Prof. Niall Ferguson: In Conversation – How Coronavirus Will Change the World of International Relations

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DATE: 12 June 2020, 3:00 pm – 4:00 pm

EVENT TRANSCRIPT: Prof. Niall Ferguson: In Conversation – How Coronavirus Will Change the World of International Relations

VENUE: Online

SPEAKER: Prof. Niall Ferguson

EVENT MODERATOR: Dr Alan Mendoza

 

 

Dr Alan Mendoza  00:35

Good afternoon everyone. I’m Alan Mendoza, director of the Henry Jackson Society. Welcome to the latest of our virtual event series, which is “Professor Niall Ferguson: In Conversation – How Coronavirus Will Change The World of International Relations.” And it really is a great pleasure to welcome Niall for this chat. It really is a worldwide complicated conversation today. We’ve got people literally all the way from Australia to the Pacific Islands. I think even I saw someone register from there. So literally, the world in between is joining us now. It’s really a testimony to our guest’s reputation. And if I read it all out, that will take the whole hour to read your biography. So, I’m going to focus on just the main bits, if you don’t mind. I know I prefer Kissinger definitely do want an introduction. But Niall Ferguson is the Milbank Family Senior Fellow at the Hoover Institution at Stanford University, and he’s also a Senior Faculty fellow at the Belfer Center for Science and International Affairs at Harvard. He’s also a visiting professor at Tsinghua University in Beijing. Now, currently, and he is the author of 15 books, I’m sure that will be shortly 16. I’m sure everyone who is tuning in has read at least one of his works. But they really have covered all sorts of grand themes within history, but also, of course, looking at individuals and concepts as well within that. So, I think it’s a pretty encyclopedic knowledge of the past few 100 years that you bring to our conversation, which is great. And, of course, an accomplished broadcaster as well. So, Niall, it’s really a great pleasure to have you join us today. And I think probably the best way to start is by suggesting that – we’ll tackle a few questions from the audience at home. Right now, of course, there’ll be some opportunities for you to write in with some Q&A as well, and use the tab at the bottom. What we’ll try and do is just ask some big questions to start on, trying to pick some of those, and then we’ll, we’ll move into that. So, Niall, Coronavirus is obviously transformed by – Well, that’s pretty evident. I suppose the big question is, to what extent is it going to be business as usual after this when it looks at when we’re looking at past relations? Or is this new, a really disruptive event that’s going to actually transform the way the international order operates? Give us your thoughts on that.

Niall Ferguson  02:56

Well, thanks, Alan. It’s a pleasure to join this – this audience. I’m a long-standing fan of the Henry Jackson Society. And just let’s make one thing clear at the outset, I’m not “N E I L” Ferguson, the epidemiologist from Imperial College London, I’m “N I A L L” Ferguson, the historian from the Hoover Institution at Stanford, and yes, you pronounce the name the same way. But my spelling is a more accurate reflection of the original Gallic Niall. Now that we’ve cleared that up, perhaps half the attendees will depart. All those who didn’t tend to pick up a fight with me for having imposed lockdowns on the basis of a dodgy bottle, to be even more explicit. When Neil Ferguson, the other one, published his March 16th papers saying that if we didn’t lock down the economy, half a million people in Britain would die, and 2.2 million would die in America, I immediately expressed skepticism about his assumptions. And so, I think I’m in the clear as far as the lockdowns are concerned, I’ve been pretty critical of policy on both sides of the Atlantic in the UK and the US. But you asked a question about the international order, which are the subjects of my ongoing biography. Henry Kissinger has already addressed – he wrote an op-ed in the Wall Street Journal a couple of months ago now saying, yes, this was a transformative moment. And I was struck by the fact that this was a very different take on COVID-19, on the pandemic than say, Richard Haas’s – Richard is the grand panjandrum of the Council on Foreign Relations, who had written a piece, I think in foreign affairs itself, saying, all that this will really do is accelerate pre-existing trends. So, we already have the debate between some luminaries of this particular world, and it’s a debate with another dimension, I think, which is the – Is it the end for the United States? “Is it the end for US dominance” line of argument, which I think has attracted a lot of journalistic support, especially from people who can’t stand Donald Trump, that this has as its corollary, Kishore Mahbubani’s idea that, that China’s ascendancy is now more or less assured. And therefore, I think we have some pretty interesting issues to get our teeth into. I think I’m closer to Kissinger than Haas on the historical significance of the pandemic, not, I think, because it’s going to be anything like as catastrophic an event as to say 1918-19 the influenza pandemic was which quite a lot of people have drawn comparisons with. I don’t think this is going to be that lethal an event. And I don’t think the significance of a pandemic necessarily lies in the body count and the final analysis. It’s really all about the consequences. Let me introduce a few beasts from my menagerie to illustrate the point. I did a paper a few weeks ago for Hoover, suggesting that to understand a disaster, like a pandemic, or for that matter, a war, or a huge earthquake, or a huge financial crisis, you need to know about three animals, grey rhinos, black swans, and dragon kings. And I’ll simplify the argument in order to speed conversation along. We had many, many warnings that there would be a pandemic. It was a gray rhino that we should have seen trundling towards us. It wasn’t just Bill Gates, there were multiple people who said, the biggest risk we face is pandemic, I wrote about it in The Great Degeneration, but maybe more qualified people than me, Larry Brilliant, for example, said this is the thing we really need to worry about the most. And yet, strangely, when it’s struck in January, February, everybody acted as if it was a black swan, “Gosh, who could ever have possibly predicted such an outlandish event?” That was a very widespread way of thinking about it. So, we went from Grey Rhino to Black Swan; the predictive thing suddenly became completely surprising, “who could have predicted an event?” Now, historically, what matters is whether a Black Swan becomes a Dragon King, that is to say, does it end up having consequences that are really world-historical? And it’s hard to say at the outset, if any disaster we’ll do that, the 1957-58 influenza pandemic, which I think probably more closely resembles this one than any other in the past century, killed quite a lot of people. Worldwide, certainly more than a million people died of that particular strain of influenza. And in the US, if you sort of adjusting for population, the numbers would have been if a similar virus struck today, in excess of 200,000 deaths. We’re not even close to that yet, though I think we’ll get there. But nobody now remembers the 1957-58 pandemic; it’s completely forgotten. It’s hardly in any of the history books. It didn’t have the Dragon King property of really transforming the world. And I think to understand why something goes from Black Swan to Dragon King; you have to assume that something more is happening than just a new pathogen that is causing excess mortality. A new pathogen that causes excess mortality predominantly concentrated in the elderly population doesn’t necessarily translate into world-historical change. But if it exposes fundamental problems of efficiency and legitimacy in major powers, governance structures, then you’re in a different ballpark. And I think COVID-19 did that. It revealed in particular that the United States had a highly dysfunctional public health bureaucracy; they completely screwed this up. The switch to lockdowns created a bigger economic shock than anything since the 1929 Wall Street Crash. And then the final piece, which I think is interesting, I was discussing with Kyle Harper, the historian of Ancient Rome, this point yesterday, if in addition to a public health emergency and the legitimacy crisis, you have a crisis of geopolitics, that is to say, for example, the rivals of the United States, China and Russia, decide to take advantage of American disarray in 2020. To bring to her head issues ranging from Hong Kong to Taiwan, then it does become of world-historical significance. In short, it’s not the body count that determines the historical significance of a disaster. It wasn’t the fact that 10 million men died in conventional warfare that made World War One significant. It was the consequences of the war. And I think we can already see that the consequences of COVID-19 politically and geopolitically are going to be very great indeed.

Dr Alan Mendoza  10:15

That’s a fascinating way of looking at it. And of course, I’d expect that given your sweep of history and understanding all of these factors, and there’s a lot to pick up on that; actually, you’ve already derailed my plan for where we go with this discussion because you’ve raised some interesting points just in there. And I noticed that one of your points, of course, looks at the legitimacy of governance and looks at that point of our insistence on how they operate. And it’s curious, is it not that we’re currently in the middle, in our societies, of dealing with another price of legitimacy that, although it hasn’t been thrown up, of course, by this crisis occurred at the same time, and may well sort of amplifying one factor to the other and I’m referring to, of course, Black Lives Matter and sort of general campaign or waterpoint, just campaign for racial equality. Do that does the fact this is happening at the same time as Coronavirus, does that essentially mean this has more of a chance of becoming that Dragon sort of King that you were referring to?

 

 

Niall Ferguson  11:12

Well, it’s – it’s conceivable in the sense that after this protracted period of economic lockdown with a great many people confined to home without work, it was likely that some kind of eruption of frustration would occur. That the catalyst for it was a particularly hideous act of brutality by a police officer and that rekindled fires that have intermittently flared up in the United States for many, many years. Now, most recently in 2014 in Ferguson. Now I tread very rarely on this subject; I’m, as you can see, white, I’m an immigrant to the United States that I’m a US citizen now. My wife is black; we have two sons of mixed race; it’s a matter of considerable concern to me and to Ayaan how those boys will be treated as they grow up and become teenagers, there’s lots of reason to be concerned that they’ll more likely be pulled over by the cops, subjected to physical intimidation by the cops that this is something that’s well established in the literature. So, we think a good deal about this, and I spent a lot of last week talking about the issue with some of the most impressive African American intellectuals I know, Roland Fryer and Coleman Hughes, for example. And I think the conclusion I arrive at is that future historians will marvel that in the midst of a pandemic, that is by no means over in the United States, the second wave is actually underway in a significant number of states between a dozen and 19, in the midst of this huge public health crisis, in the midst of a huge economic crisis arising from lockdowns that we should divert the national conversation to a debate on reforming or quote, unquote, “defunding the police” is quite bizarre. It’s even more bizarre that in the midst of a pandemic, people should be encouraged to form large crowds in city centers. It’s true that this virus doesn’t spread so readily outdoors as indoors. But Nick Christakis, who’s one of the people I most respect in the field of public health and social networks, said just the other day be extraordinary if there weren’t increased numbers of cases in the wake of these protests. So, I think the first point to make is that whatever your views, and I think we can all agree that something terribly wrong happened in Minneapolis just over two weeks ago, this is probably not our top priority in the midst of a pandemic and a terrific and severe economic crisis. I think, from the point of view of our theme, geopolitical stability, the significance of what we’re seeing here is twofold. First, we see how new techniques of protest, which I think were pioneered in Hong Kong originally, spread last year to a whole range of different cities around the world as far afield as Beirut and Santiago, and have now arrived in the United States. Now, the significance of the smartphone and the Internet, of things I’ve written about before and the most recent book I did The Square and The Tower. The key point is that for most of the second half of the 20th century, the police tended to dominate protesters in technology and communications technology. And that changed really recently, when protesters in Hong Kong realized that they could use smartphones to be more savvy and more effective with communications than the police, and this is why it proved so difficult to control and defeat the protests in Hong Kong. They were shapeshifting. And we’re seeing a similar kind of shapeshifting to quality to protests here. They were less violent this past week than the week before. I think because protesters understood that the more violent they were, the more they might have the unintended consequence of helping President Donald Trump. So, I think the first thing to recognize is there’s a global phenomenon here where protests are different in their nature from even a few years ago and certainly radically different from anything that happened in 1968. The second thing to notice is that from the vantage points of America’s rivals, it is always welcome when the United States goes into a paroxysm about the issue of race relations. The Soviets loved that in the 1950s and ‘60s and made a great deal of it and their propaganda. And it wasn’t in the least bit surprising to me that the Chinese Foreign Ministry jumped in with commentary on what was happening in the United States. Now, I think what we’re seeing here is a broadly speaking, an escalation of Cold War Two; I think Cold War Two began around about October of 2018, when Vice President Mike Pence broadened out the focus of American strategy towards China, from trade to a whole range of other issues, including technology and democracy, and indeed religious rights, a whole range of issues. I think Cold War Two has escalated because of the pandemic. And in that sense, the eruption of protest in the United States is an opportunity that China is already exploiting, and the extent to which China and Russia are seeking to make mischief online may well turn out to dwarf what happened in 2016. We have an election, it’s just a matter of months away. And it’s obvious that from the point of view of this country’s rivals, anything that you can do to stoke up domestic division is strategically advantageous. So, in information warfare terms, the eruption of Black Lives Matter, from the point of view of the rivals of the United States, is actually a very welcome development indeed.

Dr Alan Mendoza  17:16

Indeed. And let’s look at those rivals. And as you’ve sort of mentioned them in that kind of context, and obviously, the China question is the interesting one at the moment, and the one I suppose it’s drawing the most attention. You have referenced the Kishore Mahbubani book early, we had a debate on that subject earlier – well, last month, and it was very interesting to hear the viewpoint from him. And others on this story. The one sense it’s obvious that you mentioned Hong Kong, there are moves afoot to do things that probably weren’t possible six months ago, if you were trying. If you’re sitting in Beijing, if you are Xi Jinping, this moment in time, you seek to take advantage of how the world is right now to further your agenda. And perhaps you also just maybe explain a little bit about what you think China’s agenda really is. Because there’s, of course, they’re conflicting viewpoints, even in Beijing, about what that should be. What do you think is in the ascendancy right now?

Niall Ferguson  18:13

Well, I’m glad we’re having this conversation on zoom, because it’s possible that Xi Jinping is listening in or at least somebody who works for him. I always, always hesitate when it comes to reading the mind of the leader of a one-party state with an iron grip on communications, at least between its own citizens. So, I think the key point to remember is that this is a crisis that began in China. It was a Chernobyl moment, what happened in Wuhan at the end of 2019 and into the first month of 2020. Anybody who’s familiar with what happened in Chernobyl will recognize the pathology of a one-party regime where the scientists are saying we have a problem, we have a problem. But the apparatchiks are trying to hush it up, and so catastrophically, millions of people left will hand in the vital weeks around the Lunar New Year, of which some unknown proportion we’re carrying the new coronavirus, SARS Cov-2, and they flew from Wuhan to airports all over the world, including London Heathrow. There are direct flights to London Heathrow until January the 23rd, to Paris, to Moscow, to San Francisco near where I live, and to New York. So, this was a disaster made in China, and a major problem for the regime in Beijing is the – this is something they need to contest. And it’s extremely hard to do that you can try your best with fake news claims that, in fact, the virus originated with an American military team that came to Wuhan in October, but nobody’s going to believe that, at least if you do believe that I’ve got a bridge to sell you so first problem has been this is a pandemic made in China. It has exposed the real pathology That one-party state suffers from. And it’s pretty difficult to bend that narrative, though they have tried with so-called wolf-warrior diplomacy. Second point, the major preoccupation for the regime in Beijing is survival, and the economic shock of the pandemic has posed a threat to that. They have to scrap having a growth target this year because they haven’t really the confidence that they’d get to positive growth. They have resorted to some fairly unusual methods to combat rising unemployment, like just a few days ago, legalizing street peddlers, street hawkers in Chinese cities. And so, you’ve got to remember that the top priority is just making sure that the regime itself doesn’t suffer a fatal economic blow that they worry a lot about their own legitimacy in the Communist Party. I remember years ago, when Wang Qishan made everybody in the Standing Committee of the Politburo bureau read Tocqueville’s L’Ancien Regime et la Revolution, and I asked a bunch of elite Chinese figures in the business and academic world, “you know, why are you reading Tocqueville” and the chap next to me at dinner said it’s funny, you mentioned that I have my copy here. And he pulled out Tocqueville’s Ancien Regime. And there was a long discussion that ensued about the resemblances between the regime in China today and the France of the pre-revolutionary period. The third thing, I think, is that in order to try to cope with the potential crisis of legitimacy, Xi Jinping is tempted to go on the offensive on key issues that are likely to attract nationalist support. There isn’t much enthusiasm for the Hong Kong protesters in mainland China; I can assure you of that – very little. And so, it’s not difficult for Xi to take a tougher line in Hong Kong and actually elicit support from the mainland population for that, but the big issue in Taiwan. And that’s really, I think, the thing that we should spend some time on because if there is a real flashpoint that could turn Cold War Two into a hot war, I think it is Taiwan. And I thought it was very notable that in some recent language around the time of the Lang-Gui two sessions, it was, it was notable that the word peaceful was missing from speeches about solutions to the Taiwanese issue. So, I think that’s the thing to watch. Hong Kong was never likely to escalate because there’s not a lot the United States can really do to help the Hong Kong democracy movement. But Taiwan is a different matter. And I don’t think many people who’ve, who haven’t visited Hong Kong and Taipei realize this, but the situations are profoundly different. Taiwan is a functionally independent country. It’s just the Beijing pretends it is a province of the People’s Republic of China, but in practice, it is an independent country. It is a successful and vibrant democracy that gives the lie to the claim that Chinese people can’t do democracy. And it is of enormous strategic importance because the most advanced semiconductors in the world today are manufactured by TSMC, the Taiwan-based semiconductor company; and China, the mainland, cannot match the sophistication of those products and is highly dependent on their import. So, I do think this is the key issue if the United States presses ahead with its plan to cut Huawei off; the PRC is the principal manufacturer of 5G hardware and other telecoms hardware. If you cut Huawei off from TSMC in the way that the US Commerce Department’s proposing to do, I think you precipitate a major crisis.

Dr Alan Mendoza  23:50

Now you’re getting to very interesting territory. Of course, the balance issues of supposing Western supply matters like that. Although you’re right to say, of course, the Cold War Two, which started back in 2018, to use that exact term. And they have, of course, been issues raised by the Trump administration before 2020 on the trading relationships, China and issues around that, I think it’s fair to say that, for much of the rest of the world, globalization was still proceeding a pace, up until January, February of this year. Suddenly, it seems that sort of forward march is no longer a forward march, it seems that everyone is now questioning whether more globalization is good, or whether actually for the first time since globalization became a thing, we need to roll back in some way, shape or form. And, you know, and actually security supply and one of those issues that have come into it. So where do you think the future lies for that whole, you know, sort of vision of the early 21st century, we’re going to globalize and bring everyone in and that’s going to solve the world’s problems, and that’s probably a bit of tatter now, right.

Niall Ferguson  24:56

Alan, I don’t think I agree with you that globalization was still proceeding at a rapid clip at the beginning of 2020; globalization peaked out in 2007. It began to decline, to go into reverse with the financial crisis that flared up in 2008. And now by almost any measure that matters, if one’s talking rigorously on the subject trade and in relation to global output, international capital flows, migration, or even the integration of the internet itself. We’ve taken significant steps backwards since 2007. And this is why when I was writing about those issues more than 10 years ago, I used the word Chi-America to describe globalization. That was the fusion between the People’s Republic of China and the United States of America. But it was a pun on the word Chimera; the idea we advanced, this was Moritz Schularick and I back in 2007, was that there was something deeply unnatural and dysfunctional ultimately about this kind of globalization. Because Chimerica has benefits when disproportionately to China, and its costs were disproportionately borne by Middle America. And the only question in our minds was when this unstable relationship would blow up; what it did blow up and beginning in the financial crisis, a number of things happened. The first was that ordinary Americans, and indeed, Britons began to call into question the benefits of unlimited global integration and to vote for populist causes, from Brexit to the presidency of Donald Trump. And this backlash against globalization was the easiest thing to predict at the time of the financial crisis. To me, the most obvious consequence of the financial crisis was going to be a shift away from globalism to nationalism, a shift from free trade towards protectionism, a shift from open borders towards the restriction of immigration, so forth. So, I think this was all happening really from 2008 onwards. And what COVID-19 did was just to add another reason against globalization, another argument against it, because really, what better evidence could you ask for, in support of the fundamental populist argument, A, that China was the beneficiary of globalism and was a bad actor, and B, that national borders really matter. The countries that handled this best, including, by the way, Taiwan, but also Israel, and South Korea, were countries that are naturally defensive nation-states with good reasons to be paranoid. Their paranoia extends far beyond the danger of a pandemic, but because of being paranoid little Taiwan and Israel, and South Korea handled this much better than the UK or the United States. And I think that’s really the critical point to focus on. This is an advertisement for borders that work. One of the ironies of Britain situation is that it’s in the midst of this great divorce, called Brexit. But in the midst of that divorce, the border was effectively open. And Heathrow still remains one of the easiest airports in the world to get through, with or without COVID-19.

Dr Alan Mendoza  28:22

And that brings us on to the final point of this first bit before I let everyone else in on the action. Do send questions in, by the way, we will pick them. And that is if you again, it’s interesting how you frame that, of course, and look at the retreat from globalization being a longer process. One of the things that this conversation should reflect, I think, is the argument of who comes out of this better force, not only just China but there’s a discussion about whether the free world or the unfree world, to use those terms, if you want to call it that, will emerge better. And you’ve just given some very interesting examples of defensive-minded if you’d like democracies, who have come out very well. But you’ve also, of course, seeing that – you’ve mentioned the UK and the US, and I’m sure we can name many other democracies that will come up quite badly from this. And of course, again, we see some autocracies dictatorships clearly doing better than others, although one never knows, given the sorts of the stats and how those come out. If you were to call it the balance, and you were looking at this from the point of an assessment, can you divide it simply as the free world vs. unfree world, coming out on top of this, all other seven different factors that it’s not possible to say whether one model or the other should work? And I just have one quick other bit on it, which is we know the number of democracies has actually been diminishing over the past few years. If you look at Freedom House’s index, for example, you know, we’re moving away from free to partially free and unfree. So how are those two factors coming in? Does the reaction to the pandemic lead anyone to conclude, actually, this model is better than that? Or is it just not possible to do?

Niall Ferguson  29:54

Well, I’m skeptical about this dichotomy. It’s a popular media talking point, and I must have been asked about this at least 25 times in the last few weeks. Obviously, there’s some kind of concern about a democratic recession as my colleague at Hoover Larry Diamond calls this, I’m somewhat less worried than he is because I don’t think that the data tell an especially terrifying story, especially when you wait for the population, in the end, ‘the decline of democracy’ story tends to get somewhat overplayed because people don’t pay enough attention to the key issue, which is, in fact, India and China. That’s really the key question to focus on. But Frank Fukuyama got this right in his new essay in Foreign Affairs. The thing about COVID-19 is that it’s revealed that some democracies work well, and some don’t. And it’s revealed that some autocracies work well and some don’t. And therefore, any generalization of the form, this is a great advertisement for authoritarian regimes, falls apart. An authoritarian regime, as I said, already caused this disaster. If China had been transparent, if scientists and doctors in China hadn’t been silenced, then this could have been contained. So that’s point one, the disaster was made an authoritarian regime. Secondly, the failures of the United States and the UK, I think, need to be understood as failures of public health bureaucracy. It’s easy because the media do it all the time to make it all about Donald Trump and Boris Johnson and Dom Cummings. But actually, when a pandemic comes along, the job of calling it and recommending policy action is that of public health bureaucrats, the people in the US and the Department of Health and Human Services, the Assistant Secretary for Preparedness, there’s even a man with that job. They totally failed. They screwed it up on a massive scale. They failed to really learn from SARS and MERS. They didn’t even learn from Taiwan when Taiwan was showing in January, how you’re supposed to do this, how you can with testing and contact tracing, avoid the need for lockdowns, and so that that failure is not something specific to democracy because some democracies and I already listed them did this very right. Indeed. It’s just that in certain democracies, and I’ll single out the US and the UK, despite our knowing that a gray rhino of a pandemic is coming, and despite on paper are being very prepared, that is to say, there was a 36-page strategy document for pandemic preparedness in the US published by the government in 2018. Despite on paper being well prepared, in practice, the public health bureaucracies failed. And we still don’t have a really good answer as to why that was because the journalists just write about Trump and Johnson and Cummings as if it’s all about them. And this is a major category error. It reminds me of Richard Fineman’s a brilliant book about the investigation into the space shuttle Challenger disaster in the 1980s. And I mean, Fineman, who was a brilliant man, points out that what really happened, there had nothing to do with President Reagan, although there were attempts to somehow pin it on him, it was to do with mid-level bureaucrats who just simply hushed up the fact that the engineers at NASA were really worried that the thing might blow up. I think we’ve seen something very similar here; a fireman fails at the level of mid-level bureaucracy. And at some point, I hope, serious historians will do the work to show that that’s what happened. And that in many ways, the leaders of these countries, the US and the UK, were kind of poorly advised flying blind, forced to kind of make decisions without really a proper understanding of the kind of pathogen, the kind of pandemic they were facing.

Dr Alan Mendoza  33:46

Thank you, Niall, now, we’ve got 25 minutes left, and I want to bring in some audience questions which have come thick and fast, and there are lots of different topics. And what we’ll do is, as usual, bring three people in per round, you’ll be able to go live briefly on your mic, unmute your mic, and then you’ll be able to give your question and then we’ll bring the next person on. And then Niall, you can take the three and answer them any way you would like. So, in our first round, we got Uri Rosenthal. I’m going to ask it for you. It’s not coming out. So Uri’s question is – Uri is a former Dutch foreign minister, what will be the impact of possible if not probable, vaccine nationalism and protectionism? How will that affect the international scene? James Wyllie next.

James Wyllie  34:55

Yeah, I’d like to ask Niall about the United Nations, given this as a global pandemic. Where does he think it’s going to leave the UN? After all, this is over? Will it be increasingly irrelevant? Will it be impacted by the poor performance of the WHO?

Dr Alan Mendoza  35:32

Thank you very much, Jim. And finally, Michael Maclay.

Michael McClay  35:42

I was going to ask Neil, how far will the Biden administration be able to return the processes, objectives, and approach to its international policies to the more globalist direction that he says has been under pressure since 2008? How much will it seek to do that? How far will he be able to do that?

Niall Ferguson  36:09

Well, thanks to all three of you for those questions. Let me go to Uri Rosenthal, first. Vaccine, nationalism will be an issue, if and only if a successful vaccine is found. I think there’ll be a vaccine. I’m sure the incentive for the more than 120 teams working on vaccine projects – they are so huge that they’ll be someone announcing success before the end of this year. But it really will be a little difficult to know initially how successful it is. And, and that’s a really important thing to remember because too many people assume that vaccine is going to be found, and it’ll be a magic bullet. But it could be a not very effective vaccine, it could be a vaccine that has maybe only 60% efficacy, or it could be even less effective if it’s something like BCG, which is a not very effective vaccine against tuberculosis. So, I think we need to wait and see what the front runners come up with. And if it’s Moderna, which the media have a great interest in the Cambridge, Massachusetts based company. Then, of course, I think the priority will be to use the initials available amounts of vaccine for United States health workers. I would be astonished if that wasn’t the case, just as in 1957. When the US scientists Maurice Hilleman found a vaccine against H2N2 influenza, the first people to get it was the US military, US health workers, the president – President Eisenhower and the Queen because the Queen was planning to visit the United States in 1957. So, Xi Jinping went to the WHO with a classic Chinese propaganda move. If we find the vaccine, he said, we’ll make it universally available. And there are two questions to that promise; do you really think China’s going to be the country that comes up with a vaccine when China’s record and vaccination are remarkably bad, so bad that the equivalent of their head of CDC had to be arrested, and I think, sentenced to death for corruption only a few years ago? Secondly, how do you scale a new vaccine to make it generally available to a world population north of 7 billion? In fact, the problems of scaling are real for whoever comes up with the manufacturing. It could, of course, be British scientists, because one of the other front running teams is based at my alma mater, Oxford. Whoever is successful, even if they come up with a terrifically successful vaccine is going to face massive challenges in scaling up production and making it available even to the population of their own country. My own view is that we should prepare ourselves for a more protracted pandemic than most people are psychologically ready for. And we should also recognize that the vaccine may be quite imperfect, even if it’s, it’s found. And so, we probably won’t get into a real issue of vaccine nationalism. There’ll be much more pressing issues of vaccine safety to grapple with, as well as the practicalities of scaling up production. James, I liked your question very much about the United Nations. I’ve always been a little bit of a skeptic about theories of the international order that attach great importance to the United Nations. There’s a fairy story about a liberal international order that was created in 1945 and which wicked Donald Trump tried to tear down, which any serious historian concede as a fairy story. The United Nations, for most of its existence, was dominated by the superpower rivalries we called the Cold War. And it’s it was essentially a case of the two superpowers taking into turns to use their veto as permanent members of the UN Security Council to stop the UN from doing terribly much. And that’s the first point I’d make. The second point I’d make is that it’s very striking that Chimerica, that period of US-Chinese fusion, led to not one, not two, not three, but four UN agencies now being under the direction of a Chinese national. That includes the International Civil Aviation Organization. Now somebody on the chat Q&A tab asked a question about an article I wrote back some months ago, on whether or not flights continued to leave Wuhan after the lockdown of January the 23rd. One of the challenges about answering that question was that it was impossible for me to get data from the International Civil Aviation Organization. And that’s perhaps not surprising since the woman who leads it is a graduate of the University of Wuhan. Last I heard, the data wouldn’t be available to me until December of this year. Funny that, and there are other problems there, too. The International Telecommunications Union is under a Chinese director right now. And interesting proposals are being put forward for fundamental structural changes to the internet. Pay attention to this; it really matters. The idea that if we gave these jobs to the Chinese, and if we welcome China into international institutions, including, of course, the World Trade Organization, they would liberalize, was the great strategic wrong call of the last 30 or so years. And it’s only now that we realize that there is no likelihood of China liberalizing on the country under Xi Jinping; the People’s Republic stands in exactly the opposite direction back to its Maoist’s roots in terms of the party’s dominance of discourse. So, I think we need to look very hard not only at the WHO’s performance, which has been frankly disastrous, mainly because they had to be so sycophantic to Beijing that they effectively were accomplices in delaying the recognition of a pandemic. But not only the WHO; there whole area bunch of UN agencies, which I think are compromised by China. Third question, Michael McClay’s on Biden. Well, of course, Europe is full of people who habitually hate on the United States when there’s a Republican in the White House and pin enormous hope on a democrat changing everything. You can see this in the tides of German public opinion, which were almost euphorically enthusiastic about Obama, and swung to the opposite extreme the minute Donald Trump won in 2016. And I just have to point out to any German listeners, if you are representative of the recent Kerber opinion poll, which said that COVID-19 damage the United States more in Germanized and damaged China, if you’re one of those Germans who want to be kind of geopolitically equidistant between the United States and China, then could you please remind yourself why there is something called German democracy today and why Germany is able to depend for its security on the United States, because there is a major confusion in European minds, which I find more and more perplexing, or I would be perplexed if I wasn’t so used to it because I remember exactly the same thing when Reagan was president and pretty much the same thing when George W. Bush was president. The continuities between American administrations on central foreign policy issues are more striking than the contrasts. One of the striking features of Obama’s administration was how negative he consistently was about key US alliances. Remember the disparaging interview he gave to Jeffrey Goldberg and the Atlantic towards the end of his presidency, when he went out of his way to insult most of America’s traditional allies. Joe Biden, who was, of course, Vice President under Obama, is not about to turn the clock back to Chimerica the day after his inauguration, not least because US public opinion Democrats and Republicans alike, has moved to a distinctly anti-Chinese position in the last two years. I think, in some measure under Donald Trump’s leadership. It’ll be very hard for the leader of the Democratic Party to sell at a return to Chimerica to Democratic voters. In fact, I’m quite sure they won’t do it. Right now. The goal of the Biden campaign is to be more hawkish on China than Trump, they want to say he’s been too soft on Hong Kong, for example, and I fully expect the campaign to work hard to distance Biden from the more conciliatory approach of the Obama administration towards a shake. Remember, the Obama administration tried to pivot to Asia; it was a failure. And by the end, when Susan Rice was in the National Security Advisor role, they were basically acquiescing in China’s emergence as the dominant power, at least in Asia Pacific, if not globally. I don’t think there’s any going back to that because Americans have woken up to the threat that China poses. And I don’t think the democrats can put them back to sleep on that subject.

Dr Alan Mendoza  45:29

Thank you. Let’s move on to another round. I’ve got Chris Oseji first.

Chris Oseji  45:41

What do you think is the future for China’s dominance in Africa, and being it almost the lender of last resort for most of the developing world, especially in Africa? And what do you think about Boris Johnson and his cabinets plan for a sort of G7 plus three as a counterweight to China in the future?

Dr Alan Mendoza  46:02

Thank you, Chris. Mark Persoff is next.

Mark Persoff  46:07

Hi. Thanks, Niall. Great session. My question is, will COVID-19 or should COVID-19 result in the UK and or the EU and revising the current approaches to the Brexit negotiations?

 

Dr Alan Mendoza  46:26

Thank you, and Gary Grant.

Gary Grant  46:33

Following the 1918 Spanish pandemic, we had the roaring ‘20s. Can we expect something similar? Or is history bunk?

Niall Ferguson  46:47

Well, great, great questions from all three of you. And looking at the clock. I’m conscious that I’m gonna have to give them frustratingly, frustratingly truncated answers. I think the first question that Chris Oseji asked about China and Africa is hugely interesting. I did a TV series based on The square and The Tower recently for PBS. And the third episode looked at the geopolitics of an integrated, internet-based world, and I interviewed Strive Masiyiwa, the chief executive of Econet, one of Africa’s most important entrepreneurs, who’s made huge contributions to building out telecoms and infrastructure all over the continent. And his, his position was clear, we don’t really have a choice. Huawei is cheaper and offers better financing than any alternative. So, we’re gonna buy Huawei equipment. And I think that illustrates the way in which the China-Africa relationship evolves. Essentially, there are many reservations amongst Africans about China’s power. Years ago, now I made a television series, I think for Channel Four about China, one episode of which focused on China as Empire. We went to Zambia, we filmed how the Africans interact with the Chinese and mining and agriculture elsewhere. It was a fascinating experience because what became clear to me was that there are a few cultural clashes in the world quite to rival the cultural clash between Africans and the Chinese. It is a non-meeting of minds. On the other hand, from an African point of view, China is now the biggest lender to emerging markets; developing countries in the world overtook Western agencies some time ago. And so, there’s really no other game in town for many African countries. When it comes to getting access to financing. The Chinese are the ones who are willing to invest in infrastructure, port facilities, roads, and so forth. And I don’t think that’s about to change because we’re not really competing in an effective way with China. And that, I think, is concerning because, ultimately, I don’t think China’s intentions towards Africa are to be regarded as altruistic or philanthropic. This has a distinctly familiar feel to anybody who studied European empires and in Africa. You also asked about the G7 plus three. I’m going to duck that question because I have no clue who the three are that Boris would like to add to the G7 a sign of how to cut off I must become from British public life, spending my time here in deepest Montana. On Brexit, I’ll approach this with almost as much caution as I approach the question that Alan asked about Black Lives Matter because I was an opponent of Brexit despite being a euro-skeptic. On many issues, I was dubious about the net benefits of Britain leaving the EU. I came to a conclusion after losing, rather like the way I was taught at school. I was a good loser, I said, okay, we lost and now let’s get on with it tore my hair out for years as the whole divorce descended times into farce and came to the conclusion that is looking at the direction of traveling Europe, which is not clear in the direction of fiscal federalism, it was just as well that Britain is leaving because I don’t think Britain could be part of a fiscal federation, which is clearly now what Macron and Merkel envisage. I think that’s a really important story that’s come out of COVID-19. All the resistance that there was to debt mutualization and fiscal federalism has kind of fallen away. In the course of the pandemic, Germans have become Keynesians, who knew it could happen. And I think that means that Brexit logically makes more sense now than it did. For a time back in 2016, my view was this notion of a European superstate which Margaret Thatcher argued against back at the time of abuse of the Bruges speech; I said in 2016, it’s kind of an anachronism, it’s sort of fallen away, it’s not going to happen. Well, I think now that Britain’s leaving, it actually can happen. And I think that that’s why how difficult though this divorce is, and it’s only got more difficult because of the pandemic. There’s no going back. It’s just that one should always remember, as I remember, writing back in 2016, in the Spectator, that divorce doesn’t solve all your problems; it takes longer than you expect, it costs much more than you think, and at the end of it, you still have all the problems that really weren’t your ex-spouses. I think that will still be true of Brexit. People at the time said, but yes, Niall, you still got divorced, and that was an irrefutable argument. Finally, the roaring 20s. You know, this gets, Gary, to the really difficult question of are we heading for a deflationary protracted secular stagnation period, a very slow painful recovery, or is there some kind of inflation reduce that is going to explode as it were, when that sentiment, consumer sentiment has recovered from the shock of the pandemic, that there are good serious economists on both sides of this arguments. I would say that I’m with those who expect recovery to be not V-shaped, but something more like a tortoiseshell, you know, you start at the top of the tortoiseshell, you go down at pretty steeply, you get to the neck, and you come back up. But when you get to the head, you flatten out some way below the shell. Martin Sorrell calls this the reverse square roots, but I think that’s too technically complicated for the lay listeners. So, it’s a tortoise-shaped recovery; we’re not going to bounce back to where we were at the end of 2019 or January 2020. And I think for at least the next year or two deflations, the problem is much more than inflation because of the sheer scale of the macro shock. And the reality that recoveries are always kind of slower than people expect. It was a pretty slow whole back to full employment after 2008-2009, remember. so I don’t think the roaring 20s are in prospects. And you could think about this just using applied history. What was it that made the 20s roar? And the answer is that the Federal Reserve, which had just been created, was sitting on a huge pile of gold reserves at the end of World War One and made a series of pretty serious monetary policy errors that created the great bubble of the 20s. The 20s weren’t roaring elsewhere. They were roaring in the United States. I don’t think the United States is going to be roaring after COVID-19, at least not for quite some years, especially given to go back to where we began, this problem of considerable civic unrest, outbreaks of iconoclasm, denunciation of people in academic and corporate institutions, the prospect of a democratic sweeping in November; all of these things when I add them together, don’t sound like the preconditions for roaring 20s.

Dr Alan Mendoza  54:05

I’m going to not call three more people now but quickly read questions to you because we’re running out of time. The first question from Jonathan. With increasing nationalism, protectionism, and obviously, economic dislocation, could you name some countries you feel are well placed to come out from the crisis in a better place to improve their standing of influence? He’s mentioned, for example, the Gulf states, but you may have two or three other ideas on that. I’ve got a question from Gary Grant, which is about the impact of the social gradient not only on health but also education in democracies; where do democracies really go? I know that’s a very big question to tackle health and educational inequalities within their societies. And then my final question there was from Graham Perry, and Graham’s question was, he starts off by saying, I know China isn’t like by the Henry Jackson Society, but he says, obviously, China has confounded his critics before, do you not think that it will do so again and will reemerge much stronger from this going forward? So, four minutes to tackle for three massive questions.

Niall Ferguson  55:20

The winners of the pandemic. Well, I alluded earlier to the democracies that did well, and I could have added to that list New Zealand and Australia. Remember, it’s not some pathology of English-speaking countries that leads to COVID-19 excess mortality; both New Zealand and Australia handled the crisis impeccably well. And it just goes to show that if you were a little bit more familiar with the lessons of SARS and MERS, you adapted your public health strategy. And you didn’t sit around as we did think that the next great crisis would be an influenza pandemic, I think probably that was the major mistake that was made and in London and in Washington or Atlanta. So I think those are countries that have shown themselves to be competent, whose governments have delivered that most basic level of security that citizens have a reason to expect looked like winners. Germany’s another country that although it hasn’t avoided excess mortality altogether, still has a much lower rate of excess mortality than the UK, and Angela Merkel, whose reign continues to defy the norms of, of democratic duration, looks like an obvious – an obvious winner here has standing has greatly improved in in Germany, and rumors of her departure, it seems to be continued to be exaggerated. Look, the questions of inequality in education are ones that I’ve spent a lot of time thinking and writing about the great degeneration had had my ideas on those issues some time ago, it’s very clear that what is wrong with public education in the United States, is the lack of competition. These are monopolies in most parts of the country at a state level, and the teachers’ union is there to stop bad teachers from getting fired. The research on this by scholars from Raj Chetty to Roland Fryer is very clear. And the thing that would greatly help in the United States would be meaningful competition. That’s why I’m a supporter of charter schools in those parts of the country where competition is most needed, for example, for African American communities in the New York area. So, I think the answers to these questions are not rocket science. Inequalities are very closely associated with low-quality education in knowledge-based economies. We just are – it seems to be determined not to confront the realities of America’s fair in public schools. Interestingly, England under Michael Gove embarked on quite a bold experiment that increased educational competition. And the proof of the pudding is in the eating in the sense that English standards of significance diverged from standards in my native Scotland, where those reforms didn’t happen. And at some point, somebody needs to ask Nicola Sturgeon some very hard questions about what is going wrong in Scottish education. It used to be the envy of Europe. It’s rapidly becoming one of the great underperforming education sectors of Europe, which saddens me greatly as a bond Glaswegian, who owes everything really to good education when I was a kid at private institutions like St. Ronan’s and Glasgow Academy. Private education is great. Private schools are the glory of the United Kingdom. The most important thing we can do is to increase access through scholarship and bursary programs to those great institutions. And those people who periodically attack them and seek to close them down, are in fact, aiming to level down education standards to the lowest common denominator, and we should all resist that. Finally, China. I wish I had a Bitcoin for every article I’ve read in the last 20 years predicting the China crisis; actually, a Chinese scholar Sean Xu and I have a forthcoming paper on the China crisis that never came. But just because it hasn’t happened for the last 20 years doesn’t mean it will never happen. And I think what’s really interesting about our (inaudible) is that to an extent most western commentators miss; there is a major problem arising from COVID-19. In China, the Chinese economy was already destined to slow down rapidly because the workforce was shrinking. The demographics are terrible; there’s a huge problem of excessive debt, they can’t really do more fiscal stimulus, at least not on the scale that they would need to offset the shock. And I think we are approaching the end of the line for the People’s Republic of China’s business model of a one-party state without the rule of law. Without the rule of law, you can never really have a satisfied and secure middle class that is prepared to invest in its own country. You make money in China, you want to get the money out, and you want to educate your children outside the country too. That tells you that something basically wrong with the system and my expectation, I’m a good Marxist remember except I’m on the side of the bourgeoisie is that according to Marxist doctrine, the rise of the middle class is a revolutionary threat to the one-party state. China’s middle classes, like the European middle classes of the 19th century, they don’t really want democracy, but they really do want the rule of law because they want their private property rights to be secure from arbitrary confiscation by the party. It’s only a matter of time before middle-class disaffection. This anachronistic model based on mid-20th-century totalitarianism produces some shift in China. And I think it will come within the next 10 years. That’s why I bet just a new Fu Lin just last year that China’s GDP would never overtake that with the United States. I bet I’m happy I made it in RMB rather than the US dollars because it is a somewhat contrary and bet.

Dr Alan Mendoza  1:00:59

it is. Indeed, Niall has been magnificent. As always, a great expedition, you, I think, are living proof of the possibly apocryphal Einstein-ism, about the story of courting a pretty girl versus a hot stove and the theory of relativity. I can tell you an hour Niall Ferguson passes like a minute because it’s so enjoyable. And we wish we’d have many more hours to do so. We don’t, of course, but thank you very much for the time; I’ll let you escape back to the peace and tranquility where you are now. Thank you, everyone else, for joining us. We will, of course, return with more subjects of notes and discussions very soon. But thank you all for today. Have a good day.

HJS



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