Niall Ferguson: Empires on the Edge of Chaos

this is big ideas from the ABC Your excellency Professor Marie Bashir on Hirsi Ali Neil Ferguson members supporters and friends of the CIS ladies and gentleman who will become members supporters and friends of the CIS It is my great pleasure also to welcome you might as well to introduce you to ask two thousand and ten Jonathon on the lecturer it follows that such in long line of distinguished speakers I'd also like to add my thanks to the McQuarrey group that has supported tonight's event as in the past in Edinburgh in August sixteen ninety six a particularly cold month a group of four young men shuffled down one of its streets after church shielding themselves from the sort of cold we don't get here too often although maybe tonight is the night maybe they've made a cobbler even to the church but battling the cold was on the mind one of the group Thomas I can hit the young man of mine came judge that was probably warm up in the place is really cold feel right now he knows that is with a sigh of my family time the same did I get a more broadly the Christian ethics of the truth of the Bible as I knew it meant and that really was a heresy the Scottish could have at this point reads this obvious in London and the whistle blew the whistle the balloon for that stops was probably the execution of Thomas I can hit for blasphemy those probably seems the Lord led me to choose someone die his store and the eminence of Neil Ferguson a product line six and ninety six is alleged is the stakes in our minds maybe sixteen eye the eye of the great wealth the glorious revolution oh seven in seventy six the year of the publication of the Wolf and nine when the US declared he was declared independence but something's not around and that is with us today that would truly good taste it was a Scottish online this message email but I am preoccupied smoothies it's also worth noting amounts of the push for the rationality and saw the daily allotment period was from a divine senior religious figures but not to indict time for the fundamentalists of their time way I did just the way I can pay that's too into appearing in two thousand and ten minus two thousand and ten the end of the seven a century and for a couple of hundred years that followed set the standard institutions the time and the confidence from a mom well in practical and philosophical terms the latest prosperous and it has made this for a the mall the mention of a low base is overwhelming Neil Ferguson is a formless chronicler of that equates it costs me from Glasgow Izzy and he is the inherent are the ideas these fellas costs of that early period Adam Smith I bit him Adam Fergusson Francis Hutchinson inside and the Simon Davey of this the fallen among necessarily hung up on the skulls of a Lindsay that might be that in itself makes the wave the flag occasionally add or let him know my purpose to the discolored a few weeks ago because of the bicycle side one interrupted she was in bagpipe given honest I'm still lost all that that was because of that but the Magpies more generally the course she discovered the music of the braid top Chile like this true you can find a new Google them on YouTube side siren was a period of accelerating British decline in the middle nineteen sixties another Ferguson mph this coming Glasgow some of the physician and his assistant Neil Campbell Douglas Ferguson didn't follow the hob disciplines conduct of these parents are and eighty cents to professor of physics least eyes tested to believe and how to ride in the twelve apostles to explain the future Emerald led to the deed still in Glasgow feel safe and Millie couple of preschool he is in Kenya a remarkable coincidence given that fine Hirsi Ali's cannot confess to liking Nairobi upon meticulous in hidden mode on College Oxford my graduation began his teaching career various and often in time greats in two thousand and two he beat ended on the top professor in financial history of York University she is lighted the candle or onsite teacher professor of history about it and also the whimsy the professor of business administration at the hobby business go is also senior is this fellow Jesus College Oxford I'm a senior fellow at the Hoover institution at Stanford University fortunately some of the boss could I go to Oxford for the Hobbit Neil Ferguson is also a teacher for the world these books and often related TV programs become inviolable cool his explanations the wall piece politics prosperity like about entrepreneurship success in finder and business banking and money is compelling but this mall the liberal tradition the liberty of the individual goal that was from a single least an a to be a lens through which he sees an intrepid to interpret events the profound lessons on underpinning always brings an authority that some ass hills and of course as the craft of writing beautifully many the book's been out for the ascent of money in an odd topping the recognition least TV has no doubt the op shop and the focus on the two of those says Islam is a few at all and this one paper and I had a good business in German politics in the ear of inflation eighteen ninety seven to nineteen twenty seven doesn't quite have the ring to it of all of the light of books but it was his first I'm afraid saw my laundry nail but then the list stopped to shop maybe because of the twelve apostles the PG of will explain mobile one the will make up the history of the health of the House of Rothschild the cash nexus money and power in the Manuel in PA the rise and demise of the British who although other lessons for global now in this and its sequel Colossus the rise and fall of the American him in the world over will go a lot more of the well wishes to the twentieth century country and then of course the ascent of money his latest just out of high finance their lives and times of semen wool that which apparently is a bylaw let this mind is a special prelate of the NAB strategists said excited for this and it would wish to give it its there and is a book on Henry Kissinger on its why it a prolific contributor to the prison like running media Andy and decadent in the future a true public intellectual attendance has sadly been prevented in this country in recent years maybe nails a double yellow line to help restore its true meaning and parents I wanted around a bit of intellectual history from three three hundred years ago has taught me that all this together toe and heel heights tonight yes I took our university Neil was even on the doctor his first as it turns out his address he discussed many things about the future of this country he unquestionably optimistic about prospects events by development Hari in the colonial administrator he hit it when surprised to know the infrastructure was one of these one of them are quite preoccupied sianz and the rest night to die this as you may notice the two hundredth anniversary of his arrival as governor of New South whilst I'm so delighted them on Korea's current its excesses is with us tonight such now quick diversion back to I can hand before I can paint before I and the seven deal with the imperative as bright ideas of in life especially this garbage wheel one of the ideas we place is what we have learned that what we have learned his comics may be put aside the political mystical or some other reason political correctness perhaps that's why we need to nail Ferguson's we need him to explain the world of what's important we're also privileged to know that the site is to die is Thomas I can hit fine Hirsi Ali but to force a lead role this dish is not made his life that you feel sleep out on in defense of freedom and traditions of them are met that's about as full of formidable team record as you will get to that ladies and gentlemen please welcome Neil fuckin as it delivers the two thousand and seven OS much the the the uh uh uh uh uh uh uh it thank you very much your accidents ladies in judgment it is useless to me to be here in Sydney which is nice my thanks goes to all of the Center for independent studies who worked so hard to make on a trip year so enjoyable so fulfilling together up to its chairman Michael bombing and of course but to grey who was the Cubans who brought me and Leon together in New York early last year you know it you've all done so much but to make me feel at home since I arrived in Australia last Friday I attended a conference a column in which every those delegates the Scottish name I was then awarded this honor on Murray degree my Univ the state named after the Scotsman the following day I was given ten my head named after the savings goals not isn't just when you have kept it all by laying on the offensive the school to swell hard for me thanks for nothing this year on the two hundredth on the vestry of some of Korea's appointments as governor of New South Wales I think it's appropriate Benoit election she found an imperial theme but you may have noticed during dinner some rather striking patients on the screens and if you would to the world in conversation was warm on the table top on the table right in front of you that the city's costs Opus cycle but it's all great paintings flying in all produced just to run ten years after mile from the quarries that in the lawsuit states my losses named Thomas Cole these paintings fascinate me because that it takes the life cycle over them facts of the five paintings and playful collectively the course of an eye you can see them incidentally the next time you visit New York if you go to the New York historical Society for the highest the one you toss on your table is auction day before in the cycle the post is entitled the South Beach State and just depicts an actual wilderness souls the same geographical location in each case the second depicts follows Arcadia and is entitled the past two days and mocks the largest town bus to take the kind of classical important I'm all whole scene of splendid a conspiracy and is titled the consummation of them what you looking at us his destruction of an ally the final scene in the fun isn't uncle simply destination the message is clear all empires no matter how magnificent they may be content to decline to fall I think essentially how we all be raised to think all the historical process as an essential is cyclical it's an approach which has a very long tradition in Western civilization stretching back in front of more than two thousand years in the histories written by up to do this the process that he calls on the site to assist proceeds in the following order this is the political cycle the five stages molecule the second is kinship then comes to her knee the aristocracy an oligarchy then democracy and finally something for the Wii is cold proceed which is the root of the mall something we have of course Mr years today just joking it ceased to be stored in a sea and sun move this week also all recurrence process of three historical faces in the cycle you go from the divine to the heroic of which is the feudal monarchy Kenya and inhuman all Democrats than all the cyclical theory of history that for much much nicer in the the twentieth century of Oswald anglers decline of the White House office of biological more was civilized nations what organisms frozen be a life cycles and went through seasons all was ending in a miserable winter Arnold Toynbee nobody reads uncle Toynbee anymore but once he was the best selling historians the warnings was all road this fall bully him study of history which causes his motorcycle challenge followed by the response of creative minorities and then came an activity declined one point people to civilization suicide when we leave this stall is responding creates a day to the challenges that face a musical theory like those remain open to this day I doubt if many people in this room have read any of the office I mentioned so far but if you have you've probably read my good friend told her that is great that some of the rise and fall of prey POS published back in nineteen eighty seven to know the statistical theory the theory of imperial of a stretch was great PAS over extend themselves through Kong question Imperial overstretched add that process causes their home in the sunroom to suffer to decline and to bring me and I'm done with this most recently Jared Diamond's book collapse how societies choose to fail or succeed all was the final cyclical theory of history environmental cycles all the way from seventeenth century Easter on and the twenty first century China the society's was an exploit the net result is overdue that and then succumb to natural disasters of one sort or another with all these different cyclical fee rates in all markets in OS up on just even if we haven't read those books on was struck by how that ID is kind of that in Nepal in the psyche we know actually tend to assume top Israel will also grew sick and slow day the environment all that demographic threat it's the way Olaf shots for us that you seem very very removes them maybe that's why we don't mind talking about the election who really care who told us about the average atmospheric temperature in the year twenty fifty all about months to the structure of the population the cycle will take care this fall we focus on funding issues like traffic congestion in Sydney it's possible that isn't yet that is in part a cyclical framework that I am describing here isn't that cool maybe just maybe cold artistic representation of imperial buff growth and eventually that is a misrepresentation all the historical process itself wall be history isn't sick and slew if you read tiny rooms it was stationary also capable of accelerating but it's looking like a sports car was the disenchantment the collapse doesn't arrive over a number of centuries the Palm Sunday if you too much I want to suggest to you tonight at great cost impacts on in the strict sense of the words complex systems than made up a very large numbers of interacting components that are quite decent people interested in all though was that construction more resembles a termite killed then and Egyptian cotton the parades somewhere between order and disorder on the age of chaos in the wonderful phrase a computer scientist Chris to collapse the complex systems as the company on the stand he to be operating stayed in the concealment of the inner could dream up quite some time to react he constantly adapting the ball you take it comes a moment when all systems go tricycle a very very small for her consent soulful the scientists call a phase transition from the anointed equilibrium so crisis although the examples the single grain of sand they call the whole time while to collapse all the makings of supply in the Amazonian rain forest which flaps its wings and causes are in the home counties of England to someone talk if you haven't read any complex to see the rate just think of the things that scientists use the complexity theory to describe the molecules think for themselves and predictably and it's a masterpiece it's time for us though I already mentioned time on next but thinks but not the parts of the pan the problems of almost all the tree interaction of faults of tiny little insects the candidate of the rain for us all of these are open to the complex systems systems the sudden things in common one of them is to be quite small includes two complexes can read these huge and unanticipated change this is what scientists call the amplifier the facts when things go wrong with the boxes the scale of destruction is in fact impossible to anticipate because there's no such thing but the typical or average forced far to use the jargon of modern physics and here I do owe a debt to my scientific family on the black sheep the title was trying to keep up forest before afar it is they all sell all the noise increase accounts it's teetering on the verge of a break what you don't it's what size the breakdown will be would be a huge and devastating called progression just a small controllable fauna it's really hard to say a forest fire once was lost last two years is in fact roughly four oh six or eight times less likely to happen this year the kind of person which is known as the total distribution a difference from the normal distribution of the Belconnen he's remarkably calm and the actual well it applies not just a force far it was all tht of quakes and it applies to academics you may possibly have been thinking as I was told it also seems to apply in the realm of fine Arts apart move to beat the Knicks crisis will be financial crises dunes of foam of the normal distribution they full Apollo what one wants is just huge and it is really quite interesting I would suggest you that regardless of weather a great classical dances Democrats or authoritarian any large scale political unit I can and or are great is a complex system he just accepts I can say exactly the same of financial systems to mind let's focus us on and arts the lowest must begin above normal central authority somebody is the registry and croquet impress the power of the individual is a function of the network of economic social and political relations over which the Emperor designs very little control was exercised overlook from a quarry by the man back to mom's the British Empire was the perfect example of the self polarizing complex system in which owns the station on the periphery of the individuals make the room decisions that will last a very very large Cuban fraction of the axle because the technology works well it's still surprising to find him talk show that many of the characteristics of the other complex adaptive systems by being described including the tendency to move from a parent's acronym for him from the parents stability tickets to see why some day that is the key facts the challenges the whole cyclical theory of history which we for some reason are a lot of room so very fond of me just give you companies the book on my key in for us in the eighteen century with amazing speed from harm the tower French intervention on the other side of the Atlantic up on the side of the colonial rebels against pursuit rule of whom we old course keep it disapproves see the great idea to the French was the perfect opportunity to take revenge on great Britain for its victory in the seven years' war that decision to intervene in the American War of independence tickets the French Mauna Kea over the edge into chaos in May seventeen eighty nine the summoning of the state's general from Moldova representative assembly a chain reaction was on the bed with amazing speed to the complete collapse of roaches in this difference just four years later January seventeen ninety three in the the sixteenth was decapitated but not extraordinary machine and get it economic case more familiar industry take the case of the collapse of the British Empire we have to think of us as a role to protect his process much history is written as if the tradition of public and declining in the late nineteenth century this is quite wrong the center of the power of the British Empire territorial Thompson's impact in the line confessions Winston shuffle in nineteen forty five sixteen thousand equal I'm told so with the all the members of the big three U with Roosevelt and Stalin it didn't seem as if the song was going to set on the British am off on his watch and yet it isn't done within just a dozen years O'Neill the United Kingdom had given up I came back with a barber I still call it karma Egypt Eritrea gone to India Israel Jordan the layout me from the staunchly time to consider all gone the Suez crisis in nineteen fifty six revealed the reality is that the United Kingdom could no longer act in defiance of United States in the Middle East oh pretty much anywhere else for that the end of laws in effect it cause far as I'm trying to dissuade you complex system sooner or later succumbed to some catastrophic malfunctions for all of them in a slight cooling said take me from Arcadia apogee to Armageddon last of the implications for the United States today one of the implications of complexity theory but today's unconfirmed am I think the result this point I'm going to make snow is the one I wanted to remember us a few attention as Waldron which usually happens in most collectors this time due to testing is this it's a real full studio was declined there isn't a decline was just awful often I mean the ol' was the same species with fiscal crises which dramatic imbalances between revenues and expenditures in a pothole is the key idea anyone know they all the hole these crises these dramatic told our associates in the mountains in Coffs ups of the same age huge public debt going to get you for examples to illustrate my point but solid stay in the seventeenth century actually even on a sixteen already as early as fifteen forty three maybe two sides of the formerly revenue perhaps but moment in Spain was going on interest payments on the rocks which for the loans that perhaps the moment he used to finance itself by fifteen fifteen on in total interest payments on these things actually exceeded the quarterly revenue other states the Spanish market was essentially running on extra ordinary financially speaking incentive turns off with silver mines in Spain fifteen eighty four eighty four percent of all the revenue going on interest payments fifteen ninety eight two on purpose when all of you who read tax revenues but going on interest payments he is the gentleman came over the difference in the eighteen century told you that story about the French Revolution what you have to understand is why they called the estates General they called it the cause of the fiscal crisis he is the day here on that day between seventeen fifty one seventeen in CA of another with the use of the retribution interest in Amazon's nation and its numbers rose from a cost of tax revenue to sixty two percent take on Kentucky the grade and possibly other modern period by the nineteenth century is the story debts of those rose from seventeen percent of revenue in eighteen sixty eight to thirty two percent in eighteen seventy one to fifty percent in eighteen seventy seven which was the time of the great awesome and defaults on the way to steal some of them are in Europe the Balkans is and they began to fall apart finally let's revisit the case of posts will already by the mid nineteen twenties discharges interest in Amazon station were holding forty four percent of total government expenditure they radiate CDs defence expenditure by considerable margin it was an accidental nineteen thirty seven the British government was spending more on defense than on interest payments a very late stage in the toolbar reall months given the German and Japanese press also are really the important key when Britain's programs in reading don't know D after nineteen forty five from the actress Americans console and the use and demanded that the XP on it very substantial proportion of Britain's dance was held in foreign parents of the twenty one billion dollars of national debt of the end of the war three point four billion what wounds of drama to foreign investors to foreign producers and that was the roof of the persons GDP in nineteen forty four you'll see the significance of that in a moment so alarm bells ladies and gentleman should be read very lucky indeed in Washington DC but the notices contemplates the deficit for two thousand and ten of more than one point four seven trillion dollars to rent ten percent of US GDP and that's the second year running that the deficit has beaten that day since two thousand and one in the space of less than ten years the federal debt in public hands that's excluding those parts of the debt held by federal government agencies in the non States has doubled as a share of GDP from thirty two percent to a projected sixty six percent next year it just keeps going up according to the Congressional budget office's Lisa's projections and it is using if you interested in this kind of thing is I now their alternative to school it's in our ear which they regard as the morning of the CP likely of the Tucson aren't they produce the US Federal that could rise above ninety percent of GDP by twenty twenty he could reach hundred and forty six percent by twenty thirty two hundred and thirty three percent by twenty four C three hundred and forty four percent by twenty fifty gentleman those figures do not include the boss of unfunded liabilities of the social Security and Medicare system the other night the Tunis trillion audience in a country with the next day is miniscule by the standards of the rest of the atmosphere these fake it sounds completely fantastic but listen to me there's more even more terrifying is to consider wall this ongoing deficit financed could mean for the pardon of interest payments as a shed of the U S federal revenues and this is where it's really cool the CBO projects that intense interest payments could rise from where they are not in his mind a sense of federal revenues to twenty percent in twenty twenty thirty six percent in twenty fifty fifty eight percent of federal revenues by twenty four c at eighteen following sentence Opal federal revenues by twenty fifty my good friend I called a call recently pointed out in the financial Times the white any meaningful measure the fiscal position of the United States today is in fact one of us the mass of Greece the grease is not the global power it hasn't been a major and offer a very long time in peace all I think the real point is on the plants of my lecture tonight is that in historical perspective unless something very drastic is done very soon the US is heading into hops but statement ever actually it is heading into the groove on friendster it is heading into the Kentucky carrot cake it is heading into the post war on terror the fiscal numbers I've given you tonight on the ice has moved on to buyers but in the role of the mystical and it is in power the role of perception his crew it may be more important than the actual numbers because in Imperial crises that is in settlements and all the material underpinnings of the Redeemer its expectations of future are in the eyes of those with a pot and even more so in the lines of the Andes right time I get the impression that the world at least the Western wall basically expects the United States to muddle through and eventually to come from its problems eschew actual famously said to do the right thing when all the loot honest it's been exhausted I know I do with the sovereign debt crisis in your own dough making up the headlines of these the headlines Outback room and growing fears of a deflationary double dip recession born to you all are at historic lows below three percent if you look at the ten year US Treasury so that's a pretty strong incentives is the full Congress man to do nothing I suppose off to school for fall to say thinking about sceptical theory of history this is a problem for the next generation no probs hero recently I was and vices today in Washington to discuss radical fiscal reform of the United States and I was quite excited because I thought it would be like this one which huge it's held in Washington the boat and with ballroom we would be a singer the review Congressman turned on it it's funny accent is no fun it's scary seems really excited to be one congressman who see receive full of high we can do with this problem and is all wrong not to mention to you as well as the fuse young Republicans who are prepared to talk seriously about stabilizing the fiscal position of the United States afforded also critical the trouble is full full EU's complacent congressmen of both parties who think this isn't an imminent Pope as a zero sum game up the Hawks of any budget requests even if I'm wrong my old rival Paul Krugman is right as possible rule and science even if he's rise in interest rates stayed low and middle market is in a coma and the vigilantes golf can take up some other activists recurrent deficits year after year never much less than five percent of GDP even on the administration's optimistic forecasts plus the accumulation as a result me in medicine the interest payments will consume a rising proportion of tax bracket the process I describe to you is independent of any bull market panic his interest payments consume more and more tax revenue with every passing year guess wat gets squeezed in all social security nor Medicare the under formal employment programs the thing that gets squeeze is that discretion we are assuming the federal budget known as defense spending gentlemen it's easy to creep around reality of the US fiscal policy today that the result is available to the Department of Defense will be reduced significantly in the years to come on I'm not talking about twenty fifties I'm talking about the next five years indeed by my reckoning at some point within the next decade the US will reach the price of the points which it will be spending more on dad's office on interest payments it is able to spend on defense remember that Hall the federal grants in public hands he's in the hands of foreign producers on of the acts of faith to be precise twenty two percent he's in the hands of the mom of four C's of the People's Republic of China Dion incidentally from twenty seven percent in July last year not on suspected hasn't escaped you'll notice that China not house the second largest economy in the wall and I expect he also spoke is that it is likely to be America's principal strategic rival in the twenty first century especially in the Asia Pacific region why are they discreetly you haven't seen in the headlines the Chinese are reducing their exposure to US Treasuries I believe as a result of a conscious policy decision to switch to the local militia claims on the US government and in two minds on commodities and preferably the Marlins to produce them maybe just maybe the Chinese of most useful the rest of the wall investors pretend not to see the United States it on a completely unsustainable fiscal course with no apparent political means of self correct these gems ministry retreat from the mountains of the Hindu Kush of the plains of Mesopotamia a small being the harbinger of imperial fall it is no coincidence after all the Soviet Union withdrew from Afghanistan in the honest men Robinson nineteen eighteen on and which was so closely followed by the company's collapse of the Russian Empire in Eastern Europe and in Central Asia what happened just twenty years ago like the events I described to turn the light of the seventeenth eighteenth nineteenth and twentieth centuries is the remarks there and caused an all in happy Rossi's reheated to client and gently fall according to some rip current unpredictable months probably the Hague like all complex adaptive systems that function in a parent who agree to some of our noble period and then quite appropriate the collapse I believe this has profound implications not only for the United States but also to all countries that have come to rely on its directly or indirectly for the groom security this country was born is being discussed and grew up under the umbrella of the British Empire expose for foreign policy has being in essence to be a commited outline of the United States and its imperial umbrella but Mason genuine want to stop the weighting of American pop but by the end brings to an abrupt end the era of US hegemony in the Asia Pacific region light changes to the claimants the population we tend to think of such a geopolitical shift is a perfect its gradual from now there is far from opera to GM preoccupations but history suggests it may no be so slow if I may return to the terminology of the OS is Thomas Cole painter of the course of time the shift from consummation to destruction and desolation is no typical a term the very very soft one we're ready for such a dramatic change in the global balance of power judging by what all I have heard since I arrived here last Friday the answer is no not bloody likely as far as I can see them sign a lease the rarefied atmosphere of the CIS can see him on simply Knowles thinking about it that kind of stuff favorite phrase in this country is not from us amazing gentleman from us lie ahead and soon as the Nazi fiscal arithmetic of imperial to try and try and get along great over the edge of chaos thank you very much the the the the the it isn't Utah in public the team should be about the lesbian of its hold on tight just a couple of the city pools the Hell's sake the staining is about sixteen and the events of the border and Leon the people of related to the house was on high and this is the quarterback a little rest the Elysee bracelets with fonts themselves sin which is what you might get caught in its push people they would need a lot of the things that you are talking about the style only Israelites in the financial sector forty five cynical profits tightly over the top of the distorted three the peak of the of the financial don't get any older some people Shorty you be supporting the Democrats on health policy my hand the garage well enjoy the irony on for those of you soreness most it's huge and me didn't quite hear that the question was about five far I would to suppose the Blues in the United States pressing for a more European up pops a student health care system in United States is you know American health care is that once the most expensive in the wall and has some of the prunes tourists outcomes in the developed world it seems to me as a tool to some cayenne the crease improvements could be made to the system of healthcare in United States I was not too divisive to hear up when President Obama proposes health care reform was one of his principal objectives as president I thought was lost here is the president is going to grasp the nettle of the insanely expensive Medicare system which more than nothing else this event is propelling the United States towards the brink of fiscal chaos in present day the Democrats man is to help with the reform of the walls was held if the thing that made it even works this was some achievement actually because I'm in this must've taken some serious fall so on the north of bites and embrace the Democrats on health care there is the need for radical health care reform about the path to begin by breaking that was all system which originates almost by chance and will hold two of Americans rely on them it was full of private health insurance in a highly on competitive market I was shocked to find plus how much I was going to be paying for healthcare Massachusetts economic harm and was going to be paying I was really stunned to find that the actual policies here is identical to that provided by the National health so this in the UK so there's a problem bouts of certainty on the model in many ways it's the biggest problem of all of the that the Obama administration is completely failed to address the problem I said the mayor they are very few American politicians super fit to talk honestly about these issues Paul Ryan is one of them and Ryan's road map of the radical fiscal reforms that such an altogether more convincing time the health care reform are suspect that your ex but six ers we would improve all since it is that it would above all else into due some rational competition and the system and allow individuals to have health care insurance an old bike since of being employed thanks for the quest I got here on my way there I will quit we have time but I also do short answer is yes I did it spokesman given with them and us actively use hopped on the game and cons the thing China and sustains and on the belts in the military spending most critically for fighting spirits while we all will China have to use so soft constant Hall will China if it is to be a non imperial up after a mild own ministry forced to make that possible composite funny things they say they don't just Iran is because of the exercise of the dishes are some do some depend heavily on that but some I'm positive that the entire population of impulse for history some and cause a rise all was in the face of absence of mine has seen the famously said of the British them on all because of a conscious decision to exercise minute trip of it because commercial imperatives give rise to forms of overseas expansion that nobody quite class I'm a pig a really good in the station with the moments is the way that China's acquiring mostly producing assets although the wall teaching in South Africa but just a buck off of the foreign direct investment is doing in a station right that's actually the way many and costs of a risen in the pants fuck you you get and bowls and trays and use tongs and to buy victim of the season you find that bind them on the open market is pretty robbers because the drastic price keeps changing many say when did these if we own the assets that produce these commodities so they do a new bill portraits of the season Rosa railroads and then you stop by the mines in the next thing you know you're gonna do something to make sure all of these mines all all real rose on overrun by the locals do you send a few more guys a little bit more heavily armed in the last guy isn't next thing you know you're in the AMP our business that's that's how it works and you know I have to get a warning for China it's gonna be damn far of course the centuries of mind and heart gave up is you will know of several give up being an overseas them off after the death of the Omer the Emperor and its re entering this overseas and our game in our time it's a dangerous game it's a game in which the law of unintended consequences plays a review very big role so the question a question on it on I had a bearish it now how much told you what you intend it that in the above mum up for academic therefore door toward third amongst all the sole sad to say if I were wealthy Australian pizza crust I was told ten percent of smartphone food in the form of goal but no more for the simple reason that gold is Dean of the best investment at times quite some like these the time to fight goals as some of you in the room although very well was in nineteen ninety nine when another Scotsman the ill fated Gordon Brown and sold vast quantities office from the Bank of England will close a three hundred something dollars in arms I was a sign of his great business acumen I wish I wish I'd been there to buy I mean like see once upon a virgin for a red cent of the points that you get ten percent is about as much as you both to poke fun at the southern sea goals during a homophobe the North End's deflationary times about things weren't right thanks a lot just falling off your college with China made we see John is the next Virginia are our heater Australia is one of you may recall this up because I see a lot of relatives of prisoners those of the state legal system of government is one incredible fiscal imbalance I was one of the past call this problem both sexes it would take a whole evening to go through all the difficulties that are in the house to grapple with my candy authoritarian regime that inbox on ten percent rotten growth for a period of office yes it's it's grappling with social and environmental costs them so things opening the book Cody imagined having set the US I think about China's less than a CPA from tell them you'll question implies if you know it's so visit Chinese opinion it's very striking that the Chinese government has more legitimacy in the eyes of its own people than almost any other government in the wall even a lion for the fact that it's not a free society I think that tells you something those of you visited China in first ever been in this room house up balloons just to have powerful Symonds nationalism has become in malls and eight China and that is something that is going to help them through the difficult times they of course came through difficult times with amazing success that's just perfect for second on what happened it was a twenty five percent also collapse in exports time I experienced the same shawl the dole the Asian export economy is experienced when the US and Europe went into recession and most of those pasta that was said this will be a disaster for time in fact they completely routed us using stimulus to the far more effective way to the banking system the new nest is and effectively killed the bonus of up of the global financial crisis so I must say I have a slightly more positive view of the abyss to the state will have a positive view of the system that is based on freedom both economic and to let the mystical on freedom but I think one shouldn't when she insists in the West hoping the bill trip hop IQ too many people in the United States fantasize about China crash China crisis a bowl full of pomp this is a totally classic case of what's even more drug use to call it wishful normal thinking that was there was an ad free will now it it was at the top from the educator by enterprising to be secured to say I am we're in favor of competition so that's great on the right ways to get out of place in the first Fridays I didn't have any children or do you plan to have any children I hope so because that will improve your understanding of day ah it Melissa side age such as we giving our children to change the finish of the truth that takes a lot of time but abides by now actually with this check it out of my late teenage with me I acknowledge that there is a serious problem in get out of sight as it was in the spread and the body I am really in Victoria about which I write a lot of material but these days a scheme is a problem prize in the world as extremists is right ball thank you for those two questions first of all it it well sorry so in which he would reveal that I have three children one a boy sixteen one girlies fifties a teenage is the most expensive source on an eleven year old whose name is in far too often and maintenance of law from a court that he didn't know the facts do I intend to have more yes have children taught me a lot about this explains it all the more the the uh the uh uh uh uh uh uh it it it it it I'm a bigger threat than the Asus to prices United States that they are in some ways two sides of the same coin and to of course I'm not the next boat in the room on the subject you know that is everyone must be to give this lecture she'll the round of applause the domain of the the United States fails to address the problems that I'm talking about here then it will not be able to contend with the threat of radical Islam simple case in point the phenomenon and our distinguished guests were disgusting Overton how do you deal with Iran if one of the most explicit the radical Islamic regimes in the walled is intense and acquiring nuclear weapons the United States is suffering from the fundamental fiscal of a stretch how do you deal with Apple so I think these problems are of equal not misused the reason I worry so much about this fiscal crisis is nil because I've been on healthy interest in bone heals it's because I have a healthy interest in the stability of the global order suffice for those two questions it the following on from just the last sentence you told him about the details the approach to the base on a more positive note which you have a three fold ten point plan if I was the embodiment of America are all in all what would be all five of six point plan to withdraw from the eighties before it's too bright more wonderfully American question actually I would give you five or six plus I'll give you two Fresno follow here that's the question what should I do I was a fuss you need to get Paul Volcker to go on primetime TV within the next week explain to the American people and the world of your administration is going to guess the federal deficit is done known to five percent to zero percent over the next ten years you need a fiscal plan and by the way here are ways in which you could do that here the ways in which it sold the Medicare and social security problems through radical reform hear of the reforms you could make the tax code to simplify in order to make it easier for Americans to pay the taxes here the Cubs you can actually make in corporation tax if you could use a federal sales tax about Woody point one but but get a pole vault into a Mensa don't do it yourself get somebody with the credibility of the man who helped say the inflation dragon back in seventy nine to slay that deflation dragon that we turn the face today the second piece of advice to him would be you need a grand strategy right now your foreign policy consists of making speeches in which to say that your mind so than your previous us and everybody should like you more you give him his speech in a whole bunch of different places he tried it and Istanbul he tried entire or even good ones of the Chinese in Tokyo that's not a foreign policy it's more like a Facebook entry so hard a grand strategy how about society will U S foreign policy is going to be in the twenty first century as China becomes two principal run rather than as it has been up until now the principal source of bands of Finance to the American consumer doesn't advance the questions I haven't been asked by the press I live in hope I've known on the likely I'll be back to the question in regards to the dismal thoughts in the radio that I developed government intervention this is a lack of government intervention on the news in the strident and all is the ideal nights of Paul Whiteman and also lieu of the nights I guess is the clips on national TV last night indeed talking about a second round of stimulus and perhaps the door full if required he needed help us to understand out what is it about the limits of paintings and what is it that you understand that there is a limit the painting is in stainless this is these other economists seem to believe that there is no limits community can help us explain why there is this dark cloud on this controversy in regards to a limited or unlimited stimulus thanks the the debate and I've been having with the minute Armaan mites but since I suppose it proved last year this is a basis for peace in the game characters chosen in the press as if to suggest that I'm paranoid about inflation than once a balanced budget tomorrow which is not what I said then and has never been what I've said my argument is peanuts I've tried to make his anointed as the noises States as a fiscal policy that implies it will run a deficit every year from now until twenty eighteen which is its current policy that is known to Keynesian isn't God is a fiscal crisis that is not a policy of which domain on things would have approved their tables one said before he shuffled off this call that he was much less Keynesian than the American consumes that's become ever more true as they come from all things Paul Krugman is a clever man and has made major contributions in the economics of trades but on questions of fiscal policy he seems to me to be in Taree us in touch with reality and not that isn't just my view that is the view can roll call of my Harvard College is a practitioner of the dismal science remember I'm not an economist at the great advantage of helping an economist by the historian so I just look at the rate that you derive from the general theory of nineteen thirty six on what happens when countries to try Keynesian this year after year after year because we've run this experiment before folks it's cold when you discover in Japan is that if you use deficit financed if you achieve our aim to achieve recovery through fiscal stimulus that doesn't necessarily want it to you and off with a heckuva lot of gas plus two hundred percent of GDP in the Japanese it's warm if you go back to the postwar period when we overcame changes remember Richard Nixon world engines not want the government run deficits you're in you're a diesel to pump prime the economy we don't stagflation the gold zero Luke growth we don't double digit inflation soak it up with the story's point of view is that it's a little bit strange suddenly in the midst of this crisis to think that means can save us and to forget all the advances that the dismal science mate in the period after canes is that all only differences seem to have vanished from Paul Rubens mind I think that's what comes of rising in Poland in the New York Times it's a very dangerous thing for a serious academic today the mighty finally time to top it off but I like to know the other side the other side making chairman of its Utah until they're about to start saw that the alien married in the future that it was a useful distinction between the public coffers and have sex all about when the BBC is telling the truth the problems in this country but it's totally wrong and that the problems on the list when a situation where the US right in our division since today somebody has recently become critical to resemble plated they can do it very often what it he demoted stools while avoid plagiarism is right off the ball one day and is clearly a problem in a hole right and historical since you see this is a book being built with whom we disagree up to increasingly political divide which is true the editor of this and the people of its real issues shh dude yes thus reduce it in the wax I encounter are liberal and more less capitalist democracies falling chuckles instead all thought I would mention any names Macbeth opens figures it is huge challenge that you have to reassure yourself it's not the first on the questions being asked the time through the history of Western political theory people are worried about the way in which democracy which fails to generate policy the dish it was the great preoccupation all of the some of the founding fathers that is democracy would give them free reign the United States Woods was to produce a Napoleon and passed a series of many overseas financial field visits to the United States in his famous trip to produce democracy in America he he always made of the shoe this by saying the great thing you have to understand about American political system is designed from idiosyncrasies to be liked the good news is that the artist is a nice tends to find the decision process tends to find its leadership where to find a new legal services is simple said being exhausted my knuckles the beam from of my own country of the United Kingdom we do feeling depressed about democracy is a system remember to keep saying that it's the West Oval office it's up call from holding all those that have been tried from time to time in nineteen thirty eight charcoal was on call to the figure in the country and an even more unpopular one in the House of Commons but in Britain's our needs in nineteen forty when we stood alone he was there so I have a fundamental confidence the PA system for all its many flaws if role that many Oprah says that it throws up sometimes accused will find really does when the times are tough thanks for him I quit working on it if they continue the present he told her that the stability of the next cool enough and Mason's historical reasons of which the Mississippi bubble hopes dreams that was true and we look good the Idol situation causing the sea chest America it's a theme that splits pretty much a bit of a Casey said eighty I said really we aim to take what you really don't mind kinds there's this doesn't use it up of the surest way to August in the size of the economic fabric these to deport parts cause it to the House's school courses of economics from the start of construction up the upcoming one cannot help feeling that we're we have the raw data in with them I will be a priest of this God is the result of exactly that prices in and the Cup really something new God tastes all any sort of sucked or not you the home and on that the boy term there is a easy I think omens on the if it's the only way of getting back to my glass of wine it black orange from Keynes it is really a quote from Keynes contains made you stop and attributes it to lend them and if you read his sense of money on explain where the Reedy came from it will cement and it was not the Bolshevik he said Ruff may the best way of getting rid of the bourgeoisie was to destroy it the Russian currency and indeed the Bolsheviks to just not many people today are worried about hyperinflation or inflation is the endgame of all of this we kind of CIA maybe not so the Chinese Theater in the end will print so where is that these huge debts and thus considerable historical evidence to support the opposition party into the economies of HD to resort to inflation that's true in the case of Argentine on more than one occasion it was true of course in Germany after the post cold war night I could go along it was hard to generate inflation than it looks this is an important point to remember but then he has famously been quoted as saying that if if if it came to this he would fly a helicopter of the United States dropping dollar bills out the windows to stave off deflation but if people's expectations become the fridge the eventing about Michael Watts is they might just find the money to goodness savings accounts not spend it so one of the big risks we face today is known in fact inflation we should be so unlucky the risk we face today is the biggest economy in the world it's over I exit the station of course the following news of course law Society don't depend exclusively on the stability of the current sit there as usual the Bolsheviks pour over simplifying things I want to leave you with this cold what we call Western civilization those of us who are too embarrassed to use the phrase consists of more than just money more than just the capitalist system the bass maybe one of its foundations it also consists all the scientific method testing your hypothesis and trying to prove the rule it also consists in the room all subordinate seeing all of the concerns to commit the concerns of the powerful to the rule all Balkans lol all which holds above all else the individual's freedom on private property rights it consists all the medicine that keeps is all much healthier than myself into being if I'd been born and some welcome a quartet of guidance five five minutes that the life he led from the age of fifteen the public consists of up to the ethic and I think that combines a sense of the need to work for fulfilment with that kind of social obligation to those around us and I hope but in this restaurant tried to at least some of those points and to raise awareness of the continuing enduring importance yesterday as the kind of beacon in its way maybe it's more of a beach in the midst of a beanie that Asia is on the rise and if you are the great coast of Western civilization in the East you have a far bigger responses to visit the walls and you have a hot before but so beautiful it was equally bizarre way of that thank you very much the the the the the this is big ideas from the ABC