from the council we are very much on the record so um with that um let me let me
start uh with i guess the big question which is um you know from peter from your perspective
uh the american century is just starting uh joe from your perspective the american century
is certainly not yet over uh so you guys are very far from being declined
maybe i should start a little bit open and maybe start with you peter because i think you have the
the more the more uh uh sort of uh the stronger position of the two in that regard why is the
american century how can we argue in today's world where so many people are are out there uh mourning
uh the lack of american foreign policy influence around the world that the american centuries
actually just started something to keep in mind about american foreign policy is the entire post
world war ii era was something that we crafted in order to fight the cold war so bretton woods
gatt nato all of this was multiple sides of the same system that system stopped being important
to the united states about 25 years ago when the cold war ended and we have been basically going
on autopilot now for about 25 years think back if you will to what the world was like before 1945.
think back what it was like when the united states had global reach but no global interests because
we're in a world now where the united states is reliant upon the rest of the world combined for
about nine percent of gdp about half of that's nafta about half of what's left is energy so
we're looking at within just five years the total involvement of the american economy throughout the
rest of the world it's about three percent of gdp now our politics haven't caught up with that yet
but economics have a way of forcing the hand and just think about what happens for example
if we have a supply-side shock in energy markets right now that has no impact on pricing in mexico
canada or the united states because you can't export crude from the united states so we're
just waiting for the other shoe to drop whether it's political whether it's economic where it's
military and then our allies find out if they still are and to be perfectly blunt we haven't
started having the conversation about who we want to keep and who we don't
and are you saying that you see a structural actual isolationism in the u.s which frankly is
perfectly fine for american national interests i wouldn't use the word isolationist i used
retrenchment the united states will still have the option of going out and doing whatever it
wants in the broader system we will have friends we will have trading partners they just won't be
as strategic as they have been in the past i also wouldn't say that uh it's perfectly fine with that
me personally i'm an internationalist i think bretton woods and nato are fantastic ideas but
i only get one vote out about 320 million these days i see the united states coasting in terms
of foreign affairs and i see that being a disaster for most of the countries that we consider allies
and rivals china is one of the countries that is most dependent on american involvement right now
we haven't really thought in this country that their strength
is a direct outcome of our intention of bringing them into the anti-soviet alliance
as long as we maintain that system they're in a decent spot the second that gets withdrawn a
series of problems crop up for them that they just don't have tools for you you're not an enormous
optimist on whether or not china is going to stay very stable over the next 20 years talk a little
bit about that but also if you're wrong i mean if it turns out that china actually does make it are
you willing to countenance the possibility they make it as the largest economy in the world even
though they're still going to be comparatively poor if that happens does your analysis changed
significantly in terms of u.s position globally not really uh the chinese are condem they're not
a condemned power excuse me they're contained to power always have been you've got a line of
archipelagos that are all navally capable that are all us allies some of which could go nuclear in a
long weekend if they wanted to china cannot reach the global ocean for markets or for resources
unless this line of states lets it and right now that's part of bretton woods that's part of the
free trade system that the us maintains anything about that changes that's the end of china china's
demography is almost as bad as russia's they've seen the number of high school students drop
by about 27 in just the last four years baby bust because of the one child policy also
when the industrialist went out to the countryside to find workers to bring into the coastal zones
for manufacturing they only brought back the women because you can put six women into a one-bedroom
apartment and they won't kill each other by the end of the week you can't do that with dudes
and so the men and the women are actually physically separated by hundreds of miles now
so this is this is a demography that is past terminal it's actually shrinking faster than the
russian demography now so the idea that they're going to be consumption-led impossible and their
export-led system completely dependent upon japan taiwan the philippines indonesia the united states
so and don't even get me started on the financial system which makes enron look like an incredibly
well-run and well-planned company this is a place where you can have growth bottomless amount of
cash a system that they don't control it is right now very favorable bottomless export markets
you can have growth but that doesn't mean it's sustainable and it's certainly not sustainable
domestically so two things come to me from this conversation we've had so far around technology
i want to ask both of you briefly one is your demographic point um we're starting to see
that technology is increasingly hollowing out the ability of countries to actually provide jobs for
people sure if that continues or as that continues does that start making you think differently
about the importance of having growing growing demographics potentially given the unemployment
question otherwise could china be getting smaller just when they need to and secondarily given
how much technology is changing the rules of the game in terms of how you assert yourself
geopolitically the cyber issue the surveillance issue does this make the americans potentially
potentially more vulnerable because does the rank order and this is for joe too
of of how we think about who has more influence who has more ability to subvert
an international system potentially change both much faster and work against the united states as
a consequence of how dramatic the technology game is changing maybe you start sure there's certainly
a twist in the conversation coming and part of the inequality debate is wrapped up in this
but a few things to keep in mind one regardless of what happens with technology you need a market
market require people who are starting out buying cars homes families that's not going to go away
because twitter becomes more popular so people in their 20s and their 30s and maybe even in
their early 40s that's the cluster where most of economic growth consumption-led economic growth
happens and the united states and new zealand are the two countries in the developed world that have
a lot of people in that cluster and no offense to the kiwis but they're just not that important
so it's really just the united states uh when the obama administration comes out and says that the
united states generated more jobs among 20 30 and 40 somethings than everybody else put together
that's because we're almost to the point of having more 20 30 and 40 somethings than everybody else
put together the birth rate collapse in most of the world is just extreme and it is not limited
to the developed world you're seeing the same thing in indonesia brazil and elsewhere they're
actually aging much faster than western europe so technology in terms of threats the cyber issue
i i'm speaking a little bit out of my area but from everyone that i know who
works for the national security council national security agency they have some
phenomenal hackers and if it ever does come to a cyber shooting war i would not want to be in china
it's like we are a first strike country and that is not limited to nukes or aircraft carriers
or cruise missiles notion of globalization what happens if the united states starts doing a lot
less peter your view is world gets more unstable dollar does better true uh question world gets
more unstable global internet is no longer global intimate starts fragmenting and so china has
its own russia has its own maybe turkey maybe iran global standards start changing us-based
multinationals have a harder time doing business in different places they've got competitors
is your perspective just these are comparatively small issues because ultimately the us doesn't
really need all of that exposure to the global economy the issue is entirely determined
by where you sit if you're an american corporation that makes the majority of its
business abroad it's potentially problematic keep in mind that all of our super majors now
they all now produce more crude abroad than here they refine more crude abroad than here
they explore for more crude abroad in here shale has forced them out of the u.s market at large
so we are seeing a bifurcation in everything that you've identified and a great many
other issues as the american corporate system is starting to cast lots
they're either making their big bet on the united states or may they're making their big bet on
the wider world and for those that are making their big bet on the wider world they're having
to look at a much more holistic approach that includes security cyber physical and otherwise
that includes financing independent and maybe in league with american banks they're realizing
that they're starting to act a little bit like sovereign states and we've seen this before
this is what the global economy looked like in the late 1800s that was the last time that the
united states had a military position but didn't necessarily participate in the global order
and i think we're going to see a lot more of that energy is leading the way it won't be the last one
so are you suggesting that the interests of major american corporations and financial institutions
are likely to increasingly diverge substantially from those of us policymakers internationally i
think that's a safe bet yes and what do you think the implications of that are i think it's going to
be very ugly if you don't have a good relationship with the company that happens to be working in
your backyard because if you take a company like exxon and apply something like standard oil policy
from a century or two ago you get a company that is perfectly willing to make foreign affairs
policy on an ad hoc basis as its global corporate interest would dictate the question will be will
this be a clean split from the american point of view where it's very clear that exxon is not
american for example just to keep picking on exxon so i don't have to anger anybody else or will we
have something more of the british style where you have large companies that are representative
of american interests that fly the flag and can rely upon intelligence support maybe even
paramilitary support from com from the government from time to time keep in mind that this is how
most foreign affairs entities throughout the world work the united states is one of the few
where the state department doesn't actually provide a lot of assistance to corporations
there's visas there's hand-holding there's a few introductions but if you are in say the australian
foreign affairs system it's called the department of foreign affairs and trade for a reason
we don't have that here we have one of the big advantages about having options is you get to
choose between them and when the united states no longer has the degree of security and economic
commitments that it has currently and it's had consistently for 70 years now the united states
gets to choose what entanglements it wants to get snarled in it also gets to choose the full
breadth and width of morals to be put into whatever the foreign policy happens to be
think of the last 15 years we've had a series of military conflicts across the middle east where
american soft power has perhaps not been at the front of our decision-making process if we're
moving into a world where we don't have to worry about this ally or that conflict all of a sudden
we have the choice of putting morality back into foreign policy wherever we want to
does it mean we will i don't know but we won't be facing the degree of
structural conflict between our ethical outlooks and our strategic outlooks unless we want to
you