Boss Time: Summits, Cold Wars, and Universities, with Condoleezza Rice | GoodFellows | Hoover Institution - GoodFellows: Conversations from the Hoover Institution

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>> Donald Trump (01:05):
President Putin invited me to get involved.
He wants to get involved, I think.
I believe he wants to get it over with.
Now, I've said that a few times, andI've been disappointed because I'd have,
like, a great call with him, andthen missiles would be lobbed into Kiev or
some other place, and you'd have60 people laying on a road dying.

(01:25):
I said, that's cold.
That's cold.

It's Tuesday, August 12, 2025.
And welcome back to Goodfellows, a HooverInstitution broadcast examining social,
economic, political, andgeopolitical concerns.
I'm Bill Whelan.
I'm a distinguished policy fellowhere at the Hoover Institution, and
I'll be your moderator today.
Looking forward to a spirited conversationfeaturing all three of our good fellows.
That will be, of course,the historian Sir Neil Ferguson and
the economist John Cochran andLieutenant General HR mcMaster,

(01:55):
former PresidentialNational Security Advisor.
Neil, John, and H.R.are all Hoover Senior Fellows.
So, gentlemen,we're doing two segments today.
In our second segment, we're going to gointo the Southern Hemisphere, talk about
Neil's recent journey to Argentina andhis conversation with Javier Millet, and
we're going to talk toJohn et al about tariffs.
But before that, we're gonna doa kind of a grab bag of topics.
We're going to talk about the upcomingTrump Putin summit in Alaska,

(02:17):
talk about whether the competitionbetween the United States and
China is indeed a cold war, andalso the merits of the Trump
administration's confrontationwith American colleges.
Over the question of fundingof federal research.
So who is qualified to have allof those conversations with us?
Only one person, and that is everybody.
By the way, straighten up becausethe boss is coming on the show.
We're of course,

(02:38):
graced by the presence today ofthe director of the Hoover Institution,
former US Secretary of state, formerpresidential national security advisor and
and former Stanford University provost,the one and only Condoleezza Rice.
Condi, welcome back to Goodfellows.

>> Condoleezza Rice (02:50):
Thank you. It's great to be with you.

So very quickly before we get on with the show, I have to ask you,
Condi, can you check your calendar andtell me what you're doing on October 12th?
I asked because it's a Sunday and
on that day the Denver Broncos happen tobe playing football in London, England.
They're playing the jets willbe a good outcome for you.
My question to you, Madam Director, couldyou please take Neil Ferguson to that game
and for God's sakes, please take tone theerror of his ways on American football.

Well, I'm not going to be there for that game.
I'm going to be with Neil and a groupof Hoover fellows earlier in London.
I'll be watching on television and sayinga little prayer for the Denver Broncos.

Very good. Well, let us go on the show, Condi, and
let's talk about the upcomingsummit in Alaska.
You have met with Putin.
You've spoken to Putin in Russia.
You've looked in his eyes.
We're going to make you a Putinologisthere and kind of ask this question for us.
What is Putin doing here?
Why is he agreeing to this summit?
What do you think he wants?
And if Donald Trump wants to be a modernday Teddy Roosevelt and end a war

(03:50):
involving Russia and another country,is this the way you go about doing it?

Well, I think that Vladimir Putin wants to have this
summit because he's feeling a littlebit that his back is against the wall.
He very clearly came out andsaid he was prepared to end the war.
And then we learned what I think mostof us thought he wasn't prepared to end
the war.
In some ways I think he just can'tbelieve that he can't crush this little

(04:15):
bug of a country orhe doesn't even think it's a country.
He told us Ukraine is a madeup country because of course,
it was always part of the Russianempire from his point of view.
And so I don't think he honestly believesjust why can't he get this done?
So this has dragged on for
three plus years when he thoughtit was going to take five days.

(04:35):
I think he thought whenPresident Trump came into office,
he was going to be ableto end it on his terms.
But a funny thing happened along the way,which is that his intransigence has
really transformed the president'sview of him to the point that he
understands that Vladimir Putin is,in fact, the block to ending this war.

(04:57):
So I don't know what toexpect out of Alaska.
My hope is that it's all right forthem to meet from my point of view, but
my hope is that there are no concessionsmade without Ukraine at the table.
That would be a dark day for Americanforeign policy, for American history.
But I could imagine a conversation inwhich they talk about territory, but

(05:21):
nothing gets decided.
I also note that I'm seeing thatthe Vice President has actually been
coordinating with the Europeans andpossibly even with the Ukrainians, and
that's a good sign because someone needsto be talking to the Europeans, who
are going to have to carry a lot of theburden if this ceasefire comes into being.

>> H.R. McMaster (05:42):
Yeah, Condi, you know what?

The way I'm thinking about this is really three outcomes,
three potential outcomes.

One is what Putin wants, which is the United States,
to support some kind of a ceasefire or
territory swap that is unacceptableto the Ukrainians, and
then to sort of cast Ukrainiansas the biggest obstacle to peace.
The second is a ceasefire,kind of like the Minsk agreement.

(06:10):
That really won't be a ceasefire, it'llbe an opportunity for Russia to try to
rebuild and maybe for the Ukrainians torebuild combat power, a pause in the war.
And the third, which I thinkis the best potential outcome,
is because of Putin's intransigence, asyou mentioned, that President Trump loses
all of his patience with Putin andputs even more pressure on Putin and
ultimately might convincehim that he can't,

(06:31):
he can't continue to prosecute thiswar at an acceptable cost and risk.
Not to put you on the spot, but, I mean,
what do you think are the percentagechances of those, or
what do you think will be the outcome ifyou were to have to predict it today?

I think it's going to be inconclusive.
HR I suspect that at the end of it, theRussians will have one story about what
happened, we'll have anotherstory about what happened, but
I don't think that this meeting inAlaska is going to end the war.
I do think, by the way, to your point,Putin is feeling a little bit of pressure
because while the President has notbeen willing to let the Graham Bill in

(07:10):
the Congress, which would put secondarysanctions on anyone who's aiding the war.
He did send a little bit of a shotacross the bow with the secondary
sanctions on India forthe purchases of Russian oil.
Now, personally,I'm a bit sorry about that,
because I think the US India relationshipis pretty important on its own terms.

(07:32):
But that, quite apart, it was a littlebit of a signal, perhaps to Putin.
That and the fact that we did send orwill send Patriot missiles, which
the Europeans will buy, is a signal toPutin that maybe he's lost the president.
So this summit gives him a chance to say,no, no, no, I haven't lost the president.

(07:54):
I still want peace, butI think it will be inconclusive.
I am one who believes that really,actually,
the Ukrainians need the war to stop.
They are not going to matchthe Russians in manpower.
The Russians have adopted terroristtactics in using drones and missiles,

(08:15):
really, against civilian targets to try tobreak the will of the Ukrainian people.
There's no military purpose to usingmissiles or drones against department
buildings except to try to breakthe will of the Ukrainian people.
So I would hope that there's a way,way for this war to stop, but
it cannot stop with permanentterritorial concessions that allow

(08:39):
Putin to achieve at the diplomacy tablewhat he couldn't achieve in the war.
And you also know HR is a military person.
This fighting season is coming toa close in a couple of months.
The Russians have made someprogress in the east, but
not overwhelming progress in the east.

(08:59):
And so, if it stops and everybody'sin place and maybe people decide,
all right, enough,that wouldn't be a bad outcome either.
We just don't need any preemptiveterritorial concessions on Friday.

>> Sir Niall Ferguson (09:12):
A couple of points and then a question.
Condi.
Watch what's happening in Pokrovsk atthe moment where the Russians are really
attempting a breakthrough.
I worry a lot about the sustainabilityof Ukrainian defenses.
As you say,the Russians have superiority of numbers.
It's not sophisticated.
But in that kind of war,it can lead to decisive changes.

(09:35):
So Putin goes into these negotiationswith something of a military edge.
Secondly, it'll be really interestingto see if he is going to drop some of
the demands that he previously had,which went well beyond territory.
Remember, the Russiansessentially have asked also for
a change of government in Ukraine andfor Ukrainian disarmament,

(09:55):
that we haven't heardanything about that recently.
And I wonder if that's because theRussians realize they might not be able to
keep pushing for those concessions.
But here's my question.
You've been Secretary of State.
You've had to manage the foreignpolicy of the United States globally.
This is about more than just Ukraine,it's about our relationship with Russia.

(10:18):
Do you buy the argument that there'ssome kind of reverse Nixon strategy
at work here, where Donald Trump istrying to improve relations with Russia,
perhaps at the expense of Ukraine, inorder to lure Putin away from Xi Jinping?
Is there something more at work herethan just than just the negotiation

(10:39):
over Ukrainian territory?
And if so, what do you think it is?

Well, if I could just first say, Neil, I think you're right to
worry about Pogovsk, but also the Russiansare not really very good on the offense,
and so I'm hoping that the Ukrainianscan repel them in any case, and
that any breakthrough isn'tgoing to be decisive.
So let me just state that, look,I actually think the idea of trying

(11:04):
to pull Putin away from Xi Jinpingin China is not likely to work.
And so I wouldn't try it.
I actually think I, and you've heard mesay this before, I'd slam them together.
The fact is that the Russians and theChinese have so little in common, really,
strategically.
You're starting to read these storiesabout the Russian intelligence forces

(11:26):
saying that they're worried aboutChinese penetration of Russia.
Do you really think the Russiansare happy to see the Chinese dominant in
Central Asia,which was part of the Soviet Union?
I think they don't havethat much in common.
And so I'm not worried about.
Yes, tactically they can make trouble and
certainly the Chinese havehelped the Russian war effort.

(11:48):
But I wouldn't spend American capitaltrying to separate these two.
And I would make the opposite argument,in fact, that if you try to do that and
you allow Putin to thereforehave some kind of victory,
you're actually giving a victoryto Xi Jinping as well,
because he's the one who decided thatthis was a relationship without limits.

(12:11):
And so if Putin wins,
then they can have their littlevictory tour having defeated NATO.
If Putin doesn't win,then Xi Jinping has to reconsider his,
his decision to join up witha Russia that is kind of a loser.
So I wouldn't try to separate them.

(12:32):
I think it's not worth the capital andI'm not sure.
I don't think you can do it anyway.
What holds them together isthey both hate American power.
That's what holds them together andvery little beyond that.

>> John Cochrane (12:43):
So if I could ask in this conversation,
have we not given uptoo quickly on Ukraine?
They are still fighting with onehand tied behind their back.
Suppose we and the Europeans gavethem every weapon they wanted and
let them use the weapons that they have,for example,
to strike at Russianbases deep inside Russia.
Suppose we went full on withsanctions against Russia.

(13:09):
That would seem like Ukrainecould do a lot better,
at least than they are doing now.
Second, is there a deal really?
You said permanentterritorial concessions and
Russia's idea that Ukraine must be somehowneutralized, carved off from the West.
Those aren't happening.
That can't be part of a deal yet.
I don't see how there's a deal without it,other than we'll just stop shooting for

(13:31):
a while and rearm.

And with that in mind.

So the bigger question you have experience in higher reaches of
politics.
What is on Trump's mind?
And I ask that in this way,Americans revere presidents who won wars,
revere Lincoln andWashington and Roosevelt.
We do not reverepresidents who ended wars.
We brought up Nixon.
Now, Bill's example ofTeddy Roosevelt was interesting,

(13:56):
but he ended a war between Russia andJapan where we really care who won.
And we just, you know, we put some shitson the table that we could do it, but
we care, we, the west,care very much about who wins this one.
So really, we don't really revere JoeBiden, who ended the war in Afghanistan.
You really want to go down that one?

Mr. Trump ended that one rather badly, I would say.

Yeah.
So ending wars doesn't getyou carved on Mount Rushmore.
And I'm just, why do we not havethe reaction that Bush 1 had?
This shall not stand.
That seemed pretty darn clear to me.

Well, let me, let me start with your first point.
And yes, I actually think the moment whenwe could have done this with Ukraine was
at the beginning of the war becausethe Russians were on their back foot.
They thought this wasgoing to take five days.
You remember that convoy that gotkind of stuck and couldn't move?
They were really kind ofsitting ducks at that moment.
And unfortunately, I think what the Bidenadministration did was that they

(14:55):
meted out kind of incrementally.
We would debate whether to send tanks,then we would send tanks, we would debate
whether to send a long range artillery,and then we'd send long range artillery.
If we just done it atthe beginning of the war,
I think the Ukrainianswould have won outright.
That's a lot harder now becausethe Russians are mobilized and
they are taking advantageof their mass and

(15:16):
they're taking advantage oftheir mobilization capability.
So I think it's hard actually for theUkrainians to win outright at this point.
So what do I mean by somethingthat might be a holding pattern?
You know, international history is fullof these, let me call them, devices.
They're things that hold things inplace until they can get better.

(15:37):
The division of Germany was a deviceuntil it East Germany collapsed.
We still have a kind of device inthe Taiwan Straits where if the way you
can tell if you've got a device isthat the language is very careful and
it basically is inconsistent.
So we've got a one China policy,but we sort of recognize Taiwan.

(15:59):
So that's how you can tell when you'vegotten to a place that you want to just
hold things in place.
That's really what I'm suggesting here,which is that Russia,
Vladimir Putin, has destroyed his economy.
Just last week,his very good central banker,
Navelina, made a speech at the St.Petersburg Economic Forum.

(16:20):
At the St. Petersburg Economic Forum whereshe gave a very dark assessment of where
the Russian economy is.
You're getting leaked memos fromGazprom that they're not going to be
profitable until 2035because they're harvesting.
I used to be an oil company director.
If you're just harvesting and you're notreinvesting, things start to break down.

(16:43):
So he's destroying his economy.
So I'm talking about buyingtime if you are Ukraine.
The reality is, de facto Russianforces are gonna hold some
of the territory that theyhave if in the east, Crimea.
Our part should be to never recognizeRussian sovereignty over that territory.

(17:07):
For 45 years,
we did not recognize the incorporation ofthe Baltic states into the Soviet Union.
When I was the young Soviet specialist,every time I wrote Latvia, Lithuania,
Estonia, I had to stamp it.
The United States does not recognizethe forcible incorporation of
the Baltic states.
And you know what?
In 45 years, the Baltic states werefree because conditions were such

(17:29):
that they could be freed if Ukraine canjust get to the point that they can
hold at risk things thatthe Russians care about.
And we've seen that their defenseindustries giving the ability to do that,
how in the world did they attackthe Russian strategic bomber force out in
Siberia?
How did they do that?
I understand blowing up a bridgein Crimea, that's not so hard, but

(17:52):
my goodness, in Siberia.
And so give them the capability to hold atrisk things that the Russians care about,
the energy infrastructure in Russiaallow them to build up their
defense industries andjust say to Putin here and no further.
And I think this couldbe stable enough for

(18:13):
Ukraine to rebuild on the part ofUkrainian territory that actually matters,
the western part of Ukraine, which iswhere the modern Ukrainian economy is.
A Ukrainian financier said to me,he said, don't quote me on this, but
I won't use his name.
He said, they kind of did us a favorbecause the Donbass is all rust belt and

(18:37):
now it's uninhabited rust beltbecause people have fled.
So what I'm suggesting is,and you notice I use the war,
I said the war must end, butI really mean the war needs to stop.
And then I think the long range,the long term favors Ukraine, but
it requires that they have enough andenough support.

(18:59):
To hold Russia at risk requiresno deal with the Russians.
That is a permanent territorial deal, andit requires telling Vladimir Putin you
will have nothing to sayabout the future of Ukraine.
Internally, I think that's the package.

Conde, I'd like to turn your attention to China.
We've talked a lot on theseseries over the past five
years in Goodfellas about Cold War II orCold War II.
You recently did a podcast with Hoover'sown Lord Andrew Roberts in which
you disagreed with that characterization.
You don't think it's a Cold War?
Tell us why we're wrong.

Well, Neil and I have had this conversation back and forth, and
I think he knows that.
I'm just trying to warn that sometimesif we adopt certain language,
it obfuscates what we'reactually dealing with.
So what are a couple ofreally important differences?
At no time in the Cold Warwas more than 1 to 4% of

(19:54):
Soviet GDP related to international trade.
This was a completelyisolated country by design.
This goes all the way back toJoseph Stalin, who talked about autarky.
They wanted to be completely independent.
And to the degree theyweren't independent,
it had to do with these weirdrelationships they had with.

(20:15):
With Eastern Europe for the economy.
That's not China.
[COUGH] One of our problems,as we're seeing with rare earth minerals,
is that China's totally integratedinto the international economy.
Supply chains are completely integrated,
investments are completely integrated,manufacturing is integrated.
And we're trying to unravel now what wasa very deep integration that we promoted.

(20:43):
So that's the first, most important thing.
And so we don't have some ofthe levers with China that we had with
the Soviet Union.
I used to run something called cocom.
So it was a series of exportcontrols on the Soviet Union.
When I was young, Soviet specialist forthe National Security Council,
it was actually kind of easy to dobecause technologically they lacked

(21:06):
sophistication andwe could hold things back.
You're just seeing with the Chinese thatexport controls, if you look at deep
Seq not working that well because we'veallowed them to develop indigenous
capability, that is really showing thatin some areas they actually exceed us.
So that's the first most important thing.

(21:26):
The second is, andhere you could debate it.
I don't think this is very ideologicalfrom the Chinese point of view.
It is nationalist and it's mercantilist.
And it does have a view of a greaterChina that was somehow broken up
during imperialism andyou're gonna restore it.
But the one thing the Chinese basicallysay to any country that they want to

(21:49):
adopt belt and road so that they can havethe ports and the infrastructure is,
hey, we don't care what your form ofgovernment is, that's your business.
And that was also not the Soviet Union.
Remember the Brezhnev doctrine that youhad to, if you were Czechoslovakia,
the Communist Party had to looka particular way, and the US Soviet

(22:10):
relationship was a kind of clash of viewsof how human history was going to unfold.
I don't think you can say thatabout the relationship with China.
And the final thing is actually, it'smore dangerous for a couple of reasons.
We and the Soviets,after the multiple Berlin crises,
basically didn't haveterritory in conflict.

(22:35):
We had some proxy wars that we fought, but
essentially once Europe stabilized,
we were in close proximity, butwe didn't have open conflict.
And the second is we made sure we wouldn'thave open conflict because we were so

(22:56):
fearful of a nuclear war that from 72 on,
we created an exquisiteset of notifications and
transparency because nobody wantedto have an accidental nuclear war.
I tell the funny story of howextreme these measures were.
So Sergey Ivanov, who at the timewas defense minister in Russia, but

(23:18):
was kind of my counterpart,he was close to Putin.
I was close to President Bush.
I get a call from Sergey one day, he says,
Condi, I'm supposed to notifyyou we've lost the warhead.
What?[LAUGH] He said, don't worry, he said,
it's an accounting thing, butI'm supposed to let you know, right?
Well, then you have this question.
Do I go tell the presidentthe Russians have lost the warhead?

(23:41):
Do I wait till they find it?
What's the deal here?
But I give that example because on 9 11,
Putin brought down exercises becauseour forces were going up on alert.
They didn't want to getinto a spiral of alert.
We had exquisite mechanisms.
We have none of that with China.
My experience in.
April of 2001 was when a Chinese pilot,hot dogging in international

(24:05):
airspace forced down an Americanreconnaissance plane on Henan Island.
It was three days beforethey would take our call.
So there are some reallyimportant differences here.
Can we learn things from the Cold War?
Yes, butI think if we call it a new Cold War,
we are obfuscating the real nature ofthis relationship, which looks more,

(24:28):
much more, kind of late 19th century,early 20th century than post World War II.

Well, it's always a mistake to argue with your boss,
but don't see why I shouldstop now be doing it.

I should have learned that a lot earlier, a lot earlier.

What's good about the Hoover Institution is.

You get points for arguing cogently with your boss.

That's absolutely right, yes.

[LAUGH] >> John Cochrane
our employer.

I agree with points one and three.
There's no question that the economicinterdependence of the US and
China is a massive difference between thisand Cold War one, as I like to call it.
And I think you're right too, that thereare sort of dangers in this Cold War or
this relationship thatdidn't exist before.

(25:17):
I had the good fortune to sit next to ourcolleague Jim Ellis on the flight here and
we discussed the nuclear dimension.
One of the resemblances between thesetwo situations is that we are in
a nuclear arms race with China.
What makes it more dangerousis that there's also Russia.
So there are two nuclear superpowerson the other side at this point.

(25:39):
And I do think that that makes the,the nuclear dimension of this relationship
between the US andChina very, very dangerous.
But I think on the ideological point,I differ with you.
And, and so I think with quitea number of writers, Rush Doshi, for
example, in a way,Xi Jinping has made the,
the People's Republic of China muchmore ideological than it was at all

(26:03):
the periods from Deng Xiaopingup until Xi's predecessors.
Not that he wants to spread Marxism,Leninism, or Maoist thought for
that matter, the rest of the world, butjust that he is hostile to democracy,
to the rule of law, and to the ideasof freedom that are fairly central to
what the United States andits allies believe in.

(26:24):
So I do think there's an,an ideological dimension.
But here's my question for you.
If it's not Cold War ii, what is it?
Because I'm not sure I buy the idea thatwe're sort of back in 1900 when there were
multiple empires, all with comparableconventional force capabilities, and
all, as it turned out,ultimately able to wage a four and

(26:45):
A quarter year conventionalwar with one another.
It seems to me thereare two superpowers today.
They're not just superpowers in,in economic terms, but
they're superpowers techn.
That's to say the US andChina are the AI superpowers.
And I'd love to hear your thoughtson where AI fits in here.
It's something we're all thinkinga lot about here at Hoover.

(27:06):
This is something that clearlydifferentiates Cold War one
from where we are today.
Because in a way,Cold War I was about nuclear competition,
the space race, and ultimatelya computer race that the US won.
This seems to be technologicallya broader frontier.
We're competing with China on everythingfrom AI to quantum computing to robotics.

(27:28):
And what's fascinating to me is thatin some domains China's even ahead, or
it seems to be.
How do you think about that?

Well, Neil, you're just making my point about why it's not
Cold War two, by the way, becausethe Soviet Union was also a technological
midget and China is a technological peer,if not in some areas greater.
I just want to say one thingon the ideological point.
It is absolutely right that Xi Jinpingis an avowed Maoist, Marxist, whatever.

(27:56):
It's just that the export of it is not soimportant to China and
to Russia, to the Soviet Union.
The export of it was extremely important.
It was as if Joseph Stalin, when hewrote back in 1926, One day we will
have a ring of brother states,he said, that will help to protect us.
And so the ideological dimension wasmore important to them in terms of their
foreign policy than Ithink it is to China.

(28:18):
I do think, by the way, the ideologicaldimension in which he believes that
China is ascendant, the west is indecline and China will rule the future,
if you want to call that ideology.
I think that is true.
So what would I call it?
Why don't we just call it that?
This is a relationship with a continuum,some of it slightly cooperative,

(28:41):
but moving pretty close now tojust a great power conflict.
And that's why I think itlooks like another time.
As to the nuclear piece,
I actually think you could say thatit is more dangerous because almost
all of our nuclear strategy going back toTom Schell is based on a two player game.

(29:01):
And now we're getting a three player gameand we have no idea how to deal with that.
And the Chinese, basically,I think as HR can tell,
you don't want to have that discussion.
And so this is the problem now as to AI,this is really a Dimension.
And it's, as you said, not just AI.
It's AI, it's synthetic biology, it'srobotics, it's what's happening in energy,

(29:25):
it's battery tech,it's across the range of technologies.
And there, I think,we really are in a race for supremacy.
And my own view of it is the United Stateshas to run hard and fast.
We are not going to exportcontrol our way out of this.
We're going to have to keep leapfroggingin order to stay ahead where we can,

(29:49):
push further where we can.
Because I have a very basic view of this.
I do not want authoritarianChina to win this race.
And I think if some.
These are what my friend Fei-Fei Li iscalled civilizational technologies.
They are extraordinary in theirtransformational character.

(30:11):
So if something goes wrong,we will have congressional hearings.
We will have investigative reporting.
There will be people whoare saying this went wrong.
How can we fix it?
If something goes wrong in China, theywill treat it the way they treat it with
COVID They'll lie about it,they'll cover it up.

(30:31):
We won't know what's happening.
Someone asked me the other day,what do you mean by when?
I said, well,let me give you my worst nightmare.
Okay, so there's, as you know, a debateamong AI specialists as to whether or
not AGI general intelligenceis actually possible.
But let's fora moment say that it is possible.

(30:51):
Another person said to me,if it is possible, and you know, general
intelligence, meaning that this, thismodel acts on its own, not on command.
And we have had examples of the modelbeing unwilling to turn itself
off to an off command, soit starts to act intelligently on its own.

(31:13):
Someone that I know well said,just don't put it in a body, right?
Don't put it in a robot.
And I think to myself, waking up one dayand the Chinese have either conquered
AGI or they've put it in a body,I don't want that strategic surprise.
And what really worries me isthe intelligence agencies,
our intelligence agencies,as well as the Brits, who, by the way,

(31:36):
are the only other AI player out there,really.
They have no way to collect on this.
They don't know how to collect on it.
They don't ask the right questions.
They don't have the right people.
When Deep Seek happened, every nationalsecurity person that I knew was stunned.
Not a single AI scientistwas stunned because they.

(32:00):
They were all reading the open literature.
They knew who the people were,they were reading the papers.
And so I worry that we will not know.
So my only way if I don't know what'scoming is to make sure that I'm as
much as I can ahead of the game.
And that's why I'm pretty a lighttouch when it comes to any

(32:21):
regulation at this point.
I would rather free American and
to a certain extent Britishinnovation to just go for it.
And if there are problems,I think we'll handle them.

So, Pradi,
having having failed in my efforts to getSir Neil Ferguson in trouble with you,
let me now try to throw allthree Goodfellows under the bus.
There was,not too long ago a retreat in Arizona.
These three fellows were on the stage.
Apparently some critical wordswere said about college,
the federal funding of college research.
And you didn't like what you heard.
Tell us what triggered you.

No, I actually came up to John Cochran after and I said, okay,
I'm coming on Goodfellas totell you why you're wrong.

And just for the record, Condi, it wasn't me.
It wasn't me.
It was the other two guys.
It was the other two guys.

Right, let me start with the assertion that
universities have a lot to atone for.
This has not been a good period for
American higher educationin the following way.
Look, the US highereducation system is still.

(33:26):
The tertiary system is stillthe gold standard internationally.
That's why everybody's trying to get theirchildren here from wherever they live
in the world.
But what should they atone for?
We did become a place where therewas an orthodoxy about views and
where certain views couldnot be expressed, or

(33:47):
if you express them,you express them at great cost.
The idea that you only sought truth,if you want to use that term,
by the clash of ideas, by listeningto people who thought differently,
by entertaining the idea thatyou might actually be wrong,

(34:07):
by being willing to say, all right,that's uncomfortable for
me to hear, but I have to hear it.
I tell my students all the time,
you don't have a constitutionalright not to be offended, right?
So if you're offended, how about you justtalk to that person about why you're
offended as opposed to organizinga protest because you were offended.

(34:31):
So we didn't do this well,and we allowed our students,
even maybe encouraged our students tothink that there were ideas that were so
poisonous that they should notbe a part of the discourse.
That's our fault.
It is also true that with the exceptionof maybe the Place that we all are,

(34:53):
places like the Hoover Institution.
Universities were pretty monolithic intheir, in the people that they hired.
I was asked to do a presentation whenI first became director before the.
The Faculty Senate.
And somebody had said wewere partisan at Hoover.

(35:13):
And so I said, you know,I'm a social scientist, so
I have to have someindicators of partisanship.
So let me say that one iselectoral contributions,
which I can see through filings.
Hoover, it was kind of 50, 50, 65,
Stanford faculty, 90, 10.

(35:35):
So I said, okay, so who's partisan here?
So we as universities have a lot.
And I'm all for getting rid of someof the stuff that was around DEI and
the like, which I think was unfortunate.
And it's somebody who's black,actually patronizing.

(35:56):
So universities have a lot to atone for.
But universities also are,
in a set of decisions taken 80 years ago,
the ecosystem forfundamental research in science and
engineering and biomedical.

(36:18):
We don't have a plan B.
Vannevar Bush's system was tohave the federal government,
the Defense Department,the Energy Department,
the nsf, the NIH, to fund universities.

To do fundamental research.

And they recognized that commercial entities would
have to meet the quarterly report,the quarterly earnings.
And sosometimes you need a long stretch of time.
One of the most interesting is a lotof the work that was done on neural
networks starting in the 60sthat sat on shelves for

(36:56):
years until the compute powercame along to give us AI.
That's an example of why youfund fundamental research.
Stanford alone, the transistor Stanford,the double helix in DNA,
the discovery of the existenceof sickle cells,
the twin that became Google,and that's just Stanford.

(37:21):
And so my view is, yes, but when you startsaying we're not going to fund scientific
research, either because you believeuniversities deserve to be punished or
because you've decided you're goingto start cutting budgets for it.
We don't have a plan B.
We once had a kind of plan B.
You know, before the baby bells broke up,there was something called Bell labs.

(37:43):
But once AT&T came along,it became a cost center.
And you know what happened toall those people in Bell Labs?
They fled to universities wherethey won multiple Nobels,
not to mention the training ofgraduate students in the Frontiers.
I just think this isnot the right strategy.
And I'm very worried at a time whenwe've just been talking about China

(38:07):
pushing the technological frontiers,we are doing just the opposite.

I think we're all in fundamental agreement there is a baby and
there's some bathwater.
There's a lot of bathwater.
And we want to get rid of the bathwater.
But let's not throw out the baby now.
I'm a little more attunedto the bathwater.
All sorts of things are goingwrong in that research enterprise.
When it was young and hearty in the 1950sand 1960s, it produced wonderful things.

(38:35):
But you gotta fill out a hundred timesmore paperwork now than you used to
have to do in the 1950s and 1960s.
So many areas of research, not justthe social sciences and humanities,
not obvious why the governmentneeds to be subsidizing those.
I watched personally howthe NSF subsidies for
economics are basicallyincentivize no new research.

(38:57):
And that was before the era of wokeism.
The kind of stuff they're subsidizingnow is very, very hard to defend.
We have watched as the physicalsciences have been politicized,
how difficult it has been todo honest climate research.
As our friends Steve Koonin andBjorn Lomborg have pointed out,
how difficult it has been to do honestresearch on so many aspects of.

(39:17):
Of medicine.
So it needs reform, andI think that's what we agree to.
Part of that reform is the inevitableproblem of a monopoly supplier.
That's a bureaucracy.
The age of principalinvestigators has gone up and up.
The political demands have gone up and up.
The Biden administration insisted DEIcomes first on every single grant.
So the need for that kind of.

(39:37):
For a fundamental reform ofthat sort I think is important.
So we can talk a lot aboutthe details of how do you
subsidize good innovative research.
It has to be a brutal meritocracy, whichis very hard for a bureaucracy to do.
Multiple points I think are important,not just a monopoly supplier.

The Saudi Arabians subsidize research on the reading of
the Quran.

While subsidizing, you gotta subsidize good research,
useful research.
And that's very hard to do because goodresearch upsets the apple cart of,
of everybody who's, who's been in there.
So, you know, more competition, betterstructures are important part of firm and
not just federal funding.
We have a lot of billionaires who don'tknow what to do with their money and
you know, they're sending it to allsorts of philanthropies that turn out to

(40:26):
be rat holes.
A little bit of sciencefunding by billionaires,
you look what Tyler Cowen hasdone with fast grants and
it's just amazing what you dowith a parallel structure.
So competition, multiple points,a very hard-hearted reform.
I think we all agree that's necessary andthere's a lot of turbulence going on.

(40:46):
I'm not happy with how the Trumpadministration is going after
universities, butsomething had to be done.
I think we're all in agreementthat's what we need to do.

John, I agree and
I wanna actually underscoresomething that you said.
I think that and our colleague JayBhattacharya has been talking a lot about
this at nih, which is that aging,you know, people are getting grants when
they're older because people are,the agencies are afraid to take risk.

(41:15):
You want the agenciesto actually take risk.
You want young investigators to take risk,
which then implicates the tenure system,which doesn't really reward risk.
It rewards coloring within the lines sothat you can get good letters.
So I agree with you.
There's a lot to be done there.
I also think that the governmenthas a big role in this.

(41:39):
If you look at the amount of paperwork andauditing and a lot of the growth
of these bureaucracies around researchare because the government requires so
much reporting that you hirepeople to do the reporting.
I would give you back,I used to be provost and
I ran the research enterprise forStanford.
I'd given you give you back 11points on what's called the indirect

(42:03):
cost number if you would just let menot have to report quite so much.
So I think there are things thatthe government could reform,
things that universities could reform.
I'll make one other point andI hear, I completely agree with you.
There do need to be multiple now ways ofdoing this and the government is still,

(42:23):
I think going to be the fundamentalresearch because people are not going to
see commercial benefits forquite some long time.
But let Me defend those billionaires fora minute.
A lot of the buildings that Stanfordhas over here in the research
quad are named Gates and Wang andWu and Tsai and the like.

(42:47):
And so a lot of the infrastructurein universities
actually is donated from philanthropy.
And the government doesn't really countthat, but it's an important contribution.

And I'm just saying we need more and more of that.
As an economist, I don't wannabe on record as the opposite,
from the economics of what we understandof long-term economic growth there is
nothing more important thanfundamental scientific research.

But I just wanted to make the following.
We do need other models too.
One of the things that I thinkuniversities are too careful about or
too afraid to do, there's going to haveto be more industry collaboration.
There just has to be.
And I understand conflict of interest andall of that, but
if we really want to push the frontiers,universities aren't able to do it alone.

(43:38):
You take something like AI, the computepower to do these large language models
actually only really right nowexist in the hyperscalers.
And so no combination of universitiescan do this without industry help.
And I think industry should look back andsay, yeah,
well we can support some ofthe fundamental research.
So I agree with you.

(43:58):
We need new models also.
And maybe, maybe some of the assault,if I call it that on federal funding for
scientific research in universitieswill cause universities to look for
alternative models which ultimatelymay improve the entire system.

Well, I don't disagree with what's being said.
The question is going to be dothe universities emerge from the current
bombardment and most of the fars beingdirected at the east coast institutions,
principally my former employer Harvard,improved.
That's the key issue.
There was all kinds of rot,as we've discussed.

(44:40):
And in many ways I think placeslike Harvard had it coming, but
I'm just not convinced thatthey're going to emerge radically
improved from the current onslaught here.
I think I agree with you, John.
There was a way of coming at this problemwith a rapier rather than a bazooka.
I think all kinds of discriminationwas going on at every level in most of

(45:03):
the established universities,
from admissions rightthe way through to tenuring.
And it probably would have sufficedto go after that in the sense that
you could then have challengedthe tax exempt status.
The problem that I see now, particularlyat Harvard, is that the federal government
is making such inordinate demands andseeking such controls over the university,

(45:25):
that a kind of resistance is pushing backtogether the people who were previously
fighting over the future of Harvard andthe people who were previously
the critics of the woke tendency have kindof shut up and rallied around the flag.
So I'm worried that five years orten years down the road,
when President Trump's longgone from the White House,

(45:46):
I wonder if the universities will reallyhave improved in a meaningful way.
Will we really have got toreal academic freedom again?
Will we be reallymeritocratic institutions?
Or is there going tobe a kind of three and
a half years of paying lipservice to ideological or
intellectual diversity followedby a return to the old ways?

(46:08):
And I, I don't have huge confidence whenI look at the universities and their
responses to the current barrage thatthey're really going to change their ways.
Which is why I've spent time supportingthe new university in Austin,
because I do think we need new models.
I think if Vannevar Bush turned up todayand looked at this world we're in,
he'd be amazed at how much researchwas going on in the private sector.

(46:32):
He'd be amazed at how much was coming outof Google and of Microsoft and of Meta.
And in that sense, I think weare in a somewhat different world.
Quantum doesn't feel like something that'sgoing to be done inside a university.
I think the first quantum computerwon't be on the Stanford campus.
It more likely will be at Google.

(46:54):
So I think we're in a different world.
And I agree with John.
We want competition,we want new models of research funding,
we want to get away from bureaucraticbehemoths and above all,
we've got to get away from the federalgovernment imposing political strings,
tying political strings tothe money that it doles out.
That I think was part of what led us tothe mess that we got into in the 2010s and

(47:17):
tying.

These two conversations together.
Competition from China.
I actually think that China is muchmore private sector than you think,
much more research focus andthey're really, really good.
And competition from China on basicresearch may be the thing that lights
a fire under America to get rid of someof the bureaucracy that makes doing
scientific research about likebuilding a high speed train.

John, I completely agree with that and
I do think that the one thing I will sayabout universities and you know, Neil,
I've applauded some of the newexperiments in univers.
A great number of people who are gonnabe leaders are still gonna be trained in
places like this, like Stanford, andwe simply can't see that territory to
those who pushed It I think sofar to the kind of folk left.

And that's why I think we work very hard at it.

As to the China competition, I agree with you.
Although there's a little voiceinside my head that says, you know,
authoritarians always go too far.
They somehow always manage to overplay.
And when I read that, you know, some ofthe models have to incorporate Xi Jinping
thought, I think, well, you know,give me freedom, give me liberty,

(48:25):
and then get the government a bit out ofit and let me see what I can produce.

If I can add just a note of optimism here in terms of research and
kind of ask you maybe to comment on it.
I think another word we shouldfocus on is collaboration.
In a previous job, I contributed tosetting the Army's priorities for
basic and applied research.
And what was frustrating for me at timeswas to not understand being unable to

(48:51):
learn what research was going on where,not just, not just in the private sector,
but even within government fundedresearch by Department of Defense,
Department of Energy, the various labs.
I think now with large language models andAI related technologies,
we can do that a heck of a lot easier.
We can understand how wecan actually work together

(49:14):
collaboratively without being redundantin a lot of this research and
we can learn cumulatively rather thanepisodically in an uncoordinated manner.
So, of course, you know, China'sbig advantage, a lot of people say,
is because it's command directed, right?
It comes from the top andyou've got civil military fusion.
I think we can unleash the power ofcollaboration with a lot of these new

(49:34):
technologies.

Completely agree.

Well, Condi, we're gonna leave it there.
Great conversation.
Now, we began this by asking yourwhereabouts on October 12th.
We've learned you will not be in London,England.
Do know where you're goingto be on February 8, 2026?
Do you happen to know what that date is?

Conde, what is it?

Super Bowl.

Is that the super bowl this year?
I thought it was February 3rd.
Well, I will be at Levi's Stadium.
I really, you know,10 years ago, just saying.
That was the last Denver Broncos superbowl and it was at Levi's Stadium.
That's not a prediction,but it might be a hope.
Get that Eagles thing out of our faces.

(50:17):
They're a good team.
They're a good team.
So HR just have to say ifwe're going to do anything,
we have to first take downthe Kansas City Chiefs.

Right Again, I should say again, from the Eagles perspective.

Thank you for having done that.

[LAUGH] Condi,
when Bumpfellows was the headcoach of the Houston Oilers.
I'm really going back years now.
The Houston Oilers.
He would leave a ticket at will call forElvis Presley.
So would you be willing to leaveone at will, call it super bowl for
Sir Niall Ferguson?

Absolutely.
And I'll even take him to the game and
instruct him in the finerpoints of football.

I would benefit inordinately from that as long as you come
with me to see the World Cup Final,
because real football is comingto the United States next year.
We can hardly wait.

That it is.

Yes, and it's, well, 2031 for Rugby World cup as well.
But, Connie, whatever you do,don't agree to go to a cricket match.

No, I was just gonna say the one thing you can't get
me a cricket match.
So, [LAUGH] So, Condi,thanks for joining us today.

Don't be a stranger.

Thank you.
Really enjoyed it and thanks a lot.
I think Goodfellows is a fantasticprogram and I love being on it.
Thanks, guys.

You guys still have a job.

We turn now to our B block and what we're going to call cambio de
ambiente in Argentina, which,if you'll forgive my pedestrian Spanish,
roughly translates to the vibeshift in Argentina, Sir.
Neil Ferguson, I turn to you becauseyou recently went into the Southern
hemisphere and you had the greatprivilege of sitting down and
interviewing ArgentinianPresident Javier Milei.
I'm curious, Neil, as to what you got outof it, what you're expecting going in,

(51:49):
what you learned from Milei and
the idea that there is indeeda vibe shift of Argentina.
Is it real and is it exportable?

And hey, Niall,
I just wanna say you were looking we guapoman in those photos that I saw, we guapo.

[LAUGH] Well, thank you so much.
I was fortunate enough toget to meet President Milei.
For those not following Argentina,it has for
most of the last century beenthe great underperformer.
The great disappointment of economichistory was once a wealthy country with

(52:21):
bright prospects.
It's had every conceivable kindof financial crisis since 1945.
Certainly most of this can be attributedto Peronism, that strange populist,
nationalist, socialist ideology thatdominated post war Argentine politics.
And something has changed,and it's very dramatic.

(52:42):
And what has changed is thata libertarian economist who makes
John Cochran look centristhas become president.
He won the election at the end of 2023,
having pledged to slashthe Argentine government.
He wielded a chainsaw during the campaign.

(53:03):
This chainsaw then reappearedin the hands of Elon Musk,
who wanted to follow malaise example.
And Malay has been as good as his word.
He has drastically reducedArgentina's perennial
deficit from 5% of GDPto zero within year one.
And it's one of the great turnaroundsin terms of economic performance

(53:28):
that I think I've ever witnessed andperhaps has ever been recorded.
Argentina was on the brink ofhyperinflation when Malay was elected.
He's got inflation under control mainlyby getting his fiscal anchor in place and
balancing the budget.
And he's also deregulatingthe economy at speed.
In other words,he's an outlier in an outlier country.

(53:51):
I didn't know what to expect.
He has a larger than life personality.
On social media he looks like an escapeefrom 1960s rock and roll band, late 60s.
Long hair, long sideburns.
I've grown my own in tribute to him.
And the chainsaw is only part ofa pretty rock and roll stage presence.

(54:15):
He also loves to rabble Rosewith his slogans such as ¡Viva
la libertad, carajo,long live liberty, damn it.
And then you sit down with him inthe quiet of the presidential office and
you have a one and a half houreconomics seminar in which in answer to

(54:36):
my questions, President Malayvery enthusiastically argues for
a radical libertarian solution,not just to Argentina's problems,
but to the world's economic problems.
And John, you would have loved it, becauseI asked him at one point, you know,
how do you reconcile your commitmentto free markets with President Trump's

(54:59):
enthusiasm for for tariffs andeven some elements of industrial policy?
And he gave the most splendid andsophisticated answer,
which involved a tour through trade theoryfrom Ricardo to the Heck Ohlin model.
So he's not at all the wild man thatyou would think from social media.
He's an intellectual who somehow or othernot only became president of Argentina,

(55:21):
but has brought about, maybe it's a bitearly to call it an economic miracle, but
certainly an amazing turnaround.

Wonderful, and let me comment by encouraging everyone to
read your lovely substack articleon your meeting with Javier Milei.
I can only say one thing.
How incredibly jealous I am thatyou got to do this and not me.
But I then have to admit that you dida way better job of both interviewing him
and writing him up.
I would have just been sittingthere in fanboy adoration.

(55:51):
Not gotten much done to your last point.
First, I follow his YouTube channel.
Javier Milei explains.
>> [FOREIGN]>> John Cochrane: Where you will see
amazingly sophisticated explanationsof all sorts of modern economic theory,
he's not just some guy who woke up froman Austrian Whip Van Winkle 30 years ago.

(56:13):
He really understands economics.
Just a couple quick sortof my takes on the lay.
First of all, big lesson here.
Stimulus versus supply.
What matters for getting an economy going?
The Keynesians ought to bein full retreat on this one.
They said, you're going to cut governmentspending, the economy will tank.
No, you get out of the way andthe economy goes remarkably quickly.

(56:35):
Often you think, you know,reforms are going to take time and
in the meantime it's going to suffer.
The Argentinian economy is,
is already booming if you juststart getting out of the way.
Lesson two, Inflation.
What conquers inflation?
Do you need tight monetary policy,high interest rates,
a big recession to conquer inflation?
Nope.You just need to get the fiscal house in
order and inflation falls with interestrates below inflation the whole time.

(56:58):
No monetary stringency required.
Third comment.
A lot of people say to me, John,your libertarian fantasies,
that's not politically feasible.
And I say, okay, wind back three years andtell me, is it politically feasible that
Argentina might elect a libertarianpresident who named his dogs Hayek and
von Mises?

(57:19):
You know,what's politically feasible can change.
We will all sooner or later do the rightthing after we've tried everything else.
I think Argentina gets the prize forhaving tried everything else.
And I only hope Milei is freeonce he's fixed Argentina.

Can I add one thing which is really striking?
You know, the economics is goingas you and I would expect, John.
It's working,as you just brilliantly pointed out.
And some of this they did against theadvice of the International Monetary Fund,
focusing on the fiscal anchor,which is of course right up your street.
But what's really amazing is the politics,because everybody, and

(57:56):
I think I probably was amongst them,thought,
well, doing this fiscal adjustmentwill make you unpopular.
This just bound to be painful and you'regoing to get into political difficulties.
No, his approval ratinghas held up throughout and
has indeed strengthened as it's beenclear that the economics is working.
And he's poised,at least his party is poised to do well

(58:17):
in the legislative midtermsthat are just coming up.
So the most amazing thing aboutthis is that it's politically as
well as economically working.

And I just.
I'm sorry, H.R. we're batting this one.
No, but he's got a good pointhere from your substack.
The beautiful point made that it camefrom the Young people in the U.S.
the young people are all socialist inArgentina according to your substack.
The young people and, andthe fact that they had social media and
didn't have to listen to that, to all ofthe standard things on, on regular media

(58:50):
the young people turned libertarian andthen they went home to covet and persuade
parents and everybody is so sick of theold system that they're not going back.
But that it came from the young peopleI thought was very interesting.

HR I've met some of those young people and
it's extremely interesting.
I was in Buenos Aires last,before the election that Milei won.
There was hyperinflation in the air and
the mood was distinctly downbeat exceptabout the World cup which they just won.
But now there's a vibrancy inthe air in Buenos Aires that

(59:23):
I'm sure hasn't been experience fora generation.
And young people sense thatthis is a real turnaround and
this time really is different now.
One can't of course count the chickensbefore they're all hatched.
It's Argentina.
It has a long history of gettinga certain way down the line of reform and

(59:43):
then coming off the rails.
But I have to say I was deeply impressedby what I saw not only when I spoke to
President Milei, butalso his economics team,
the economy Minister whose name is Caputo,deeply impressed me as somebody who
really understands the challengesthat they still face, particularly in
persuading financial markets thatArgentina really has turned a corner.

(01:00:06):
But this combination ofyouthful enthusiasm,
which Malay is very,very good at tapping and
real competence in the governmentleft me thinking, you know what?
I think they've done it.
And of course when people say butit's Argentina,
I remind them that noteverything is forever.
Underperformance can't be forever,just as performance isn't forever.

(01:00:28):
You can do tremendously well asan economy and then you run into trouble.
I think Argentina's been in trouble for solong that people have just had enough and
they, they're ready now to take the,the radical steps that Malaya's urging and
he's not finished.
He's got a second term agendaof radical labor market reforms,
of tax reforms, potentially a flat tax.
It's exciting, John.

>> Bill Whalen (01:00:48):
I hope you get a chance to go down there and
take a look because it's a long timesince any government in the world
has been this radical in itscommitment to free market economics.

>> Sir Niall Ferguson (01:01:01):
In fact,
it may be the most pro marketgovernment in our lifetime anywhere.

>> Bill Whalen (01:01:06):
I think Niall hit on one thing important here, HR,
which was competence in government.
If you look at what's going on with Trumpright now and his agenda, you know,
the chipping away at Doge,the ICE raids and so forth,
it does raise questions about just howblunt of an instrument he's wielding.
But if Trump were to react Niall's column,HR,
what do you think the most importanttakeaway for him would be?

>> H.R. McMaster (01:01:25):
Well, I think it was, we were just talking about, which is
the enthusiasm of the, of young people andthe ability of a leader to kind of
galvanize people in a positive directionand maybe the power of a positive vision.
I mean, Neil and John, like you guys,maybe comment on this.
I think what's, what's missing is, I thinkwhat President Trump has done effectively
is point out the deficiencies of previousadministrations and the degree to which,

(01:01:49):
you know,he needs to disrupt really a lot of the,
the previous practices in Washington, youknow, leaving people behind, not really
caring about citizens and really caringmore about sort of their own, you know,
the agenda of the, of the political elite.
But what's missing a lot of times withPresident Trump is like the positive
vision, you know, of, of the future.

(01:02:09):
Some of that's there, right?
Deregulation, growing the economy,you know, and,
and, andinvigorating the industrial base and
so forth, securing borders, you know,I mean, but the way he goes about.
A lot of times,it's just cast as negative.
I mean, is there,
do you think there's something thatPresident Trump could maybe, you know,
take from Malay's playbook ormaybe future political leaders could.

Well, what's interesting is the way Milei has, has
solved a problem which proponents of freemarket policies have long grappled with.
How do you make this sexy?
How do you make it exciting?
How do you sell it to younger voters?
And I think Milei's trick isto make liberty, freedom,
something that is exciting andto juxtapose as its opponent

(01:02:58):
what he calls lacasta,the insider class of politicians.
Corrupt politicians, corrupt businesses,corrupt union leaders who
are the beneficiaries of socialism,of Peronism, of the old regime.
And so what's fascinating to me is the wayMilei has cast radical free market reforms
as something liberating for young peoplewho have been, to put it bluntly, and

(01:03:23):
he uses very blunt language, I should say,screwed by a corrupt establishment.
I think there's something there thatany conservative in the world can use,
because after all, in the end,what socialism and
state control does toan economy is to corrupt it and
to create insiders who establishmonopoly or oligopoly.

(01:03:46):
And that's at the expenseof ordinary people.
So I think Malay's great political successhas been to say, I'm mobilizing you young
people because you've been screwed by thissystem and I'm going to give you liberty.
And liberty is gonna be Just a lot of fun.

>> Bill Whalen (01:04:00):
I think he makes liberty exciting.
And that's something which,which Republicans and I, I would say also
British conservatives have been strugglingto do really, since the 1980s, which is
the last time we had a kind of libertarianmojo in the Northern Hemisphere.

>> John Cochrane (01:04:15):
Yeah, Liberty and opportunity,
as opposed to the governmentis going to send you a check.
And you know what?
Unfortunately, the Trump administrationis sliding into state capitalism,
crony capitalism.
Greg IPS column in the Wall Street Journalwas excellent today.
And will of one man, here's a tariff,here's another tariff,
not something institutionalized.

(01:04:36):
What I just learned from Neilis that Milei is moving from I
extend a decree to somethingthat is in the institutions and
will last after he's gone andhas the popular and political support.
So, so freedom and opportunity,as opposed to a move to state
capitalism of the right ratherthan state capitalism of the left.

(01:04:57):
This can be politically salient.
That this can survive politicallyeven among Trump's base,
that they would rather.
Opportunity, I think might be a lesson.
Not likely one that it will be heard here,but maybe.

>> H.R. McMaster (01:05:10):
And it's, it's American, right?
I mean, in terms of individual agency,you know, I mean,
I think about the contrast with the likekind of the postmodernist critical theory
nonsense that putsthe words institutional and
structural in front of every problem androbs people of agency.

Right? >> H.R. McMaster
hey, you can build a better life foryourself, you know, for your kids,
you know, know, and, andwe're to create the right environment.
You can do it.
You can exercise authorshipover your own future.
Right.And
I think that's a pretty powerful message.

>> Bill Whalen (01:05:39):
John, let's talk tariffs for a minute.
So Argentina right now islooking at a 10% tariff.
Its neighbors to north Brazil,I think is a 50% tariff.
China's tariff to be determined.
China got another 90 day reprieve.
I think November 9th is now the, the magicdate to decide what to happen there.
Anybody curious about this cango to a wonderful website called
tradecompliancesourcehub.com and it coversterrorists in every way imaginable.

(01:06:02):
It's a very good website.
John, you wrote back for Grumpy Economistback in January that you said you're,
quote, not a fan of terrorists.
Not a catastrophist either.
So here we are in the middle of August,and
it seems to me thatthe world hasn't collapsed.
So are you willing to say thatmaybe Trump is onto something here?

No, [LAUGH] remain an answer in such a-

>> H.R. McMaster (01:06:22):
That's so surprising.
So surprising.

But my mind is not Closed.
I've learned a lot and come to appreciatethe national security point of view.
There is a hypothetical view of some verynarrowly constructed tariffs that actually
have something to dowith national security.
Thanks, HR for educating me on that one.
Although I would needle you a little bit.
How's that global economicstrategy working out for
you there now that this sword hasbeen unsheathed and off it goes?

(01:06:46):
In fact, we're seeing the tariffs arebeing wielded for foreign policy purposes.
The 50% tariff on India is.
Why don't you guys stopbuying Russian oil?
It's not about optimal trade policy.
So I'll defer to HR orneedle HR about whether it's.
It's working or not.
Tariffs are a tax.
A 10% tax is not good, but you know,we have 10% sales tax in California.

(01:07:07):
Well, it is kind of falling in the ocean.
But bigger tariffs are muchmore economically damaging.
What I've seen economically is thatthe price increases are coming.
They won't be huge.
Now, what's the interesting thing aboutthe tariffs is how long will they last?
The court case on tariffs looksvery likely to blow up in

(01:07:27):
the administration's face.
And I encourage you,
Scott Twitter repostedthe administration's letter to the court,
which is just a wonder of understandinghow America works these days.
Read that letter of how Trump's view.
It is clearly written by Trump ofwhy you must stay this on the way to

(01:07:47):
the Supreme Court.
But it's very likely that the tariffswill be declared illegal.
And if they are declared illegal,
the government has to pay backevery cent collected so far.
I think a lot of what's going on ispeople are waiting because this is not
institutionalized.
This is the will of one man.

(01:08:08):
There is not a economic force,a political force.
There's not anything demanding big tariffsright now from economic point of view.
So I don't think they will last.
And a lot of the world is justholding its nose and waiting.

>> Bill Whalen (01:08:22):
Okay, Neil, I struck out with John.
Let me try you, has there been a vibeshift when it comes to tariffs?

Well, what's important, and
I said this to Margaret Hoover on FiringLine the other day, is that there are at
least three different rationales fortariffs that have been proposed.
One is that it's a negotiating leverthat you're going to use to get
relatively protectionistcountries like India and

(01:08:48):
Brazil to lower their tariffs,hence reciprocal tariffs.
Another is that they'rea source of revenue,
which suggests that they become permanent.
And by the way, John, I think even if theIIPA basis for the tariffs, which is the,
the legislation that or rather the basisfor the tariffs that's being challenged in
the course, I think even if that'soverturned, I'd be very surprised if

(01:09:11):
the administration quietlyreimbursed everybody.
I think they'll just find another way to,to continue to impose the tariffs.
But they can't simultaneously bea bargaining chip or a lever and
a permanent source of revenue.
And then there's the third rationale,which is in some ways the oldest one,
which is that they'll help to reindustrialize the the United States.

(01:09:32):
They'll bring jobs back to us,which I think is very,
very hard to to see working.
Except that President Trump uses his tradenegotiations to get other countries to
commit to investing in the United States,
how far that will actuallyhappen is another matter.
Can I add one last point?

The only way another country can invest more in the
United States, how do they get the dollarsto invest more in the United States?
They have to export to us.

So this is the kind of economic-

Which I think is great.

Number one problem.
But the last thing I, I'd add is that Imean these aren't really trade agreements
as we used to understand them.
Anybody who's seen a trade agreementknows that it's a very long and
detailed document.
These are more like press releases evencalling them deals I think over does it.
And it's not clear that theyreally have much staying power.

(01:10:22):
And I the point that's interesting to meabout the tariff policy is it's ultimately
very fluid.
I mean it seems to changefrom week to week.
We just had an extension of the,
a postponement of the tariffsthat President Trump threatened
to impose on China and the tariffsthe Chinese want to impose on us.
So if you're doing business andit involves imports from the rest of

(01:10:43):
the world, you really don't know whereyou're going to be this time next month.
And I think that uncertainty to goback to Bill's point is a headwind,
not a tailwind for the economy.
So I'm with John.
I'm sceptical that this really worksrelative to a counterfactual in which
the US retained more of a freetrade stance where it does work and

(01:11:06):
this was Milei's point when we discussedit is if you are really interested
in doing geopolitics andusing tariffs as effectively sanctions,
then you can find some rationale for it.
And I think HR would probably agree withme if I said when you're dealing with
a country like China, which clearlydoesn't obey World Trade Organization

(01:11:27):
rules and is in effect a mercantiliststate, there is an argument for
using tariffs to apply pressure toChina to liberalize its economy and
open its economy.
How far that works remains to be seen.
It's turned into a pretty tough andbruising battle between Washington and
Beijing.

But HR, how is this working out?
So you might like tariffs on China.
Canada hates us now, andthe rest of the world.
It's going to take a long timeto put this back together.
Nobody trusts America becausewe're breaking our deals.
This looks like a geopolitical long term.

>> Bill Whalen (01:11:59):
Term,
there's a lot of long term damage herethat I'm curious how you evaluate.

>> H.R. McMaster (01:12:05):
Well, there, there has been a lot of damage.
I think we can recover it with, with kindof a rational approach to trade policy and
to economic statecraft broadly.
I would just, I would agree with Neilthat, that even if there is a ruling that
sort of reduces the President'sauthority under the IEPA legislation,
that he will fall back on the trade lawand then do the homework, which is already

(01:12:27):
happening in terms of, you know, what isthe national security justification under
Article 232 of the Trade law in terms ofintellectual property theft by the CCP and
others under, under 301 of the Trade lawand other actions that have to do with,
with overcapacity and dumping to, so
that China can gain controlof critical supply chains.
I think now there is maybe an opportunityto rationalize the approach to economic

(01:12:51):
statecraft overall.
And to get to your question, John, like toincentivize private capital to invest in
the supply chains thatare critical to national security.
If I see a glimmer of hope there, I seea little bit of that happening now on
the supply chains associatedwith permanent magnets and
critical minerals and the mineralseparation and refinement process.

(01:13:13):
You're seeing a lot of investment in somenew companies and in some old companies to
try to address this really significantthreat to national security.
And I, when I look atthe President's approach to China,
I think he's buying time.
He's buying time so that we can reduceour vulnerability to disruptions of these
critical supply chains that China has kindof an exclusive grip on at the moment.

(01:13:37):
So I think as the focus becomesmore on China, we'll realize, hey,
Canada is our friend.
These agreements, the USMCA renegotiationfor next year will focus a lot
on transshipment and dumping andoffshoring by China.
So I think there'll be kind ofa move toward normalization, but
I don't think necessarily a reductionin tariff rates, you know,

(01:13:59):
because I think Trump still loves them.
He's going to justifythem in a different way.
There'll be more sectoral tariffs andthere'll be more that are tied
to the trade law under these variousclauses associated with national security,
intellectual property and so forth.

>> Bill Whalen (01:14:13):
I know we could keep going on this, guys, but
I've got to cut you off.
We have to move on to the lightning round.
So we're going to do one topic andtry to make it a quick one today.
Gentlemen, this week marksthe 80th anniversary of Japan's
acceptance of the Potsdam Declaration andan end of World War II,
the formal surrender coming onSeptember 2nd in Tokyo Bay.

(01:14:33):
We're also a few days past the 80thanniversary of the dropping of atomic
bombs on Hiroshima and Nagasaki.
And it seems to me that each year we getinto a conversation about the morality of
atomic warfare.
Neil, why do we have thisconversation each year?
And is it possible that history mayturn at some point in the future?
Whereas history tends to be rathercritical of the US decision,
a lot of second guessing of it.

(01:14:54):
Will there actually be,if not cheerleading for it,
at least a more positive assessment of it?

I think it would be odd if we didn't look back and
ask ourselves,
was it really right to use atomic weaponsto drop them on two Japanese cities?
I think we'd be odd and
the historical profession would befailing if we didn't ask that question.
But of course the answer is that's thebest way to end World War II swiftly and

(01:15:22):
avoid an enormously bloodyamphibious invasion of Japan.
So I remember when I was writingthe book War of the World,
going back over the literature, remindingmyself of the revisionist critique,
the argument that it somehow wasn'tnecessary, that it was really designed to
send a signal to the Soviet Union,no, you've got to step aside and

(01:15:42):
ask what was the alternative confrontingthe US Government at that time?
And horrific though it was,it not only ended World War II much more
swiftly than would have been possible,he also established a new order,
a Pax Americana, based on the factthat the United States had once,
or to be precise,twice used atomic weapons in anger.

(01:16:06):
And one shouldn't underestimatehow important that was for
the subsequent peace of the world.

>> Bill Whalen (01:16:11):
John.

I think it's a good week to remember our dearly
departed Tom Leher andhis wonderful song, Who's Next?
Written in what, 1960, whatever,and how relevant it is now.
One of the issues right now is not justthe decision to drop bombs, but the non
proliferation regime that we put togetherin the Cold War seems to be falling apart.

(01:16:34):
Who's next, is an interesting question.
We should ask every year.
Was it right?
This is not a question you shouldjust consign to not thinking about.
You should think about it andas Neil said, come to the right answer.
Ask and remember.
I also think among the manycounterfactuals, this is a great one for
our usual counterfactual show.

(01:16:54):
Had we not dropped themin World War II and
had the New Yorker not written its articleon what happens after an atomic bomb,
we almost certainly would havedropped the H bomb in Korea.
So the fact that we saw these weapons,how awful they are,
they became the ultimate deterrent.
They became the line that must neverbe crossed precisely because we

(01:17:19):
actually saw what they did.
And had we not seen what they did,I can't imagine a world,
you guys can comment on this more than me,where the U.S. and Soviet Union did not
drop hydrogen bombs on cities atsome point during the Cold War.
So that demonstration of just how awfulthey were had actually an enormous
salutary effect for getting throughthe Cold War without their use.

>> Bill Whalen (01:17:40):
Right. >> Condoleezza Rice
mentioned actually becamea book by John Hersey.
I actually read it on a recent airline trip I took.
He accounts what happened tosix survivors of the blast.
It's quite remarkable to read.
Actually we have just a minute left,so I'll give you the final word.

>> H.R. McMaster (01:17:52):
No, it's important to read Hersey's book Hiroshima,
as you mentioned.
It's also important to,to look at really the, the,
the strategic bombing ofWorld War II broadly.
George Kennan's essay in his,in his collection of essays,
Sketches From a Life, when he,when he visits Hamburg and sees and
then makes the argument we shouldnever have to do this again.
This is one of the reasons why I thinkit's important to develop a range

(01:18:15):
of military capabilitiesthat allows you to fight and
win in war without the indiscriminatedeath of civilians.
And of course, there are those who wantto try to make war such that it could be
resolved quickly from standoff range andso forth, will make the argument,
you know, for strategic bombing,the use of less discrimination.

(01:18:39):
And it's important for
us to kind of revisit just what ThomasAquinas told us about just war theory.
But there's also, and2 we have more time to talk about,
there's a lot of bad history around,around the dropping the atomic bomb and,
and as Neil knows, well,like this, what was it called?
The, the atomic diplomacy,the school of atomic diplomacy and
others who just put false argumentsout there that, you know, you know,

(01:19:02):
that Japan was about to surrender anyway.
And so I think it's important to approachthe body of work on this with a deal
of skepticism, read broadly and understandthe decision in context of the time.

>> Bill Whalen (01:19:15):
Okay, gentlemen, great conversation.
We'll leave it there.
And I hope you enjoythe rest of your summer.
We'll see you back here after Labor Dayin the US on behalf of my colleague
Sir Niall Ferguson,Lieutenant-General H.R.
McMaster, John Cochrane, the director ofthe Hoover Institution, Condoleezza Rice.
All of us here at Hoover,we hope you enjoyed today's show.
Until next time, take care.
Thanks again for watching.

(01:19:38):
>> First we got the bomb, and that wasgood because we love peace and motherhood.
Then Russia got the bomb, but
that's okay cuz the balance ofpower is maintained that way.
Who's next?
France got the bomb, butdon't you grieve cuz they're on our side.
I believe China got the bomb,but have no fears.

(01:19:58):
They can't wipe us out forat least five years.
Who's next?

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