Cold War II + An Update on Global Conflicts — with Niall Ferguson
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I almost called 911 and said, "I am masturbating too much." And the operator said, "That's not really a problem." So I put him on speakerphone and said, "See, mom? Get off my case."

Welcome to the 311th episode of The Prop Jeep Bot. In today's episode, we speak with Neil Ferguson, the Milbank Family Senior Fellow at the Hoover Institution, Stanford University, and a Senior Faculty Fellow at the Belfer Center for Science and International Affairs at Harvard. He's also a columnist at the Free Press.

and the author of 16 books. We discuss with Neil why he believes we are currently in Cold War II, the state of play with the wars in Ukraine and the Middle East, and who he thinks is likely to prevail in the upcoming presidential election. I'm a huge fan of Neil.

I love – you know, Neil's the real deal. Neil writes these incredibly intense, long, really well-researched books. He loves writing, and then he's used his platform as kind of a world-class historian to launch a consulting business called Green Mantle that is really –

Very similar, kind of along the same veins as the Eurasia group with Ian Bremmer. But anyways, I'm a huge fan of Neil. He's a great thinker. We have almost nothing in common politically. His views are much different than mine, but his views inform mine because he's such a clear blue flame thinker. And I love how he couches everything in a historical reference. Okay, before we get to that, what's happening? What's happening? Where's the dog barking? What?

Where's he barking? I am still in Aspen, but I'm heading to Nantucket this weekend on the Privileged White Douchebag Tour. That's right. Why am I headed to Nantucket? So let's talk a little bit about the two. I love Aspen. This is where I'm definitely going to hang out. I bought a home here.

And then Nantucket, I did not want to like. Why did I not want to like Nantucket? I think of myself as being sort of Euro-fabulous. I have the impression of myself that I'm a little cool, a little edgy. None of those things. And Nantucket is very Americana, like the pink shorts, the kind of cobblestone streets. It's actually a really interesting town. It's sort of where venture capital originated, the

A captain would raise money, pull together a team, and then go hunting for whales, and then come back. And if they got a bunch of whales, they'd make a bunch of money. And it is spectacularly beautiful. And I like places where my boys can just go free and not get into too much trouble. My parents were worried about me getting in too much trouble. I'm worried my boys are going to get into too little. So I like pushing them out and shoving them out and hoping that they find some fun. But I absolutely love it there. And it gives me a chance to come back to New York and work again.

What did I vacation when I was younger? First vacation I ever took, my mom took me to Niagara Falls. No joke. We went to, we saw the Canadian side of the waterfall, which is much more impressive. And then we went to this, we went to the kind of this camp where we stayed in a cabin with her other single mother friend.

And their daughter or her daughter, Annette, and we went to kind of this little camp where, you know, the big highlight was a tire swing. So my vacationing is a much different complexion now. But it was a ton of fun when you're a kid being outdoors, having a lot of fun. I don't know how I got here. Should we get back to the podcast? Okay, so moving on. Google got hit with a massive antitrust hammer.

Boom, said the FTC and the DOJ. Oh, my God. Couldn't happen to a nicer group of people. What do you know? A federal judge ruled on Monday that Google is an illegal monopoly when it comes to its search business. The ruling claims that Google has not achieved its stronghold on search just by happenstance. It's hired highly skilled engineers, innovated consistently, and made shrewd business decisions. Okay, I'm not sure that makes their case. But anyways, what they are, I believe, guilty of.

is something called monopoly maintenance. What do we mean by that? And that is, search is really unusual in the sense that it ages in reverse. What do I mean by that? The companies that have any shot at becoming a trillion-dollar company, and I think this is something entrepreneurs should take note of,

of as they age in reverse it's what i call the benjamin button effect and i wrote about this in my new york times bestseller the four by sky gallery which by the way has been optioned for an original scripted drama we'll see how that goes i'm going to la this week to pitch a bunch of the platforms literally the biggest story that's never been told or not told yet is about big tech but anyways we'll see but effectively the companies that in fact run to a trillion dollars uh

defy biology. Benjamin Button, a short story by F. Scott Fitzgerald about a father whose heart is broken because he loses his son in World War I and thinks that if he builds a clock...

that perfectly goes in reverse, and maybe he can reverse time and bring back his son. It's actually a really lovely story and was made into a wonderful movie starring Brad Pitt and Cate Blanchett, who are just really easy on the eyes. Oh, my God. Anyways, where was I? Oh, Benjamin Button, Aging in Reverse. That is what trillion-dollar companies do. They age in reverse. They defy biology. What happens when you drive a car off the lot? It loses about 30% of its value, literally, when you drive off the lot. When you take...

When you twist the cap off of toothpaste, it loses 100% of its value. It's not resaleable. That is the pace of most companies, or that's the cadence in most products, is they age in reverse. I'm sitting here looking at all this equipment, a ring light that makes me look like Joe Biden in 10 years. Jesus Christ, look how fucking ugly I am. Anyway—

All of this shit ages, like everything. Most business mimics biology, but the companies that bust a move towards a trillion defy biology and they age in reverse, mostly through network effects or agility. And search is one of those. And that is, every time someone searches, the next search gets better because the links you pick inform which links are the best links to present higher in the query results.

than the search before it. So it ages in reverse. So size matters and creates a better and better search product such that it makes sense for Google or Alphabet to go and pay Apple $20 billion to become

the default search engine. And what happens, that gets some additional traffic, gives them more pricing power, and slowly but surely they run away with it. And they have these deals with a variety of different companies. And essentially, their position has become unassailable. Now, was that the smart thing to do? Yeah. But does it create monopoly power and monopoly abuse where they charge greater rents?

on advertisers, basically every other company in the world? Yes. As a matter of fact, essentially Airbnb, which is my largest position, the reason why Airbnb is so powerful for shareholders is it's one of the few companies that's been able to exit the stranglehold that is Google or Meta. What do I mean by that? These are giant toll booths

And in Amazon, basically every e-commerce, every information age company, every institution or organization that wants to acquire customers online, see above everybody, has to go and pay a toll through one of these three organizations. And slowly but surely, they have increased the rents on the rest of the corporate world. So what would be the biggest tax cut in history? The biggest tax cut in history?

is if you made these markets more competitive and broke them up. And effectively, that's what they're saying here, is that the monopoly rents they are charging because everybody has to use Google has gotten to the point where it is stifling competition. And because they have access to cheaper and cheaper capital because of their monopoly position, they can become – go out and basically buy their position as the default search engine across the largest platforms anywhere.

and effectively run away with it. And this is what you refer to as monopoly maintenance. One of the important points the ruling makes is that, in fact, that Google charges a supra-competitive prices for general search ads, meaning that they're getting unfair rents. I think there's tremendous innovation to be unlocked in search once they, in fact, break these companies up. As a matter of fact, you kind of could argue that ChatGPT is a function of the innovator's dilemma where this $170 billion business is

called Search, right? It's actually 175 billion, had no vested interest in innovating. And as a result, ChatGPT or AI came in and said, we're not going to give you every answer in 0.0055 seconds. We're not going to give you 1,100 results. We're going to give you one, and we're going to try and do our best to give you the best answer. But still, this is a good decision. This is absolutely evidence that

of what I think is the smartest thing to oxygenate the economy and the complexion of the Biden-Harris administration around making markets more competitive and breaking up big tech. So I think this is good for the ecosystem, good for the planet, good for consumers. And also, I believe it's good for Alphabet. If you're an Alphabet shareholder, I think you want YouTube's fund. I don't think you want them cooperating

And coordinating with Google search. I think YouTube on its own probably trades would trade at a greater multiple because it is the premier. Everyone talks about Netflix, TikTok. I actually think arguably the most dominant video search and video platform amongst people under the age of 30 is probably YouTube. And I just think it's fantastic technology.

that Lena Kahn and Jonathan Cantor have taken a more aggressive approach to this. What will be the remedy? That'll be really interesting.

Could they break them up? I don't think they'll do a fine because that doesn't mean anything for these companies. Will they maybe ask Apple or demand that those players present multiple options and then you get to pick which search engine you want? I don't know. We're going to see. The remedy part of this case is going to be super interesting. We've already seen TikTok play an interesting role in search, particularly for Gen Z. Axios reported that 21% of 18 to 24-year-olds start their search journey with TikTok. Oh, my God. 21% search journey.

share on TikTok. Who would have thought that? Lugged is not controlled by an adversary that wants to deposition

and train our youth to hate America. But anyways, Amazon, Instagram, Snap, and of course, ChatGPT have also played a big part in where and what people search for. Google shares closed down 4.5% on Monday because of the ruling. Analysts speculate that Apple would face a blow if one of the core remedies prevents Google from paying to be the default search engine. You've got to imagine that $20 billion a year payment, about 19.9% of it hits the bottom line, and then there are multiple on-line

On profits, I think it's about $30 or $33. So you're looking at about a $600 billion hit to their share price if all of a sudden it were to – if shareholders would decide, okay, they're going to have their EBITDA reduced by 20% here. I don't know if it's going to have a big impact on Apple because I think what Apple could probably do is get that same $20 billion cut.

Can they get $20 billion? I don't know. They control custody to the billion wealthiest people in the world called iOS users. And if it's not Google, it's going to be someone else that they'll backfill and say, do you want to be the premier or the default search query AI here? I think they're still in a pretty good position. Alphabet also, I don't think their shareholders are going to get hurt because I think a breakup would actually be good for the company.

But this definitely sends, I think, a healthy flare across the bow of these companies, which have become way too powerful. What's some evidence down there?

against CrowdStrike and Microsoft. But he didn't say we're switching vendors or switching technology. Why? Because he can't because he's above monopoly power. The best thing we could do to oxygenate the economy would be, one, to restore Sino-U.S. relations, the first and second largest economy. Kissing and making up would bring down the price of everything globally. They got manufacturing and supply chain down. We got IP innovation and consumer demand. Come on, let's kiss and make up. Anyways, that would be the number one tax cut. The number two tax cut...

would be the breakup of big tech who are every day increasing their rents on essentially every business in the world. We'll be right back for our conversation with Neil Ferguson. There's a lot of things you might say when your small business has a problem. You've got to be kidding me. Come on. Well, I didn't see that one coming. But that won't get you the help your business needs. What you should really say is something that can help. Like a good neighbor, State Farm is there.

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Life is filled with crucible moments, those turning points where a tough decision can change everything. Sequoia Capital's podcast Crucible Moments asks founders of some of the world's most important tech companies to reflect on those very moments that defined who they are today. And in this season, Crucible Moments is back with the founders of YouTube, ServiceNow, DoorDash, Natera, Reddit, and more as they share firsthand their triumphs, setbacks, and

and the often unexpected decisions that shaped them. Tune in to the new season of Crucible Moments now. You can catch up on season one at cruciblemoments.com or wherever you listen to podcasts. Welcome back. Here's our conversation with Neil Ferguson, the Milbank Family Senior Fellow at the Hoover Institution, Stanford University, and a Senior Faculty Fellow at the Belfer Center for Science and International Affairs at Harvard. Neil Ferguson, where does this podcast find you? I cannot disclose my location for this.

reasons of national security, but I'll say New England. New England. Wow. Very mysterious. So first off, let's bust right into it. Starting with something topical, the Wall Street Journal reporter Evan Gershkovich has been freed as part of what the White House National Security Advisor described as a historic exchange, something not seen since the Cold War. Neil, what do you make of this? Well, I've been saying for the last six years that we're in Cold War II, and there you go.

It's a very Cold War thing to do prisoner exchanges with the other side. And so for me, it's fresh evidence, if fresh evidence were needed, that we're in a new Cold War. And Russia, as in the first Cold War, is on the other side. So, of course, is China. So is Iran. So is North Korea, of

But this is a good day because obviously Evan's release was something that everybody who has any connection with journalism was praying for. And although, of course, we've had to let some Russian spies go to get him out, I'm inclined to think that that is a price worth paying. Let me ask you though, when...

When Brittany Griner was exchanged for, you know, this merchant of death, I think his name was Victor Boot, I was worried we were setting up a series of incentives that encouraged Russia and other kind of, for lack of a better term, axis of evil nations to take more and more people prisoner on unfounded charges. Do you have any, and we don't know what they're trading for here, but do you think this sets up poor incentives that will only result in more Americans being incarcerated?

It's possible. On the other hand, they're not going to stop spying and we're not going to stop trying to catch their spies. If the lesson of the Cold War is relevant here, that didn't produce an escalating cycle of prisoner taking. And so I wouldn't expect that to happen in this case, mainly because

There are bigger pieces on the chessboard than spies and journalists. And in the end, the Cold War is like a massive game of chess. And these are pawns, are pawns.

If there were pieces smaller than ponds, they would be those. And the Russians have much bigger pieces that they want to move and bigger pieces of ours that they want to take, like, say, Ukraine. And in that sense, there's no obvious rationale in their accumulating more ill will by arresting more journalists. And I'd be surprised if it happened on a larger scale in the coming years.

So let's use that as a jumping out point, talking about the war in Ukraine. Give us what you think the state of play is there, what you think a likely outcome is, and how you would approach it, or what advice you would have for Western policymakers as it relates to Ukraine. Well, there are two, perhaps more than two, but two plausible futures, depending on who wins the election on November 5th.

In the scenario in which Kamala Harris wins, there'll be a continuity of the policy that has got us to where we are. And that policy has been outwardly to support Ukraine and its maximum war aims by saying Ukraine sets the war aims, privately to continue the war

at such a level of support that Ukraine doesn't lose, but not at such a level that it can win. That policy, I imagine, would continue into the next four years if Harris wins.

because I wouldn't expect a big change to the national security strategy or team. There'd be some changes, but I don't think there would be a huge shift. And the danger with that policy became obvious last year and earlier this year. If the US stops its support for Ukraine, then Ukraine loses. For six months,

the House of Representatives cut off financial and military aid from the US to Ukraine, the Europeans couldn't compensate for the shortfall, and Ukraine started to lose the war because it simply cannot maintain its defenses along this now very long front without American support.

And so the risk of a protracted war without a conclusion is that at some point we lose interest or politics leads us to lose interest. And then I think Ukraine loses the war. I was always against prolonging the war. I said in late 2022, when it was going well for Ukraine, that it would have been ideal to lock in Ukraine.

some kind of peace negotiation then, when Ukraine's fortunes were at their height. Because if it dragged on, the sheer superiority of Russian resources would be bound to tell. So that's one future, and it's not one that I, or indeed my Ukrainian friends, find very appetizing. Especially because

In this future, you'd expect President Harris to be as easily intimidated by threats of nuclear escalation as President Biden has been. From a very early stage in the war, the Russians realized that if they said nuclear weapons, the Biden administration would kind of pull back. And this has put a lid on the support that the Biden administration has given Ukraine.

It's, I think the best explanation for why support has been enough, not to lose, but not enough to win.

So now let's imagine scenario two, in which Donald Trump is reelected after a four-year intermission. What would that be like? Many people wrongly assume that Trump would just throw Zelensky, President Zelensky of Ukraine, under the nearest available bus and do a deal with Vladimir Putin, the Russian president, that would be hugely favorable for Russia. That is not, I think, what would happen.

And the reason I say that is that one national security spokesman after another on the Republican side has come out against that kind of isolationist, the hell with Ukraine stance in recent months.

If you look closely at what Trump says, if you look closely at what JD Vance said to the New York Times last week, you will see that the Trump plan is radically different. The Trump plan is to put huge pressure on Russia, economic and military, make the sanctions bite more, make the weapons available to Ukraine more powerful in order to force Putin to the negotiating table.

And then you're going to try and rerun the Korean peace of 1953, where you don't actually ever get to a peace agreement, but you have an armistice so the fighting stops. And then this nasty border just kind of stabilizes roughly where it is. I think that's the very different future that we'll get if Trump wins.

That sounds like, in some, sort of an endorsement of the Trump plan as it relates to Ukraine. And what I would say is, and I don't know this as well as you, I'm not tracking this closely, but I remember Trump saying, I'd have this done in a day. And my sense is that Putin and his supporters are bigger fans or are hoping for a Trump administration. But you think that actually a Trump administration would, in fact, go harder at Russia in the short term trying to force a deal.

Well, that's, I think, exactly what Mike Pompeo said in the Wall Street Journal earlier this week. He said the sanctions have not been enforced nearly hard enough. We need to go after the Russian banks. We need to really make the Russian economy hurt. We need to confiscate the reserves and make them available to Ukraine as reparations. And we need to step up the firepower that we give Ukraine.

in order to force a negotiation upon the Russians. And I'm not endorsing Donald Trump when I say that that makes more sense to me as a plan than carrying on with what we're currently doing, which I think will lead to Ukraine's defeat. The longer this lasts...

And the more we drip-feed weapons to Ukraine, the more likely it is that ultimately Russia's superior manpower, superior raw materials, superior resources together lead to victory. And we really have to avoid a Russian victory. So I think it makes sense to try and get to an armistice. And what's interesting is that if you talk to people close to Zelensky, they will privately say,

We kind of prefer this to what we're getting from Biden, which is,

this drip feeding of support and this constant language of de-escalation. The problem about the word de-escalation, which the Biden administration loves as a word, is that in practice it means the opposite of deterrence. And you need to have some deterrence. You have to make it clear to Russia that it will cost them to carry on this war if you're going to have any kind of peace negotiation. Of course, it doesn't get done in a day. These things never get done in a day. It'll take six months to 12 months

And I don't think even at the end of 12 months, there'll be agreement on everything. But if you can get an armistice, a ceasefire, even that hugely helps Ukraine, even at the cost of accepting for who knows how long that the Russians control the part of their territory and the frontier between them and the bad guys would be a very dangerous place for quite a long time to come.

So just for the purpose of the discussion, some pushback. I see that Biden and Harris have distinctive some dysfunction in Congress that, as you said, delayed funding for the war for six months, which was, I think, I would describe more of a lack of leadership on the part of Congress, not necessarily Biden and Harris. And that this has been, in my view, I think of the president as the CEO responsible for allocating resources to their greatest return. I would argue this return is

has been one of the greatest investments the West has ever made. We've taken out what, a third of Russia's kinetic power, defanged the reputation of this supposedly ferocious army, given Xi paused before he tries to invade Taiwan without ever even putting a boot on the ground, an American boot on the ground. NATO is out of its brain coma. Europe is finally unified. And I don't want to in any way diminish the incredible loss of human life on both sides. And then on the other side, this notion that

the Trump administration would put forward more pressure. When I hear J.D. Vance consistently saying he's indifferent and doesn't care about Ukraine, you don't worry that it emboldens

Putin to be less apt or inclined to accept some sort of deal or armistice here. I see the opposite. I see this emboldening Russia, not getting them to the negotiation table. The problem with your first point is that this business strategy, as you describe it, doesn't look good if after three years your enterprise goes bust. If after three years... You mean Ukraine loses? Right.

You mean if Ukraine were just to lose?

in Cold War I faded. And so to say that it's all the fault of the House of Representatives is to slightly miss the point. It was obvious from the outset that there would be a finite amount of domestic patience in channeling resources to a war in Eastern Europe that really ought to be much more a concern of Europeans than Americans.

I think the risk that they ran when they said to themselves, which they did, let's keep this going because we're really destroying Russia's military capability. The risk that they ran was that in the end, if Russia won, albeit at a high cost, then Putin would be the winner. So I think this was a very poor business strategy. And I said so at the time. It would have been much smarter to try and push for a peace or at least an armistice strategy

When the war was going really badly for the Russians, which it was in late 2022, when they were driven back from Kharkiv, they nearly lost a large amount of their military outside Kherson. That was a moment when I think he could have attempted a negotiation. And we didn't do that because we thought, we're so clever, we're going to fight to the last Ukrainian and exhaust Russia's military. Point one. Point two, Vance has changed his tone.

Because it's been explained to him and to Speaker Mike Johnson and to all the people in the House, this is what happens if Ukraine loses. And what's been fascinating to me, Scott, over the last six months or so has been to see that the isolationist faction within the Republican Party, which is quite well represented in the House of Representatives, has been routed.

And the reason that it's been routed is that they had it explained to them in, I presume, intelligence briefings, what would happen if Ukraine lost. And then they realized that not only would Putin be laughing, but so would Xi Jinping. And what's interesting in this past six months is that the argument that I made last year is now almost conventional wisdom amongst Republicans, namely that there is an axis of China, Russia, Iran, North Korea,

that it is engaged in a Cold War against the United States and its allies. And a victory for Russia in Ukraine is a victory for Xi Jinping, as surely as it's a victory for Vladimir Putin.

Republicans have had that explained to them. They've had it drummed into their heads that if you let Russia win, it's a very bad outcome for the US and its allies and a very good outcome for China and its allies. So I think there's been a big shift. Not everybody's noticed this, but I think it's very important because it means that Putin, who is certainly paying attention, is realizing that a Trump administration won't simply hand to Ukraine a

In a phone call, I think that scenario was never very likely and it's certainly not going to happen now. Thoughts on the war in the Middle East? Well, we're speaking of what could be the eve of a new war, the one that is brewing between Israel and Hezbollah.

The probability that that war happens this August is, I think, high now after the events of recent days. It's pretty clear that Benjamin Netanyahu came back from Washington in

and made like Al Pacino in The Godfather and settled family business with the succession of remarkable hits against Israel's enemies. It's difficult for me to see that there isn't retaliation for that. I think the Israelis expect it. It's possible that the Iranians and Hezbollah duck because they don't want to be drawn into that conflict.

On the other hand, they may realize that there's some non-trivial probability that Donald Trump gets reelected, in which case their situation is going to be much worse next year because Trump will ramp up the pressure on Iran in a way that Biden has not. So I'm afraid we're probably on the eve of a war that will make the war against Hamas look quite small because...

Hezbollah is much, much better armed than Hamas. It has a formidable arsenal of weapons and missiles. And if this war does break out, as I think it is increasingly likely, it's going to be a bloody war for both sides. And Israel will certainly suffer more casualties than it has in the war in Gaza. It appears that the calculation is that Israel has decided they're ready, that they're up for that fight. Your thoughts?

It's been a debate within the government since October the 7th. I was in Israel in the spring and met with members of the government, as well as with their opponents and the critics of Mr. Netanyahu. And what struck me was that although the political divisions remain very deep in Israel and hostility to Bibi is something that is very widespread,

Nevertheless, October the 7th changed something in Israel and created a new unity, not a political unity, but a unity of purpose, unity.

The sense that a second Holocaust was premeditated, was being planned by the likes of Hamas has greatly changed the atmosphere in the country. And it has made even my liberal friends in Tel Aviv more or less write off the idea of a Palestinian state. And

more or less acquiesce in a very aggressive policy directed against Hamas, Palestinian Islamic Jihad, and now Hezbollah. So if you go back to the days after October the 7th, when we were all reeling from the sheer horror of what was done by Hamas and its confederates, the debate that was going on within the Israeli government was, do we hit Hamas?

or do we actually go after Hezbollah? And Defense Minister Gallant and other military advisors said we should go after Hezbollah because it's the stronger of our enemies. And the planes were on their way. They had taken off to hit Hezbollah when Netanyahu overruled that

decision and said, no, we go after Hamas first. So as always, the Middle East needs to be understood partly through the lens of Israeli domestic politics. Many people forget just how important that is. Given it's the only democracy in the region, you have to follow its democracy closely. And that battle about when do we hit Hezbollah has been going on ever since October. And I think ultimately,

the realization is you can't postpone indefinitely a showdown, A, because they keep acquiring more weaponry, B, because your people near the Lebanese border were evacuated many months ago now, and they want to go back to their homes. You've got a very large displaced population that was moved away from the Lebanese border.

If you want to get them back in time for the school year, you have to do this now in August. So I think, although one can never be certain, I think we're quite close to the brink of a new phase of the Middle Eastern conflict, which in many cases is a multi-front war already. It's not just about Gaza, though that's what has dominated media coverage. It's also about Iran's direct attacks on Israel. It's about the Houthis. This is a very complex picture.

But Hezbollah is the organization that poses the most clear and present threat to Israel. And sooner or later, there's going to be a showdown. And I think the argument that has been made by the Israeli security services and armed services is why wait for them to hit us first? Why give them the initiative? If we take the initiative, then we're likely to suffer fewer casualties than if they do.

Yeah, I felt as if, I don't know if assassinations are the right word or strikes, were pretty bold in that Israel, the way I read it was Israel believes that they are coming to an end of the war in Gaza, that the tunnels are nearly taken out. They've kind of cut the region in half and controlling the flow of Hamas. I was actually struck by how bold this was, that they're effectively willing to open up a two-front war. Is that your sense of it? Yes, I don't think it's born of overconfidence, though. Right.

rather the opposite. I think there's considerable disquiet about the extent to which Hamas has really been destroyed. There's a sense that Israel has to act now because the longer it waits,

the worse the situation becomes. So I think this decision to force the issue with Iran and with Hezbollah has been taken because they realize that they're getting nowhere with ceasefire negotiations, with the hostage negotiations.

because there's no good faith on the side of Hamas. Their situation internationally is one of relative isolation. That's not new in the history of Israel. And the support that they've received from the Biden administration has been tepid and

ambivalent, and there are elements of the administration that clearly still somehow believe that you can reach a modus vivendi with Iran or resuscitate the Iran nuclear deal. So the Israelis have decided it might as well be now. It's not ideal. But if not now, when? Is our situation really going to be better next year? I think that's what's going on.

You think it's fair to call the Biden support of Israel or involvement of Israel as tough, but my understanding is it'd be difficult to point to any country in the world, in my view, that has provided more steadfast support than the U.S., immediately deploying carrier strike forces, coordinating around intelligence, coordinating around...

defense systems for the missile attack from Iran. You really think it's fair to call the support from the U.S. tepid? Yeah, I do. I mean, because apart from the initial fine words that Joe Biden uttered, the support has been publicly, internationally tepid. Of course, these things are all relative.

The US is more supportive of Israel than any European country. Yeah. I mean, there are European countries that are recognizing a Palestinian state this year, even though it doesn't exist, doesn't seem likely to exist. But if you compare Biden's administration with, say, Richard Nixon's in 1973, which is the last time Israel suffered a surprise attack,

the scale of the support was far greater then. US support for Israel is much less important economically than it was 50 years ago. Much, much smaller share of Israeli GDP because the Israeli economy is actually a much bigger and more innovative economy. So one mustn't make the mistake of thinking that the US is absolutely crucial to Israel. It's much less crucial than it was

it was from a military as well as an economic standpoint. But it's not indispensable. And so, for example, the big problem that doesn't get talked about nearly enough is that Iran is now very close to having a nuclear capability. I asked a Biden official not so long ago,

Are you in fact acting like they do have nuclear capability? Are you treating them as if they already are a nuclear arm power? Because although you sent two aircraft carrier groups, they didn't actually do anything to punish Iran for its obvious complicity on October the 7th. And on the whole, the administration tried after October the 7th to pretend like Iran wasn't involved, which

which got hard to do when the Iranians unleashed a direct drone missile attack on Israel for the first time in the history of the Islamic Republic. So I think this kind of ambivalence, which characterizes the administration as a whole, is in marked contrast to the support that Israel could count on in the 70s, when that support was absolutely indispensable. I'll add one other point. Back in the 70s, you did not have a

a wing of the Democratic Party, the progressive wing, taking the side of the Palestinians. And so the politics is very different in 2024 as compared with 1974.

In 1974, the Democratic Party was pretty strongly supportive of Israel and had a significant Jewish element, which Nixon used to complain about because he would always bitch that he was doing so much for Israel. Where was the gratitude? Typical Nixon. But we're in a very different world today where, you know, although Joe Biden's still kind of rooted in that era, and I think he means it when he talks about the U.S. commitment to Israel, there are plenty of people to the left of Joe Biden

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Offer valid for a limited time. Other fees and terms apply. So let's move to the U.S. You said that Vice President Harris is a California Democrat through and through, therefore will be hard to draw in moderate voters. And also you've described the Republicans remain the captives of the personality called the MAGA movement and the Democrats remain the captives of the donor crats, the wealthy friends of the Clintons and the Obamas. Give us what you think the state of play is in the election and who

Who do you think is likely to prevail in November? Well, anybody who tells you they know the answer to that question in August of an election year, I think is having you on. It's once again close to a coin toss. We've gone back to where we were on the eve of the debate that blew Joe Biden's hopes of reelection up. And the polls are going to be noisy again.

probably for the next few weeks, because not only do you have the bounce that comes with the novel nominee, but you have the problem bounce that comes with the convention. So my sense is that when all of this bouncing is over and we get to Labor Day, there will be some return to where we were in June with

Trump slightly ahead, but with some polls putting Harris ahead and within the margin of error. And then you'll look at the states that are in play and you'll say, well, it's still pretty close in Pennsylvania and Wisconsin and Michigan. And maybe there are some other states that have changed a bit since Harris became the nominee, but it's close. And that's not surprising because if you set aside the personalities of the candidates, which media they represent,

pay more attention to than is warranted. American politics is really run by two machines, Republican and Democratic Party machines. And these machines are very good at delivering most states and most counties within most states to one or other party, leaving very little contested ground.

And the contested ground is contested partly because it just has demographic peculiarities and partly because there are independent voters who are up for grabs, who vote one way in one election and another way in another.

When you kind of take a step back and look at American politics, two things are really striking. One, it's a two-party system still, and there aren't any others like that everywhere else, including in the English-speaking world, where they used to have two-party systems like the UK. It doesn't have a two-party system anymore. But the US has institutionalized a duopoly system.

And it's extraordinarily difficult to get into that, to break that duopoly, even although about a third of the electorates say they're independents and would rather that they had another option.

Second really striking thing is that one party has retained elite control, Democrats. That's why I use the term donorocrats, because the wealthy elites currently in the Hamptons or in Aspen, that elite still controls the party. They determined that Biden was no longer viable, and they agreed that it would be Harris and that they wouldn't have

a contested or open convention. All of this was done with phone calls and texts between, oh, perhaps a dozen people who made the decision.

The difference with the Republican Party is that their equivalents, the wealthy Republican donors, no longer control the party. Those people would have far rather, Ron DeSantis was the nominee, and when that didn't work out, they would far rather have had Nikki Haley. But they failed because a MAGA movement that is part of personality culture around Donald Trump now controls the Republican Party, and that's what makes this election close, because if

If you had a better organized, better disciplined Republican machine and a more conventional candidate, you would absolutely clean up in this election. The Democrats are very vulnerable on key issues. They had an inflation mistake that was predictable and people haven't forgiven them. They have an immigration problem on their hands because of the southern border. Those two issues alone should ensure that the next president's a Republican.

But because the Republican Party is no longer under the control of its elite, it's capable of making tremendous self-harming mistakes. And that may give Kamala Harris a chance to be president of the United States. So just on the inflation issue, I would argue it's unfair to lay at the feet of Biden. My sense of inflation is too many dollars facing too few products. And with the amount of stimulus that

presented in both the Trump and Biden administration where 85% of it was saved and it just went into the market, which sent prices skyrocketing and had more money chasing Tfue products. And ultimately, I would argue the culprit of inflation is Putin who interrupted the supply chain.

Don't you think both Trump and Biden share equal blame, along with Putin, for inflation? I just think it's unfair to say that Biden had a misstep around inflation that's any greater than the misstep around Trump. Your thoughts? Scott, I seem to remember that your family hails, as mine does, from the East and the East. I don't remember anybody in Sheffield. Sandy Hills. Nobody in Sandy Hills ever said life was fair. In fact, it was a recurrent refrain of my childhood childhood.

Life isn't fair. Get used to it. No, of course, politics is not fair. And the voters are deeply unfair to Joe Biden when it comes to the performance of the economy, which practically any president of the last hundred years would have seized with both hands if it had been offered. Here's the deal. You get full employment. You get surging growth. You get investment in manufacturing structures, high cost.

Marks touching all time highs. And the stock market's roaring and inflation has a 9% high in the midterm year and then it falls back towards 2%. I mean, the president's going all the way back 100 years. Would have taken the data that this president has presided over with relish and yet the

the voters bitch about economy to every pollster who calls them up. And why is that? So there are two theories, as you know, Scott. Theory one is they just don't forgive 9% because they got real, really used to low single digit inflation and high single digit inflation.

has made them mad and they like the price level. They don't care about core CPI or core PCE. They just like, hey, it's still expensive compared with what it was. That's explanation number one. I have a lot of sympathy of that explanation because it tracks with my observation of how ordinary people think about the economy. But then there's the Larry Summers point, which you probably know, which is, well, actually higher rates might not hurt you through your mortgage if you have a 30-year mortgage, but it hurts you through a whole bunch of other things, a whole bunch of other debts you have. So

You take your pick. My basic view of this is that the Democrats were dreaming last year when they said they were going to run on Bidenomics because the voters hate Bidenomics and it's unfair. I will add the fair part is that the inflation overshoot in the US was a direct consequence of fiscal overkill in 2021.

That was the result of hubris in the Biden administration. They did not need to throw so much money at the economy when the vaccine said 90% plus efficacy. And I said that at the time, some has also said it, that this was a, um, an avoidable policy error. They did not need to juice the economy as aggressively as they did. Most of the inflation in Europe was Putin's fault. It was basically a supply shock.

about half or more the inflation in the U.S. was a demand effect, which I think came from keeping the stimulus going too long after the pandemic was beginning to dissipate. And then finally, as we wrap up here, both of us have spent time in different directions and different tenures and different parts of our life, but in the U.K. and the U.S., I would argue those are the two nations you know the best. They're the two nations I know the best. And my understanding is you're now spending more time in the U.K. after spending a lot of time in the U.S.,

Can you compare and contrast what the difference between business and politics and general lifestyle between your observations, having spent time in both countries and what it says about us? Yes. Well,

Britain, the United Kingdom of Great Britain and Northern Ireland to be precise, is despite a brief foray with Republican government in the mid 17th century, a monarchy that retains a hereditary aristocracy, even though they've just lost their seats in the House of Lords, it is a society still bound to a striking extent by tradition.

And I noticed this having returned to spend more time in the UK for family reasons because I've spent most of the last 20 years in this revolutionary republic, the United States of America, which still has the character of a revolutionary republic when you view it through British eyes.

The way in which this election is being conducted, the vituperation, the threat of violence, the sheer nastiness, is very reminiscent of the American politics Charles Dickens encountered when he visited early in the 19th century and was appalled. British politics is still a game of cricket between people who went to Oxford. And you saw that very clearly when Rishi Sunak was roundly defeated in

by Sir Keir Starmer on July 4th.

The handshakes, the jokes, the "I say, old chap, jolly good show," "bad luck, old boy," I mean, all of that is exactly the way in which British politicians have conducted themselves over 200 years. And so there's a sense in which that continuity limits the range of outcomes in British politics. Even after a period of turmoil,

that Brexit created, that period of turmoil was like periods of turmoil in the 19th century over the Corn Laws, over protectionism, turmoil over the Irish question. Although we have periods of turmoil and we've had years of multiple prime ministers before, the system remains stable around, particularly around Oxford University, because there seems to be one rule of British politics, and that is that the prime minister has to have been to Oxford. There are very, very few exceptions.

Having said all that, we would be deluding ourselves if we didn't recognize some similarities and points of convergence. I don't think Taylor Swift is a smaller deal in the UK than in the US. I don't think AI is a smaller deal. That's what unites us.

I was the first. The second was, of course, AI. And the third is this potential for conflict over immigration. It's tragic that three little girls were murdered by, it appears, the teenage son of immigrants from Rwanda when the girls were attending a Taylor Swift dance class. And this has unleashed a kind of classic summertime period of violence in

in the UK that reminds us that it's not all cricket and well done old chap, that some of the trends that have produced populism and political violence in the US are in fact still to be found in the United Kingdom too.

It's interesting, if I understand you correctly, you're saying the coarseness of our discourse in the US might be a feature, not a bug. Oh, it's absolutely a feature. And visitors commented on it from very early on in the Republic, that the sense that politics in America is a contact sport, perhaps even a blood sport, whereas in Britain, it's cricket. That goes back a very, very long way indeed. But you

We're divided by a common language, united by a great deal of increasingly global popular culture, and both the United States and United Kingdom face the same sociological dilemma. We are aging societies.

Half of the electorate in the United States is over 50. It's somewhat similar, perhaps even older in the UK. Older voters are not only more numerous relative than they used to be, but they also turn out at higher rates than younger voters. And older voters want two contradictory things. They don't really like inflation. That's nothing new. But they also don't like immigration.

The problem is that if you don't have large-scale immigration, the inflation would have been higher. Think about the counterfactual of closed borders in the period of the last four years. Inflation would certainly have been higher because the tight labor markets would have driven wages up. And so it's very hard to satisfy what old American and old British voters want. They also want health care.

In the US, this manifests itself as a sort of health insurance inflation problem. In the UK, the National Health Service rations healthcare, so everybody's always grumbling that they take weeks to get a doctor's appointment and months, if not years, to get a surgical procedure. But it's the same basic problem. It's just that the systems are radically different in the way that they work. So

As I go back and forth across the Atlantic, which I have to do far too often, I'm struck by the fact that although we think of ourselves as being very different, and in some institutional respects we are, there's real convergence in the experience of being British and the experience of being American, whether you're an oldie or a Taylor Swift fan.

Sir Neil Ferguson is a Milbank Family Senior Fellow at the Hoover Institution, Stanford University, and a Senior Faculty Fellow at the Belfer Center for Science and International Affairs at Harvard. He's also a columnist at the Free Press and the author of 16 books, including "The Pity of War," "The House of Rothschild," and "Kissinger, 1923 to 1968."

the idealist which won the Council on Foreign Relations Arthur Ross Prize. In 2024, he was knighted by King Charles III for services to literature. What a nice moment for you, Neil. Congratulations on that. That's a nice, just a really nice thing for you and your family. And he joins us from somewhere in New England. Neil, I always love hearing from you, as do our listeners.

It's just, you kind of have, your comments are totally puncturing and open me up to a viewpoint, quite frankly, that I don't share most of the time. But really appreciate all your good work and welcome back to the UK. Anyways, it's great to catch up with you. Algebra of happiness, where to live? So I had two close friends, Eddie Blau and David Frey, who were my roommates my sophomore year.

come hang out with me in Aspen and they brought another close friend from the fraternity, Michael Baruch. It was just so wonderful to see all three of them. But one thing I think they've missed out on and that I've gotten right, and that is I have lived in five different cities and they chose not to leave their city. And I understand they have nice lives, but my advice to any young person would be to take a risk and live in another city.

I think it informs you. I think it's an incredible experience. And I think the analysis that young people do is that they say, well, I could never do better than to live in this city. I have family here. I have friends here. I'm doing well here. I totally get that. I'm living in London right now. To be honest, I don't like it as much as New York. I don't like Europe as much as the U.S. But the key is not necessarily to do better. It's to do different. And it informs you

It creates a different appreciation to look at the world through a different lens. I think it's really interesting to look at America through a different lens. What is looking at America through a European lens done for me makes me appreciate America more. And despite all of our faults, all of our weirdness, I mean, some of the things I love about the UK, there's not a discussion around assault rifles or transgender rights or bodily autonomy for women. These are givens there. It's like, well, of course we don't allow assault weapons there.

in the general public. Well, of course, a woman should be able to decide if she wants to terminate a pregnancy. And I really enjoy that or appreciate it, I should say. But I also recognize that there's something about the U.S. where we're willing to take risks. We embrace risk. You meet with people around business. It's like, okay, we're not interested or we are interested. Let's go. People are much more willing to take risks. The kind of the distinction or the thing that summarizes the distinction between Europe and the U.S. for me is simple.

Millions of people looked around and said, you know what, I'm going to get on a steamship and go to this place, an unknown, and I'm going to try and forge a new life and stake my claim, if you will. And tens of millions of people decided, no, I'm just going to hang here. That is the distinction. The DNA, the type of people that came to America, immigrants from all over the world decided to take a risk. And it's made me appreciate that.

risk aggressiveness, the diversity of the U.S., the action orientation, sort of the ready-fire aim. But I wouldn't have that perspective unless I'd lived in Europe. And what I would suggest to any young person is that if you have the ability, especially with remote work, if before you have aging parents or you have kids of your own, by all means, brother, get on a boat, a plane, a bus, and live in a different city. You don't need to do better. You need to do different.

This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer and Drew Burrows is our technical director. Thank you for listening to the PropG Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our PropG Markets pod wherever you get your pods for new episodes every Monday and Thursday. Little muffin. Thanks to Huntress for their support.

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