22,760 role of asset prices in the economy. As I said that asset price inflation 411 00:34:23,400 --> 00:34:30,039 is something which is as pernicious as consumer price inflation. Why do I say 412 00:34:30,039 --> 00:34:32,719 that, What do you mean by asset prices? It means stocks, bonds, 413 00:34:32,719 --> 00:34:39,039 and most importantly, property prices. That if the feed's policies are boosting 414 00:34:40,079 --> 00:34:45,679 property crisis or there's too much liquity boosting property prices, that is good for 415 00:34:45,719 --> 00:34:51,119 the very narrow band of people who own those properties, but it puts the 416 00:34:51,360 --> 00:34:54,480 average home out of reach for the average American. And I think that the 417 00:34:54,480 --> 00:35:00,159 FED is not enough focused enough on that. And also the other criticism of 418 00:35:00,199 --> 00:35:05,159 the FED was that it can't have this asymmetrical reaction, which is that you 419 00:35:05,159 --> 00:35:08,440 know, which they've officially said so in fact, that we don't know how 420 00:35:08,440 --> 00:35:12,039 the spot of bubble. They say, so if a bubble is being formed, 421 00:35:12,639 --> 00:35:15,280 it's we ignore it, but the moment the bubble bursts, we are 422 00:35:15,280 --> 00:35:20,280 there to clean up the mess. Now that again is a very sort of 423 00:35:20,320 --> 00:35:24,199 asymmetric way of thinking about things, which is that we only burst that we 424 00:35:24,239 --> 00:35:29,280 want do anything to burst the bubble or even manage expectations there. But on 425 00:35:29,280 --> 00:35:31,920 the downside, we are there to clean the mess up by pumping liquidity and 426 00:35:31,960 --> 00:35:35,880 what we do. So, I think that if I have two main criticisms 427 00:35:35,880 --> 00:35:37,719 of the FED, it's these two and is there's the third one. It 428 00:35:37,800 --> 00:35:42,679 is the fact that even during the expansion the twenty tens, it kept on 429 00:35:43,079 --> 00:35:46,760 carrying on with this policy of quantity easing, of buying you know, government 430 00:35:46,840 --> 00:35:54,239 bonds, even when the economic crisis of two thousand and seven two thousand and 431 00:35:54,280 --> 00:35:58,320 eight was where in the rear view window, they kept on doing that along 432 00:35:58,639 --> 00:36:01,159 in the two thousands and tends. As I said, there is a role 433 00:36:01,199 --> 00:36:06,000 for the fair, there is a role for the government, but we need 434 00:36:06,039 --> 00:36:08,960 to restore the balance here. There's no going back to the nineteenth century Lassiefair 435 00:36:09,079 --> 00:36:14,840 type of catalysm we have, but we need to restore the balance here where 436 00:36:15,519 --> 00:36:17,480 there is a role for the government but needs to prioritize what it wants to 437 00:36:17,519 --> 00:36:22,960 do. But this idea that every excuse is used to expand the role of 438 00:36:22,960 --> 00:36:27,960 the government, that needs to I think change and be a reeve. Is 439 00:36:28,039 --> 00:36:31,079 it off, here's a loaded question for you. It certainly comes with a 440 00:36:31,079 --> 00:36:37,679 lot of perspective. My own perspective on this as a free market for a 441 00:36:37,760 --> 00:36:45,000 people guy. How disastrous has Bidenomics, as the White House likes to coin 442 00:36:45,360 --> 00:36:53,639 whatever this economic policy or suite of policies are from the current administration, How 443 00:36:53,679 --> 00:37:01,679 disastrous has Bidenomics been to the the economy? Well, I think you know 444 00:37:01,719 --> 00:37:07,079 what my dynomics is Dan, is that it's operating on two false premises. 445 00:37:07,480 --> 00:37:12,519 One, when they came to power, their sort of premise was that we've 446 00:37:12,559 --> 00:37:15,840 been in this era of small government for the last thirty to forty years and 447 00:37:15,880 --> 00:37:20,960 we have to reverse it and increase the role of the government to fix out 448 00:37:20,960 --> 00:37:23,800 of problems. As I show in the book that in the last thirty to 449 00:37:23,840 --> 00:37:27,880 forty years, we've never had an era of small government. So to say 450 00:37:27,880 --> 00:37:30,920 that we're going to reverse that post was convenient but just not factually true. 451 00:37:31,360 --> 00:37:36,119 And the second thing is that we keep invoking the example of China and how 452 00:37:36,280 --> 00:37:42,000 the state in China, with its industrial policy and other subsidies and staff helped 453 00:37:43,079 --> 00:37:47,119 the Chinese economy grow. Again, that's a wrong characterization I think of China. 454 00:37:47,239 --> 00:37:52,119 What really worked in China, And more importantly that of late, the 455 00:37:52,199 --> 00:37:55,519 Chinese economy has been faltering, so why follow a model that is faltering. 456 00:37:57,199 --> 00:38:00,800 So I think that those are the two things that I would, you know, 457 00:38:00,880 --> 00:38:05,639 like point out in terms of great problem with bidynomics. And you know, 458 00:38:05,679 --> 00:38:08,079 like I'm a bit wary of speaking too much about debt and deficits because 459 00:38:08,480 --> 00:38:12,159 a lot of people glaze over saying, oh, we've heard these warnings for 460 00:38:12,239 --> 00:38:15,599 years. It's not decades, and nothing has ever come off those But if 461 00:38:15,599 --> 00:38:21,119 you put it in perspective now, of course Biden is running a budget deficit, 462 00:38:21,280 --> 00:38:25,760 which is exceptional square because in the past, America's budget deficits would be 463 00:38:25,760 --> 00:38:29,920 about three percent of GDP over the last twenty years, sort of in line 464 00:38:29,960 --> 00:38:35,000 with other developed countries. Today the budget deficit is more than six percent of 465 00:38:35,079 --> 00:38:39,159 GDP and far higher than any other developed country in the world. So they've 466 00:38:39,159 --> 00:38:43,840 taken this to another extreme out there, and we yet to know what the 467 00:38:43,880 --> 00:38:50,400 consequences of this will be. But clearly they are overstimulating the economy here and 468 00:38:50,440 --> 00:38:53,559 feeling saying that, you know, the visually feeling good about it. But 469 00:38:53,599 --> 00:38:58,400 they've already been one big negative side effect visible to everybody, which is the 470 00:38:58,480 --> 00:39:02,480 high inflation that has wiped out the wages of many poor and bill income Americans. 471 00:39:02,800 --> 00:39:07,239 But more importantly, I think the long term consequences of this could be 472 00:39:07,320 --> 00:39:10,360 quite negative, just because of the fact that we have now sort of just 473 00:39:12,000 --> 00:39:17,920 dropped all caution and are treating the government's finances with complete abandon perfect economy. 474 00:39:19,039 --> 00:39:24,079 For you, would it be returning to the days of Coolidge, the whole 475 00:39:24,119 --> 00:39:30,159 idea of hands off the economy las fair as it is called. Of course, 476 00:39:31,119 --> 00:39:37,119 there has been a considerable amount of debate over the last eighty ninety years 477 00:39:37,159 --> 00:39:42,800 in this country about that policy and did it lead to the Great Depression? 478 00:39:43,320 --> 00:39:46,800 And that argument that it has has, Unfortunately, I think in many cases 479 00:39:46,840 --> 00:39:52,519 prevailed, so that that created the groundwork for exactly what we're talking about today. 480 00:39:52,079 --> 00:39:57,039 But the question is, again, would you like to see us return 481 00:39:57,159 --> 00:40:02,159 to the Calvin Coolidge style of economic governance? No? I mean, as 482 00:40:02,199 --> 00:40:06,679 I say in the book, that that there's no going back to you know, 483 00:40:06,719 --> 00:40:09,519 such an extreme environment, that there is no going back to a Lassifier 484 00:40:09,559 --> 00:40:15,079 type capitalism. It's not practical. And you know, like societies evolve, 485 00:40:15,599 --> 00:40:19,039 economies evolved. So I don't think that in working any period in the past 486 00:40:19,159 --> 00:40:21,800 is going to be any good. But I think the balance needs to return. 487 00:40:21,880 --> 00:40:24,840 I mean the Calvin you know, Coolist economy with Herbert Herbert Whober after 488 00:40:24,880 --> 00:40:30,280 that was characterized by this feeling that the government almost liquidated the cycle, and 489 00:40:30,360 --> 00:40:36,800 so therefore this pejorative term came into being of being liquidationists. I think now 490 00:40:36,880 --> 00:40:38,880 we have like at a situation where we we just want to keep you know, 491 00:40:39,000 --> 00:40:43,400 liquidfying the economy, and I think that there's got to be a middle 492 00:40:43,400 --> 00:40:46,679 ground between the between the two. And I point too countries like Switzerland, 493 00:40:46,719 --> 00:40:51,199 etc. Which have found the middle ground. So I think the balance needs 494 00:40:51,239 --> 00:40:53,800 to be restored between the two. There's no going back to the nineteenth century. 495 00:40:53,840 --> 00:40:57,679 And the other thing which I think is important is the fact that you 496 00:40:57,719 --> 00:41:00,280 know, with the twenty first century, we need to stay to be designed 497 00:41:00,280 --> 00:41:04,760 for the twenty first century. There is a role for the state, but 498 00:41:04,800 --> 00:41:07,519 the state need is to prioritize what it does rather than just deal with you 499 00:41:07,559 --> 00:41:12,519 know, like every single problem in the world from you know, like the 500 00:41:12,559 --> 00:41:19,079 green energy and climate change and defense and increase national security and like you know, 501 00:41:19,440 --> 00:41:22,639 an increased homeland security in everything that the government just keeps on playing a 502 00:41:22,719 --> 00:41:27,360 role everywhere. There is a role for the government to be played in crisis, 503 00:41:27,440 --> 00:41:30,599 there is a role for the government possibly even to be played in things 504 00:41:30,599 --> 00:41:35,880 like antitrust. There's a role for the government to be played as far as 505 00:41:36,239 --> 00:41:39,880 some basic welfare is concerned. But the idea that the government should be playing 506 00:41:39,960 --> 00:41:45,519 such an extensive role is not consistent with any form of capitalism. And clearly 507 00:41:45,559 --> 00:41:50,559 the outcomes that we have today with this very expanded role of government are not 508 00:41:50,679 --> 00:41:55,199 satisfying people. In fact, the trust of Americans in their government today is 509 00:41:55,199 --> 00:42:00,400 at a record low. Indeed, final question for you as it relates to 510 00:42:00,440 --> 00:42:05,199 that, and I appreciate the generosity of your time today, but you noted 511 00:42:05,239 --> 00:42:09,840 earlier that we have a majority in some polls, a vast majority of young 512 00:42:09,920 --> 00:42:15,960 people who say they would prefer socialism to the idea that they have of us 513 00:42:16,159 --> 00:42:22,360 capitalism. Right now, with what we have experience in this country over the 514 00:42:22,440 --> 00:42:27,880 last forty years, the bailouts, the constant assistance the welfare state in America, 515 00:42:28,400 --> 00:42:34,519 there has been clearly an indoctrination into what the government is supposed to do 516 00:42:34,599 --> 00:42:37,679 in the minds of young people in America. So, with that said, 517 00:42:37,519 --> 00:42:43,639 is it possible to strike the balance that you're looking for. I mean to 518 00:42:43,639 --> 00:42:47,800 the fact that they said that my objective in this book is to at least 519 00:42:49,599 --> 00:42:52,280 point out what the reality is in a very data based way. I mean 520 00:42:52,320 --> 00:42:57,599 all the data in the book with its regulation, government spending, the costs 521 00:42:57,599 --> 00:43:01,280 of the bail outs, the enormous size or the financial markets relative to the 522 00:43:01,360 --> 00:43:06,320 other economy. It's all in the book. So the whole idea of the 523 00:43:06,360 --> 00:43:10,079 book is to sort of make it accessible to as many people as possible, 524 00:43:10,599 --> 00:43:15,519 given my background as a writer and I've been writing now regularly for over thirty 525 00:43:15,599 --> 00:43:20,199 years. Is to make it as accessible so that people know what the basic 526 00:43:20,280 --> 00:43:23,599 problem is. And I think that enough people on both sides of the aisle, 527 00:43:24,079 --> 00:43:28,360 who at least if my early readings are correct, us seeing the merit 528 00:43:28,360 --> 00:43:30,960 in this argument that yeah, you know, there's something to this that the 529 00:43:31,000 --> 00:43:36,320 government just can't be doing all of this and expecting a good outcome. I 530 00:43:36,360 --> 00:43:38,760 mean, even the people the left degree that you know in my statement that 531 00:43:38,880 --> 00:43:44,119 yes, you know, as they say that the road to hell is paved 532 00:43:44,119 --> 00:43:46,840 with good intentions. So find if the government's intention. Let's say that people, 533 00:43:46,880 --> 00:43:51,159 let's have a more generous view of the government. But you know, 534 00:43:51,159 --> 00:43:53,800 I say that find the intentions are good, but let's see what the outcomes 535 00:43:53,800 --> 00:43:59,119 are. I think there's a broad agreement which I'm sensing from the people, 536 00:43:59,199 --> 00:44:01,039 the early readers of the book on both sides of the aisle, that yeah, 537 00:44:01,320 --> 00:44:07,519 you know that there are so many negative, perverse consequences of these actions. 538 00:44:07,559 --> 00:44:09,320 So you're right. I don't expect there to be, you know, 539 00:44:09,360 --> 00:44:15,559 like any big radical shift, but let's at least start the post correction in 540 00:44:15,599 --> 00:44:20,679 a sensible way by first becoming aware of what the basic problem is and in 541 00:44:20,800 --> 00:44:27,440 the bargain learning what the history of capitalism is intriguing book and driving a lot 542 00:44:27,480 --> 00:44:30,559 of important conversations, And I think that's the intention altogether. Yeah, the 543 00:44:30,599 --> 00:44:36,400 book is again, if you are looking for it, what went wrong with 544 00:44:36,800 --> 00:44:42,719 capitalism? And quickly, where can our listeners find your book? The book's 545 00:44:42,719 --> 00:44:46,400 available everywhere. It's available on Amazon, it's available across bookstores. It's been 546 00:44:46,400 --> 00:44:52,440 published by Simon and Schuster. And I know this is a radio interview. 547 00:44:52,440 --> 00:44:54,320 I wish they could see the artwork on it, because I'm very proud of 548 00:44:54,360 --> 00:45:00,079 the cover of this book that it's you know, like God w slash across 549 00:45:00,119 --> 00:45:05,800 the major president so over the last one hundred years that America has seen. 550 00:45:05,920 --> 00:45:10,360 But the book now is widely available, and I hope you know, people 551 00:45:10,400 --> 00:45:15,599 sort of read it through your program and we can carry you on this conversation. 552 00:45:15,119 --> 00:45:21,559 Yeah. I thought the cover was very, very clever. Thanks to 553 00:45:21,599 --> 00:45:27,320 my guest today, Rusher Sharma, chairman of Rockefeller International and founder and chief 554 00:45:27,360 --> 00:45:31,920 investment officer of Breakout Capital and investment firm focused on emerging markets. He's also 555 00:45:32,039 --> 00:45:38,039 the author of this new book, again available everywhere, What Went Wrong with 556 00:45:38,239 --> 00:45:43,719 Capitalism. You've been listening to another edition of The Federalist Radio Hour. I'm 557 00:45:43,760 --> 00:45:47,039 Matt Kittle, senior correspondent at the Federalist. We'll be back soon with more. 558 00:45:47,440 --> 00:46:00,960 Until then, stay lovers of freedom and anxious for the fray for the 559 00:46:00,000 --> 00:46:09,480 reason. And then it faded away. Mm hmm.