Volcanoes are erupting in The Philippines, but on-fire Australia received some welcome rain. The Iran war cries have been called off and The Donald’s military powers are about to be hamstrung by the Senate. Meanwhile, his impeachment trial is starting, and we’re all on Twitter for a front-row seat.
The Raging 2020s
Featuring Alec Ross
The bad news? The social contract is broken. The good? It can be mended. An entrepreneur working in the intersection of geopolitics, markets, and technology, Alec Ross has traversed the private and public sectors in his varied career, including a stint as Senior Advisor for Innovation in the Obama administration. In his new book, The Raging 2020s, he looks at how we might restore the balance of power among government, citizens, and business.
Prefer to read? Check out the Audio Transcript
Zachary Karabell (ZK): What could go right? I’m Zachary Karabell, the founder of The Progress Network. And I am joined by Emma Varvaloucas, the executive director of The Progress Network, as we have an ongoing series of conversations with seriously interesting people about those seriously interesting topics. And today is a little more of a wide-ranging traipse through the major issues that we will all face over the next decade with one of the more eclectic and intriguing voices out there. Alec Ross I’ve known for about 15 years. He has been in government and he’s been in public service. He’s run for office, but what’s intriguing about Alec is the way in which he brings to bear all of these, to think about the world that we’re going to be living in. More to the point, because he’s been situated in these different places, he’s been able to think about really, like, who are we and what are we doing at a business level, at an individual level, at a collective level, at a national level, at a technology level, all of which intersect with each other in a game of three, four or five dimensional chess to produce the messy, complicated world that we’re in.
So we’re going to have a conversation that touches on a whole bunch of these things, all of which are pretty essential to our lives today.
Emma Varvaloucas (EV): Alec Ross is a best selling author and entrepreneur working at the intersection of geopolitics markets, and technology. He is a distinguished visiting professor at Bologna Business School. And you might hear a little bit more about his life in Italy. And he also served as a distinguished senior fellow at Johns Hopkins University and as a senior fellow at the Columbia University School of International and Public Affairs. He’s got a new book, The Raging 2020s, which is about restoring the balance of power among government, citizens, and business. So Alec, welcome to What Could Go Right?
Alec Ross (AR): Thank you.
ZK: Great to be talking to you today. There are very few people who have had such an unusual, eclectic and multifaceted career from public servant, serving in government, being an advisor to the secretary of state around all things technology and digital, when that seemed quaint and new, to running for governor, to spending—for those of you who don’t know, Alex spent a year in Italy as a visiting professor in Bologna. I just wanted to say Bologna.
AR: Le Universidad de Bologna.
ZK: Yeah, there we go. That’s about it. That’s about as good as I can do with my Italian, but, being Facebook friends with him, which makes us, you know, deeply intimate acquaintances, there was luscious pictures of food being presented to us in a somewhat, I know, “sharing is caring” fashion, but all it did was make me envious and hungry.
AR: I’m sure I got unfriended by more than one person who was just like, you know what, Alec, we’re sitting here huddled in our homes suffering from COVID and you’re showing us like, bucatini, I’m done with you. Z.
ZK: I think the bucatini was the final proverbial straw for many of us.
EV: It was mass food FOMO.
ZK: But on a more generic note, your new book, which in many ways, and correct me if I’m wrong, I think it’s fair to say it’s in many ways kind of like a sequel to your other book, in that years ago you forecasted what the industries of the future would be. And in many ways, this is like, what are these industries going to do for us in the next decade or plus? One thing I liked notionally about the book was the title, because it could go either way, right? The raging twenties can be either like the roaring twenties of the 1920s, but it can also be the raging twenties as the Pankaj Mishra you know, years of rage twenties.
AR: That was intentional. I’m glad you picked up on that. Thank you.
ZK: Well done. So here’s a softball question if there ever was one. Are you more concerned about the rage or the roar, or do you think the rage is more likely than the roar, or are they going to dance together in some sort of strange mixup?
AR: So I think that that both are possible. So what am I more concerned about? I’m more concerned about the rage, you know, I’m from West Virginia, and I don’t see much roaring coming out of West Virginia in the 2020s, absent dramatic change. We’ve seen accumulating rage where I live now in Baltimore as well as where I grew up in West Virginia, and a lot will have to change for that rage to become roar. I am more optimistic about other parts of the country and other parts of the world. So it’s a mixed story. There aren’t a lot of tweet-sized conclusions that you can come to about what the dynamics of the next decade are going to be. But I try to take a mostly optimistic view of what’s to come.
EV: When I first read the title, I did not get the double meaning. I went straight for, oh, roaring twenties. Yes. We’re going to head into great times. And then when I read it, I was like, yeah, no, the rage seems more accurate for me.
AR: Well, Emma, you’re a millennial. I have an 18-year-old son, and the word “rage” has an implicitly positive connotation for young folks. Like, yeah, we’re going to go rage! Then you talk to his mother, and rage is like, no, that’s the worst word in the world. So yeah, part of it is where you stand depends on where you sit.
EV: I was almost ashamed to admit that I had that implicit mental connection of like, we’re going to rage together, post-pandemic is going to be great. But it’s not, actually. The social contract is broken is what you’re telling us, right?
AR: It’s broken, but it can be mended. And, you know, look, I feel like the roaring twenties, I mean, Zachary knows this better than anybody else. You know, the dynamics socially, economically, and politically of the 1920s, went in wildly different directions. We built enormous amounts of wealth. And then sort of the choices we made politically in the United States ended up driving us toward first a Depression, but then a New Deal. In Italy and Germany, it drove us toward fascism. So there are a lot of choices that we get to make. Are we headed towards something that looks like more like the New Deal or something that looks more like Mussolini? These are choices. The dynamics will be remarkably similar, especially with COVID in the context. I mean, the Spanish flu was at the beginning of the roaring twenties,COVID is at the beginning of the raging twenties, and then the choices we make determine how they end up.
ZK: It’s funny, we’ve come out of a period, and thankfully we might be in hopefully the end of that period. We’re definitely in a low of a lot of talking about the fascism analogy, right? And you just mentioned Mussolini, obviously you’ve just been in Italy. So Mussolini has a kind of a top of mind resonance. In many ways the attempt to find the right historical analogy for the present, and I say this as somebody who’s been writing history for years, but from a perspective more that there isn’t a perfect historical precedent to any of our present. They’re just things that we can learn that rhyme, that illuminate spectrums of possibility. Do you think we were a little too full of that fear in Trumplandia of this kind of almost over the top hysteria that we were somehow on the verge of the Reichstag fire or Mussolini or some sort of replay of that history?
AR: No, I mean, look, I don’t believe that history replays. People will always draw an analogy to the past, but nobody ever says, oh yeah— Nobody said in 1936, oh yes, this is exactly how it was in 1848. Like, no. But history does run. And I do believe that but for some narrow changes in the 2020 presidential election, if Trump had won, then yeah, I do think that a lot of our institutions of democracy, would have come thundering to the ground. I’m not convinced of this by Democrats. I’m not convinced of this by people on the Left. I’m convinced of this by people I know who worked for Donald Trump. I’ve spent a lot of time with really powerful Republicans, many of whom worked closely with Trump in the White House. And they are the ones who have convinced me that, you know, but for a little bit of change in the 2020 presidential election, Donald Trump would have all but turned the United States into a banana republic. And there were plenty of places abroad where it would have similarly empowered little mini Trumps. I wish that weren’t true, but I’m convinced of it by people who worked for Donald Trump.
EV: I almost don’t want to ask, because it’s Trump, but I can’t resist asking, what did they say to convince you of this? Can you tell us?
AR: They would tell personal stories of just the degree to which he was completely unhinged and the degree to which he would ask them to do things that were completely illegal, that undermined the rule of law, that if any other president did it, they would have been impeached and removed from office. And it’s also the diversity of them. It’s not like one person who worked for Trump who, you know, became disillusioned. And there’s a community of people who were the tippy top levels of government, who all but say, thank God we survived this. We got the Supreme Court Justices and the tax cuts we wanted—and this is them speaking, not me—and we survived it. Now we need to reclaim our party and our dignity. It’s pretty scary. I do my best then to not lose my head with them and say, why didn’t you do more? Why didn’t you say, why don’t you say publicly, what you’re saying to me privately? Why didn’t you do it while you were working in the White House? So I’m not giving them a free pass by any means, but I’m just reporting what I’ve actually heard.
ZK: I wonder, though. Now we have a reality in the United States of a Republican Party that seems to have gone down a particular groove that has in many ways been carved over the past 20 to 30 years, not just over the past four or five, and you have a sort of independent slash Democrat group that is increasingly treating that cohort as kind of beyond the pale of engagement. And I know you get into this in the book, but you’ve also thought a lot about this as someone who ran for governor in a state that is, and has always been, somewhat of a dividing line. Certainly it was the dividing line at the Civil War, right? Maryland was a slave state, but it was in the Union. I’m sort of troubled on the side of the spectrum that says X percentage of the country is irredeemable or untouchable because of their support of Trump. And you grew up in West Virginia, which flipped from like 70% Democrat to 70% Republican in the course of less than 20 years. So you’ve thought a lot about this, right? I mean, where’s the bridge here? And a lot of people on the Left—or I’m in New York, this is part of our, you know, generic cohort, are beginning to feel that, that they are “they,” “them.”
AR: So I’ll tell you one thing. I found that there are five words, five, that trigger people, that do 80% of the triggering: Trump, Obama, Clinton, Democrat, Republican. If you inject any of those five words into a conversation, it becomes a game of limbo. How low can you go? But as long as you keep those five words out of the discussion, whether I’m in a country music bar in West Virginiaor at the most woke coffee cafe in Cambridge, Massachusetts, as long as you don’t invoke any of those five words, you’re going to have a balanced conversation. And so even in this book of mine, The Raging 2020s, there are certain words that are banned, like the word Trump doesn’t appear. The word, Clinton, the word Obama, the word Biden, those words literally don’t appear in the text because to your question of how can we make progress actually engaging people, part of it is by taking these triggers out.
So part of this might be a facile strategy, but part of what I do is, whether I’m talking about taxes or labor or whatever it is, is to try to take the words out of it that allow for the intellectual laziness for us to retreat to our positions. And then the other point that I would make on this… I think that I might, I may get the number wrong, but I think that there were a little north of 70 million Trump voters. I think of those more than 70 million Trump voters, I do think that about 20 million have become truly radicalized. I mean, they have the views of the Taliban. I think that 50 million can be positively and productively engaged. I think that 20 million cannot.
EV: Where do we go from there, then? You know, if we have 20 million people in the country that have been radicalized? It just comes to mind, you know, you’re saying maybe it’s a facile strategy for the book. I don’t think so—I think it really makes the whole book very clear to take in, because it’s not about political sides. It’s about, again, the social contract has been broken. This is where the rage is coming from. So I just put two thoughts in there, but maybe you can tie them together here.
AR: Yeah. So Emma, thanks for making that point. And the way I would respond is saying that the way you engage those 20 million Americans who have become truly radicalized, it’s not through persuasion, right? You’re not going to sit down and just convince them to not be radicalized. The only way we can really—whether it’s the far, far Left or the far far, Right. The angry form and the destructive form of rage, the only way I think that we can reduce that is by repairing our social contract. It’s not going to be because of some intellectual process that drives somebody to a new solution. It’s gonna be, I’ve now not been bankrupted by my prescription drugs. I don’t have to work three jobs to meet a basic standard of living. So ultimately I think that which is gonna harmonize our society is not going to be going to the same conferences and opening up to each other about the source of our pain. It’s going to be delivering against the needs and aspirations of people who have been left behind.
ZK: It’s funny, I’m, I’m much more willing to allow for X percentage of a population—I don’t exactly know what that numerically is. 10%, 15%, something non-negligible, but not overly significant to be beyond whatever collective discussion framework working together we have. Just because I think in most societies, there’s some non-negotiable percentage of humans who are outside of whatever spectrum of working together. Look, sometimes that 10 or 15% are the harbinger of something really important that changes in the future. And sometimes they are a harbinger of something really important that goes really bad in the future. But I don’t know of any society where you don’t have that. You know, I don’t know what the number is. I’m not sure if an achievable amount is like everybody works together, because that’s a kumbaya reality. So I’m a little less troubled by the 20 million in a country of 340 million.
AR: And so, Zachary, that’s why I’d rather focus on the 50 million who voted for Trump who are not irredeemably radicalized. Yes, there’s a certain percentage of humans on earth who are cuckoo for Cocoa Puffs, right? And we’re not going to change that. What I would rather do is figure, look, we all know people who, and again, I don’t want to just turn this into a “Did you vote for Trump? Did you not vote for Trump?” binary. But we all know people who have been drawn into politics in a way that we might think of as destructive, who we would otherwise think of as not being destructive people, we would think of them as being totally reasonable people. Why are they engaging in something that is politically destructive? I’d rather work with them than with the guy at the country music bar in my native West Virginia, who, as soon as he heard that I worked for Barack Obama said, why did you work for that communist Muslim who is trying to sterilize young white women? That’s the point at which I changed bar stools. And I think guys like me and women like Emma and dudes like you should not, we should spend our time trying to create a more inclusive social contract rather than, you know, trying to engage in naive acts of persuasion.
EV: That’s fair. That’s not a starting point. You’re not going to go anywhere from there. Which of course raises then a very obvious next question. How do we do that? How do we repair the social contract? What’s the nitty gritty of that?
AR: So I think that there are a lot of specific things that we can do. Part of it has to go with taxes. I mean, it struck me, again, writing this book, that I paid a substantially lower percentage of my income in taxes than the student loan debt-laden research assistants who worked for me. Why? Because the money I make is largely a function of the appreciation of capital, and the research assistants who worked for me, what they earned is a function of the labor that they put in for me. That’s really, really screwed up. And when I hear my fellow members of the 1% defend that, it’s just not credible. And it’s not just about like, oh, you’re saying raise taxes. What I’m calling for is more fair taxes. And what I genuinely believe is that for the vast, vast majority of the people in the world, that can and should mean that they’re paying less taxes.
So that’s an issue within the US tax system, but also internationally. A lot of what I write about… In The Raging 2020s, I give an example of a dude named Marco buying a belt after having clicked on a Google ad. And, you know, it’s a guy in Rome buying a belt from a belt maker in Florence, and I track the the euros and cents of that transaction. And the long and short of it is the belt maker has to pay the 21% VAT. Marco, the guy who bought the belt, dutifully, pays his 40% in taxes, and Google, ultimately for the money that they earned ends up paying 0.07% tax because of a bunch of tax gymnastics. It might seem really geeky, but creating tax justice will give us the resources to pay for all of the sorts of things that we want and need to pay for government to do, and will enable everyday middle class and working class citizens to pay less taxes. So that’s sort of one concrete example of what we can do.
ZK: Let me push you on that. There is the reality that for the past really 30-plus years, certainly since the mid eighties, we’ve been in this golden age of capital, meaning, “great to be capital, sucks to be labor” would be your sort of easy equation. And that’s been true in most of the developed world, much less true in the developing world where it’s actually been pretty good to be labor because the starting point was so low, was either non monetized or zero. So you have hundreds of millions, if not billions of people entering the world of capital in the past 20 years. The other way to look at it is this has been until COVID the golden age of the emergence of what we used to call the developing world and the sort of the stagnation of the developed world net, net. You could design a much more equitable tax structure, but doing so wouldn’t create a golden age of labor, right? That to me is why the tax conversation ends up being sort of politically satisfying and intuitively gratifying, but not systemically mollifying. So what do you do about that?
AR: Well, first I would argue that it is systemically mollifying, because in part what it does is it transfers trillions of dollars to the public sector that wouldn’t otherwise be there. And those trillions of dollars in the public sector do things like pay for schools and high-speed rail and other such things. So for me, it is a substantial systemic solution, but to your point, which I’m very sympathetic to, how do you create a golden age of labor? Part of how you create a golden age of labor, in my opinion, is to make capital more accessible. So when I think about the American dream, for example, the thing that most defined the American dream for decades and decades was owning a home. Not very many Americans owned their home a hundred years ago and fewer still 150 years ago. And then we put a thumb on the scale that sort of incentivized homeownership, and in so doing, what we did is we created the economic basis for the American middle class. What I want to do now, and full disclosure, one of the controversial ways in which I do this is the venture fund in which I’m a partner.
We own between three and 4% of Robinhood. I radically believe in the virtue and value of making access to cap tables and to stocks and other such things much more accessible to larger numbers of people. So my answer to how do we bridge capital and labor, in part, is to make capital more accessible to middle-class and working-class folks. One of the not-so-secret sauces of Silicon Valley’s success is it attracted so much talent… Part of why startups drew in people as opposed to a Cisco Systems or a Sun Microsystems or a company like this was in part because of employer, employee ownership in the form of stock options. I want a world where more of our labor is participating in the ownership of companies that are being created and developed.
EV: And you also have a really good example from Singapore in the book, right, where government sector employees are being paid at the level of private sector, which allows for a much more robust government system. I wanted to tell you Alec, living in Greece, you didn’t have to convince me about where we could be if we all paid our taxes. Because I say avoiding our taxes is a national sport here. I wanted to ask you, since we have this announcement coming out about, a hundred-plus countries agreeing to discuss the global corporate minimum tax rate, and since we are losing trillions of dollars in tax avoidance every year, how excited should we be about this? Is this something where you can say, okay, we’re moving the needle in the right direction, or is this like what Zachary is saying that actually we might not really accomplish that much here?
AR: So this is a case where I’m wildly optimistic. So I think we are absolutely positively moving in the right direction. And this is an area where I’m a little bit radical… So let’s imagine that the UK, her Majesty’s government, which is home to a massive percentage of the offshore world, like the Cayman Islands, Jersey, the Isle of Man, etc. I’m so radical on this, that if the UK didn’t play ball on this, I would sanction the United Kingdom. Like I actually think that we need to not just have carrots, but big, big nasty sticks that draw blood to draw as much of the world into this as possible, because it’s a multi-trillion dollar problem. If we’re going to build the infrastructure that allows us to have a more sustainable future, if we’re going to be able to develop the kind of healthcare systems that enable people to live longer, happier, healthier lives, it’s going to be in part because we’re doing an efficient and effective job of actually getting people to pay their taxes.
And so I do think that this is a really important move. And now I want to see the consequences for not playing ball, because let’s imagine that 90 of the 100 countries actually do this. What it enables is for the other 10 countries to continue to be home to a lot of activity that screws over the other 90 countries. And what I’d like to do is isolate and punish the hell out of the holdouts, because what that then means is, Emma, it means that tax evasion won’t have to be a national sport in countries like Greece. It means that the garbage men in Italy will not be paying for the taxes of the country’s wealthiest people. That’s my view on this. I’m usually considered to be relatively moderate, but I’m sort of a radical on this issue.
ZK: In the book I just did about Brown Brothers, one of the things that was sort of implicit in this very elite closed WASP world was an understanding that you can’t endlessly beggar the commons, that there is ultimately a tether, maybe more elastic than some would like, but a real one between public and private goods, and that you cannot endlessly thrive privately if the commons and the public around you are not thriving. Now globally, the problem of course is there’s always somewhere, you can escape to, hence why this tax regime is particularly important. I do wonder, though, we have seen one of the things that COVID-land has done—and maybe it’s only done temporarily—is explode this notion of what’s possible in terms of governmental spending detached from a tax base that supports it.
There’s been this fringe theory called modern monetary theory, which I’m sure a lot of people know about, that says, look, particularly governments that are in control of a currency that has some global market, there’s a much greater elasticy of spending than traditional 20th-century orthodox. They suggest, and Japan, as you know, as an example has always been the asterisk on that point, because they’ve just spent so much more money, but are you maybe falling into the same trap? Meaning, maybe we can just spend a lot more for the public goods that we need for the social safety nets that we require for all the things, particularly the United States, but also the UK, even, you know, even the EU has been proven that a public health care system that follows the dictates of efficiency, just as much as a privatized health care system is equally inadequate to a healthcare crisis. Like the pandemic, meaning it’s essentially been under-invested in as well, even in the EU. Maybe we should just spend a lot of money and not worry so much about the taxes to do everything we’ve just said we should do.
AR: Well, I think that if you can do both, then it actually… I believe there is greater elasticity in what we can do in terms of spending, but not infinite plasticity. So I look at the spending proposals that have been made by Joe Biden. And I will give Biden credit because he wants to do a lot more on IRS enforcement, for example, to make sure that we can actually pay those tax bills. I think that in the current tax regime, it makes spending like you’ve got a fistful of dollars at a strip joint really scary, and not necessarily sustainable, but I do think that if you can cohere these tax systems, it allows for increased elasticity in these tax systems. And one thing that worries me about this a little bit, and this sort of legitimizes your point, Zachary, is one of the things that I saw during COVID, and people didn’t talk about it much, but a lot of our elites very quietly got new passports.
There are a lot of new citizens of Cyprus, who nobody has any idea. And there are a lot of people who, when things began to really shake, for example, on January 6th with the protests at the Capitol, when things began to really shake with COVID part of what I saw were more and more private jets going wheels up, and the people in those private jets having some surprising passports in their pockets. One of the points you made in your last books accurately, which was so good, was about this idea that the elites can only go so far and they cannot really disconnect from the commons. Part of what I’ve seen in the last year is a decoupling of some of America’s and Europe’s elites from their place. And that is possible in a way that was not possible during the heydays of Brown Brothers Harriman.
EV: That’s sort of alarming. I mean, I hear that and I’m like, as not member of the elite, that just makes me really pissed off. Like, I don’t know what to do with that other than like, wow, I kind of want these people to fall into the ocean somewhere.
AR: Emma, you’re raging!
EV: I’m raging, and not in the good way.
AR: You’re raging in the other way!
EV: I mean, but you say in the book, too, that it’s kind of impossible to make any progress without elite buy-in. So if they’re untethered to place, and they’re not paying any taxes, how do we get them to do anything here?
AR: Because I think that first of all, you set rules, so most of them actually follow the rules. So I actually don’t believe that billionaires are implicitly criminals. I don’t believe that at all. In fact, I believe that most billionaires are really, really good rule followers, because the last thing that a billionaire wants is to spend time behind bars anywhere. The last thing a billionaire wants is to have her or his name tarred and feathered. The last thing that a billionaire wants is to lose their billions of dollars. So they’re actually good rule followers for the most part. So I think if you change the rules, if you do harmonize global tax, if you make it impossible for them to get on a plane and stash their money somewhere else, keep that money that stashed in dodgy country X for being taxed anywhere, I think that that’s a big part of the solution.
And Emma, it’s part of why I’m optimistic, because we do actually have mechanisms for this. It makes me think about the mid 19th century. There was this period from 1800 to 1840 called the Engel’s pause where there was this wild transformation of the economy where much of the European economies went from being agricultural-based to industrial-based, and industrialization in the early 19th century was kind of ugly. It was the industrial economy of the Charles Dickens novels: 11 year olds losing fingers in factories. What were the byproducts of this? The byproducts of this were things were ideological movements like communism. The Communist Manifesto was written in the late 1840s, the largest wave of revolutions in Europe’s history.
This process of industrialization looked dystopian. It looked Mad Max-like until there were great leaders like Bismarck and others who recognized that we can actually have equilibrium, and we can have equilibrium through really innovative new ideas, like a pension, a minimum wage, child labor laws, and things like this. And I think we’re in a little bit of an Engel’s pause for the 21st century, where once again, the nature of our economy is changing in the same way. It was changing from agriculture to industry in the early 19th century. We’re really migrating now from a dominantly industrial based economy into a technology rich knowledge-based economy. But we’re in a world where Emma, look, I’m sure you love working with Zachary, but you’re not going to have that job for 30 years in anticipation of a pension, right?
EV: I don’t know, Zachary, should we talk?
ZK: The pension part, yeah, I thought, woof.
AR: So pensions, right. What good is a pension, a construct from going on 200 years ago in the 2020s? We need to, in the same way in which we were wildly innovative in the mid 19th century and created things like a minimum wage, a five day workweek, child labor laws, and other such things to make industrialization work, I think we can innovate within the public policy sphere so that we can think about, what is the pension or what is its equivalent in the world that reflects the reality of your generation?
EV: Anyone that I’ve spoken to around my age is definitely on board with the movement for the four day work week. I mean, we are a hundred percent in on moving toward that.
AR: That’s part of what happens. The workweek during the agricultural age used to be six days. It was every day, but the day of our Lord, and the work day was the number of hours of sun. So when the sun went up, you went to work, when the sun went down, you went home for dinner. We then moved to a five day workweek. Now we can, I don’t know if it’s four days or if it’s a reduced number of hours across seven days, who cares. But the point is that our output is so much greater today than it was 20 or 30 years ago that we shouldn’t have to be bound by the structures of industrial America.
ZK: Alec you’ve been both a political animal and had a career in politics, which is one of the reasons why you’re so good at saying people’s names so that you don’t forget them—a trick that I’ve never managed to learn for myself, but it seems so obvious and yet not one that I’ve cultivated or practiced sufficiently. But you’ve also been a technologist and thought about the disruptive role of technology. And it seems to me, and again, I share a lot of these sentiments. I ask myself these questions. So if I’m probing you about them, it’s mostly because I ask them as well, that there’s this tension between a world where we want government to do more, we want it to spend more, we want to increase the enforcement of tax regimes and some of the continually disruptive slash liberating power of a lot of technologies, and the natural tendency governments to want to control things that threaten their monopoly on either force or the issuance of currency or the collecting of revenue.
You mentioned Robinhood before, but it’s not just about that. It’s clearly about the pushback against Big Tech, much of which, in my opinion, I think people know, has been completely merited by Big Tech’s complete arrogance and inability to actually engage this conversation about the commons, but maybe there’s a mid ground here between wanting government to become ever more powerful, right? I mean, I’m going to use the Robinhood example again, because the result of it being disruptive and new and trading and not going through Wall Street and not going through money centers has been this massive regulatory counter-reaction largely on the part of the Left, which is ironic given that it’s largely a product of young people who lean Left to want to be able to use their money and invest it. So what do you do about that? Cause I’m not sure I want a world where we are ever empowering the regulatory state, because it does have these tendencies to react to something that looks uncontrollable to try to control it.
AR: Yeah. What I want is for government to do different things. Like what I believe government is hardwired to do right now is to try to sort of manage and regulate the industrial state. What I want to do is throw off a lot of what it has done and focus it on things that it ought to be doing. So infrastructure, for example, like I want it to spend less time regulating some of our crumbling infrastructure and more time building more and helping to facilitate the creation of more infrastructure using the very best technologies of the 2020s to make it as efficient and effective as possible. So it’s really about a reorientation of government. And I write about this a little bit, but we’ve we’ve got three big problems right now with government: butocracy, kludgeocracy, and brain drain.
And I’ll start with the last one, which Emma mentioned earlier. During the cold war, a lot of the best minds… If you were a hot shot at a fancy college and you graduated from college, there was nothing better you could do, there was nothing more appealing than going to work for government. If you are a scientist, you would love to go work at a national lab. If you are a finance or econ person, you wanted to go work for the Department of Treasury. If you had an interest in foreign policy, there was nothing more elite than going to work for the state department or the CIA that began to change in the 1980s. And we’ve had this period of brain drain. And while we have wonderful career civil servants, the simple fact of the matter is that the talent level at a consultancy or an investment bank or a Robinhood at the 50th percentile is way higher than government.
So we’ve suffered from brain drain, one. Two, kludgeocracy. So to your point, Zachary, we have such a dense regulatory state right now that it makes it impossible to build as much because of 7,243 regulations as because it’s expensive, and it’s expensive because of 7,243 regulations. And so we got to dekludge. We need to take the patches off of a lot of our regulations and build them from scratch. And then three, butocracy. The issue of polarization, the fact that we don’t have governing middles right now, I think makes it very hard to take things that historically would have been nonpolitical, like building infrastructure, where all of our politics, whether the sun rises in the east and sets in the west right now, if you were to make that position either Democratic or Republican, that the assertion of that fact would be contested by 50% of the people. So I want government to do things differently, more than more in sum.
EV: Are there any governments you could think of Alec that are avoiding those three things and focusing on the kinds of things that you were suggesting? Are there any shining examples for us to follow?
AR: So I don’t think there are perfect examples, but I think that there are good examples. You mentioned, Emma, Singapore. So what Singapore has done is as a way of working against brain drain. They’ve created a compensation structure that is not equal to what you would find at an investment bank, but it’s much more competitive. So for example, if you’re a government minister, if you’re the equivalent of a cabinet secretary in Singapore, you make a million dollars a year. When I interacted with Singaporean government officials, I would look at their CVS. I’d be like, oh my God, you have a PhD from Oxford. You’ve got this econ degree and you’re a poet on the side. And you know, every business in the world wants to hire you, but you’re choosing to live a life of public service. Why? Because instead of making $110,000, which you would in the United States, he’s making $510,000.
So that’s a good example on the brain drain side. From a regulatory perspective, a lot of what I look at is frankly, East Asian countries. I look at Taiwan, I look at South Korea and others, which are much more nimble, and I think we can see their effectiveness, not perfection, but their effectiveness in managing COVID. There’s no kludge in some of these East Asian economies, even where it’s very competitive politically, there’s no vetocracy, you know, on something like, how do we fight and contain COVID, we do not get into the Hutu versus Tutsi politics of the United States where we’re going to turn very basic things about public health into the inanities of partisan politics. So I do think that there are good examples that can be drawn from, from around the world.
ZK: The challenge of the Singapore one though, is the same as Americans in particular rhapsodizing about Scandinavian social safety nets, right? There’s a big difference between being Norway with 5 million people, most of whom have, after centuries of fighting, are kind of somewhat aligned in their mentality of the world. Plus there’s a trillion dollar oil fund. So, you know, it’s interesting to look at these as examples. I don’t know that they are feasible examples. It’s like saying, look how well New Zealand managed COVID. Well, if you’re an island nation of two islands in the middle of nowhere with 5 million people, it is somewhat simpler to wall yourself off from the world of disease and have a rational set of policies. But I don’t know that those lessons are easily applicable. They’re interesting.
AR: So they’re not always feasible, but they’re instructive. And let me give one example from Singapore and one example from Scandinavia since you cited both. So Singapore, can we turn all of our high-end civil servants into $400,000 a year employees? No, but what we can do is we can identify, say, two to 300 positions that are really strategic, where we don’t want people to just work for 18 months, and we can create a pay structure that is elevated in a way that doesn’t exist presently. Going to Scandinavia, I’ll give you an example of something that I do think is feasible. So if we, look, sorry to be sticking on the issue of COVID, but a lesson, I think we can learn even going back to the question of capital versus labor. The United States made different choices than a lot of the Scandinavian states, as a response to COVID each with roughly equivalent, same size of their GDPs. And in the United States, we made decisions that we were going to make sure that balance sheets, corporate balance sheets did not collapse as a result of COVID.
And we made that choice. And in making that choice, part of what we saw was a substantial increase in unemployment. And now we’re having a lot of difficulty getting those unemployed people to come back to work. This has an inflationary effect on labor. There are lots of problems with the fact that we saw the surge in unemployment, and we can now not redirect these people back into jobs. By contrast, in Scandinavia, they made a choice where they cared less about the health and wellbeing of corporate balance sheets, but they made sure people stayed in their jobs. So that as soon as the economy turned back on, people went back to work. And the question was, are any of these big companies, is Maersk, are any of these big companies in central and Northern Europe going to collapse? The answer was no, and the result of that is the health of their labor force. Right now it’s a much healthier labor force now than the American labor force. So you can’t cut and paste these examples, but I do think, they’re instructive if not feasible.
ZK: One thing that COVID revealed, of course, is that the entire American social safety net is structured around unemployment benefits that are easily obtained if you’re fired and very hard to maintain if you don’t get rehired. So it’s essentially a social safety net that manages to make people feel chronically insecure. Now there may be changes afoot in that because we extended it so much with direct payments and removed some of the bureaucratic hurdles to obtaining those benefits. And I guess we’ll have to see how this all plays out in that, you know, some of that would be a good thing, right? A more permanent sense of benefits, absent having to go through 18 hurdles with the constant threat of losing them.
I want to shift gears for a moment in the time we have and ask a little about you and your career. We did talk a little bit about the public service part—you’ve for awhile really focused a lot,10 years plus of your career, on public service. And you’re now a writer and have some role in deploying capital. Is this a break in the action of public service? Do you know, have you thought about it? Are you part of the indication of some of the issues that you’ve talked about, which is that you’ve made choices to move out of public service rather than to plunge more into it?
AR: So thanks for that question. Look, I have a limited skillset. There are only three things that I can do that I think shaped the world somewhat. And it’s about public service, as you said, the six years I spent working for president Obama, I felt like I was able to do a lot of things of consequence. So it’s public service, entrepreneurship, and ideas. And I’m actually pretty agnostic about where I do that from. I don’t feel like I have to be doing it from the White House or from a university campus or from inside a venture capital fund. It can be any of those three. So, you know, my last book, the Industries of the Future, half a dozen different heads of states spoke about that book publicly, and laws were changed in a few countries after heads of state and members of their parliament read the book.
I wrote that book from academia, not from inside the four walls of government. So for me, that’s like a win. I felt like I didn’t have to be in government to do that. I like moving between the worlds of academia, entrepreneurship, and government. And I actually think that each benefits… I feel like each of those worlds benefit from the participation of people from other spheres. I actually feel like some of the people who are most effective in government are those who have done real work in the private sector. I feel a lot of the most effective private sector entities that are out there who are looking to become global benefit substantially from people who have lots of stamps in their passports and experience in government and who understand the cultural and political context of moving around the globe. And goodness knows academia really benefits from people who have seen how things work, not just in theory, but also in practice. So I love working and living between these three spheres. It works for me.
EV: Very neatly done Alec. That was very nice. I have a question, but I’m not sure if we’re going to have time for it because we only have five minutes left. Maybe I can throw it out there, and if you’re able to do a quick take… Something that really stuck with me and it reminded me when Zachary said “chronically insecure.” It’s funny, when I talk to my cohort, even people in my cohort who are in relatively stable positions, as far as their jobs, we all feel chronically insecure, just period. Like that’s the feeling of millennialism, I think. And you write in the book that you read a study by Yascha Mounk, and I forget who the other person was on the study, that it was something like only 30% of millennials agreed that democracy was a prerequisite for a flourishing society. And that surprised you. It was funny because when I read it, I was like, wow, I’m really surprised that he’s surprised. So how concerned about this should we be, and how do we draw the line a little bit more clearly for people? Because I think the line between democracy and prosperity and security is not a clear line for people my age.
AR: Well, you know, this is one of those things where I feel generation very keenly, because I’m a member of Generation X, and the virtue and value of democracy is sort of uncontested by and large within my generation. I think that in order for millennials to embrace democracy, democracy has to deliver better results for millennials. So a lot of millennials right now are laden with student debt. They are earning at the functional equivalent of 80% of what their parents earned at the same age. They’re seeing the US Capitol being invaded by barbarians. And so I think ultimately in the same way in which we were talking about people who would become radicalized, ultimately the best way to persuade people is not over a cup of coffee and sort of giving a theory of the value of democracy over socialism or other such things. It’s to actually demonstrate how democracy can deliver. And I feel like for millennials who have had the imprint of the financial crisis and COVID and political polarization as that which defines their adulthood, I don’t think democracy is delivering.
EV: Yeah, that’s exactly what I’m saying. I don’t think that it has delivered for us, but it goes back to what you just said about, if you can see how other places operate and do the compare and contrast, sometimes that line becomes a little bit more clear to understand.
ZK: There’s the famous, democracy is the worst form of government, except for every other form of government.
AR: Exactly right. And even in a lot of these sort of techno democracies, or techno authoritarianism, they’re like, we’re slightly authoritarian, but we’re also very enlightened, that works up until you want to assert yourself on something, that’s up until you want to express something that does not align with that of your techno authoritarian state. The rule of law is much more closed in those societies. So it works up until you have a problem or up until you color outside of the lines.
ZK: You know, this is probably the beginning of a part two conversation and not the end of a part one, but all this does lead to, and you talked about this a bit in the Industries of the Future, you’ve talked about it a bit in the new book, and you’ve thought about it a lot when you were running for office that one og the downsides of the upsides of the 21st century is that a lot of human beings have been promised a lot of stuff. And by stuff, I don’t just mean material stuff. I mean, have been promised the fulfillment of age-old, eternal desires and needs that human beings have had for security and shelter and caloric abundance and freedom from disease, and the ability to have their voice heard and honored and some degree of security and respect for the autonomy of them and their family.
That’s a tall order, given human nature, human history, human society, and global international relations. And I do think that there’s a degree to which… Some of the rage on the rage part is the rage of, Hey, wait a minute. I’m not getting all those things. And not all of that is somebody’s fault. I mean, it may be our collective fault, but it may not be a fault of anything other than our reach doth exceed our grasp, our hopes and dreams remain hopes and dreams and not lived realities. And I do think injecting some of that for all of us, tempering the reality of utopia lies just beyond the advent horizon and may always, which doesn’t mean we shouldn’t strive for it. It just means that maybe we should cut ourselves a little more slack sometimes.
AR: Related to this, Zachary, is part of the stagnation. Some of the frustration we’ve seen in the United States is a result in part of the wellbeing of people, the increased wellbeing of people around much of the rest of the globe. So like I’m talking to you today from Baltimore. For a period of decades, Baltimore competed with Bangalore based on the cost of labor. So something would go from being built in Baltimore to built in Bangalore because it was cheaper to build it in Bangalore. The result of that and everything that happened thereafter and the investments in education is Baltimore is now having to compete with Bangalore, not based on of labor, but based on quality of labor. And so what we’re seeing is the rise of middle classes around the rest of the developing world. It means that you can’t be lazy in developed economies in Western Europe or in the United States, because so many more people around the world are competing for this abundance that you described Zachary. And because more people have access to that abundance, it means that you can not take a sort of sleepy approach in these Western democracies and assume that every next day is going to be better than the day before.
EV: I have a VBQ. A very basic question. Why can’t we just continue growing the pie, though? Like I think Zachary, your message about like tempering our expectations is kind of a tough message to sell to somebody whose expectations have been dashed.
ZK: Yeah. I’m not actually saying temper expectations. I’m saying temper the sense of failure and anger that it’s all not happening right now leavened by you know, sometimes it’s difficult to get to there from here. It’s not that we shouldn’t strive to get to there, it’s that the immediacy of that path may be desirable but not realistic.
AR: And so I do think that we’re growing the pie. Let me give an example of life expectancy. Okay. I’m 49 years old. The day that I was born global life expectancy was 58. So if you’re born on planet earth, global life expectancy was 58. Today it’s 71. Because of what we’ve learned about mRNA vaccines, I think the slope on the graph is going to continue to go up for all of us. And that number is going to go from 71 into the eighties, and there will be extremely abundant access to world-changing medicines that enable people throughout much of the world to live longer lives. So when I think about growing the pie, the first way I think about it is, are you going to die in one year, in 10 years or in 20 years? So I do think some of what you can call abundance or wealth such as life expectancy, it’s going to be unevenly distributed, but it will be increasingly distributed.
EV: And here we are back at the raging 2020s, the party kind, into your eighties and beyond.
AR: That’s right.
ZK: Let’s hope that your next book is the thriving thirties and not the terrible thirties or the atrocious thirties or the some other opposite of the thriving thirties, that we’re on a pathway through the rage and to the thrive.
AR: From your lips to God’s ears. Let’s hope that the next book is all about the good choices we made during the 2020s, which are now forcing us to make difficult decisions about how to just bathe in the abundance.
ZK: And I would suggest that in interim, given that there will be an interim, you probably should just write a cookbook.
AR: There we go. Go to Instagram, not for the intellectual stuff, but for the bucatini.
ZK: I think “At Home with Alec” would be an appropriate taking a deep breath between your various serious work about very serious things.
AR: I would enjoy writing that cookbook.
ZK: Anyway. Thank you today. Thank you forever. Thank you for being a part of The Progress Network and trying to help create some community of like-minded souls who are trying to navigate through the rapids of that rage into the currents of that thriving, or at least let’s hope so. And I will be fascinated well beyond this conversation, not just to continue these with you, but to see where your journey takes you over the next what’d you say, into the eighties. So at least 35 more years.
AR: That’s right. Here’s to 35 more years and 55 more years for Emma.
EV: Thanks guys. Thank you.
ZK: Clearly it’s a conversation that could have gone on and on and on and on and on. Maybe some people think it went on too long. We think didn’t go on long enough. We’ll leave it to you to decide, although frankly, if you’re listening at this point in the podcast, you probably think it was a conversation that we should continue. Otherwise you wouldn’t be listening to me right now. And look, if you’re one of these people who like Billy Crystal in When Harry Met Sally who goes right to the end of the podcast, just to make sure that you know how it ended in case you don’t make it to the end…
EV: So I think that it should have gone on longer. I think we could have done it. We’ll have to hear from listeners about what they think, but I have a question for you, Zachary, which I didn’t get to ask during the episode, which is, did we convince you about the taxes?
ZK: I think all of the outcomes of higher tax policy are ones that I fully agree with. I just don’t know that the current tax policy, we’ll actually get to those outcomes. And I think that’s where the conversation becomes stickier. My attitude towards taxes has been we should collect as much in revenue as possible to serve the needs of the commons, provided that we are actually serving the needs of the commons and not just the needs of government. So that’s where I fall on taxes. And as long as that’s coupled with, we’re not just doing better to collect more of them from those who can pay more and should, but we’re actually using the money to meet all these needs that we have for healthcare and childcare and a more robust safety net and better infrastructure, and not just beefing up the regulatory state or the collection state, because institutions tend to serve their own interests above all. And I don’t think government is particular in that. So, am I convinced You know, marginally, not quite, maybe. I’ll let you know.
EV: Okay, fair enough. Cause I was, you know, Alec writes about this in the book that Nordic states can take a lot from taxes because the social contract is strong between the citizens and the government and corporations. So they pay a lot of taxes, but they’re taken care of. Here in Greece, the tax rate is horrifying, but you’re not taking care of, right? And that’s where it completely falls apart. And these efforts to make sure that everyone’s paying their taxes just starts to feel like highway robbery rather than the restoration or the replenishing of a social contract. So I hear you on that.
ZK: And look, in Scandinavian states, it’s also tends to be very competent government. So that’s part of the social contract, right? If I’m going to pay a lot, a lot should be provided, there should be some organic connection between inputs and outputs. I think in the United States, it’s a much more complicated lattice and also because we have all these levels of government between state, federal, and municipal. So that’s a whole other question that we didn’t get into. Plus, you know, one aspect we didn’t touch as much in the conversation, but is really true to Alec’s work is, he does have a techno utopian part of him in the best way, tempered by realism, tempered by politics, but a real belief that we should not ignore, and looking at the mRNA vaccines is one way not to ignore it. The sort of the continually incredible power of the innovations that human beings are creating in part to solve the problems that human beings have created. So this is not in ignorance of all of our issues or blithe denial of them. It’s simply saying we have proven remarkably adept to cleaning up our own messes over time, but that’s one of the things in Alec’s work, and a lot of The Progress Network Members’ work, that I think is vital, which is the ability of human beings to solve for problems that human beings have created.
So thank you for joining us all today and keep joining us. And we will keep having these conversations and trying to figure out what could go right.
*To find out more information about The Progress Network and What Could Go Right? Visit the progress network.org. You can also sign up for our weekly newsletter to stay up-to-date with everything happening with The Progress Network. If you like the show, please tell a friend, share an episode, or leave a rating and review on Apple Podcasts, Stitcher, Spotify, or wherever you’re listening to this podcast. What Could Go Right? Is hosted by Zachary Karabell, and me, Emma Varvaloucas. We are produced by Andrew Steven. Jordan Aaron is our production coordinator. Executive produced by Jeff Umbro and the Podglomerate. Thanks so much for listening.
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