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tv   Book TV  CSPAN  March 11, 2012 11:00pm-12:00am EDT

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on her wardrobe, convention speech, in responding to the entire media that was going on in the space of 72 hours. you cannot imagine. i would have loved to have been there to see that in death /. [laughter] >> that is all the time that we have today. [applause] . .
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now on book tv louis hyman looks of the impact of credit cards and consumer borrowing on our economy since the great depression. this is about 40 minutes. >> think you so much for having me here. one of new york's most distinguished institutions and it is a pleasure to speak here this evening. history is more than anything storytelling, and i want to tell you some stories about the history. i want to start with a story that because of the recent past should be all too familiar to you, a story of financial crisis. now, i changed the name to what dick and jane but the story is all too real. it's not just about money it's
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about love. it's about hope, it's about finding your place in the world, it's about growing up. now, dick and jane smith met shortly after they moved to the city with the declarations of love, rings were exchanged and vows inevitably followed, and then they began to search for a home of their own. he didn't have a college degree dick recently found work in the high-tech industry one that was sweeping the country promised a new age of technology offered a few years back had been the most successful in american history but dick and jane like the rest of the country work caught up in this optimism, in this moment which was called a new era.
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though they had a lot of love for and they didn't have much cash so they went to the local bank to see if the to get a mortgage and after a few calculations, the mortgage officer informed them what they earned they couldn't get enough to buy a house of the got an amortized mortgage they paid back the interest and principal every month, but the mortgage officer told them there was something new that makes their dreams come true. some think the smart people use all the time called a balloon mortgage, something that lets them pay the interest of the month and not just two years they can refinance it. now let them buy a house immediately and sleep in the knowledge their household income had nowhere to go but up just like the value of the house itself and when the time came a few years later to refinance if
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he would be there it wouldn't be a problem. they would just get a new loan and of course of a banker knew after they left he had nothing to worry about. he could sleep soundly at night because he knew he could resell the money. resell the debt to somebody else and not worry about it. and so the couple moved into the new house and went to work. jane filled the house with fashionable contemporary furniture that she bought on the installment plan and he bought the ship. his father only paid cash for cars but he got a loan and the smiths didn't have savings they did have a steady income. everything was working out. now unfortunately this only lasted a little while. things quickly began to go badly at this new firm at which she
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works. the orders began to slow down, and then suddenly everywhere all around them the house values began to plummet and the note came due and was the fact they could get a refinance the they couldn't in mortgage officer shortly thereafter dick lost his job and when they came to repossess the house they felt they couldn't sell their ipod, they couldn't sell the notebook, they couldn't solve a stereo because all these things didn't exist, they wouldn't be invented for another 100 years because its 1932. the parallels between the moment in 1932 between the six manufacturing jobs at general motors and michigan and the jobs
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in silicon valley are unsettling but the largest structural similarities between the 1920's and the present are truly terrifying. the smiths and millions of other americans at that time borrowed their way to the american dream and in both eras of the boom credits made possible by the invention of new ways to repackage of individuals in the capitol market and pothier as the credit came crashing down in a financial cataclysm. but the past decade the americans of the 1920's use credit to live beyond their means and the last 100 years inequality would have to particular moments, 1928 and
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27th. it's no coincidence the highest era of inequality has coincided with accepted of lending. why is this? the industrial economy on the mass production does require the consumption and at that moment there are two ways to pay for that consumption either through credit or wages to keep the returning. more than just understanding these moments of inequality, we must also understand the moment of relative equality in the post mortem. the postwar prosperity was to a large extent on the ways in which the federal government responded to the crash of 1929 and the subsequent great depression. now in the last few years journalists have spun many about
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this novel agreed and the bankers supposedly invented, but the origins of the crisis go back to the great depression, go back to the choices were made in the aftermath of 1929 because these policies used to solve the crisis which laid the foundation for both the postwar prosperity is and eventually the financial crisis with which we now grapple with as the new deal order dissolves in the 1970's. we need to recognize the differences between the 1920's and in 2000 we also need to realize what is similar, economic inequality and the need for profitable investment and a dividend housing boom.
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to bore you with lots of macroeconomics talking about ratios and things that are equivalent to a high school algebra class which would be very exciting indeed. i think we should look at this picture. this picture explains everything about the world that was lost and the world that was made. this was a picture that would have hung in a small shop in the late 19th century, and anybody who didn't want to give more credit to their customers. the owner of the shop very easily points to this and says no, i will not sell for credit. what's interesting to me about this picture is the opposite of what we think today. we think of the doors that someone credit, people who lend credit but this picture is the opposite of that story.
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if you look at it he can see a man on left, finn, hair like mine, a man consumed by anxiety now the other one, the fat man as we will call him he settled for cash. look at that. look at those shops, william with envy those chops. look at them. something to behold. but behind their appearances, was the financial practice. this man sold on credit she might lend a little money, what she cannot money but to be paid back in the future to its customers, the grocery store and return would have these ious which pile up.
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on the other hand, to have a gentleman who only sells for cash. and look at him, the guard hand, the flower and filled with money and possibly sushi. i want you to look at this picture not just for the fashion of course but to understand the inversion, the mirror image of what we think today. it's the opposite. when you borrow money from he would write your name in the ledger and he had to lend to his customers to keep them coming back. it was a competition. but he wouldn't make money doing it. he might have charged them a little extra, but it wasn't
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profitable. it wasn't something that he wanted to do. it was something he had to do. it was a bad business decision because it was his money out there, the money came out of his own pocket or even his. no bank would lend him money. he couldn't sell the debt to someone else. loans were not commodities bought and sold like they are today. that is businesses didn't think debt was a good investment. it's hard to think about debt that we as an investment, but that is exactly what it is for those who own at. wasn't a good use of this man's scarce capital. now there were forms of lending for instance the singer sewing machine which we have all heard of. they did offer credit all across
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america so people could buy their sewing machines. now they did it not because they made any money on it and this is why it is a good example, they make money on the manufacturer of the sewing machines. they made no money on the selling and this is different in the world we live today. so, one of the questions is how did this world become inverted? how did this world become the opposite of what it was in the 19th century? that is how did it stop being personal so you could sell your other manufacturing goods? how did that become profitable in and of itself? and more importantly, how did that become sellable and commodity? how did it become an end of itself rather than a means to an end? from being something we had just to keep things getting sold and
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made, and in the process of becoming an end of itself how did the debt ultimately replace the making of real things and this is a story. now, in the 19th century it went from being the province of loan sharks to board room investment bankers, and it's in this moment we begin to see the connection between indebtedness and inequality. the common wisdom is of course we began to bar in the 1970's five seen some of the morality in the consumer lost but what changed in the 1970's was into the american character changed, we were already and always will be in my opinion consumers. it was that the american
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paycheck changed. we stopped being able to pay back what we borrowed. they get paid the 99% wages no longer did so so the 1% got better. and then the 1% with all the money saved up decided not to invest in businesses, which is really the only way to justify that kind of concentration of wealth. workers needed money because they got paid less, and because they were paid less, the 1% to have a welcome audience for their loans. this is an example of what kind of a different world we live in today. look here. from 1955 to 1969 you can see a 47% rise in the real wage. from 1969 to 2007 the period of 41 years there is only a 3% rise
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even though the economy continues to grow. and all those gains in wages still like this and all that except that 3% goes to the people at top of the economy. this is hard to understand and believe. it's hard to believe that it was in that decision that drove the transformation that is how that works. it's the same decision you make when you are investing in a factory or forearm, and one of the key drivers in this moment is simply in that moment it became more profitable to put a dollar back into the consumer debt back into the factory. but the borrowers as well as lenders people wanted and needed to borrow that money. we need mortgages, credit cards, loans and the like.
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places to invest and to be free sellable. he needed that picture to turn upside down. he needed the practice is to change and how people borrowed. so it tells the story of where all of those came from sometimes in the most unexpected of places how debt became a part of our lives. it explains for instance how the inventor of the modern car company henry ford also resisted to his last breath basically the modern car loan and help gm and braces and nearly drove for a out of business and tells the story of how bloomingdales gave us the first credit card and when they succeeded in citibank first sales. help target even been in the 1960's is called dick and tar-jl
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that would be too much for one night and i promised to be quite so you can go out to dinner before the snow comes. but i did want to take a second to talk about this idea of investment and debt and what it had changed in the 1970's to bring us back from the 1920's that moment of inequality to bring back our new regime. so i want to talk about mortgage-backed securities. in the beginning of the book there's new research i did i show how the mortgage backed securities called participation certificates funded the housing boom of the 1920's and this is how he was able to sleep at night after the collapse. he knew that the money could come. but in these mortgage-backed securities are shunned by the
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market because they were toxic assets that couldn't be resold and lost all their value in those mortgages as the house's got foreclosed on so they were backed by the fed and ignored by the market in the 1930's only to be resurrected in the 1970's as a way to channel money into the inner cities with the noblest of intentions originally conceived under the johnson administration, but it was under nixon, actually under nixon's secretary someone named george romney, author of a certain presidential candidate said it was implemented and he rode on the occasion he said on the occasion in the 1970's of this very first mortgage-backed securities being issued this event marked a revolutionary step forward to increase the funds available for the mortgage financing but in a figuring of
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2000, the subprimal lending program to the predatory lenders and unscrupulous house flippers' distraught home buyers. the government found itself unable to sell the houses they had to foreclose on. first denying the problem romney was forced to freeze it in 1971 yet even as the particular lending program ended, the mortgage-backed securities blossomed for higher-quality middle class homes. securitization works as an instrument to connect the demand and a global capital. these new bonds for any kind of house transformed global finance. bypassed traditional banks which could make the loans to allow money to come from almost
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anywhere from small-town banks, union tensions and european investors. all of them could buy american mortgages in your home town. and london on houses at least for middle class housing became easier than ever before. and that was exactly the problem. mr. romney may have stopped the fraud but he didn't address the flip side of the urban crisis in effect he didn't address the flip side of what was going wrong in the economy at all. but the millions invested in mortgages and invested in debt and houses and productive houses with money not invested in business. put differently the policymakers of the late 60's and 70's confuse the call of the prosperity which was good jobs with its symptoms which is home ownership and for 40 years we kept doing the same, finding new
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ways to funnel money into housing and then credit cards while doing little to put money into small and medium-sized businesses. the very things that would have created good jobs. even then the securities and even then as they were being disseminated in our economy they seem confusing and other world leader from the scene of mysterious and that's because they were. nobody knew how they worked. this is from freddie mac in 1984, and these are the unknowns. that man, the cfo of freddie mac on how to use securitization. these new mortgage-backed securities offered something to the 1%. it offered them a safe place to put their money and get a little extra on the side and in this moment supply created demand
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first for mortgages and then for credit card debt furnished by these folks. how could one company start an industry? the help can from the gnomes. the associate. if i saw this it wouldn't make me want to invest in freddie mac securities. it is terrifying. but it would be funnier i think if it didn't end in tragedy. these developments were not inevitable. it wasn't the knowns that made mortgage-backed securities after all. it was government policy, it was business policy and ultimately it was us allowing it all to happen, and in doing so it became easier to invest in my credit card debt of them in small businesses. i want to give you a sense of
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the very first mortgage backed securities and where it came from as well. this is the advertisement from 1969 from the associated mortgage companies that were very proud of getting money into america's ghettos. these are the companies that offered money in 1969, and these were the people will wall street about sold the bonds in the first issue in 1970, names that should be familiar to us now. it's always been the case there were connections of people on the ground and wall street. wall street producing these bonds for investments for the 1%. and for 40 years this is far earlier than we imagined them to begin but even from the get go, they were on stable and they produced distortions, they produced misery in our lives.
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they have never worked. for 40 years it kept during the same thing trying to find new ways to funnel money into housing while doing little to put money into growth even in places we wanted to help. the regulations have made it harder to profit in ways that didn't help the many that only the few were fooled back. profit is chosen over stability. finance is true as an overproduction. credit was chosen over wages. the memory of the depression and its causes were forgotten. but let us not forget again. let us remember not only this recent history but fell long history of credit in america but before we can remember we must understand, and right now i fear we do not understand. the current crisis is not the result of a few people breaking
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the rules. it is not want a result of a few bad apples. it was the rules themselves the were broken. most borrowers followed the rules and i don't just mean deval but the rule of our lives what made for a responsible adult. the thought houses like responsible adults and lived inside their budgets. they obeyed their budgets. the scary thing about the recent crisis is that resulted more from people doing what they were supposed to do then not doing, borrowing for houses, cars, like responsible adults but no matter how crist the budget may be laid out and no matter how you discipline your week to week expenses, when you spend your money on it doesn't discipline the world around you, it doesn't make the economy and more
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orderly place. and as americans lost their jobs first to the working class in the 1870's and then the middle class in the 80's and 90's the workplace became ever more precarious and the budget to cover more meaningless. and then of course even if they followed the budget, the house couldn't be sold because of the crash. americans followed the rules just like the had been in the 1920's and even bankers on the other side followed the rules. there was a predatory lending and there was some fraud but it wasn't just housing for the poor, it was for the middle class. it wasn't just a few bad bankers doing bad things with their money, it was pension fund is just investing interpol littleness, following the rules that got there and will that makes for a good morality claim to say that it was bad people,
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it was also good people just doing their jobs, good people that thought they were helping us to buy the things we wanted, good people following the law, good people fall within the rules on both sides and the rules that need to be changed because it doesn't matter if the rules were broken if they should have never been written that we in the first place. the idea that it was brought comfort but a cold comfort because the system does not work the fact that the rules themselves that were broken should comfort us because if it were just human nature we can't change that but we can certainly change the rule, law, the institution, the morrill prescription that we think about it and decide our economic actions through people do bad
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things sometimes but they will follow the rules and the rules need to be changed like they were changed in the 1930's to bring order and stability to our financial system so that the real work, the work of making things for real people can happen once again. we can bring back prosperity pseudonyms will work for us and not just for them. it's not just enough to stop like romney did what isn't working. we also have to figure not what really works. and i hope this book will be part of that giving us a perspective, some stories to tell so we can understand what really happened. thank you and i look forward to your questions. [applause] if there is no q&a we can just go to mcsorley. [laughter]
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won by the largest landslide what do you see in the new deal that might come to get us out of our financial crisis? >> i think the most important thing to realize about the new deal is that fdr was no intellectual. he was not inconsistent thing there. he tried what ever came across. what is interesting about the 1930's is that it offers us a lot of different experiments, a lot of different ways of thinking about what is capitalism. on the one hand, you have people say we should just spend more money to create jobs. they're certainly was an aspect of that in the new deal and in the book i read a lot about the
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secretary of the interior, the head of twa, a very good liberal. on the other hand, there is james woo-hoo in the up being the head of the fha. he had come out of new jersey, he was like a rich man's son, he was no part of what we imagine the new deal to be. unfortunately for the morality the ultimately had a greater effect on the american economy. was moffitt in the fha that created regulation that channeled private capital into investments. the fha spend no money. it created ways for private capital sitting on the sidelines like it is today to be invested at a profit safely and for social purpose. at the time we desperately needed housing.
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we probably have enough housing right now, but at the time in the 30's we desperately needed housing, so what the new deal can offer zero us both then and we imagine what kind of policies is creative thinking, creative thinking about what we want to do. it's not suspicion to say to the capitalists to say don't make a profit with, don't do that, just spend it as you will. it is more powerful to use a carrot and stick. you offer them a little bit of money. businesses are terrified. they want to find ways to invest their money safely and we can offer them instead of mortgage-backed securities business backed securities and ways to securitized a small and medium-sized business and offer them ways to invest in the things that will benefit americans to create jobs.
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this is what i think is the great deal of before to use policy and finance creatively to channel private capital into the social and that we desire and not say is an either or either the market is free or rashad over us and our open dreams and lives or we tax the crap out of each other. it's not an either or. we can make policies that will work, we can make policies will bring back to make it possible for the small banks not just to invest in mortgage securities investing in credit card debt and other things that produce nothing instead of investing again in our communities. >> that ties in with the question which is what about some of the other types of securitization and mortgages that have developed like
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securitizations medical or more exotic things, do those have the same risks of the mortgage-backed securities or are they more like saying what you are investing in business? >> sometimes when i get this talk people say that is all well and good, but mortgages have something real. they are based on houses and when the loans go south you can always resell the house and we know that houses have lots of intrinsic value that is a lesson you should take for the last few years. so i guess the question is if it's not really about that intrinsic value than what is the risk? what is the risk? and of course on the one hand business people aren't very creative. the security was developed in concept used for consumers and
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then expanded incrementally to other aspects of our lives with car loans and medical debt and credit card debt, the other kind of debt outside of cars and houses are all unsecured there's nothing backing them except for your future income. that is what underpins these loans so why not invest instead in businesses, not crazy start-ups that just came out of the blue that is the venture capital or whatever you want to call it. let's talk about regular business it just means extra money. things to find profit which have standards defined by accounting to make something profitable, things that are the backbone of our economy. so i do think there's a difference between different forms of debt obviously, but i think the distinction one might
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make between secured and unsecured debt is and the distinction made with credit cards, and we figure out ways to do that. are there any other questions? >> you mentioned participation as being a securitized mortgage i wonder if you could talk for a little while about their origins and whose idea they were and did it play a role in the great depression and have taken to the realization they were not a good idea? >> you know what i like about this question it's a history question and i'm a historian they had their origins in the 19th century with foreign mortgages so in the beginning of the book i talk about this, how the finance is made in the west as a way to finance all those mortgages, and initially these mortgage bonds were sold to pay
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for her owning and lending money in the west, and they were owned by two different kind of institutions, banks and then these things called bond houses that directed like mortgage companies today. they would lend the money and then they would sell a bond against the mortgage, and unlike today they could be resold. there was no secondary market. but what happened in the cause of the great depression for the housing crisis of the great depression is that like i said in the introduction, most of the house is had to be refinanced every three to five years, so the balloon mortgages of the 1920's had to be refinanced and they were also three to five years and in the idea is you could go to the bank and get another mortgage which is all well and good as long as your bank can find five years for those bonds. after the crash within a couple
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of years the buyers to the bonds were fewer and fewer. investors were holding back their capital, and because of that, they accelerated the foreclosure rate which made people hold back their capital and for closure which led to the crisis and its only in the moment where the government creates the loan corporation to step in and issue new kind of bonds that would stop the freefall in the market. so that's the connection in the story and comparing anecdotes. the author of the book come its colorful and i highly recommend it. are there any other questions? >> no? think you so much for having me and coming this evening. i will be around for a little while signing books. [applause] thank you.
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>> you are watching book tv on c-span2 and we are at georgetown university interviewing some of their professors who are also authors and now joining us is charles, the author of this new book, "no one's world the rising west and the coming who global turn," published by oxford. what do you mean by global turn with? >> buy global term i refer to a period in history in which the world center of gravity moves. the last global turn is when the world was relatively multipolar but arguably the center of gravity was in the buzz of the tammie and valley, india, china, and then beginning in late medieval period let's say 12 come 1300 began to see
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commercialism rise in europe, new cities were born, you begin to see a middle class of bruges' fauzi and by 17 or 1800 europe was dominant in this of the pendulum had swung from a stone wall come from new delhi from that part of the world up to northern europe, and what i'm arguing in this book is the pendulum has started to swing again and that is because we seapower moving from the west that is to say north america and europe and it's heading east, but it's not just heading east and that's why i call the look no one's world. i don't think that any country regional or model will dominate and we are headed to a world that for the first time in history will be interdependent, globalized, but without a political thinker. >> why do these terms takes a long? you're talking about the term since the 17th and 18th century
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you are talking about the next term that we are in. >> i think this turn will be the fastest turn ever because we live in a digital age, and we are seeing how quickly china is growing, how quickly they are catching up economically with the united states and consequently the degree to which globalization brings back economic change to the u.s.. we've lost roughly half of our manufacturing jobs in the last ten years in part because economic activity is moving so quickly elsewhere but in general to the score overtime becomes tomorrow's periphery. today's periphery becomes tomorrow's core and that is the business we look historically as far back as we can go you see the great powers don't stay on top forever and that there innovation, they're know how gradually moved to other regions
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the less developed and over time they are able to catch up with the core and the of being in a hegemonic position that cycle starts all over again. you are right to say this last term the u.s. and europeans have been a top of the sheep since about 1815 when the napoleonic war ended so we have had about two centuries which is a good run and what we are headed to now is the world for most 21st century of have a dominant player and that's an interesting world not that different than where we were in 1600 when you had the roman empire, the ottomans, the chinese empire, but the key difference is in the 1600's those imperial zones didn't penetrate, they rarely interact with each other, so they can each ago kind of
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according to their own. what's happening now was the urals mushed together. what we do, what china does, what happens in india affects us and that is why the next as can be complicated because we need to agree on a set of rules in ways we have never before. >> charles kupchan, how is it that europe and the 17th and 18th centuries became dominant? >> it starts with the end of feudalism and to some extent, europe's strength was its weakness because when the structure began to erode suddenly use of new towns, small towns the merger and the more populated by partisans like blacksmiths, by the beginnings of what you might call professional people, bankers and then over time the cities became the vanguard of the commercial revolution and economic activity
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and debt instruments, little workshops that eventually become laboratories, they were able to thrive because they pushed back against the noble the become the markey and the church, and the rest of the world the thais are much stronger and they were unable to the table to maintain and there for what you saw in europe, the fragmentation of the institutions, the birth of the bourgeoisie that embraced the reformation which slowly pushed the catholic church out of politics and led to the sort of secular realm, all of that happened only in northern europe but then crossed the atlantic and happens here in the united states, but it led to the program in which technologically and economically the western world pulled far ahead of the competitors, and that technology also allowed them to penetrate the competitors who had better shifts, better navigation, and so by the end of the 1800's, by
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the end of the 19th century the west dominated about 80 plus% of the world, and that is something that is historic lehane unique. >> some would argue that the 70's and 80's when japan was on the rise and becoming a dominant economic power could have been a turn. >> i think though the terms we have seen in the last several decades have been terms within the family is to say along the country's all of whom kind of looks the same as to their liberal democracies and industrialized economies, so if we see what has happened over the last say 50, 60, 70 years, europe, the u.s. and japan have competed to be the top dog. what i think is happening now is the circle is widening. there are now many new cooks in the kitchen, and the western
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model from industrial capitalism, liberal democracy from secular nationalism is being called into question, and that is in part because the west hasn't been doing so well. we are seeing the political polarization in the u.s., fragmentation and europe, japan has been stuck in an economic recession for two decades, and a lot of that is a product globalization. we are seeing jobs leave, we don't have as much control over our economy as we used to come so the broad middle class is in the west and europe and japan are not very happy, and they're saying to their government help me, i don't like the situation, and the governments are finding it very hard to respond, and that's why we see in the united states trust in government is hitting historic lows. that's why in europe we see the nationalization of political life away from the european
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union, and all the while we see other models directly doing pretty well. steve capitalism in china. they are growing at about 10% a year whereas the u.s. is stuck at about 2%, and they are not going to keep growing at 10% but to the success of their model does raise questions about whether we are heading to a world in which no model dominates and which western democracy, western capitalism will have to compete in the marketplace with other kinds of models, china of being one, the persian gulf, another leading left-wing populism in latin america been feared and all of these have the advantages and disadvantages that lead to a world which the playing field will be more levels and it has been. >> you see the china model or the middle east model as an ideological rather than just pure economic models, and are
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people going to look to those like they look to the west in the past? >> i would say that they are a combination of ideology and socio-economic foundations and i think they are hard to untangle so let's take china for a second. what is so different about china's trajectory than the west? as we were talking about a few minutes ago in the west of middle class was a vanguard of change. they've really drove economic growth and they pushed back against the absolute estate. the chinese will state is much smaller than the old marquee of europe because the monarchies of europe tried to keep down the middle class. the communist party isn't particularly communist has integrated the middle class. they've made them stakeholders in the state so to talk to most which panora il's they don't
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want to change the system, they are happy and that raises the question is this stable? of those with the wealth and power to change a brac trolley pretty happy with something less than democracy, does that give the model staying power and if the chinese can make decisions about high-speed rail, investment for the long run the fae five-year plan, ten year plan. in the united states we've a lot of government agencies that nobody is doing the long-range economic planning. that's why i think the china model isn't going to carry the day. it's not going to be the model that everyone ascribes to but it will be one version of modernity. it will have a large place in the world of the 21st century, and the western model i think won't be as powerful and pervasive as we once thought so
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i would say history has been seemingly on one road all heading towards some kind of endpoint that looks like the west. now i think we are starting to see the road take different paths, and that is one of the reasons that this century is going to be quite interesting but also dangerous, because it requires a level of management and the level of consensus that strictly speaking of the world has never required. islamic charles kupchan served on the national security council under president bill clinton and in fact your former boss and his most recent book back to work has aligned in there that hasn't been picked up on much, but he said as long as we are still organized by the states, do you think there is a future where we are not organized by his country nation's? >> mabey but it's a long time
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away and one of the interesting developments over the last couple of decades is how strong the state remains committed by what kind of argue that the nation state is coming back, and it's partly because globalization is extraordinarily powerful. it reaches into countries across borders in a way that is very intrusive, and in some ways those states are basically saying stop, we want more control over our destination. tikrit symbol what is happening in europe. europe desperately needs collective government to stabilize the euro to find its way out of the crisis to what is happening is the politics is drifting back from brussels the capitol of the union to the nation state, and that's because the nation states are getting slapped around by the european integration and by the globalization and saying we are mad and we aren't going to take it anymore.
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they are pushing back and so precisely because of the globalization punctures orders those borders are coming back to life so i think the 21st century will be a century in which the nation state is alive and well. >> if your theory is our predictions for not to be true, is this a bad thing for the west? >> i would say it is an inevitable development, it is troubling in the sense that the west has run the show for quite a long time and it's been able to create an international system in which western values predominate and which they are inseparable from the western interests. we have to prepare for a world in which the west is no longer as dominant as it used to be and in which the west which at one point represented 75 plus% of the world trade and world gdp will now shrink to well below
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50%. after all, the west only represents about 50 to 20% of the global population, so it's troubling in the sense that we who are lucky enough to live in the west won't have as much control, but i think the key challenge for the western world is not to pretend that this isn't happening, it's not to wring our hands, it's to say the world is changing. power is diffusing. how are we going to react to it, how are we going to strike a bargain with the chinese, the brazilians, the indians, the indonesian? because they don't necessarily want to play by our rules but we want to keep some of our rules, so i think what is required is expanding the circle but also having a serious conversation about what kind of norms, what kind of rules can the major powers of different political systems, different values agree upon?
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>> what you teach her georgetown university? >> i teach broad classes and international politics this semester i am teaching one called contemporary debates and international security and that is a class that looks at what our people are doing about in foreign affairs for international security, what are the cutting edge debates? and then i teaching class called grand historical perspective which is a class about imperial management where we start with the romans and then we go through the ottomans and get to the brits, the french, the german, the japanese, and we end with of the era of american hegemony, so it is a senior seminar if you will and it covers a lot of history. >> what was your area of expertise on the six council? >> i focused on principal europe, and you may recall the
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first term of the clinton administration was bosnia, the balkans was coming undone, so i basically did everything but the balkans because anyone who touched the balkans disappeared into a black hole, so i spent a lot of time worrying about the european union, trade relations, nato, and dealing with the emergence of central and eastern europe from the soviet bloc trying to make sure that transition went well. >> this is the cover of charles kupchan's new book no one's moral, the west, the rising of rest and the coming global turned published by oxford. thank you. >> thank you very much.
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an hour-long program where we invite guest hosts to interview authors. this week maggie anderson and her book our black year in it she writes about the year her family spent engaged in the economic experiment of bye teeing exclusively from african-american owned businesses. she discusses her findings and the importance of what she calls conscious consumers some with "washington post" reporter chrissa thompson. >> host: take me back to the beginning. what were the origins? >> guest: >> host: did you have any idea this would become a the?
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>> guest: we had no idea of what would come of this fantastic journey. it's really what you said, the naive company to pass its guilt, that's really how it started, and then when we made the pledge to do it for a whole year, we thought maybe if we were to do this for a whole year the media might pick up on it and maybe we can in inject the conversation we keep having among ourselves and maybe we can touch everyday stories so there's a lot of maybes that we had no idea that number one the media would respond the way it did, the community would respond the way it did and that it is a result in the book that wonderful people like you are actually reading and revealing. so we didn't have any idea what we wanted it to come out of the book because we did it as an experiment so we wanted this to be as academically grounded as possible. a lot of folks have been talking
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about buying black and doing it with our fists in the year. we wanted there to be an experience, something to be lasting maybe students could learn from, so we hoped there would be a book that we didn't know it would be so the folks come together and kept it alive so well and now that we have the chance to make it something historic is fantastic. >> did you keep a journal to keep track as he went along? >> i did a little bit and then i got too busy and by husband was like you've got to read this stuff down. i know it's all in their. but little bo things like the first time i got in front of an audience and spoke at our good friend's church, on a journaled about that. it was a gut wrenching experience to present our little journey to strangers and had

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