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tv   Book TV  CSPAN  July 7, 2013 3:00pm-4:01pm EDT

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science of life," in 2010 and finally just this past year, "gulp: adventures on thal meantly canal." mary roach, thank you for being on booktv. thank you all for joining us, enjoy the rest of your day. .. to discuss why powerful nations and civilizations break down under the heavy burden of
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economic imbalance and why america could be nest. as many of you know, dean hubbard has authored a number of books including the healthcare name, covered in healthy, wealthy and wise. the role of business development in africa in the'll -- hard truth about ending poverty" ands most recently taken on a topic with balance. he found a great partnership with tim kane in the creation of this book. tim is an active entrepreneurs and investor, a having founded multiple software firms in addition -- kane has served twice as the senior economist at the u.s. congress. team and dean hubbard blog at balance of tim also authored a book about
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leadership in the u.s. military hat has been favorably reviewed by the "new york times" and the national review. more information on dean hubbard and tim kane can be found on the information shades -- sheets on your chair. without further addai i'll ask dean hubbard tim kane to speak about their partnership and the back, and then we are going to move to a question and answer session. i have a few questions up my sleeve but i welcome you to start thinking about any questions you might have about this very important subject so dean hubbard, why don't you begin. >> thank you. thanks, everybody, fork coming out tonight to talk about the book with tim and me. tim and i are radicals. i know we may not look like radicals. sitting here tonight, but i think we are radicals. the book is not one of the many
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thomes that explain why declines inevitable for the united states. and in fact it's quite the opposite. we're saying no to decline school for america. the book, though, is radical as well, though, in that we claim we have an answer, a road map to what causes great powers to decline. it's a bit like a clinician looking at a series of patients and spotting common symptoms and then treating them, and then finally, we try to offer some very specific ways out for the u.s. to avoid some of the historical fates. economists tend to get really excited about explaining economics growth. but this book, and books about stumbling of great powers, are different than that. we're about explaining why growth stops. which may sound to many economists like much less fun but is in fact much more
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important. and to set the stage i'd like you to imagine with tim and me tonight, that you're standing in 1913, on the verge of, let's say, of soon happen world war i. the per capita income in today's dollars, in much of the industrial world, was a little over $3,000 at the time. if you were fortunate enough to be an american, it was about a thousand dollars higher. if you were to dial the clock back from 1913 to the year 1000, that number would be $400 per capita income in today's money. but what is more interesting is of you dial the clock way back, to augustus and rome, people were better off, and the is, what happened to rome? this is where historians have weighed in many times that what
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happened to rome was classic overstretch, an empire that had its reach exceed its grasp, and we know what happened. that's not our view. our view is that what happened to rome and what happened to many great powers that we look at, was rather more akin to century jury under-stretch, politics not keeping up with economics and looking inward rather than outward. there was a book 25 years ago by paul kennedy, called the rice and decline -- rise and decomplain of nations. and what caught our attention -- in the new yorker, i raved the cartoons but what first caught my attention in the book was the cover. and on the cover was the globe with a set of people crossing it, and somebody had already stumbled off the globe and it
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was john bolt, the sing dom of the united kingdom. the person beginning to stumble was none other than uncle sam. and guess who was arising transformative at the top of the globe? it was japan. this book was 1987. i was skeptical at the time, and textbooks about -- i think paul kennedy was not alone. there were many economists trumpeting japan0s rise, and this decline good fall comes from the textbook where for massachusetts many additions the soviet union was predicted to overtake the united states. with each edition the date kept slipping. in the 1989 edition for reasons at that time are probably official, it simply disappeared from the text. so even the greatest economists struggle with this notion. tim and i looked at case studies in the book. we're very fond of rome as the
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starter, but we also look at china as the period in which great exploration had china the envy of the world, only to see inward lookingness kill that. we looked at the ottoman empire, which is a surprise to a lot of people, was outward and inclusive and diverse until taken over by rent, seeking from internal forces. we look at japan through the lens of the game of "go." and for those who are "go" fat fanatics, at the beginning it's a blank slate, anything is possible. the end is predetermined. the middle is where the fun is, and that's what we argue japan is struggling with today. we looked at the british empire's decline through the lens of, again, inward lookingness, the failure to make more people british was a small part of the world in 1776 that
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noticed that. noticed many times in the british empire. we also talk about some contemporary examples in europe, and in the state of california. but what we really had in mind in thinking about the book was the contemporary united states. the u.s. is fundamentally imbalanced. it's imbalanced in the gap between its interest in the present and con assumption in the present versus interest in the future, and indeed, a great symbol of this is what has happened to the budget in the united states. if you were to look prior to 1970, and plot the federal debt, the gdp ratio ex-eve time from the revolution to 197 0, what do you suppose the picture would look like? not numbers. just shape. would look like -- [inaudible]
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>> yes. it's war and peace. not just for the united states. i could have said britain or france. prior to about 1970, debt tended to rise in wartime in peacetime, economic growth resume, gdp ray showses decline. after 1970 the rise of very large spending in social security medicare, principally in the u.s. but social welfare spending throughout the industrial world, really increase edit to gdp ratio substantially. where tim and i come down on this, this is not a book about policy or even a book particularly about economics. we don't see that this is an economic problem. we see it as a political problem that we have a system, and indeed each of these great powers had a system, that was too polarized to deal with the problem that was right in front of its eyes. i promised you we had a quick
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way to get out of it, and it's really about three things. the standard economist joke, which you have to understand to be able to get out of america's problems, the game of basketball, and reading the odyssey. i can look at you all and tell that economics was your favorite class in college. just have that look to me. and you remember the classic economist joke which tim and i ahead because we're economists but it's instructive. the classic joke is, of course, the economist, the checkist, and the physicist, are marooned on a desert island, and a can of soup washes ashore. and the chemist says, let's just eat it up and -- heat it up and it will explode. the physicist says we'll beat it open and the economist says, assume a can opener. the rope that's important is we
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can't assume a good government. too much of our idea power in thinking about public policy, is the political process is essentially fine. we just need an economic answer. we think that's got it completely backwards. if you can't assume a good government, that may mean you need to change the rules. well, hearings what basketball comes in. basketball provides us a little bit of competition for this event tonight, but here's what basketball comes in. basketball in the 1930s, nearly died. and it nearly died because in those days there was not ale shot clock. there was not a three-point shot. and in those days, they had what was called the tall man problem. the tall guys hung around the hoop and dominated play. and it might be interesting for the players but not terribly interesting for fans. enter a man named howard hobson. howard hobson was a coach of a team in oregon at the time, but
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he did his ph.d at columbia, which is how he comes to our attention. now, you might be asking, basketball coach did a ph.d at columbia? absolutely these were times in which that happened. what howard hobson figured out was that the answer to the tall man problem was the three-point shot. wrote a thesis about this. it was tried out in 1945 in a game between columbia and ford. columbia won. it take took a while for the three-point shot to make it to college, and then the nba, and making the career of one michael jordan. changing the rules. the question is how do you change the rules to fit the problem? and here's where the odyssey comes inment one of our favorite story in the odyssey is the story of a siren. and you remember the story of the siren. how does odisya handle thing -- odisus happening? they put wax in their ears so
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they can do real work. he is lashed to the mast so he is able to hear the song of the sirens but not respond. in order to reform, sometimes you have to be lashed to the mast, and we talk about a number of budget rule reforms, and indeed what we think is a novel and better way to have a real spending limitation and a real balanced budget amendment we can come back and talk to. but i'll just say, this book is really optimistic. when i talk to students on campus about it the other day i showed two pictures, and one picture was of agatha christie and another one want ben franklin. for agatha christi i had in mind her book "and then there were number. " in her books, there's a group of rich people doing things at a
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mansion. then mothered happens. you might guess that pandemonium wrecked out. not a pleasant thing to happen. but soon people come back together, but then another murder happens. and then another. and so -- and then there were none. the country without change is on agatha christie's path. but the path we think is more likely is ben franklin are. at the end of the constitutional convention, franklin commented he had spent much of the time watching the back of george washington's chair, and on the back of that chair was a sign, and franklin said he had been very curious to figure out whether the sign was rising or setting, and he concluded that it was rising. we think these case studies are cautionary tale but they're not a tale that indicates the sun is seeing. we think the sun is full rising. tim? >> gosh.
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i'm caught up listening. we've dune a -- done a few of these, talking about the book, and agatha christie is new. so you've thrown me, glen. we have copies here and i wanted to mention harriet and bob are over there selling "balance." so thank you for being here, and as glenn mentioned, i'm a spurs fan, and tonight the spurs are in a decisive game four, maybe not decisive but if they win it's a big deal, and i think anyone else here who is a spurs fan, or maybe heat fans or just fans of basketball, the spurs set a record with the most three-point shots in an nba finals game in the game the other night. it was just a treat to watch. just a highlight reel. amazing. just different places around the arc, and to think that game wouldn't be possible if it weren't for a wise man from columbia. it's pretty interesting.
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and as we say in the book, michael jordan probably doesn't know who howard hobson was or is or hadn't heard the name, that made him in a way the greatest player in the nba history because he probably wouldn't have been the greatest player without that equalizing rule. the basketball gods at the time were saying that tall men problem has gotten so out of control, that we're going to need to cap the height and if your higher than 6'6", you can't play. play volleyball. that's not a smart way to deal with the problem, outright discrimination. leveling the playing field is a smart rule, and as glenn has said, america needs a three-point shot. we need to think about our rules in a way that constrain the playing field to get politicians back to making wise choices. and in a sense that's what balance is all about. we say -- i say this as an ex-military officer -- we tend to look at history at the air force academy, the other military schools, as great battles when great powers fell.
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but the economists said, wiped the clock become a century or two and you can see usually the power that loses is the power that has the weaker economy. rome was strong for so long, it became economically imbaseballed. so by the time the barbarians at the gates were bursting through, the fate had been sealed by centuries of stagnation, and before the economic imbalance was political imbalance. that's why tim and glenn's plan about how to fix the budget, there were too many blue ribbon panels already, and we see them not succeeding. not because they're democrat or republican. a lot of smart great democratic economists with good ideas how to bring balance back to the budget. at it just that the politics can't work together. and one of the lessons we applied was microeconomic game theory, where people can make rational choices with what look
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like irrational outcomes and the story of the prisoners dilemma. you have two prisoners separated and it doesn't make sense for either of them to confess unless they're told the other one might confess. but when they're by themes hey head -- by themselves hey have a better outcome if they admit what happen, even though it ends up being what looks like a rational, they both go to jail for a longer period of time. when we have two extremely parties without any entrepreneurial center, which is our politics, that's a political prisoner's dilemma. we're locked sunrise imbalanced eequell libup where where is find unpricingly for lower taxes and one for higher spending and they're actually both okay with the other solution. neither one will stick their neck out and say the republicans won't really lower spending and the democrats won't really raise
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taxes even when they have complete control over all chambers of government. you don't see balance brought back. so there's this dysfunctional, equilibrium. we focus on how to work on that. but one i've taken to describing the books, it's like a peanut butter and jelly sandwich. there's boring bread on one side and the other side and there's really good stuff in the middle. we have eight really fun case studies, and glenn ran through a few of those. the one thing we wanted to apply to hoyt that we think sometimes you don't see in the foreign policy journals and the pundits on tv, when they say, great power -- super power, or soft power. they have meaning to those word but they don't have measurements and what economists have done from adam smith, even a hundred years before adam smith, when william petty wrote the book
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"political arithmetic" and politics in britain talking about other power in europe. these guys don't note what you mean. there was no such thing as gdp. that wasn't invented until the 1930s or '40s. petty said we need to bring numbers, weight and measure to assessing nations. and so then began this idea of looking at trade flows as a measure of power. exports. currency exchange rates. that was perfected a little bit then by adam smith, who looked at, it's not just the amount of gold that a kingdom has. it's the productivity of its people, of its capital, land, and labor. and then gdp was developed. what glenn and i wanted to do was make an intellectual contribution with baseball to how we do economic measurements, to provide numbers to the notion of what is great power. an idea that has been thrown around, we think a little bit too vaguely, and leads to the
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pundit class saying, look out, here comes -- fill in bogey man. the soviets. here comes japan. here comes china. we analyze 50 articles by leading newspapers about the economy of china. to see how many times they mention growth, how frequently the phrase gdp or anything referencing the size of the economy, is measured, and what's really important to economists, gdp per cap tacoma or productivity of the people inch those stories on the chinese economy in "the new york times," the waugh paul street journal," "final times" growth was mentioned in 80% of the articles. pretty good. the others were almost lot mentioned at all. gdp was mentioned 11 times out of 50 articles. gdp per capita, six. so we're worried about this great power, they're growing at
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10% a year, we're growing at 2% a year itch think boast of us want america to grow faster. and we think we have some ideas about that. but my daughter's growing at 10% per year. she is six years old, and i'm not worried about her. not for another ten years. but need to put these things in context. so we have a measure of power in "balance," chapter 2. i think it's exciting. what people tend to focus on is the eside which is policy prescriptions, how are our politics broken and how can we fix them? glenn pointed out the only appendix in the book is a one-pain -- one-page proposed balanced budget amendment. and one of the reasons why we are optimistic in this chapter about california -- because the fate of america isn't just the federal government's budget. it's the 50 states. they also have massive budgetary problems. california is the golden state. it has a gdp per capita higher
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than the rest of the u.s. it's one of the most powerful countries in the world. we have it as ten. the tenth most powerful economy in the world. even if you just look at the military bases, they have that, too right? but california suffered from some political imbalance. they jerrymandered the congressional districts. there will no moderate districts left. they had set really strict term limits. and one of the problems with politicians is, they have a very short attention span. and i don't mean that as a criticism. they have to part of the business. but when you set up a term limit it goes your gut. i can imagine talking to my aunts and uncles and cousins. they get so angry at politicians and seem like they're nonresponsive. throw the bums out. clean house, set term limits. these are individuals who are very hard-work, who already by definition have a short attention spane you tell them
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your career can only be six years long. they're not going to care too much about what happens in year eight or 12 or 15, when the consequences come do on their actions. so shortening their consequences and ours are longer, bad idea. which two states have the worst fiscal dill maples in the us? and which two states have the shortest term limits on their state legislatures? it's not illinois. shouldn't say -- this fiscal situation. they're beside. economic cliff i think you might say michigan who has had a rough decade or two. michigan and california had the shortest term limits in the america but california just electric lengthened theirs and don't heavierry maundered districts. they're set by a nonpartisan board. so there's hope for california, and if there's hope for california, doggone it, there can be hope for america, too. but we have great stuff on rome, on ming china, and then some of
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the themes we found -- we were asked earlier -- maybe i shouldn't give this away -- >> go ahead. >> we were asked which great power most resembled america and i tell you, when glenn and i talk about which great power should we include, took great courage pick those eight because we were literally called on, you neglected rome, how can you write bat great powers and not mention great britain. there were some things we didn't know about a few of these. the ottoman empire was not my area of expertise or glenn residents either but we knew they had to be talk about. the thing with great britain that is so funny is, great britain we didn't want to include. neither of us think great britain really declined. it's like the agatha chitty murder mystery. you can't have a murder mystery if there's no dead bodies but we knew we would be criticized.
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but we talk about their horrible mistake of being so expansive, and they set up this tremendous colony in the new world, and then they decide not to let those subjects become citizens. now, they brought in scotland into parliament before the american revolution. brought northern ireland into parliament after the american rev law enforcement why didn't they let the americans be recognized with citizens and representation in parliament. adam smith called for this in the wealth of nations. the prime minister called for it, and didn't happen. great mistake. so, they could have been maybe less imperial and more british with what they had and would still have what adam smith would be the most powerful country in the world. so when it comes comes to that question, is america next? well, yeah. it has to be. by our power definition this is
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the most powerful economy in the world and will be the next to decline, about it doesn't have to be this century or next century. let's make it five centuries from now. that's within our hand. two mysteries you can look for in the book. one is who is going to be on top in 2030. and another that might surprise you is why citizens united is one of the best things that happened to the american political system in a long time, despite what you may read in the news media. >> thank you so much for what you shared. tim, would you mind sharing a little more from the japan chapter? there's quite a bit there that is also relevant to their interests. >> sure. >> nothing is boring in the book. there's no white bread. all -- >> all peanut butter and jelly. sorry. >> that's good.
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so, the chapter on japan, for me, was personal because i was stationed in japan in the military, and i'd been stationed in south korea. so, i had a perspective on how economies grow when they're trying to catch up. my dissertation was about that. what has really y been fascinating when you look al japan's trajectory, the predicts and assessments were that japan caught up to america in the 1990s, which were wrong. the good dat we have at our fingertips now, and data called you can compare one country's incomes in terms of what they can purchase. japan never broke past 90%, and it settled into an 80% ratio. its gdp per capita of the world frontier and america is considered to be setting the world frontier as far as gdp per capita. that 80% level is the same level
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that britain is hoverer around for the past 50 years, and france, and germany. so, there's this equal -- equal libbum, and the reason we wanted to work together, we're both scholars of entrepreneurship and how important they for creating new technology, that pushes that frontier forward and also creating jobs-it turns out. follow our economies and what japan developed was this wonderful developmental economy, with big toys companies and big government and industrial planning and that worked wonders and shocked the world how fast you can grow when you follow that model. but it's a catch-up model and requires you to be open to the world to export and borrow technology from the world but you don't need entrepreneurial class, and they don't have that which is in japan. so if wasn't to make a transition of successful. >> moderator: toll growth and innovation model you need an
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entrepreneurial class and this where is we used in the "go p.o.w. metaphor. japan has a great game strategy. fuseke but it was so great it was copied by many other country, diffusing across japanment a set of rules, three-point shot. but they need a new fuseke, new strategy if they want to breakthrough the malaise and the stagnation. don't cry for japan. it's a wealthy economy. many world leading industries. they're way ahead in robotics. they've got demographic challenges, but institutionally, i think they need to take a second look. >> they're also folding in. they've been very focused internally. dean hubbard, in the book you postulate there's been a rise of rent-seeking. >> that's about special interest groups trying to manipulernmentn
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advantage, and one of the things you see in great power declines is typically the rise of rent-seeking. when i was speaking earlier i alluded to it in the context of the ottoman empire that started out with wonderful intentions but wound up taking over, and in the case of the u.s., two elements of rent-seeking. one is the fact that some of our social programs are growing so large and creating constituents around them, they run the risk of crowding out everything else the government does. the ability to defend the nation, to educate our children to conduct basic research, and then there's enormous political rent, seeking among the political leaders. the extreme polarization in the congress relative to the american people, makes it very, very difficult to get anything done. and the way to combat that kind of rent-seeking would be to have much more political competition, which is one of the reasons
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actually the citizens united caught our attention as actually being very pro competitive to use economic language. >> tim, do you want to comment? >> i was fascinated by the corps. i heard of them from a military perspective. one of the great things about the ottoman empire it was incredibly long-lived, i think six centuries. so they preserved so long because they were servants. they were slaves to the empire and very committed to preserving the structure, but what we found in great power after great power was that a servant class would become corrupted over time, as strictly disciplined as they tried to be set and have the rules be firm, they were only recruited from foreign lands and converted, usually christian lands, and eventually hey wanted to have families and children. so finally somebody acceded to that and that's where the notion of, they began to become
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self-serving, got their fingers into industry and trade and then monopoly. the question glenn and i asked in referencing the roman empire which had a guard to serve the emperor and then king make you'res. who are the servants of the public that over time are becoming perverted and serving themselves? that's a question we threw out there to think about. but that's where the special interests, the most dangerous special interest, is the government itself when you lose the seasons serving the people. so that's what we need to stay on guard for. >> so, it sounds like there's need for radical change. are we in a -- is the u.s. ready to face radical change? are we in a position where we can embrace that and be prepared for that or still very cautious?
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>> you know, don't know the answer to that question. i told you we're radicals. but i think that the american people are far more prepared than our political leaders are, but the problem is -- this is why rome was our very first chapter, not just chronologically -- decline doesn't happen quickly so in terms of perspective rifting -- riveting the public's attention it's more like a slow are moving cancer then a heart attack but there's more of a scone sense sunday today for a change and the way to mobilize it would be in the form of rule changing. not very sexy, change rules, but that could move it much faster. so i'd love to be table to -- to be able to say there's a groundswell for change but i think that would be an
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overstatement. >> american people, whether you're a democrat or republican, this book doesn't have answers for you that will make you happy, because it's not democrat or republican economics. but we all agree that our politics are broken and we have to find a way to fix them. what gives me hope is the founding fathers established the constitution and gave us the mechanism. you can amend the constitution. we've done it 27 times. and we think when you look at the budget imbaseball, that's the balance we're wrestling with. the monster that has been released from pandora's box or whatever metaphor you want to use. legislative constraints have nod worked. graham rudman didn't work. so we can find the democratic will power to do these things but they're not a fundamental enough constraints. the ropes tiling o political leaders the mast are not strong
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inform. that's what politics are, restraining government, how long the terms are, and this constraint has broken and the 28th amendment will be the solution. probably won't happen next month. glenn and tim have this great idea. but i think in the next decade might get done. >> can you speak more about the amendment? >> sure. glenn? >> the 28th amendment we have in mind is very different from what people commonly call balanced budget amendment. economists, including us, have been very skeptical of proposed balanced budget amendments because they would exacerbate business cycles, forcing the government to raise taxes in bad times and they're hard to measure because they focus on a deficit. rather, why don't you set a spending limitation where spending is capped at a moving average of inflation adjusted revenue. now, the reason we put it that way is to be agnostic as to whether you should raise taxes
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or cut spending. i disagree with some on the right who shay we should do everything possible to avoid a tax increase to me that's -- this is a democracy. i'm up -- it's up to the american people to decide that. what we can't do is promise ourselves more we pay for, and so you can imagine something that work that way ask then hat universal acceptance. so rather than having politicians define, you can have any conception you want. just has to have a supermajority and has to escalate. so three-ins becomes four-sixths and five/sevenths, so we think real spending limitation could happen. for those who say that kind of spending limitation sounds odd, that's how universities. look at columbia business school. our spend out of an endowment
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goes exactly according to some moving average of the value but not an unusual notion at all. >> the early draft of the balanced budget amendment in 1982 almost became law, passed the house but came one vote shy of passing the senate and one ten years later that passed the senate about not the house. the earlier versionmore balanced. democratic and republican support, but became a republican idea and they layered on. the only exception for one year's imbalance would be a war. well, then people said, wait a minute, wouldn't you just -- couldn't you get a president who has dictatorial powers who says we're at war and then sort -- that's a bad exception to have. so you don't want to define it. we don't know what the crisis will be in the future. i don't want to be the guy watch something center saying an alien attack is not a war. we don't want to say what the constraint will be in the
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future. it's an emergency. it has an escalating majority clause it in but the drafts we have is very different from the one republicans have been pushes. it's one, glenn and i were first thinking about it, what are institutional changes we want to recommend? how about the bba. and i think glenn might have said, isn't that one of those whacky ideas that is bad? it is if you're required to fix your spending this year to what your income is in the same year, and you get -- you lose your job and say, sorry, kids, you can't eat this year, there's some years you have to bridge-gap gap. but by the same token what a balanced spending amendment would do is if you get a big raise you're not going to change your moving average of your spending constraints. so i think it's written in a way that lawyer -- larry summer might think it's a good idea.
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we did, too. but this new one is politically neutral and returns power to voters. >> so at columbia business school we spend a lot of time talking about entrepreneurship, and i know that you teach entrepreneurial finance, you're an entrepreneur, and that very much has been part of the solution for our economy. do you have an example, either current or historically, where entrepreneurship has been represented in the political system that might be sort of inspiration for us moving forward? >> yeah. i'd love that. i think it surprised us both when we applied the week lens to the political system and went, wow, this is a duopoly. two strong parties who have not only naturally -- a market where there's two parties and a political finance law that says within take all but it's a
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duolopy that has taken over the regulatory apparatus of itself and made it punishable to be a political entrepreneur so starting in the 1970s, right when hyper partisanship takeoffs and when fiscal balance goes crazy. that's when there 'twas law passed that said if you wanted to give money to a candidate, more than a thousand dollars, you had to funnel it through one of the two parties. the parties got a lot stronger and this notion of a party line became a lot stronger. so if you were a candidate with some unorthodox ideas, and we can't predefine that whose ideas are. some are bad. but some might be like that political entrepreneur, abe lincoln where the two parties then, the whigs and the democrats, we both proslavery parties and if the laws we have applied in the 1850s there wouldn't have been an republican party or an antislavery revolution, no civil war.
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abe lincoln would not have been president, i think what a tragedy, we have political entrepreneurs who want to raise their voice and so infected the thinking of our regulatory apparatus they can't get their nonprofit status approved. so, yeah, we see a problem with the government and the matters being in bed together, reinforcing that duolopy and we need political entrepreneurs. >> this is where citizens united comes in. what it does is allow the giving to nonpolitical party groups of large amounts of money. on the right and the left. and i -- while i personally am not a tea party fan, i celebrate the fact that we're get to get ideas from progressive groups on the left their tea party ton the right who can challenge the or know docksy of the democratic and republican parties. doesn't have to be these two parties, of -- or at least these two with their current views and maybe competition is a good
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thing. so the next time you read this next media bashing of citizens united, think about the pro competitive element. >> with the thought of competition as a good thing i now open it up to questions, and we have a microphone. yes, sir, please. >> i guess i want to -- a lot of time change is spread by a crisis in the country, we're good when our backs are against the wall, and other times technology advancements help. how do you sew those two playing in a role of your view of the future. >> it's a great point. where the country has riz ton great which will -- risen to great challenge have been economic crises and wars. one of the ropes we were follow the rule changeses, if i can be really candid to almost manufacture a crisis. politicians have a very difficult time in dealing with long-term present value issues. they need a crisis in the here and now and we may have to manufacture that.
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if we don't, the problem is, over time, the able to dual the things the american people today take for grant will simply kim diminish, so i love to believe a crisis is all of saud, but it's unlikely without a rule change. >> i think one of the reason the spurs are going to win is -- >> you and the spurs. not giving it up. >> yes? >> serious point. the -- greg popovich is a great coach and an air force academy grad. learned from other teams that faced lebron james, the crisis doesn't have to be an american crisis. we can learn from rome and learn from ming china but we can also learn -- i hear this from my mom and dad -- they're completely alarmed by seeing riots in the capitals of europe. so the crisis today, the biggest crisis, is what is happening in
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these countries which are advanced economies, which are having their own fiscal imbalances. they're going to hit the wall. they are hitting the wall. at least a decade before we do, and luckily there's still diversified, that metta federalism where they have a set of different institutions in the 17 countries we use as our europe composite, eve one has a different model. the nordic supermodel, the southern european supermodel, and some of those are thriving. the nordic companies are thriving. they happen to be more economically free. so, we can learn from that crisis. i think we will. my parents are learning about this. they've got certainly their preferences. think american voters will pay more attention to what happens in europe than they will to balance but they can learn from both. >> and basketball players who are retiring and then eight days alert being selected to be the coach, that's entrepreneurial
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model. >> absolutely. a lot of teams are looking for coaches and i just want to say to anyone hiring, an economist as a coach maybe -- >> excellent. we have another question right over here. >> just curious, why you treat this as a purely political problem and -- if everybody agree0s on the prescription, just matter of getting the politics out of the way and maybe a balance it budget amendment can help. my impression there is is a range of opinion how significant this issue is. if you read krugman he said spending is the lowe's of our problems. maybe down the road gradual adjustments but the income distribution is another issue. so the politicians are reflecting differences of opinion of what most critical economic pron lem are for -- problems for the next decade. so it's actually an issue of intellectual disagreement over what the right prescription is.
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>> certainly disagreement over prescriptions that i think there's a continuum of economic use of all -- the notion of fixing the problem. to illustrate what europe and the u.s. are suffering through now is things like sequesters and debt ceilings in the united states, and hair shirt economics in europe, because politicians can't do the right thing which is to address he long-term problem, and on that i agree with paul krugman, much as it pains me. but it's that difficulty leading to trouble and if you had 100 different economize, 100 differenties, all of them can be consistent with the notion of stabilizing the lon-term problem. we're not at vow indicating ind- advocating a particular system. we're saying let's get a system that allows those ideas to come
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to fore. the problem is that the politicians are unable to deal with and it's not an american only problem. europe this same way. so what what we get is this hair shirt that angers the left because we don't have the courage to deal with the future. >> ever seen a hair shirt? >> my next gift for you. >> okay. one more question over there. >> when you talk about balance and stuff like charles murray's book that says we're having a wealth gap, income gap, education gap. does that play into this as well, that we have to figure out -- does that come into the great powers as well? >> we have accused of not talking about income inequality in a separate online question. we read the comments people make, and really good comments.
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and i think it might be the television interview i did once that was four minutes long and afterwards somebody said you didn't talk about income inequality or the gold standard. i said i really wanted to but that darn producer. but, yes, sometimes you're just limited by what we can do. and to glenn's point, the very first thing he talk about. 100 years ago, 1913, the average income the world was $3,000 a person. now here in the u.s. it's closer to 40,000. there is still inequality, and i think most economists agree that growth is a big part of the solution to that inequality. but still, if you look at median income, they wavered but have gone up tremendously. the world has never seen this sort of prosperity. so, i think that's what makes us optimistic, and today robert voelker passed away and thinking
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about hard data and we should appreciate how wealthy we are, because when glenn and i approached this, neither of us were very wealthy. both from relatively humble backgrounds, and it makes us so amazed by the opportunities this country has given us. >> i think toker point about income inequality, there are two kinds. and income inequality that comes from rent-seeking as opposed to the natural outcome of market forces, is deeply troubling. we talk about that in the book and here's a case in great power decline, this massive rent, -- rent-seeking can lead to that inequality. >> two more questions. >> i want to start by referring to the famous philosopher pogo, after all, we he met the enemy and he is us. i'm a child of the 60s, received motion of my education in the 60s and now in my 60s. and i see myself as part of a
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generation which grew up thinking they could have everything we want. we have politicians who gave it to us. we have been able to borrow our way because the rest of the world has us as their standard currency and that allows to us basically have everything. we have a cognitive dissidence within our society such that people want to have everything but don't want to pay for it. i think the system works well. reflect that cognitive dissidence. the problem is more inside us to understand the things you brought up today. the 1880s strike me as a time much more similar to what we're experiencing now. this idea of having lobbies and rent control. we had it in those days days ano had it in the formative period between 1814 and 1859, before the self war. >> and your question to the speakers? >> well, the question how one -- i'll talk about the budget. we don't have a long-term budget
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for infrastructure or armies. we have a budget, unified budget. and if one talks about a budget amendment, how does one make the distinction between those things which the government can and should do for the longer run and those things which right enough they don't do on either -- >> can i speak? >> sure. >> one of the trends we saw there wasn't just one country that was a parallel to the united states. every great power, we saw the center consolidate its authority, sovereign authority. ancient rome under emperor augustus had a very small bureaucracy, much like a house staff. the cities were independent. and when the united statestive places the sovereign authority of the 50 states we'll have, one health insurance system, and one set of minimum wages and one speeding limit, for example. and the states can't be responsible to set their own
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minimum wage? that what raises the alarm bell, the people look to the president to solve every problem, and we idea to not do that. the constitution was established with the tenth amendment to have the state and people hold on to the power. the document is written to constrain the sovereignty of the u.s. so we have gotten drunk with the notion the federal government can solve everything. that's a dangerous amount of sovereignty to give up to one location, and it worked for a while, for maybe a century, and then what the chinese called the bad emperor problem. they get one emperor who has all this power and says, we don't need free trade anymore because a group of advisors, said the merchant class is threatening our power, let's cut off their legs and end free trade. that will work. oops. so, let's not consolidate power too much, to your point.
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>> to your point of decentralization, switzerland is a very decentralized nation, and it also a mission with a much lower jeanie coefficient than ours does, meaning it's more equal than our country. what in terms of income. what does that say in your minds when you compare a states like out and -- like utah and tennessee compared to new york and connecticut, the highest coefficient. we have big government a lot of inequality, less government in switzerland and utah and tennessee, lots of equality. what does that sale sai about the role of government in the future? >> i think glenn -- >> you question is so amazing. i was going to leave it there. it does suggest that remedying inequality is harder than it sounds and the better thing is to go at the foundations of the inequality itself, mainly, the
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opportunities for the least well off among it us. tim and i are working on another project and tim mentioned lincoln. lincoln impressed me as a father of the republican party not baas of his radical abolitionism but his muscular role for the government in empowering people. abolition was a polar example of that but lincoln was for the railroads, land grant, colleges, massive muscular empowerment and that's the inequality medicine. >> the most powerful thing in our country to empower people, in my life, was public libraries. i'm so thankful for the libraries out there and it breaks my heart when i see libraries closing early on saturdays, or closed on sundays. it breaks my heart. and that we can't find money for that. and i think to your question, exactly, and glenn said this earlier, when you see rent-seeking, what eisenhower called the military industrial complex.
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the government makes money and doles it out to certain companies with connections with people in power, and that doesn't filter down. that doesn't get to the poor. so, a great education system and a diversified education system where each state can set it own standards. we're centralizing again. you can always buy a copy of balance and give it to your local public library. >> there you go. last question. >> i have a quick comment and then a question. i saw the three-point shot as interesting with the conversation but i'd argue that the most important rule change in basketball was, in the '30s, african-americans were not allowed to play, and then its changed. and that has become global. so, the best player from the spurs is french. the best player from the spurs is from the virgin islands, so it's very, very different.
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>> argentina. argentina. come on. >> and the last thing i want to say on that, is that the very best players in the nba have not been known for their three-point shots. lebron james is not the strongest three-point shooter. >> but we needed a rule change that originated at columbia. >> but last year i thought it very important book called why nations fail, which i'm sure you read. >> we talk about a lot. >> their thesis was more about like mason -- inclusive nations fail because they're extracted. so -- [inaudible] >> well, it's just -- saying in the book by -- fabulous book called "why nations fail" the difference is that the problem in exclusive and extractive.
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you can draw that distinction in moments in time but many case studies were at varying times inclusive or he can tracktive. the questiones what kind of political process led to that within the country. so we view as explaining that. what we have in common, though, i think is the emphasis on competition. the inclusiveness. whether it's for market forces, where there's competition in the labor market, capital market, is the haulmark of success -- hallmark of success. one good thing about our book, it's shorter than "why nations --" >> so we learn from war games that tic tac toe is the wrong game and that "goes" the wrong game. what this right game. bridge? that sort of teamwork? something to think about. >> yeah. i think "go" is the right game.
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have to constantly innovate new strategies, but basketball is always the right game. >> on that note, thank you both very, very much. [applause] >> now, the author of games without rules, the often interrupted history of afghanistan, and the untold afghan story. the authors discuss the past, present, and future of their country. this hour-long event was hosted by the commonwealth club of california. ... >> good afternoon and welcome to today's meeting of the commonwealth club of california. i'm robert rosenthal, executive director of the center for
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investigative reporting. i'll be the chair for today's prom called afghanistan. we also welcome our listening and internet audiences and invite everyone to visit us online at www.commonwealth and now it's my pleasure to introduce our speakers. tamim was born in kabul where father was a professor and his mother taught the first school for girls. he is the writer, lecturer, teacher and director of the san francisco writer's work shop. , in, in... block -- he has written the game without rowells. ...


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