Yours started in london, and ours started in new york. Host exactly. And youre the home team. [laughter] i want to come back, because i think the parallels between that era and this era are interesting and something i think a lot about as a business journalist. First off, i want to just note a point of connection we both have, were both from indiana guest exactly. Host in my case, rural indiana, and you are from guest whiteland, indiana, which i wrote about in a book that came out last year called when the new deal came to town. Host okay. Guest and i wrote a book about how the new deal affected people in this little farm village, which it was back this those days. Host fascinating. Guest anyway, were not talking about that book, were talking about this book. Relevant, because i think where people come from often influences their world view guest oh, absolutely. Host im curious, how would you say growing up in rural indiana has influenced your opinion . Guest yeah. Well, i think growing up as i did in a small town actually, a village, we only had 406 people you have a lot of contact with other human beings. Host yeah. You actually know their secrets, which is one of the drawbacks of a small town. [laughter] host yes. You can also cash checks at the grocery store. Guest i think it helps you a great deal as a journalist, because it makes you see things in terms of real people rather than statistics or and i thought it was a great way to, you know, you go down to the local barbershop and you argue politics. Thats how i learned to argue. [laughter] host in the barbershop. Markets and free people. Thats why he wrote an editorial which im sure was very unpopular at the time. There were 100,000 coal miners out of work. They were on strike. Host yep. Guest and he wrote an editorial defending the coal miners coal. Which probably wasnt terribly popular on wall street. [laughter] they were losing money on mining stocks and all that sort of thing. Host yeah, yeah. Guest but he was defending their rights, that workers have just as much right to organize as investors do to organize business corporations. So that was one of the points i make in the book is that that kind of philosophy, just a kind of fundamental philosophy has carried on pretty much through the history of the wall street journal. Thats pretty much where the editors are today, defending markets as the journal today defends trade, trade agreements, and defending people as weve had to do many, over many years of defending people against the various tyrannies of the world. Some of whom, some of which still exist like cuba, for example, and now venezuela. So thats kind of the thing that interested me, was that continuity despite an enormous change in the world. Host yeah. Guest particularly in technological terms. The journal has sort of remained constant over those guest barney kilgore, casey hillgate came out of depau, and he took over from clarence bare row in 1928. And he hired another boy wonder from depau named barney kilgore, and he was the creative guy who set the wall street journal on the course that turned it into the huge publication it is today. Host so, all right, so youve raised a lot of interesting topics. Foreign coverage, which you were very much a part of. Were going to come back to that. Labor relations, you know, the nature of defending individual and corporate rights. But let me ask you kind of a more personal question since you also are bringing up some of these past editors and stars that came out of the journal. Who were personally your favorite editors to work for, and you give us any sort of details about, you know, the inner workings of the journal and how its changed over time. Guest well, i just mentioned barney kilgore, and he was a remarkable man. He seemed just very natural, and he had a slight tic. Tick. He kind of went like this sometimes. So he had this little defect that made him seem human. And he was, he acted very human. He was very nice to people. But he was brilliant. He was Bureau Manager at the wall street journal when he was 23 years old. He sort of dissected the new deal, various aspects, and then he became ceo in the late 40s. And, as i say, designed the modern wall street journal. Host how actually, you know, youve seen several eras of journalism come and go, and were many what many people would call an incredible period of disruption right now. Do you think journalism is better or worse today than when you started . Guest well, its certainly far more diversified. I mean, you have all these blogs. Anybody can be a journalist today. And maybe gather a following. And there are all kinds of blogs. I have no idea how many there are [laughter] host a lot. Guest as you know, they compete with and the wall street journal is about half of our circulation of wall street journals circulation is electronic now. Probably same way with the ft. Host yeah. Twothirds, actually. Guest so its extremely diversified. And the professional journalists, people who are hired reporters on the staff of well known publications kind of resent that competition. But on the other hand, probably i kind of think it might be good for them because sometimes these amateurs come up with pretty good stuff. [laughter] host well, okay, so im glad youre remaining true to your tenets of free markets and supporting the blog. To go to your point about the journal retaining this view of free markets above all else, you know, i can see when youre writing in the book many great examples of that. I can also see some times, particularly in the modern era, you know, under murdoch where, to me, it seems like theres a more partisan environment. And i think thats something that a lot of american readers worry about today, that the media has become too partisan. Whats been your experience with these debates at the journal . Guest well, the journal ive been on the opinion side. I started out as a reporter this chicago and then went to detroit, cleveland, atlanta, whatever. Foreign correspondent. And then i joined the editorial page in 1970. So ive been in the opinion business host long time. Guest we are partisan. We make no bones about it. Host yeah. Guest we are partisan. Host but partisanship above ideas sometimes is what people criticize both on the left and the right. The times will come in for this criticism as well. Guest yeah, i can see your point. And i think that has become a problem. I think that some people are just kind of wearing their hearts on their sleeves and just winging it because theyre just so antitrump, for example. [laughter] host yeah. Guest the main issue here. Host yeah, yeah. Guest and i think it has done some damage to the quality of journalism, particularly when people are just full of anger. And i, you know, im not sure thats justified. I think journalists should at least even opinion journalists should try to remain cool and analyze things. And you never can be quite totally objective, but at least you should try to be intellectually honest. Host yeah, yeah. Lets i want to sort of come back to some of your favorite stories and some more personal stories in a moment, but let me kind of link together a big financial topic thats been in the news for the last 810 years which is quantitative easing which has been done by the fed, of course, following the financial crisis, you know . For the viewers who may not know, the fed dumped about 4 trillion of money into the u. S. Market. Guest absolutely. Host this is something that i know a lot of folks at the journal were unhappy about. I wrote a number of articles myself even though im more on the liberal side of the spectrum saying i thought easy money was actually not going to fix what was wrong in the economy. Its interesting, because you in your book mention several other points throughout history in which there was this problem of government papering over, essentially, fundamental problems in the economy with monetary policy. And i wonder if you could maybe kind of take us through some of the historical lessons that you see there and how things might end in the next few years with this. Guest well, of course, one of the classic cases from history was the silver act of the late 18th 19th century. And the journal was against that. And basically, that was an act where the Western Mining interests wanted congress to monetize silver so that silver would have more value, and they would win. And we were on the Gold Standard at that point, so we would be bimetal centered. Host yep. Guest well, the journal already had i think correctly thought that would be inflationary. It would benefit the silver miners and, of course, William Jennings bryan made his great speech about the cross of gold and all that sort of thing. Host populism. Guest yeah, that was populism. And populists have many heroes. There are different kinds of populists, but many eras have wanted easy money. Is so the journal has had to fight that over the years to try to encourage government. Money is theres no such thing as wealth. The Gold Standard was about as near as you get. But the journal supported the federal exchange act. Again, with the idea that this would stabilize money. At that point local banks could issue money against gold. They supposedly had in their vaults. Well, they created a national currency. The journal supported that. But then in the 1920s began to have second thoughts [laughter] host i wonder why . Guest but at any rate, the journal and one of our editors which we might get to said ive probably written 50 editorials about inflation. He wrote editorials over and over again about how your money depreciates if the central bank or the government inflates the currency. And this gets a little, it gets more complicated than many people understand, but basically the point is that the issuance of currency is what causes inflation. Its not producers, its the currency, okay . So host well, no, so its interesting though because critics i mean, frankly, i started writing columns that were critical several years ago of the amount of qe that was being done. But a lot of people, including me, thought that by now wed be starting to see more signs of inflation, and were not. What do you think . Is this time different . Is there something going on that guest i wish i knew. Im exactly as be puzzlinged, im just as puzzled as you are. Host yeah. Guest and the quantitative easing, we were certainly against that. Host yeah. Guest the Government Spending or the Federal Reserve, actually, which is really more of a branch of the government than most people realize. Host yeah. And i want to ask you about that. Guest spending these e nor mouth sums enormous sums to buy up government securities. In other words, basically giving the, in a sense giving the Government Free money because the Federal Reserve returns its earnings on bonds, as you well know, government bonds, to the treasury. So it takes out its own expenses and returns everything. So the government is actually at these low Interest Rates, and with the fed buying enormous amounts of federal paper, the government was getting money free, and they took advantage of it. They doubled the National Debt in seven years. So we were against that. Host well, its interesting guest and let me get back to your question which, i dont know how we managed to well, i know how we did it. I know how the fed did it. The fed actually, basically just borrowed back the, i mean, just just created reserves in the banks and held them by giving the banks interest on the reserves. You know all about that. So thats how they managed to avoid inflation. But there was still an enormous distortion, and thats what i have written about as well as you have. Host and were waiting to see what the impact of thats going to be. It could surface in five years, i mean, actually, its interesting because if you take it in the international context, theres still a lot of money being pumped into system by europe, by japan guest absolutely. Host so were not really through that cycle yet. Its interesting because, you know, not only has the government taken advantage of easy money, but corporations have actually guest oh, absolutely. Host and, in fact, we have, i believe, a record Corporate Bond bubble right now. Whats the journals feeling been about that . Whats your feeling about that . Is that something that keeps you up at night . Guest my feeling is pretty much consistent with the journals even though i havent been there for a while, but i still write for them. And and we worry about this. Debt has consequences. Its not just corporate debt, but the Consumer Debt is now getting very high. Host yep. Guest and it went down, after the crash it went down, hit the low in 2010 as everybody pulled in their horns, and then its been kind of growing ever since. And now were getting up to the point where auto loans outstanding are very high, Credit Card Debt is very high host right. Student loans. Guest student loans, that might be a writeoff because host yeah, right. [laughter] guest god, thats a trillion. Host yeah. Guest so, you know, debt has consequences. Host yeah. Host yeah. Guest borrowing from the future host yeah. Guest and someday you have to pay for it. Host you think rand paul doesnt get his due . [laughter] guest well, you know, i agree with him on some things, and other things i dont agree with. [laughter] host well, its interesting to me because, again, im sort of coming back to our mutual indiana roots here. Host im definitely a liberal, but one thing that has always puzzled me, actually, is why more folks on both sides of the aisle but particularly democrats dont think more about the consequences of debt bubbles for ordinary people. Because, of course, everybody or borrows in this society. We have a debtor society. Guest yeah. Host Consumer Credit has grown certainly dramatically over the last 40 years. Corporate credit has grown. Theres any number of reasons for that. Guest thats a very big question, a really interesting question. Ive thought about that a lot myself. I think probably at one point we were too conservative. It was probably harder than it needed to be to get a loan from a bank. And, of course, one thing that changed all that was deposit insurance policy which came out of the new deal. Host right. Guest and i kind of like that. Theres a big argument about that among monetary economists, monetary economists, some of them think, well, that caused the banks to be more risky. Host yeah. Host yeah. Guest because host moral hazard problems, yeah. Guest i tend to think that, no, probably it actually seemed to stabilize the Banking System along with some to other things. And i think maybe. The banks needed to more risks. So i think that the risk taking has become more free and people are more willing to do it. That is good in some sense because it keeps the machinery of the economy going and finances production. But it has consequences. Host yeah. Guest and this slow growth that we have, have had now for quite a long time, it may be permanent just simply because we have such a large debt overhang. Host thats interesting. Guest because so much money has to go back into servicing the debt host yeah. Guest that theres not as much available for growth. Host yeah, yeah. Guest so thats just one of my crack brain theories. [laughter] interest well, i think certainly some people would agree with that. Just since were on the topic of debt, im curious, you know, you have a chapter in your book that deals somewhat with the post08 environment and some of the Obama Administration decisions that were taken. If you could time warp back to 2008, what do you think we should have done differently . Guest well, i think the, i think the t. A. R. P. Bill which was the bailout of the banks, that worked out okay. And the journal actually supported that. But there was a lot of internal discussion about that host tell me about that. What were the pro and con sides there . Guest well, some people on the Editorial Board didnt like that idea, but paul gigots the boss [laughter] and he made the final decision. Host and the critics would have been using the moral hazard argument . Guest well, the critics would have been saying, you know, let them take their lumps host yeah. Guest and lets give them a little lessson in sound banking. Host yeah. Guest but looking back, i think paul was right. Giving them this backstop paul argued that this wasnt just a banking problem, it was a social problem because everybody was borrowing host yeah. Guest in the, in the 2000s. Host corporations, consumers, everybody. Guest well, we had a huge credit boom. And the fed was keeping Interest Rates down, or to the extent they can control Interest Rates but they apparently can to some degree. And so paul was right. And, actually, it worked out okay, because the banks paid the i dont much believe that. First of all, i dont believe in demand economics very much. Im a supplysideor r. I believe in stimulating production, and demand will take care of itself. So the Obama Administration spent a very large amount of money getting fairly close to a trillion, 800 and something, i dont know. Basically, human huge numbers. On this kind of passing out money. And the evidence that that stimulated anything very much is not there. Because we stayed, we had very slow growth even after the recovery in 2009. Finish so, and i dont believe in monetary stimulus. And we were getting that as well from the fed. They were keeping Interest Rates down. Well, the problem with that is, yes, you make it cheap to borrow, but you with you also decent return on their investments. So im against both. [laughter] host in good libertarian fashion. Guest right. Host right. Well, so lets think about this sort of interplay between fiscal and monetary. I mean, i take your point on monetary, and i completely agree. Basically, you end up jacking up the stock market, but the vast majority of Americans Still keep most of their wealth in their home. So thats got limited effect for individuals. Very good for investors, good for people like all of us in our 401 k s and a nice stock portfolio, but et didnt really fix it didnt really fix main street. Its interesting though, the supplyside argument has come in for some challenges recently. Not only amongst liberals, but among some conservatives that are concerned now that, all right, tax cuts, supplyside measures did help to a certain extent during the reagan era, but in the last 20 years, you know, you saw the bush tax cuts in 2001, 2003, you didnt get too much growth off the back of that. Same again with obama. The Administration Today is keeping to the line that tax cuts and regulatory cuts will produce growth. Do you still buy that . Do you think its going to and if so, is it going to give us a point or two of the kind theyre talking about, the really big boost, up to 3 or 4 . Guest well, lets go back to the fundamentals. Supplyside economics isnt new. We traced it back to a guy who was a 16th century liberal philosopher, and its very simple. Supplyside economics, i think i kind of alluded to it before, but what it really means is you have to produce something before you can consume it. And african countries, places like zambia, are poor not because they dont consume. They consume they like to consume as much as we do. But because they dont produce, because they havent, they havent had the knowhow, they havent, they dont have the knowhow to produce more advanced marketable goods. Theyre getting there. Gradually, theyre making progress. But you have to produce something. You cant just stimulate demand. You have to create an environment where people will use their creativity and their energy and their work to actually produce goods that they can sell to other people. Thats supplyside economics. Thats just kind of basic, traditional economics. Keynes came along in the 20s and 30s, and he came up keynes has been totally misunderstood, misquoted for many years. Host how so . Guest mainly because he came up with, he came up with a new idea every day. And so you never knew what keynes really was selling. But the thing that really caught on with keynes was John Maynard Keynes who was an english economist actually, not an economist, but he was a floss philosopher. Host yeah. Guest keynes thought you could actually moderate Business Cycles by the government stepping in and spending. You know all this. And it was a very, very popular theory because it gave congress, politicians an intellectual rationale for doing what they want to do. Taking money from taxpayers and spending it on their constituents. And it also gave economists a great boost because the economists are suddenly advising politicians on how to to spend money. So it was very popular. And what we did in the 1970s was try to bring back this classical theory. It was at the journal. Its in the book. Host yeah, and i want to hear about your take on the lessons of guest that we, basically, what we were trying to do was bring back the classical theory that you have to produce, you have to create an environment for people to produce. And one thing that you dont do is put a huge tax on successful people who are actually producing something. And you dont overregulate them up necessarily unnecessarily and all those things. So thats what we reached back in the 70s. We had guys like art laffer and host arts still around. I occasionally run into him in a green room or two. [laughter] guest and laffer came up with the famous laugher curve which said, you know laffer curve which, basically, was an application of the law of diminishing returns to tax policy. You get taxes too high, you get less revenues if you lower them, you get more revenues. And that actually happened with the reform of the Capital Gains tax in the early 1980s. And we got, we lowered the rate and got more revenues. So it can happen. And jude and art made that laff earn curve rather famous. But theres a lot more to supplyside economics than the laffer curve. Host well, lets just stay on the tax point for a minute, and then i want to make sure we move on to other topics. Warren buffett makes the argument, and i would frankly agree with it, you had much higher tax rates both on corporations and individuals in the periods of the 1950s, the 1960s when the u. S. Was actually growing much more strongly than it is now. Theres also evidence in the last 20 years that tax cuts really havent created kind of growth. So has something fundamentally changed here . What would you say to the very smart people who would make the exact opposite argument . Guest absolutely, everything has changed. [laughter] its like that all things being equal. All things are never equal. [laughter] host fair enough. Guest and the 1950s and 1960s we were recovering from world war ii. And the dollar was king. All the other countries were flat on their backs. And we were investing, american corporations were investing overseas to rebuild the factories, and the dollar was very much in demand. Service it was strong. Of course we had growth, and we did have, we had postwar policies that had discarded, under eisenhower, that had discarded a lot of the old new deal inhibitions. The new deal had an excess profits tax even in the 1930s which just practically kill industry. Thats why we had a crash in 37. And so we were making a big comeback during those years. And we actually, you know, then things kind of got screw up in the 70s with price controls. [laughter] nixon was responsible for that, but congress was too. And so Ronald Reagan had to kind of straighten things out again with, and he used quite a few supplyside policies. Things picked up. We had volcker did his job of killing inflation. We had a pretty sound currency. Host he deserves a lot of credit, in my opinion guest yeah. Host he was a Federal Reserve chair that would actually stand up to political forces, which is a big deal. Guest well, actually, carter hired him because carter knew he had a real problem when inflation was getting pretty close to 15 . That was serious. So he hired this tough guy from the new york fed, paul volcker, to do something about it. Host yeah. Guest and paul did. Host im curious, that puts me in mind, a lot of folks ive spoken to about the 2008 financial crisis and its aftermath said putting aside what you think government should or shouldnt have done, that there was a need for more strong people in these rooms telling bankers, heres what youre going to do. A regulator like paul volcker that says, you know, were going to stick to this plan, i mean, do you think that theres an argument to be made around that . Its sort of, i guess, the great man theory of history. Guest no, im not really much i dont care much for great men theories. [laughter] thats caused a lot of trouble over the years. Host and well get to the autocrats and Foreign Policy in just a minute. Guest but volcker was a special guy. He knew what he was being hired to do by president. He was they didnt, he got that job to do what jimmy carter wanted him to do which was kill inflation. Which was, you know, it was a big political problem. And volcker knew how to do it. He was a banker, and he ill give you a little story about that. Host please. Guest he called bob bartley and me over to the new york fed right after he was hired and gave us a nice lunch, and then he said, okay, when theres blood all over the floor, will you guys support me . And i held up my hand first. I didnt give bob a chance. [laughter] we both agreed, yes, we would. And there was blood all over floor. We had a sharp recession, the latin american countries had overborrowed, they were this trouble, the farmers were in trouble, they had overborrowed, and there was a lot of blood on the floor, but we stuck by him. And when it was all over after the sharp recession, we got Economic Growth again. Host well, thats a great story. Speaking of blood on the floor, you spent a lot of your career overseas as a foreign columnist, reporter guest right. Host give us some of the highlights. What was it like being a Foreign Correspondent back then, for starters . Im always, i must say, a little jealous of that era. I feel like you guys got to do incredible things. Guest you should be. [laughter] you shouldnt call covering terrible things great fun, but i wasnt always covering terrible things. I was, i had it was very nice to work for the wall street journal because you were doing, basically in those days we were doing special stories. I went to africa once to do a story about missionaries. That was fascinating. Host what was the story . Guest and i met a woman named Maribel Taylor who had started a Little School for nurses up in the mountains of cameroon. And one day a bunch of guerrillas came into town with their ak47s, and she stood in front of her school and told these guys dont touch any of my girls. And they didnt. Host wow. [laughter] guest she just had the moral authority. And so that was one of my little stories. But the it was great fun. I covered the old soviet union. That was fascinating. I mean, talk about a place that was really screwed up, it was. Sixday war. Host yeah. Guest the afghan war. And so, yeah, a lot of times i was covering not they were terrible things, but most of the time i was just having a good time covering interesting things that were going on like the 1968 strike in france where everything just shut down. Host so tell us about that. Guest well, it was rather a remarkable event because, as i say, everything did shut down. And so i was in london, and i flew to brussels and represented a volkswagen and drove down to the border and bought myself a [inaudible] at a flea market and filled it up with gas so id have enough to get back. Roger rickles was already there, one of our reporters. So roger and i had the hotel maurice, one of the finest hotels in paris, all to ourselves. Host wow. [laughter] fabulous. Guest the staff was all on strike, and the place was being run by a few managers. So roger and i went around to the odion theater where there was a nonstop, 24hour discussion of revolution going on. The french are always fascinated by this revolution that they had once that didnt quite work out [laughter] and how to do it again. And thats what they were discussing. And so we met some young man in one of the dressing rooms who was, apparently, had something to do with organizing all this except he claimed he didnt. And i asked him, well, what are you protesting against . And he said, i suppose were protesting against our fathers. I thought, thats an interesting answer. [laughter] i think they may have been protesting existence Charles De Gaulle who was against Charles De Gaulle who was kind of the father of the country. I think that was probably the best theory. Host actually, just while were on france for a moment, what do you think about the election of macron . And do you think that this is a turning point for, you know, neoliberalism in general, lets say to kind of get its mojo backsome. Guest yeah. Well, as i mentioned earlier, im not much for great men theories [laughter] but i think thats a good, positive development for france. I think macron is at least going to try and actually got his own people into the assembly. He got these, all these young amateurs into the assembly. So they did have a kind of a strange little revolution host revolution again, yeah. Guest and hes going to try to fix the labor laws which are a big problem in france because they are so demanding of employers that people dont want to hire. You know, if you make labor laws too tough, why they dont hire people. And it also causes competitive problems in competing in the international economy. And so macrons going to try to do something, and hell probably have some success. Host its interesting because hell be, at the same time hes got to do all this stuff internally, hes got to work with germany to figure out if the e. U. Is actually going to be a sort of United States of europe or not. Whats been the journals position over time on the creation of the euro, the formation of the e. U. , and where do you think the e. U. Is going . Are we at a Tipping Point moment right now . Guest i dont think so. Weve been all for it. We, were, we were very much, we supported the creation of the European Union. We supported the creation of the euro. In fact, one of our supplyside writers, bob mundell, whos over at columbia, actually advised the europeans on creating the euro. And we, we supported that. And i think the euro will be around for a while. I dont think its going to disappear. And as to brexit host yeah. Guest which is kind of the key issue here, yeah, there were some good reasons why britain decided to split off. And it is true that the European Union created a, an enormous bureaucracy in brussels. And they were, you know, to make work for themselves they were interfering in all kinds of policies that they shouldnt be involved in. Kind of like federal government in this country interfered in a lot of policies that were not, they were not empowered to do in the constitution. But they did it anyway. And the brits finally kind of got tired of that, so they voted brexit. And now theyre going to try to figure out how to implement it. Host yeah. Well, my colleague, martin wolf, at the ft has argued he thinks britains going to be poorer and meaner more this. Would you agreesome. Guest could be. Could be. It depends on the terms they work out. If theyre really smart, europe if europe, macron and germany are really smart, theyll try to create terms that are reasonable so that britain can continue to contribute its production, its trade to the european community. Host yeah. Guest and it depends a lot on where britain goes from here, whether it goes into whether we are able to set up some kind of an Atlantic Community host yep. Guest that lowers tariffs between the u. S. And britain. Canada of course, canadas no problem, but in other words, if we can avoid protectionism creeping back in to what has been an amazing lowering of trade barriers, all kinds of barriers trade, monetary, immigration host yep. Guest those things all happened under the european Community Host yeah. Guest creating a more integrated and a more fluid economy which i think was beneficial to europe. Host its interesting because you could say its been the most sort of benevolent kind of globalization that the world has ever known. Guest absolutely. Host its interesting though because, you know, youre talking about new kinds of communities being formed, potentially a Transatlantic Alliance of some kind between the brits and the americans. This puts me in mind of what you said earlier, you know, if you are a supplysider, you do believe you have to supply things in order for people to consume hem, and you referenced also that you need skilled folks to do that. You need hightech industries, you know, you need advanced manufacturing, whatever it is. You need to be at the top of the food chain in a rich country like ours. Guest yeah. Host theres a debate going on right now about whether or not globalization itself might be sort of altered in some way to encourage this by creating regional blocs, you know . Having maybe europe be one thing, britain and america and maybe some kind of new configuration of mexico and canada be more integrated with shorter supply chains to sort of adjust in time production cycle. Same again with asia. Do you think thats going to happen, and would that be a good thing . Guest well, i dont think it would be a particularly good thing. It might happen. We do seem to see some retardation in the thrust for globalization. Theres always been globalization. It goes back to the early dutch traders host yep. Guest whoever, on sailing ships. Host yeah. Guest but after world war ii, there was a great impetus towards globalization. For all kinds of reasons. First of all, countries were devastated, and they needed rebuilding. And so we had the kennedy round, we had various rounds of multilateral trade negotiations. The latest one was doha which sort of had a few problems. [laughter] but the, so there has been a kind of a slowing down of that impetus towards globalization. But look at what its created. Its created a whole planet of multinational corporations. Every Big Corporation is multinational today whether its in the u. S. Or england or germany or wherever. They operate all over the world. Their supply chains are all over the world. Their sales offices are all over the world. So we have globalization of corporate organization. Host yep. Host yep. Guest and i dont think were going the repeal that. It would be terrible if we did. Host well, so this is a very important point. I agree with you. I mean, i think history has shown that Tariff Barriers and trying to stop trade generally has very bad repercussions for national economies. Guest right. Host but youre raising an important point which is that Multinational Companies are globalizedded. There is a kind of an economic globalization thats moved way ahead of political globalization. That creates these natural tensions in some ways that potentially have led to the kind of populism weve seen not just here in the u. S. On both sides of the aisle, but in places like france or even some of the nationalism that you see in the emerging markets. So how does one square that circle . How do we make sure not to lose the gain from a conservative free market viewpoint, how do you make sure not to lose the gains of globalization that have been had because of the populist backlash from local populations that sort of feel like, hey, im not getting mine in this equation . Guest yeah, thats a very interesting question. And the way, the ideal way to solve the problem would be to get government out of a lot of these things. In other words, as government takes more control over an economy, the politicians play a bigger part in making decisions. And they start making those decisions, they mostly make those decisions on the basis of a certain kind of populism. And so i think thats one of the reasons why the journal and i particularly have argued in fave fave in favor of reducing government power, government involvement in things. And so i think those two things go hand in hand. The government becomes more important, things become more political rather than just letting a Big Corporation like General Motors do its business making cars. It all becomes political. Host toss in the era, though, of state capitalism. Because its not just us anymore, of course, its china and brazil and these countries that dont have barriers really between the private sector and government. I remember actually being in china once during around about the time that the snowden leaks were coming out. Guest right. Host and i met with a pla general, and i was asking her about industrial espionage and, you know, these issues that a lot of american firms complain about in china. And she said, well, of course were spying on everyone. Corporations, other countries. There was no division. So in an era in which the highest growth is coming from areas that have a fundamentally different ideology about capitalism, how does all that play out for america . Guest well, china has come a long way. You have to think about where china was compared to where it is today. Yeah, it doesnt have free market capitalism in our sense, but it sure has come a long way from america from maoism. And chinas in some trouble host debt. [laughter] guest yeah, absolutely, debt. And thats because theyve never quite made that transition from a command system host yep. Guest to a private free market system, capital system. They have capitalism, and theres quite a bit of free market activity, a lot of free market activity in china in terms of business corporations and business activities. Host yep. Host yep. Guest chinese are Good Business people. Host yes. Guest and, but the government still uses the banks to, as a channel to channel money into stateowned industries, and its very hard. They, i was i i interviewed somebody at the bank of china ten years ago, and they were trying to figure this out host yeah. Guest and its very hard to do because these stateowned industries employ a lot of people, you know . And its very hard to cut them off from this. But what you have are, there are some estimates youve probably heard these estimates that the banks in china may have Something Like 30 nonperforming loans that dont really pay anything. Host well, its interesting, im remembering another story. Like you, i spent some time there about ten years ago right after the financial crisis, and i remember interviewing the head of the icbc bank. And he, i said how are you all going to cope with the crisis. And he said, well, were going to lend more. You know, when youre a Chinese Banker and the government says lend, everybody raises their hand and lends. [laughter] and i said, well, do you think some of those loans are going to go bad . He said, yeah, probably 2030 . And i thought, wow, thats planned. [laughter] planned economy. But its going to be interesting how they pivot within the confines of their political system. Lets just, in the last five minutes or so that we have left here, i want to hear some more personal anecdotes from you. I would love to know the oped piece that you hold nearest and dearest to your heart. Whats your favorite piece or the most meaningful piece that youve ever written and why. Guest oh, that ive written . Host yeah. Guest oh, wow. That gets tough. I wrote a column for 18 years, so there were a lot of pieces. I think some of the maybe just in a general sense, more general, i think some of my best writing has been about finance, about monetary policy. Ive been critical of the Federal Reserve. Ive been critical of quantitative easing and those kinds of things. And i think those, that kind of thing has kind of proved out, that these are problems that, as you mentioned earlier, we still wonder why we didnt, why were not getting more inflation. Host well x and to that point, we havent talked too much about technology, but let me just ask your thoughts on just the incredible sort of digital revolution that were going through and why are we not seeing in the productivity figures . You know, where is the im forgetting the famous quote about, i think it was solo that said you can see productivity everywhere except in the figures. [laughter] are we miscalculating something . Is our economy actually booming and we just dont know it . Where is all this Technology Sort of taking us . Guest well, the productivity number is kind of a derivative number, basically, you know, you divide number of hours worked, production or Something Like that. So i think solo is kind of right about what it actually measures and doesnt measure. But we certainly do know that the digital revolution has changed the world. And, i mean, you know, there are all sorts of new things coming down the pipeline. Health monitors of various kinds, you might be able to, you know, in the not too distant future look at your rust and find out if your wrist and find out if your heart is okay with a monitor. And so its been revolutionary. Whether i wrote something about this a long time ago about computers generally, about whether they were adding to productivity. And they didnt seem to be at that point. But, you know host maybe Robert Gordons right guest just look at computers, god, what they do for irgsz us now. Host yeah. Guest so what do we really mean by that . And technology has just been incredible, and it still is. Its still going forward. And thats creativity. Thats what i talk about with supplyside economics. Leaving people free to create. If you go on facebook, for example, just wandering around, you know, looking at various people on facebook, you find out theyre creating all sorts of things, you know, theyre doing all kinds of people, americans are enormously creative, and you just have to allow that to continue happening. Host let them be free. Well, its interesting because were certainly in a period in many ways that mirrors the period in which the journal began. Incredible Creative Destruction and creativity. And lots of challenges, lots of opportunities. But its been a pleasure talking with you today about your book, and i wish you Great Success what we saw in the with it. Trump cam pain was long standing tension between the big guys and little guys and so on. As a candidate, you know, trump got a lot of mileage out of taking the side of the smaller folks and that might be workers who have less jobs