How many of you are from the washington area. How many of you are from outside washington . How many of your capitalists . How many anticapitalists here. How many came because you think you will learn to invest in asia q2 we have two distinguished authors here and individuals and i know them both and let me introduce them and we will get into the background and conversation. To my immediate right is the author of this book can american capitalism survive . By steven pearlstein, steve is a native of boston area and he went to college at trinity and a number of things in the journalistic area after starting his own magazine in boston, worked at the Washington Post for many years and for his writing on the 2008 financial crisis he won the Pulitzer Prize. He is now the robinson professor of public affairs, in addition to writing for the Washington Post and writing books. Talk about your book in one moment into his right is parag khanna who lives not in washington dc but singapore. He flew all the way from singapore for this event which is very good. [applause] his book is the future is asian. He grew up in many different places around the world, dubai among other places, and hes a graduate of Georgetown University school of Foreign Service where he got his bachelors and masters degree and his phd at the London School of economics and he has written many books about global affairs, he is the head of future map which gives a lot of strategic advice to companies and other organizations and he is a person who esquire magazine said not long ago that he was one of the 75 most important people of the 21stcentury. A lot to live up to. We will see if you can live up to that some point so steve, your book has a very exciting title. Can american capitalism survive . The answer is sure, okay . Does it have to do anything to change . It probably does. It will survive, but whether we will continue to be the richest country and have the most vibrant and innovative economy and the best social and legal and political institutions, that is not a given. In your book you point out we have a lot of challenges now and you point out income inequality, social mobility issues and things like that. Why are there not riots in the streets, why arent people is upset about this is you think they should be if they are reading this book . It is not so much that they read the book but have experienced the sort of unfair, unequal capitalism that we have. Why dont they write in the streets . First of all, it is america and secondly it is not bad enough but i would say the election of donald trump is a good indication they are pretty unhappy with things and are willing to sort of lash out at the establishment and the elites and thats a pretty good indication maybe we are not too far from it. You say american capitalism. What type of capitalism do you like better than american capitalism . Like my students i think swedish capitalism is a little better. Northern european capitalism is a little more humane, provides more Economic Security, not so shareholder focused, they dont have as many financial crises, they dont start financial crises. They have very high taxes. People move out of those countries to avoid those taxes. They used to but the story you are telling is one that is really 30 years old when they did have very high taxes and realized, when a tennis player moved to monaco or Something Like that to avoid taxes and they reduced taxes. Their overall tax burden is around 50 . Our overall tax burden is around 35 but they get a lot for that. For one thing they get their healthcare which represents almost 18 of our economy. So 9 of that is private so 9 of that differential can be accounted for by healthcare and they get free childcare, mostly Free Education including Higher Education so they get more for that and they seem to like it which is not to say we have to do the same but that is where their politics and their culture and history has taken them. Those countries often have the highest Happiness Index so our Happiness Index. Pretty low for the industrialized countries if you factor in that we are richer. Let me ask you about asia for a moment. Asia, you say the future is asian but the past is asian as well. Asia was the center of the world for 1000 years as far as economy and so forth. I could call it the present is asian also because if you think about global demographics half the population is asian today, 50 of global gdp is in asia today. So it is past, present and very much future as well if you think of the growth rates. Went to the west take over asia as the dominant political and military power and economic power as well, when was that . Roughly the 16th century with the rise of the european colonialism and things could have turned out differently. Im not a historian but two episodes im looking at our real turning points not only in World History but how asians think about those episodes and how it motivates them. One is the ming dynasty standouts treasure fleet as far as the indian ocean is africa but then retreated in order to focus on domestic, Economic Issues and border skirmishes and that allowed european colonial powers particularly portugal to move into the indian ocean but imagine Vasco Da Gama rounding the cape of good hope and seeing ming dynasty fleet in the indian ocean, just how successful would not only the portuguese explorers but the dutch and British Companies have been and then the ottoman sacking of constantinople in the 50s and that motivate europeans to look for alternate routes to asia. The lessons asians draw on historical episodes that enable the rise of the west are they should not retreat from their commercial, political expansionism and that sort of thing but also they should not be divided and conquered and they dont view their success as great ingenuity but also the transpacific partnership. Would that have been a good thing to keep our foot in asia but do we heard ourselves by not moving forward . Economics is everything to asians, economic growth, building economy and building trade networks. Over the last 30 years with the rise of economic partnerships, the transpacific partnership. All the acronyms i am throwing at you unfolding in real time in a diamond to integrate. For us it would have been an enormous opportunity already we can see the data about americas declining market share and what we are seeing is our exports may fall to countries like china as a result of the trade war. Canada, mexico, japan, australia and new zealand are all actively joined the tpp even competing to lead it and eat away at American Market share and we will be left out. For those not familiar with it, what is that and where did the name come from . The belton Road Initiative is a continuation of what has been happening for the last 25 or 30 years in terms of this resurrection of the precolonial world where asians had more to do with each other than the rest of the world. Particularly in the last 510 years, i have been watching this over the last 20 years they have been investing massively in crossborder railways, pipelines, highways. Now they call it digital silk road, optic cables, 5g, the infrastructural networking of asia and china has committed hundreds of billions as well. It is the bazooka of infrastructure. Your definition of asia is from where to where . The real bugbear to me as a student of geography there is only one definition of asia and asia is not a continent. Our kids always learn the wrong thing which is that asia is a continent, europe is a continent, theres one big continent called eurasia. Europe shares it with asia. They are two regions but asia, two thirds of it, Mediterranean Sea to the red sea all the way to the sea of japan, from russia to singapore to india, that is asia. There is no dispute about what is asia. The fact is the last 10, 15, 20 years weve been focused on asia as if it is just china and china represents all of asia and china is only one third of the asian population. Half of asias gdp and other countries growing faster than china and much of what we call the middle east, saudi arabia, turkey, israel, these countries are geographically in asia and more and more they are gravitating towards the rest of asia and the way from the west economically and even strategically. In your book you make the 1970s which i lived through and worked in the white house is a great time because he made it sound like people were happier. Is that true . I would say it was a transitional period and it wasnt a great time, not because you were working in the white house. But in fact, this is apropos, it was during the 1970s that our economy began to become very uncompetitive for a variety of reasons and as a result of that and as a reaction to that we decided japan looked like they were going to take over and we were going to be left behind, we were going to be like britain, a falling Industrial Power and we pulled up our socks and made our capitalism leaner and meaner and it worked and we became the most competitive country in the world so the 1970s was not a particularly good period, you say for workers, it was a good period for workers at least absent inflation but the 1950s and 60s are considered the golden era. In the 1980s reagan took over, thatcher took over and the concept of shareholder being the most important part of the corporation took over. As this roundtable said shareholders are not the only thing ceos and companies should worry about. What do you think of the Business Roundtable statement . I would say the pendulum swung from do little regard for shareholders and profits to too much regard for shareholders and profits and now happily the pendulum is swinging back and the statement by the roundtable was more a signal that the leaders of the Biggest Companies in the country understood that it had gone too far and they would like a more balanced approach which not like the 1970s but more like the 1950s. Income inequality, as that is the 1920s. Do what do you attribute our growing income inequality . You technology, trade, deregulation which happened in the 1970s when you were in the white house. They didnt listen to me. There has been a natural tendency toward winner take all Competition Among companies and among workers. The top lawyers today get paid much more than people slightly below them. The top professors, top athletes and companies, the Top Companies make huge profits, google, facebook compared to companies that are almost as good product so the winner take all quality, lack of antitrust enforcement, it is a long list, but they are not all because of government and i think this is a mistake people make, they think that is reagan and thatcher and of course they play a role but a lot of it has to do with norms of behavior. In the 1950s and 60s the chief executive probably had power over the board of directors to pay himself huge fee. They wouldnt of thought to do so. It would have been socially unacceptable. Of a gun to the country club another ceo would have said dont do that. It makes us all look bad. And anyway you will make democrats of all of our workers. They didnt do it in those days. You think people were happier in the 1950s than they are today . We know they were. The best period of time. We do surveys of this, we ask about satisfaction with life and their Economic Situation and they were. They werent richer. They only had one bathroom in the house people who were happier were white presumably. Minorities were disenfranchised in the 50s and 40s. Yes, but that doesnt necessarily mean they werent happy. They had more vibrant communities than some of them have today and it was built around their church and their communities. Happiness as you well know, people dont get richer until they have incomes of 70,000. Then money and happiness, those lines start to depart. People were happy mostly because they had Economic Security and this is something i think the market fundamentalists dont understand. People assigned highvalue to Economic Security and we have much less secure economy for middleclass and workingclass. Some say Economic Security and happiness with their financial situation arises when you have exactly twice what you already have. You need twice what you have before you are financially secure. In terms of politics, you say in your book that the contribution system in our country is skewered towards wealthy people and is making our Economic System not so competitive. I would say what i said about that, there are things we can do and should do and we can talk about that on the policy sense to make our capitalism more palatable to people. But we cant do any of those things until we change the political money situation. How would you change that . Constitutional amendment due to a constitutional amendment requires a Constitutional Convention or 2 thirds of each house and 3 quarters of state. Is that realistic . I think so. It is realistic if you think having and the Democratic Congress and democratic president at the same time are realistic. There is a lot of support for an amendment that would allow a reasonable restriction on political money. Everyone who thinks they would vote for that constitutional amendment could you raise your hand . There is broad support for that idea. [applause] people who come to book festivals may not be a crosssection. They are not. They are older, richer, more liberal and live in washington dc so that is right. Polling has been done on this. There is broad support for that. What about you know who is against it . Politicians of both parties are against it. They mastered the current system. They dont want to change it. They are happy with the current system. We are the ones who have to force it on them. Another constitutional amendment you recommend . Now. That is the only one . Is there any Legislation Congress could pass that you think would bring us closer to what you would like us to have . Some of it has to do with boring stuff like antitrust. I will mention a sort of to for. I think we should have a modest 3000 per person universal basic income in the United States. Some of that to replace the programs we have. I wouldnt call it universal basic income. I call it a dividend for all citizens and then i would pair that with require universal service. 3 years during your life when how would you pay for that . Where would the money come from . We are in debt already. Part of it is i would eliminating existing programs we now have and i would raise money on people like me and you. To cut taxes. All right. You are not running for congress vote. I think if the democrats would stop talking about how they will give a middleclass tax cut because that is not what people want. They want good services, social security, medicare, childcare, good education and they dont need a tax cut and they dont want a tax cut and i wish democrats and i am a democrat and you used to be a democrat, i wish we would Start Playing the tax cuts game, no tax cuts period. [applause] maybe if i ran for congress here. Social Security System is more or less financially bankrupt. It is not insolvent over along period of time by a little amount. It could be made solvent very easily. By increasing taxes . I would say you could do two things, what is you could very slowly raise the age and secondly you could subject all income to this payroll tax rather than only up to whatever it is, 225,000. Let me ask you this. Is xi jinping going to be president for life . I strongly dismiss between Vladimir Putin and xi because they have a government system. A common almost bureaucratic tradition that goes back 4000 years, russia is an oligarchic authoritarian autocracy. Even though you have two leaders who appears if they could rule for life you have 22 very event systems. Xi can technically rule he abolished term limits but there are still term structures whereas in russia Vladimir Putin has been president and Prime Minister and he can decide which portfolio is more important. I can imagine a scenario where xi steps down either after one more term lets say because he has a number of rings. He is in his second term now. He could do one more and that would be unprecedented but it is a finite period and he has people around him from which he can choose. Do xi jinping or others want a trade agreement with the United States or not . One of the hardest things to know is what the Chinese People think other than what is mediated through the official spokesman. I try not to psychologically capture the sentiments of billions of people but if i could, if i had to the fact is chinas largest trading partner is it asian neighbor and second largest trading partner outside asia is european. We are the third most important trading partner and that trade volume is going down so they are decoupling pretty significantly from the United States. We should be selling the more oil and gas and soybeans in machinery and tools and technology. Instead we are selling them less. Do they want an agreement or not . Better to have one than not to have them but it would have to be one that is not so disruptive. Explain what is going on in hong kong are the chinese going to send troops in or not . The troops are there. The question is whether they release them onto the street and the answer is they might. If you want to know the answer without knowing what will happen tomorrow it is death by 1000 cuts strategy that began 20 years ago whe