Boss Time: Summits, Cold Wars, and Universities, with Condoleezza Rice

>> Bill Whalen: Hi, this is Bill Whalen from Goodfellows. The Hoover Institution is proud to announce two national competitions honoring the life and work of Thomas Sowell, one of the most influential public thinkers of our time. For high school and college students, the Thomas Sowell Essay Contest is a chance to engage deeply with his ideas, whether by applying them to a pressing issue in society or by reflecting on how Dr. Sowell's writings have shaped your own worldview.

 

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Entries are due by August 31st. Details and submission links are available at the following URL hoover.org/thomas-sowell-legacy. Repeat that, Hoover.org/thomas-seweell- legacy. Good luck. We hope to see you here at Hoover in the near future.

>> Donald Trump: President Putin invited me to get involved. He wants to get involved, I think.

 

I believe he wants to get it over with. Now, I've said that a few times, and I've been disappointed because I'd have, like, a great call with him, and then missiles would be lobbed into Kiev or some other place, and you'd have 60 people laying on a road dying.

 

I said, that's cold. That's cold.

>> Bill Whalen: It's Tuesday, August 12, 2025. And welcome back to Goodfellows, a Hoover Institution broadcast examining social, economic, political, and geopolitical concerns. I'm Bill Whelan. I'm a distinguished policy fellow here at the Hoover Institution, and I'll be your moderator today. Looking forward to a spirited conversation featuring all three of our good fellows.

 

That will be, of course, the historian Sir Neil Ferguson and the economist John Cochran and Lieutenant General HR mcMaster, former Presidential National Security Advisor. Neil, John, and H.R. are all Hoover Senior Fellows. So, gentlemen, we're doing two segments today. In our second segment, we're going to go into the Southern Hemisphere, talk about Neil's recent journey to Argentina and his conversation with Javier Millet, and we're going to talk to John et al about tariffs.

 

But before that, we're gonna do a kind of a grab bag of topics. We're going to talk about the upcoming Trump Putin summit in Alaska, talk about whether the competition between the United States and China is indeed a cold war, and also the merits of the Trump administration's confrontation with American colleges.

 

Over the question of funding of federal research. So who is qualified to have all of those conversations with us? Only one person, and that is everybody. By the way, straighten up because the boss is coming on the show. We're of course, graced by the presence today of the director of the Hoover Institution, former US Secretary of state, former presidential national security advisor and and former Stanford University provost, the one and only Condoleezza Rice.

 

Condi, welcome back to Goodfellows.

>> Condoleezza Rice: Thank you. It's great to be with you.

>> Bill Whalen: So very quickly before we get on with the show, I have to ask you, Condi, can you check your calendar and tell me what you're doing on October 12th? I asked because it's a Sunday and on that day the Denver Broncos happen to be playing football in London, England.

 

They're playing the jets will be a good outcome for you. My question to you, Madam Director, could you please take Neil Ferguson to that game and for God's sakes, please take tone the error of his ways on American football.

>> Condoleezza Rice: Well, I'm not going to be there for that game.

 

I'm going to be with Neil and a group of Hoover fellows earlier in London. I'll be watching on television and saying a little prayer for the Denver Broncos.

>> Bill Whalen: Very good. Well, let us go on the show, Condi, and let's talk about the upcoming summit in Alaska. You have met with Putin.

 

You've spoken to Putin in Russia. You've looked in his eyes. We're going to make you a Putinologist here and kind of ask this question for us. What is Putin doing here? Why is he agreeing to this summit? What do you think he wants? And if Donald Trump wants to be a modern day Teddy Roosevelt and end a war involving Russia and another country, is this the way you go about doing it?

 

 

>> Condoleezza Rice: Well, I think that Vladimir Putin wants to have this summit because he's feeling a little bit that his back is against the wall. He very clearly came out and said he was prepared to end the war. And then we learned what I think most of us thought he wasn't prepared to end the war.

 

In some ways I think he just can't believe that he can't crush this little bug of a country or he doesn't even think it's a country. He told us Ukraine is a made up country because of course, it was always part of the Russian empire from his point of view.

 

And so I don't think he honestly believes just why can't he get this done? So this has dragged on for three plus years when he thought it was going to take five days. I think he thought when President Trump came into office, he was going to be able to end it on his terms.

 

But a funny thing happened along the way, which is that his intransigence has really transformed the president's view of him to the point that he understands that Vladimir Putin is, in fact, the block to ending this war. So I don't know what to expect out of Alaska. My hope is that it's all right for them to meet from my point of view, but my hope is that there are no concessions made without Ukraine at the table.

 

That would be a dark day for American foreign policy, for American history. But I could imagine a conversation in which they talk about territory, but nothing gets decided. I also note that I'm seeing that the Vice President has actually been coordinating with the Europeans and possibly even with the Ukrainians, and that's a good sign because someone needs to be talking to the Europeans, who are going to have to carry a lot of the burden if this ceasefire comes into being.

 

 

>> H.R. McMaster: Yeah, Condi, you know what?

>> Condoleezza Rice: The way I'm thinking about this is really three outcomes, three potential outcomes.

>> H.R. McMaster: One is what Putin wants, which is the United States, to support some kind of a ceasefire or territory swap that is unacceptable to the Ukrainians, and then to sort of cast Ukrainians as the biggest obstacle to peace.

 

The second is a ceasefire, kind of like the Minsk agreement. That really won't be a ceasefire, it'll be an opportunity for Russia to try to rebuild and maybe for the Ukrainians to rebuild combat power, a pause in the war. And the third, which I think is the best potential outcome, is because of Putin's intransigence, as you mentioned, that President Trump loses all of his patience with Putin and puts even more pressure on Putin and ultimately might convince him that he can't, he can't continue to prosecute this war at an acceptable cost and risk.

 

Not to put you on the spot, but, I mean, what do you think are the percentage chances of those, or what do you think will be the outcome if you were to have to predict it today?

>> Condoleezza Rice: I think it's going to be inconclusive. HR I suspect that at the end of it, the Russians will have one story about what happened, we'll have another story about what happened, but I don't think that this meeting in Alaska is going to end the war.

 

I do think, by the way, to your point, Putin is feeling a little bit of pressure because while the President has not been willing to let the Graham Bill in the Congress, which would put secondary sanctions on anyone who's aiding the war. He did send a little bit of a shot across the bow with the secondary sanctions on India for the purchases of Russian oil.

 

Now, personally, I'm a bit sorry about that, because I think the US India relationship is pretty important on its own terms. But that, quite apart, it was a little bit of a signal, perhaps to Putin. That and the fact that we did send or will send Patriot missiles, which the Europeans will buy, is a signal to Putin that maybe he's lost the president.

 

So this summit gives him a chance to say, no, no, no, I haven't lost the president. I still want peace, but I think it will be inconclusive. I am one who believes that really, actually, the Ukrainians need the war to stop. They are not going to match the Russians in manpower.

 

The Russians have adopted terrorist tactics in using drones and missiles, really, against civilian targets to try to break the will of the Ukrainian people. There's no military purpose to using missiles or drones against department buildings except to try to break the will of the Ukrainian people. So I would hope that there's a way, way for this war to stop, but it cannot stop with permanent territorial concessions that allow Putin to achieve at the diplomacy table what he couldn't achieve in the war.

 

And you also know HR is a military person. This fighting season is coming to a close in a couple of months. The Russians have made some progress in the east, but not overwhelming progress in the east. And so, if it stops and everybody's in place and maybe people decide, all right, enough, that wouldn't be a bad outcome either.

 

We just don't need any preemptive territorial concessions on Friday.

>> Sir Niall Ferguson: A couple of points and then a question. Condi. Watch what's happening in Pokrovsk at the moment where the Russians are really attempting a breakthrough. I worry a lot about the sustainability of Ukrainian defenses. As you say, the Russians have superiority of numbers.

 

It's not sophisticated. But in that kind of war, it can lead to decisive changes. So Putin goes into these negotiations with something of a military edge. Secondly, it'll be really interesting to see if he is going to drop some of the demands that he previously had, which went well beyond territory.

 

Remember, the Russians essentially have asked also for a change of government in Ukraine and for Ukrainian disarmament, that we haven't heard anything about that recently. And I wonder if that's because the Russians realize they might not be able to keep pushing for those concessions. But here's my question.

 

You've been Secretary of State. You've had to manage the foreign policy of the United States globally. This is about more than just Ukraine, it's about our relationship with Russia. Do you buy the argument that there's some kind of reverse Nixon strategy at work here, where Donald Trump is trying to improve relations with Russia, perhaps at the expense of Ukraine, in order to lure Putin away from Xi Jinping?

 

Is there something more at work here than just than just the negotiation over Ukrainian territory? And if so, what do you think it is?

>> Condoleezza Rice: Well, if I could just first say, Neil, I think you're right to worry about Pogovsk, but also the Russians are not really very good on the offense, and so I'm hoping that the Ukrainians can repel them in any case, and that any breakthrough isn't going to be decisive.

 

So let me just state that, look, I actually think the idea of trying to pull Putin away from Xi Jinping in China is not likely to work. And so I wouldn't try it. I actually think I, and you've heard me say this before, I'd slam them together. The fact is that the Russians and the Chinese have so little in common, really, strategically.

 

You're starting to read these stories about the Russian intelligence forces saying that they're worried about Chinese penetration of Russia. Do you really think the Russians are happy to see the Chinese dominant in Central Asia, which was part of the Soviet Union? I think they don't have that much in common.

 

And so I'm not worried about. Yes, tactically they can make trouble and certainly the Chinese have helped the Russian war effort. But I wouldn't spend American capital trying to separate these two. And I would make the opposite argument, in fact, that if you try to do that and you allow Putin to therefore have some kind of victory, you're actually giving a victory to Xi Jinping as well, because he's the one who decided that this was a relationship without limits.

 

And so if Putin wins, then they can have their little victory tour having defeated NATO. If Putin doesn't win, then Xi Jinping has to reconsider his, his decision to join up with a Russia that is kind of a loser. So I wouldn't try to separate them. I think it's not worth the capital and I'm not sure.

 

I don't think you can do it anyway. What holds them together is they both hate American power. That's what holds them together and very little beyond that.

>> John Cochrane: So if I could ask in this conversation, have we not given up too quickly on Ukraine? They are still fighting with one hand tied behind their back.

 

Suppose we and the Europeans gave them every weapon they wanted and let them use the weapons that they have, for example, to strike at Russian bases deep inside Russia. Suppose we went full on with sanctions against Russia. That would seem like Ukraine could do a lot better, at least than they are doing now.

 

Second, is there a deal really? You said permanent territorial concessions and Russia's idea that Ukraine must be somehow neutralized, carved off from the West. Those aren't happening. That can't be part of a deal yet. I don't see how there's a deal without it, other than we'll just stop shooting for a while and rearm.

 

 

>> Bill Whalen: And with that in mind.

>> John Cochrane: So the bigger question you have experience in higher reaches of politics. What is on Trump's mind? And I ask that in this way, Americans revere presidents who won wars, revere Lincoln and Washington and Roosevelt. We do not revere presidents who ended wars.

 

We brought up Nixon. Now, Bill's example of Teddy Roosevelt was interesting, but he ended a war between Russia and Japan where we really care who won. And we just, you know, we put some shits on the table that we could do it, but we care, we, the west, care very much about who wins this one.

 

So really, we don't really revere Joe Biden, who ended the war in Afghanistan. You really want to go down that one?

>> Condoleezza Rice: Mr. Trump ended that one rather badly, I would say.

>> John Cochrane: Yeah. So ending wars doesn't get you carved on Mount Rushmore. And I'm just, why do we not have the reaction that Bush 1 had?

 

This shall not stand. That seemed pretty darn clear to me.

>> Condoleezza Rice: Well, let me, let me start with your first point. And yes, I actually think the moment when we could have done this with Ukraine was at the beginning of the war because the Russians were on their back foot.

 

They thought this was going to take five days. You remember that convoy that got kind of stuck and couldn't move? They were really kind of sitting ducks at that moment. And unfortunately, I think what the Biden administration did was that they meted out kind of incrementally. We would debate whether to send tanks, then we would send tanks, we would debate whether to send a long range artillery, and then we'd send long range artillery.

 

If we just done it at the beginning of the war, I think the Ukrainians would have won outright. That's a lot harder now because the Russians are mobilized and they are taking advantage of their mass and they're taking advantage of their mobilization capability. So I think it's hard actually for the Ukrainians to win outright at this point.

 

So what do I mean by something that might be a holding pattern? You know, international history is full of these, let me call them, devices. They're things that hold things in place until they can get better. The division of Germany was a device until it East Germany collapsed.

 

We still have a kind of device in the Taiwan Straits where if the way you can tell if you've got a device is that the language is very careful and it basically is inconsistent. So we've got a one China policy, but we sort of recognize Taiwan. So that's how you can tell when you've gotten to a place that you want to just hold things in place.

 

That's really what I'm suggesting here, which is that Russia, Vladimir Putin, has destroyed his economy. Just last week, his very good central banker, Navelina, made a speech at the St. Petersburg Economic Forum. At the St. Petersburg Economic Forum where she gave a very dark assessment of where the Russian economy is.

 

You're getting leaked memos from Gazprom that they're not going to be profitable until 2035 because they're harvesting. I used to be an oil company director. If you're just harvesting and you're not reinvesting, things start to break down. So he's destroying his economy. So I'm talking about buying time if you are Ukraine.

 

The reality is, de facto Russian forces are gonna hold some of the territory that they have if in the east, Crimea. Our part should be to never recognize Russian sovereignty over that territory. For 45 years, we did not recognize the incorporation of the Baltic states into the Soviet Union.

 

When I was the young Soviet specialist, every time I wrote Latvia, Lithuania, Estonia, I had to stamp it. The United States does not recognize the forcible incorporation of the Baltic states. And you know what? In 45 years, the Baltic states were free because conditions were such that they could be freed if Ukraine can just get to the point that they can hold at risk things that the Russians care about.

 

And we've seen that their defense industries giving the ability to do that, how in the world did they attack the Russian strategic bomber force out in Siberia? How did they do that? I understand blowing up a bridge in Crimea, that's not so hard, but my goodness, in Siberia.

 

And so give them the capability to hold at risk things that the Russians care about, the energy infrastructure in Russia allow them to build up their defense industries and just say to Putin here and no further. And I think this could be stable enough for Ukraine to rebuild on the part of Ukrainian territory that actually matters, the western part of Ukraine, which is where the modern Ukrainian economy is.

 

A Ukrainian financier said to me, he said, don't quote me on this, but I won't use his name. He said, they kind of did us a favor because the Donbass is all rust belt and now it's uninhabited rust belt because people have fled. So what I'm suggesting is, and you notice I use the war, I said the war must end, but I really mean the war needs to stop.

 

And then I think the long range, the long term favors Ukraine, but it requires that they have enough and enough support. To hold Russia at risk requires no deal with the Russians. That is a permanent territorial deal, and it requires telling Vladimir Putin you will have nothing to say about the future of Ukraine.

 

Internally, I think that's the package.

>> Bill Whalen: Conde, I'd like to turn your attention to China. We've talked a lot on these series over the past five years in Goodfellas about Cold War II or Cold War II. You recently did a podcast with Hoover's own Lord Andrew Roberts in which you disagreed with that characterization.

 

You don't think it's a Cold War? Tell us why we're wrong.

>> Condoleezza Rice: Well, Neil and I have had this conversation back and forth, and I think he knows that. I'm just trying to warn that sometimes if we adopt certain language, it obfuscates what we're actually dealing with. So what are a couple of really important differences?

 

At no time in the Cold War was more than 1 to 4% of Soviet GDP related to international trade. This was a completely isolated country by design. This goes all the way back to Joseph Stalin, who talked about autarky. They wanted to be completely independent. And to the degree they weren't independent, it had to do with these weird relationships they had with.

 

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

 

So that's the first, most important thing. And so we don't have some of the levers with China that we had with the Soviet Union. I used to run something called cocom. So it was a series of export controls on the Soviet Union. When I was young, Soviet specialist for the National Security Council, it was actually kind of easy to do because technologically they lacked sophistication and we could hold things back.

 

You're just seeing with the Chinese that export controls, if you look at deep Seq not working that well because we've allowed them to develop indigenous capability, that is really showing that in some areas they actually exceed us. So that's the first most important thing. The second is, and here you could debate it.

 

I don't think this is very ideological from the Chinese point of view. It is nationalist and it's mercantilist. And it does have a view of a greater China that was somehow broken up during imperialism and you're gonna restore it. But the one thing the Chinese basically say to any country that they want to adopt belt and road so that they can have the ports and the infrastructure is, hey, we don't care what your form of government is, that's your business.

 

And that was also not the Soviet Union. Remember the Brezhnev doctrine that you had to, if you were Czechoslovakia, the Communist Party had to look a particular way, and the US Soviet relationship was a kind of clash of views of how human history was going to unfold. I don't think you can say that about the relationship with China.

 

And the final thing is actually, it's more dangerous for a couple of reasons. We and the Soviets, after the multiple Berlin crises, basically didn't have territory in conflict. We had some proxy wars that we fought, but essentially once Europe stabilized, we were in close proximity, but we didn't have open conflict.

 

And the second is we made sure we wouldn't have open conflict because we were so fearful of a nuclear war that from 72 on, we created an exquisite set of notifications and transparency because nobody wanted to have an accidental nuclear war. I tell the funny story of how extreme these measures were.

 

So Sergey Ivanov, who at the time was defense minister in Russia, but was kind of my counterpart, he was close to Putin. I was close to President Bush. I get a call from Sergey one day, he says, Condi, I'm supposed to notify you we've lost the warhead. What?

 

[LAUGH] He said, don't worry, he said, it's an accounting thing, but I'm supposed to let you know, right? Well, then you have this question. Do I go tell the president the Russians have lost the warhead? Do I wait till they find it? What's the deal here? But I give that example because on 9 11, Putin brought down exercises because our forces were going up on alert.

 

They didn't want to get into a spiral of alert. We had exquisite mechanisms. We have none of that with China. My experience in. April of 2001 was when a Chinese pilot, hot dogging in international airspace forced down an American reconnaissance plane on Henan Island. It was three days before they would take our call.

 

So there are some really important differences here. Can we learn things from the Cold War? Yes, but I think if we call it a new Cold War, we are obfuscating the real nature of this relationship, which looks more, much more, kind of late 19th century, early 20th century than post World War II.

 

 

>> Sir Niall Ferguson: Well, it's always a mistake to argue with your boss, but don't see why I should stop now be doing it.

>> Bill Whalen: I should have learned that a lot earlier, a lot earlier.

>> Sir Niall Ferguson: What's good about the Hoover Institution is.

>> John Cochrane: You get points for arguing cogently with your boss.

 

 

>> Condoleezza Rice: That's absolutely right, yes.

>> Bill Whalen: [LAUGH]

>> John Cochrane: [CROSSTALK] And our employer.

>> Sir Niall Ferguson: I agree with points one and three. There's no question that the economic interdependence of the US and China is a massive difference between this and Cold War one, as I like to call it. And I think you're right too, that there are sort of dangers in this Cold War or this relationship that didn't exist before.

 

I had the good fortune to sit next to our colleague Jim Ellis on the flight here and we discussed the nuclear dimension. One of the resemblances between these two situations is that we are in a nuclear arms race with China. What makes it more dangerous is that there's also Russia.

 

So there are two nuclear superpowers on the other side at this point. And I do think that that makes the, the nuclear dimension of this relationship between the US and China very, very dangerous. But I think on the ideological point, I differ with you. And, and so I think with quite a number of writers, Rush Doshi, for example, in a way, Xi Jinping has made the, the People's Republic of China much more ideological than it was at all the periods from Deng Xiaoping up until Xi's predecessors.

 

Not that he wants to spread Marxism, Leninism, or Maoist thought for that matter, the rest of the world, but just that he is hostile to democracy, to the rule of law, and to the ideas of freedom that are fairly central to what the United States and its allies believe in.

 

So I do think there's an, an ideological dimension. But here's my question for you. If it's not Cold War ii, what is it? Because I'm not sure I buy the idea that we're sort of back in 1900 when there were multiple empires, all with comparable conventional force capabilities, and all, as it turned out, ultimately able to wage a four and A quarter year conventional war with one another.

 

It seems to me there are two superpowers today. They're not just superpowers in, in economic terms, but they're superpowers techn. That's to say the US and China are the AI superpowers. And I'd love to hear your thoughts on where AI fits in here. It's something we're all thinking a lot about here at Hoover.

 

This is something that clearly differentiates Cold War one from where we are today. Because in a way, Cold War I was about nuclear competition, the space race, and ultimately a computer race that the US won. This seems to be technologically a broader frontier. We're competing with China on everything from AI to quantum computing to robotics.

 

And what's fascinating to me is that in some domains China's even ahead, or it seems to be. How do you think about that?

>> Condoleezza Rice: Well, Neil, you're just making my point about why it's not Cold War two, by the way, because the Soviet Union was also a technological midget and China is a technological peer, if not in some areas greater.

 

I just want to say one thing on the ideological point. It is absolutely right that Xi Jinping is an avowed Maoist, Marxist, whatever. It's just that the export of it is not so important to China and to Russia, to the Soviet Union. The export of it was extremely important.

 

It was as if Joseph Stalin, when he wrote back in 1926, One day we will have a ring of brother states, he said, that will help to protect us. And so the ideological dimension was more important to them in terms of their foreign policy than I think it is to China.

 

I do think, by the way, the ideological dimension in which he believes that China is ascendant, the west is in decline and China will rule the future, if you want to call that ideology. I think that is true. So what would I call it? Why don't we just call it that?

 

This is a relationship with a continuum, some of it slightly cooperative, but moving pretty close now to just a great power conflict. And that's why I think it looks like another time. As to the nuclear piece, I actually think you could say that it is more dangerous because almost all of our nuclear strategy going back to Tom Schell is based on a two player game.

 

And now we're getting a three player game and we have no idea how to deal with that. And the Chinese, basically, I think as HR can tell, you don't want to have that discussion. And so this is the problem now as to AI, this is really a Dimension.

 

And it's, as you said, not just AI. It's AI, it's synthetic biology, it's robotics, it's what's happening in energy, it's battery tech, it's across the range of technologies. And there, I think, we really are in a race for supremacy. And my own view of it is the United States has to run hard and fast.

 

We are not going to export control our way out of this. We're going to have to keep leapfrogging in order to stay ahead where we can, push further where we can. Because I have a very basic view of this. I do not want authoritarian China to win this race.

 

And I think if some. These are what my friend Fei-Fei Li is called civilizational technologies. They are extraordinary in their transformational character. So if something goes wrong, we will have congressional hearings. We will have investigative reporting. There will be people who are saying this went wrong. How can we fix it?

 

If something goes wrong in China, they will treat it the way they treat it with COVID They'll lie about it, they'll cover it up. We won't know what's happening. Someone asked me the other day, what do you mean by when? I said, well, let me give you my worst nightmare.

 

Okay, so there's, as you know, a debate among AI specialists as to whether or not AGI general intelligence is actually possible. But let's for a moment say that it is possible. Another person said to me, if it is possible, and you know, general intelligence, meaning that this, this model acts on its own, not on command.

 

And we have had examples of the model being unwilling to turn itself off to an off command, so it starts to act intelligently on its own. Someone that I know well said, just don't put it in a body, right? Don't put it in a robot. And I think to myself, waking up one day and the Chinese have either conquered AGI or they've put it in a body, I don't want that strategic surprise.

 

And what really worries me is the intelligence agencies, our intelligence agencies, as well as the Brits, who, by the way, are the only other AI player out there, really. They have no way to collect on this. They don't know how to collect on it. They don't ask the right questions.

 

They don't have the right people. When Deep Seek happened, every national security person that I knew was stunned. Not a single AI scientist was stunned because they. They were all reading the open literature. They knew who the people were, they were reading the papers. And so I worry that we will not know.

 

So my only way if I don't know what's coming is to make sure that I'm as much as I can ahead of the game. And that's why I'm pretty a light touch when it comes to any regulation at this point. I would rather free American and to a certain extent British innovation to just go for it.

 

And if there are problems, I think we'll handle them.

>> Bill Whalen: So, Pradi, having having failed in my efforts to get Sir Neil Ferguson in trouble with you, let me now try to throw all three Goodfellows under the bus. There was, not too long ago a retreat in Arizona.

 

These three fellows were on the stage. Apparently some critical words were said about college, the federal funding of college research. And you didn't like what you heard. Tell us what triggered you.

>> Condoleezza Rice: No, I actually came up to John Cochran after and I said, okay, I'm coming on Goodfellas to tell you why you're wrong.

 

 

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

>> Condoleezza Rice: Right, let me start with the assertion that universities have a lot to atone for. This has not been a good period for American higher education in the following way.

 

Look, the US higher education system is still. The tertiary system is still the gold standard internationally. That's why everybody's trying to get their children here from wherever they live in the world. But what should they atone for? We did become a place where there was an orthodoxy about views and where certain views could not be expressed, or if you express them, you express them at great cost.

 

The idea that you only sought truth, if you want to use that term, by the clash of ideas, by listening to people who thought differently, by entertaining the idea that you might actually be wrong, by being willing to say, all right, that's uncomfortable for me to hear, but I have to hear it.

 

I tell my students all the time, you don't have a constitutional right not to be offended, right? So if you're offended, how about you just talk to that person about why you're offended as opposed to organizing a protest because you were offended. So we didn't do this well, and we allowed our students, even maybe encouraged our students to think that there were ideas that were so poisonous that they should not be a part of the discourse.

 

That's our fault. It is also true that with the exception of maybe the Place that we all are, places like the Hoover Institution. Universities were pretty monolithic in their, in the people that they hired. I was asked to do a presentation when I first became director before the.

 

The Faculty Senate. And somebody had said we were partisan at Hoover. And so I said, you know, I'm a social scientist, so I have to have some indicators of partisanship. So let me say that one is electoral contributions, which I can see through filings. Hoover, it was kind of 50, 50, 65, Stanford faculty, 90, 10.

 

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

 

But universities also are, in a set of decisions taken 80 years ago, the ecosystem for fundamental research in science and engineering and biomedical. We don't have a plan B. Vannevar Bush's system was to have the federal government, the Defense Department, the Energy Department, the nsf, the NIH, to fund universities.

 

 

>> Bill Whalen: To do fundamental research.

>> Condoleezza Rice: And they recognized that commercial entities would have to meet the quarterly report, the quarterly earnings. And so sometimes you need a long stretch of time. One of the most interesting is a lot of the work that was done on neural networks starting in the 60s that sat on shelves for years until the compute power came along to give us AI.

 

That's an example of why you fund fundamental research. Stanford alone, the transistor Stanford, the double helix in DNA, the discovery of the existence of sickle cells, the twin that became Google, and that's just Stanford. And so my view is, yes, but when you start saying we're not going to fund scientific research, either because you believe universities deserve to be punished or because you've decided you're going to start cutting budgets for it.

 

We don't have a plan B. We once had a kind of plan B. You know, before the baby bells broke up, there was something called Bell labs. But once AT&T came along, it became a cost center. And you know what happened to all those people in Bell Labs?

 

They fled to universities where they won multiple Nobels, not to mention the training of graduate students in the Frontiers. I just think this is not the right strategy. And I'm very worried at a time when we've just been talking about China pushing the technological frontiers, we are doing just the opposite.

 

 

>> John Cochrane: I think we're all in fundamental agreement there is a baby and there's some bathwater. There's a lot of bathwater. And we want to get rid of the bathwater. But let's not throw out the baby now. I'm a little more attuned to the bathwater. All sorts of things are going wrong in that research enterprise.

 

When it was young and hearty in the 1950s and 1960s, it produced wonderful things. But you gotta fill out a hundred times more paperwork now than you used to have to do in the 1950s and 1960s. So many areas of research, not just the social sciences and humanities, not obvious why the government needs to be subsidizing those.

 

I watched personally how the NSF subsidies for economics are basically incentivize no new research. And that was before the era of wokeism. The kind of stuff they're subsidizing now is very, very hard to defend. We have watched as the physical sciences have been politicized, how difficult it has been to do honest climate research.

 

As our friends Steve Koonin and Bjorn Lomborg have pointed out, how difficult it has been to do honest research on so many aspects of. Of medicine. So it needs reform, and I think that's what we agree to. Part of that reform is the inevitable problem of a monopoly supplier.

 

That's a bureaucracy. The age of principal investigators has gone up and up. The political demands have gone up and up. The Biden administration insisted DEI comes first on every single grant. So the need for that kind of. For a fundamental reform of that sort I think is important.

 

So we can talk a lot about the details of how do you subsidize good innovative research. It has to be a brutal meritocracy, which is very hard for a bureaucracy to do. Multiple points I think are important, not just a monopoly supplier.

>> Bill Whalen: The Saudi Arabians subsidize research on the reading of the Quran.

 

 

>> John Cochrane: While subsidizing, you gotta subsidize good research, useful research. And that's very hard to do because good research upsets the apple cart of, of everybody who's, who's been in there. So, you know, more competition, better structures are important part of firm and not just federal funding. We have a lot of billionaires who don't know what to do with their money and you know, they're sending it to all sorts of philanthropies that turn out to be rat holes.

 

A little bit of science funding by billionaires, you look what Tyler Cowen has done with fast grants and it's just amazing what you do with a parallel structure. So competition, multiple points, a very hard-hearted reform. I think we all agree that's necessary and there's a lot of turbulence going on.

 

I'm not happy with how the Trump administration is going after universities, but something had to be done. I think we're all in agreement that's what we need to do.

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

 

You want the agencies to actually take risk. You want young investigators to take risk, which then implicates the tenure system, which doesn't really reward risk. It rewards coloring within the lines so that you can get good letters. So I agree with you. There's a lot to be done there.

 

I also think that the government has a big role in this. If you look at the amount of paperwork and auditing and a lot of the growth of these bureaucracies around research are because the government requires so much reporting that you hire people to do the reporting. I would give you back, I used to be provost and I ran the research enterprise for Stanford.

 

I'd given you give you back 11 points on what's called the indirect cost number if you would just let me not have to report quite so much. So I think there are things that the government could reform, things that universities could reform. I'll make one other point and I hear, I completely agree with you.

 

There do need to be multiple now ways of doing this and the government is still, I think going to be the fundamental research because people are not going to see commercial benefits for quite some long time. But let Me defend those billionaires for a minute. A lot of the buildings that Stanford has over here in the research quad are named Gates and Wang and Wu and Tsai and the like.

 

And so a lot of the infrastructure in universities actually is donated from philanthropy. And the government doesn't really count that, but it's an important contribution.

>> John Cochrane: And I'm just saying we need more and more of that. As an economist, I don't wanna be on record as the opposite, from the economics of what we understand of long-term economic growth there is nothing more important than fundamental scientific research.

 

 

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

 

You take something like AI, the compute power to do these large language models actually only really right now exist in the hyperscalers. And so no combination of universities can do this without industry help. And I think industry should look back and say, yeah, well we can support some of the fundamental research.

 

So I agree with you. We need new models also. And maybe, maybe some of the assault, if I call it that on federal funding for scientific research in universities will cause universities to look for alternative models which ultimately may improve the entire system.

>> Sir Niall Ferguson: Well, I don't disagree with what's being said.

 

The question is going to be do the universities emerge from the current bombardment and most of the fars being directed at the east coast institutions, principally my former employer Harvard, improved. That's the key issue. There was all kinds of rot, as we've discussed. And in many ways I think places like Harvard had it coming, but I'm just not convinced that they're going to emerge radically improved from the current onslaught here.

 

I think I agree with you, John. There was a way of coming at this problem with a rapier rather than a bazooka. I think all kinds of discrimination was going on at every level in most of the established universities, from admissions right the way through to tenuring. And it probably would have sufficed to go after that in the sense that you could then have challenged the tax exempt status.

 

The problem that I see now, particularly at Harvard, is that the federal government is making such inordinate demands and seeking such controls over the university, that a kind of resistance is pushing back together the people who were previously fighting over the future of Harvard and the people who were previously the critics of the woke tendency have kind of shut up and rallied around the flag.

 

So I'm worried that five years or ten years down the road, when President Trump's long gone from the White House, I wonder if the universities will really have improved in a meaningful way. Will we really have got to real academic freedom again? Will we be really meritocratic institutions?

 

Or is there going to be a kind of three and a half years of paying lip service to ideological or intellectual diversity followed by a return to the old ways? And I, I don't have huge confidence when I look at the universities and their responses to the current barrage that they're really going to change their ways.

 

Which is why I've spent time supporting the new university in Austin, because I do think we need new models. I think if Vannevar Bush turned up today and looked at this world we're in, he'd be amazed at how much research was going on in the private sector. He'd be amazed at how much was coming out of Google and of Microsoft and of Meta.

 

And in that sense, I think we are in a somewhat different world. Quantum doesn't feel like something that's going to be done inside a university. I think the first quantum computer won't be on the Stanford campus. It more likely will be at Google. So I think we're in a different world.

 

And I agree with John. We want competition, we want new models of research funding, we want to get away from bureaucratic behemoths and above all, we've got to get away from the federal government imposing political strings, tying political strings to the money that it doles out. That I think was part of what led us to the mess that we got into in the 2010s and tying.

 

 

>> John Cochrane: These two conversations together. Competition from China. I actually think that China is much more private sector than you think, much more research focus and they're really, really good. And competition from China on basic research may be the thing that lights a fire under America to get rid of some of the bureaucracy that makes doing scientific research about like building a high speed train.

 

 

>> Condoleezza Rice: John, I completely agree with that and I do think that the one thing I will say about universities and you know, Neil, I've applauded some of the new experiments in univers. A great number of people who are gonna be leaders are still gonna be trained in places like this, like Stanford, and we simply can't see that territory to those who pushed It I think so far to the kind of folk left.

 

 

>> Bill Whalen: And that's why I think we work very hard at it.

>> Condoleezza Rice: As to the China competition, I agree with you. Although there's a little voice inside my head that says, you know, authoritarians always go too far. They somehow always manage to overplay. And when I read that, you know, some of the models have to incorporate Xi Jinping thought, I think, well, you know, give me freedom, give me liberty, and then get the government a bit out of it and let me see what I can produce.

 

 

>> H.R. McMaster: If I can add just a note of optimism here in terms of research and kind of ask you maybe to comment on it. I think another word we should focus on is collaboration. In a previous job, I contributed to setting the Army's priorities for basic and applied research.

 

And what was frustrating for me at times was to not understand being unable to learn what research was going on where, not just, not just in the private sector, but even within government funded research by Department of Defense, Department of Energy, the various labs. I think now with large language models and AI related technologies, we can do that a heck of a lot easier.

 

We can understand how we can actually work together collaboratively without being redundant in a lot of this research and we can learn cumulatively rather than episodically in an uncoordinated manner. So, of course, you know, China's big advantage, a lot of people say, is because it's command directed, right?

 

It comes from the top and you've got civil military fusion. I think we can unleash the power of collaboration with a lot of these new technologies.

>> Condoleezza Rice: Completely agree.

>> Bill Whalen: Well, Condi, we're gonna leave it there. Great conversation. Now, we began this by asking your whereabouts on October 12th.

 

We've learned you will not be in London, England. Do know where you're going to be on February 8, 2026? Do you happen to know what that date is?

>> Condoleezza Rice: Conde, what is it?

>> Bill Whalen: Super Bowl.

>> Condoleezza Rice: Is that the super bowl this year? I thought it was February 3rd.

 

Well, I will be at Levi's Stadium. I really, you know, 10 years ago, just saying. That was the last Denver Broncos super bowl and it was at Levi's Stadium. That's not a prediction, but it might be a hope. Get that Eagles thing out of our faces. They're a good team.

 

They're a good team. So HR just have to say if we're going to do anything, we have to first take down the Kansas City Chiefs.

>> Bill Whalen: Right Again, I should say again, from the Eagles perspective.

>> Condoleezza Rice: Thank you for having done that.

>> Bill Whalen: [LAUGH] Condi, when Bumpfellows was the head coach of the Houston Oilers.

 

I'm really going back years now. The Houston Oilers. He would leave a ticket at will call for Elvis Presley. So would you be willing to leave one at will, call it super bowl for Sir Niall Ferguson?

>> Condoleezza Rice: Absolutely. And I'll even take him to the game and instruct him in the finer points of football.

 

 

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

>> Condoleezza Rice: That it is.

>> Bill Whalen: Yes, and it's, well, 2031 for Rugby World cup as well.

 

But, Connie, whatever you do, don't agree to go to a cricket match.

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

>> Bill Whalen: Don't be a stranger.

>> Condoleezza Rice: Thank you. Really enjoyed it and thanks a lot.

 

I think Goodfellows is a fantastic program and I love being on it. Thanks, guys.

>> Sir Niall Ferguson: You guys still have a job.

>> Bill Whalen: We turn now to our B block and what we're going to call cambio de ambiente in Argentina, which, if you'll forgive my pedestrian Spanish, roughly translates to the vibe shift in Argentina, Sir.

 

Neil Ferguson, I turn to you because you recently went into the Southern hemisphere and you had the great privilege of sitting down and interviewing Argentinian President Javier Milei. I'm curious, Neil, as to what you got out of it, what you're expecting going in, what you learned from Milei and the idea that there is indeed a vibe shift of Argentina.

 

Is it real and is it exportable?

>> H.R. McMaster: And hey, Niall, I just wanna say you were looking we guapo man in those photos that I saw, we guapo.

>> Sir Niall Ferguson: [LAUGH] Well, thank you so much. I was fortunate enough to get to meet President Milei. For those not following Argentina, it has for most of the last century been the great underperformer.

 

The great disappointment of economic history was once a wealthy country with bright prospects. It's had every conceivable kind of financial crisis since 1945. Certainly most of this can be attributed to Peronism, that strange populist, nationalist, socialist ideology that dominated post war Argentine politics. And something has changed, and it's very dramatic.

 

And what has changed is that a libertarian economist who makes John Cochran look centrist has become president. He won the election at the end of 2023, having pledged to slash the Argentine government. He wielded a chainsaw during the campaign. This chainsaw then reappeared in the hands of Elon Musk, who wanted to follow malaise example.

 

And Malay has been as good as his word. He has drastically reduced Argentina's perennial deficit from 5% of GDP to zero within year one. And it's one of the great turnarounds in terms of economic performance that I think I've ever witnessed and perhaps has ever been recorded. Argentina was on the brink of hyperinflation when Malay was elected.

 

He's got inflation under control mainly by getting his fiscal anchor in place and balancing the budget. And he's also deregulating the economy at speed. In other words, he's an outlier in an outlier country. I didn't know what to expect. He has a larger than life personality. On social media he looks like an escapee from 1960s rock and roll band, late 60s.

 

Long hair, long sideburns. I've grown my own in tribute to him. And the chainsaw is only part of a pretty rock and roll stage presence. He also loves to rabble Rose with his slogans such as ¡Viva la libertad, carajo, long live liberty, damn it. And then you sit down with him in the quiet of the presidential office and you have a one and a half hour economics seminar in which in answer to my questions, President Malay very enthusiastically argues for a radical libertarian solution, not just to Argentina's problems, but to the world's economic problems.

 

And John, you would have loved it, because I asked him at one point, you know, how do you reconcile your commitment to free markets with President Trump's enthusiasm for for tariffs and even some elements of industrial policy? And he gave the most splendid and sophisticated answer, which involved a tour through trade theory from Ricardo to the Heck Ohlin model.

 

So he's not at all the wild man that you would think from social media. He's an intellectual who somehow or other not only became president of Argentina, but has brought about, maybe it's a bit early to call it an economic miracle, but certainly an amazing turnaround.

>> John Cochrane: Wonderful, and let me comment by encouraging everyone to read your lovely substack article on your meeting with Javier Milei.

 

I can only say one thing. How incredibly jealous I am that you got to do this and not me. But I then have to admit that you did a way better job of both interviewing him and writing him up. I would have just been sitting there in fanboy adoration.

 

Not gotten much done to your last point. First, I follow his YouTube channel. Javier Milei explains.

>> [FOREIGN]

>> John Cochrane: Where you will see amazingly sophisticated explanations of all sorts of modern economic theory, he's not just some guy who woke up from an Austrian Whip Van Winkle 30 years ago.

 

He really understands economics. Just a couple quick sort of my takes on the lay. First of all, big lesson here. Stimulus versus supply. What matters for getting an economy going? The Keynesians ought to be in full retreat on this one. They said, you're going to cut government spending, the economy will tank.

 

No, you get out of the way and the economy goes remarkably quickly. Often you think, you know, reforms are going to take time and in the meantime it's going to suffer. The Argentinian economy is, is already booming if you just start getting out of the way. Lesson two, Inflation.

 

What conquers inflation? Do you need tight monetary policy, high interest rates, a big recession to conquer inflation? Nope. You just need to get the fiscal house in order and inflation falls with interest rates below inflation the whole time. No monetary stringency required. Third comment. A lot of people say to me, John, your libertarian fantasies, that's not politically feasible.

 

And I say, okay, wind back three years and tell me, is it politically feasible that Argentina might elect a libertarian president who named his dogs Hayek and von Mises? You know, what's politically feasible can change. We will all sooner or later do the right thing after we've tried everything else.

 

I think Argentina gets the prize for having tried everything else. And I only hope Milei is free once he's fixed Argentina.

>> Sir Niall Ferguson: Can I add one thing which is really striking? You know, the economics is going as you and I would expect, John. It's working, as you just brilliantly pointed out.

 

And some of this they did against the advice of the International Monetary Fund, focusing on the fiscal anchor, which is of course right up your street. But what's really amazing is the politics, because everybody, and I think I probably was amongst them, thought, well, doing this fiscal adjustment will make you unpopular.

 

This just bound to be painful and you're going to get into political difficulties. No, his approval rating has held up throughout and has indeed strengthened as it's been clear that the economics is working. And he's poised, at least his party is poised to do well in the legislative midterms that are just coming up.

 

So the most amazing thing about this is that it's politically as well as economically working.

>> John Cochrane: And I just. I'm sorry, H.R. we're batting this one. No, but he's got a good point here from your substack. The beautiful point made that it came from the Young people in the U.S. the young people are all socialist in Argentina according to your substack.

 

The young people and, and the fact that they had social media and didn't have to listen to that, to all of the standard things on, on regular media the young people turned libertarian and then they went home to covet and persuade parents and everybody is so sick of the old system that they're not going back.

 

But that it came from the young people I thought was very interesting.

>> Sir Niall Ferguson: HR I've met some of those young people and it's extremely interesting. I was in Buenos Aires last, before the election that Milei won. There was hyperinflation in the air and the mood was distinctly downbeat except about the World cup which they just won.

 

But now there's a vibrancy in the air in Buenos Aires that I'm sure hasn't been experience for a generation. And young people sense that this is a real turnaround and this time really is different now. One can't of course count the chickens before they're all hatched. It's Argentina.

 

It has a long history of getting a certain way down the line of reform and then coming off the rails. But I have to say I was deeply impressed by what I saw not only when I spoke to President Milei, but also his economics team, the economy Minister whose name is Caputo, deeply impressed me as somebody who really understands the challenges that they still face, particularly in persuading financial markets that Argentina really has turned a corner.

 

But this combination of youthful enthusiasm, which Malay is very, very good at tapping and real competence in the government left me thinking, you know what? I think they've done it. And of course when people say but it's Argentina, I remind them that not everything is forever. Underperformance can't be forever, just as performance isn't forever.

 

You can do tremendously well as an economy and then you run into trouble. I think Argentina's been in trouble for so long that people have just had enough and they, they're ready now to take the, the radical steps that Malaya's urging and he's not finished. He's got a second term agenda of radical labor market reforms, of tax reforms, potentially a flat tax.

 

It's exciting, John.

>> Bill Whalen: I hope you get a chance to go down there and take a look because it's a long time since any government in the world has been this radical in its commitment to free market economics.

>> Sir Niall Ferguson: In fact, it may be the most pro market government in our lifetime anywhere.

 

 

>> Bill Whalen: I think Niall hit on one thing important here, HR, which was competence in government. If you look at what's going on with Trump right now and his agenda, you know, the chipping away at Doge, the ICE raids and so forth, it does raise questions about just how blunt of an instrument he's wielding.

 

But if Trump were to react Niall's column, HR, what do you think the most important takeaway for him would be?

>> H.R. McMaster: Well, I think it was, we were just talking about, which is the enthusiasm of the, of young people and the ability of a leader to kind of galvanize people in a positive direction and maybe the power of a positive vision.

 

I mean, Neil and John, like you guys, maybe comment on this. I think what's, what's missing is, I think what President Trump has done effectively is point out the deficiencies of previous administrations and the degree to which, you know, he needs to disrupt really a lot of the, the previous practices in Washington, you know, leaving people behind, not really caring about citizens and really caring more about sort of their own, you know, the agenda of the, of the political elite.

 

But what's missing a lot of times with President Trump is like the positive vision, you know, of, of the future. Some of that's there, right? Deregulation, growing the economy, you know, and, and, and invigorating the industrial base and so forth, securing borders, you know, I mean, but the way he goes about.

 

A lot of times, it's just cast as negative. I mean, is there, do you think there's something that President Trump could maybe, you know, take from Malay's playbook or maybe future political leaders could.

>> Sir Niall Ferguson: Well, what's interesting is the way Milei has, has solved a problem which proponents of free market policies have long grappled with.

 

How do you make this sexy? How do you make it exciting? How do you sell it to younger voters? And I think Milei's trick is to make liberty, freedom, something that is exciting and to juxtapose as its opponent what he calls lacasta, the insider class of politicians. Corrupt politicians, corrupt businesses, corrupt union leaders who are the beneficiaries of socialism, of Peronism, of the old regime.

 

And so what's fascinating to me is the way Milei has cast radical free market reforms as something liberating for young people who have been, to put it bluntly, and he uses very blunt language, I should say, screwed by a corrupt establishment. I think there's something there that any conservative in the world can use, because after all, in the end, what socialism and state control does to an economy is to corrupt it and to create insiders who establish monopoly or oligopoly.

 

And that's at the expense of ordinary people. So I think Malay's great political success has been to say, I'm mobilizing you young people because you've been screwed by this system and I'm going to give you liberty. And liberty is gonna be Just a lot of fun.

>> Bill Whalen: I think he makes liberty exciting.

 

And that's something which, which Republicans and I, I would say also British conservatives have been struggling to do really, since the 1980s, which is the last time we had a kind of libertarian mojo in the Northern Hemisphere.

>> John Cochrane: Yeah, Liberty and opportunity, as opposed to the government is going to send you a check.

 

And you know what? Unfortunately, the Trump administration is sliding into state capitalism, crony capitalism. Greg IPS column in the Wall Street Journal was excellent today. And will of one man, here's a tariff, here's another tariff, not something institutionalized. What I just learned from Neil is that Milei is moving from I extend a decree to something that is in the institutions and will last after he's gone and has the popular and political support.

 

So, so freedom and opportunity, as opposed to a move to state capitalism of the right rather than state capitalism of the left. This can be politically salient. That this can survive politically even among Trump's base, that they would rather. Opportunity, I think might be a lesson. Not likely one that it will be heard here, but maybe.

 

 

>> H.R. McMaster: And it's, it's American, right? I mean, in terms of individual agency, you know, I mean, I think about the contrast with the like kind of the postmodernist critical theory nonsense that puts the words institutional and structural in front of every problem and robs people of agency.

>> Sir Niall Ferguson: Right?

 

 

>> H.R. McMaster: This is saying, hey, you can build a better life for yourself, you know, for your kids, you know, know, and, and we're to create the right environment. You can do it. You can exercise authorship over your own future. Right. And I think that's a pretty powerful message.

 

 

>> Bill Whalen: John, let's talk tariffs for a minute. So Argentina right now is looking at a 10% tariff. Its neighbors to north Brazil, I think is a 50% tariff. China's tariff to be determined. China got another 90 day reprieve. I think November 9th is now the, the magic date to decide what to happen there.

 

Anybody curious about this can go to a wonderful website called tradecompliancesourcehub.com and it covers terrorists in every way imaginable. It's a very good website. John, you wrote back for Grumpy Economist back in January that you said you're, quote, not a fan of terrorists. Not a catastrophist either. So here we are in the middle of August, and it seems to me that the world hasn't collapsed.

 

So are you willing to say that maybe Trump is onto something here?

>> John Cochrane: No, [LAUGH] remain an answer in such a-

>> H.R. McMaster: That's so surprising. So surprising.

>> John Cochrane: But my mind is not Closed. I've learned a lot and come to appreciate the national security point of view. There is a hypothetical view of some very narrowly constructed tariffs that actually have something to do with national security.

 

Thanks, HR for educating me on that one. Although I would needle you a little bit. How's that global economic strategy working out for you there now that this sword has been unsheathed and off it goes? In fact, we're seeing the tariffs are being wielded for foreign policy purposes.

 

The 50% tariff on India is. Why don't you guys stop buying Russian oil? It's not about optimal trade policy. So I'll defer to HR or needle HR about whether it's. It's working or not. Tariffs are a tax. A 10% tax is not good, but you know, we have 10% sales tax in California.

 

Well, it is kind of falling in the ocean. But bigger tariffs are much more economically damaging. What I've seen economically is that the price increases are coming. They won't be huge. Now, what's the interesting thing about the tariffs is how long will they last? The court case on tariffs looks very likely to blow up in the administration's face.

 

And I encourage you, Scott Twitter reposted the administration's letter to the court, which is just a wonder of understanding how America works these days. Read that letter of how Trump's view. It is clearly written by Trump of why you must stay this on the way to the Supreme Court.

 

But it's very likely that the tariffs will be declared illegal. And if they are declared illegal, the government has to pay back every cent collected so far. I think a lot of what's going on is people are waiting because this is not institutionalized. This is the will of one man.

 

There is not a economic force, a political force. There's not anything demanding big tariffs right now from economic point of view. So I don't think they will last. And a lot of the world is just holding its nose and waiting.

>> Bill Whalen: Okay, Neil, I struck out with John.

 

Let me try you, has there been a vibe shift when it comes to tariffs?

>> Sir Niall Ferguson: Well, what's important, and I said this to Margaret Hoover on Firing Line the other day, is that there are at least three different rationales for tariffs that have been proposed. One is that it's a negotiating lever that you're going to use to get relatively protectionist countries like India and Brazil to lower their tariffs, hence reciprocal tariffs.

 

Another is that they're a source of revenue, which suggests that they become permanent. And by the way, John, I think even if the IIPA basis for the tariffs, which is the, the legislation that or rather the basis for the tariffs that's being challenged in the course, I think even if that's overturned, I'd be very surprised if the administration quietly reimbursed everybody.

 

I think they'll just find another way to, to continue to impose the tariffs. But they can't simultaneously be a bargaining chip or a lever and a permanent source of revenue. And then there's the third rationale, which is in some ways the oldest one, which is that they'll help to re industrialize the the United States.

 

They'll bring jobs back to us, which I think is very, very hard to to see working. Except that President Trump uses his trade negotiations to get other countries to commit to investing in the United States, how far that will actually happen is another matter. Can I add one last point?

 

 

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

>> Sir Niall Ferguson: So this is the kind of economic-

>> John Cochrane: Which I think is great.

>> Sir Niall Ferguson: Number one problem.

 

But the last thing I, I'd add is that I mean these aren't really trade agreements as we used to understand them. Anybody who's seen a trade agreement knows that it's a very long and detailed document. These are more like press releases even calling them deals I think over does it.

 

And it's not clear that they really have much staying power. And I the point that's interesting to me about the tariff policy is it's ultimately very fluid. I mean it seems to change from week to week. We just had an extension of the, a postponement of the tariffs that President Trump threatened to impose on China and the tariffs the Chinese want to impose on us.

 

So if you're doing business and it involves imports from the rest of the world, you really don't know where you're going to be this time next month. And I think that uncertainty to go back to Bill's point is a headwind, not a tailwind for the economy. So I'm with John.

 

I'm sceptical that this really works relative to a counterfactual in which the US retained more of a free trade stance where it does work and this was Milei's point when we discussed it is if you are really interested in doing geopolitics and using tariffs as effectively sanctions, then you can find some rationale for it.

 

And I think HR would probably agree with me if I said when you're dealing with a country like China, which clearly doesn't obey World Trade Organization rules and is in effect a mercantilist state, there is an argument for using tariffs to apply pressure to China to liberalize its economy and open its economy.

 

How far that works remains to be seen. It's turned into a pretty tough and bruising battle between Washington and Beijing.

>> John Cochrane: But HR, how is this working out? So you might like tariffs on China. Canada hates us now, and the rest of the world. It's going to take a long time to put this back together.

 

Nobody trusts America because we're breaking our deals. This looks like a geopolitical long term.

>> Bill Whalen: Term, there's a lot of long term damage here that I'm curious how you evaluate.

>> H.R. McMaster: Well, there, there has been a lot of damage. I think we can recover it with, with kind of a rational approach to trade policy and to economic statecraft broadly.

 

I would just, I would agree with Neil that, that even if there is a ruling that sort of reduces the President's authority under the IEPA legislation, that he will fall back on the trade law and then do the homework, which is already happening in terms of, you know, what is the national security justification under Article 232 of the Trade law in terms of intellectual property theft by the CCP and others under, under 301 of the Trade law and other actions that have to do with, with overcapacity and dumping to, so that China can gain control of critical supply chains.

 

I think now there is maybe an opportunity to rationalize the approach to economic statecraft overall. And to get to your question, John, like to incentivize private capital to invest in the supply chains that are critical to national security. If I see a glimmer of hope there, I see a little bit of that happening now on the supply chains associated with permanent magnets and critical minerals and the mineral separation and refinement process.

 

You're seeing a lot of investment in some new companies and in some old companies to try to address this really significant threat to national security. And I, when I look at the President's approach to China, I think he's buying time. He's buying time so that we can reduce our vulnerability to disruptions of these critical supply chains that China has kind of an exclusive grip on at the moment.

 

So I think as the focus becomes more on China, we'll realize, hey, Canada is our friend. These agreements, the USMCA renegotiation for next year will focus a lot on transshipment and dumping and offshoring by China. So I think there'll be kind of a move toward normalization, but I don't think necessarily a reduction in tariff rates, you know, because I think Trump still loves them.

 

He's going to justify them in a different way. There'll be more sectoral tariffs and there'll be more that are tied to the trade law under these various clauses associated with national security, intellectual property and so forth.

>> Bill Whalen: I know we could keep going on this, guys, but I've got to cut you off.

 

We have to move on to the lightning round. So we're going to do one topic and try to make it a quick one today. Gentlemen, this week marks the 80th anniversary of Japan's acceptance of the Potsdam Declaration and an end of World War II, the formal surrender coming on September 2nd in Tokyo Bay.

 

We're also a few days past the 80th anniversary of the dropping of atomic bombs on Hiroshima and Nagasaki. And it seems to me that each year we get into a conversation about the morality of atomic warfare. Neil, why do we have this conversation each year? And is it possible that history may turn at some point in the future?

 

Whereas history tends to be rather critical of the US decision, a lot of second guessing of it. Will there actually be, if not cheerleading for it, at least a more positive assessment of it?

>> Sir Niall Ferguson: I think it would be odd if we didn't look back and ask ourselves, was it really right to use atomic weapons to drop them on two Japanese cities?

 

I think we'd be odd and the historical profession would be failing if we didn't ask that question. But of course the answer is that's the best way to end World War II swiftly and avoid an enormously bloody amphibious invasion of Japan. So I remember when I was writing the book War of the World, going back over the literature, reminding myself of the revisionist critique, the argument that it somehow wasn't necessary, that it was really designed to send a signal to the Soviet Union, no, you've got to step aside and ask what was the alternative confronting the US Government at that time?

 

And horrific though it was, it not only ended World War II much more swiftly than would have been possible, he also established a new order, a Pax Americana, based on the fact that the United States had once, or to be precise, twice used atomic weapons in anger. And one shouldn't underestimate how important that was for the subsequent peace of the world.

 

 

>> Bill Whalen: John.

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

 

Who's next, is an interesting question. We should ask every year. Was it right? This is not a question you should just consign to not thinking about. You should think about it and as Neil said, come to the right answer. Ask and remember. I also think among the many counterfactuals, this is a great one for our usual counterfactual show.

 

Had we not dropped them in World War II and had the New Yorker not written its article on what happens after an atomic bomb, we almost certainly would have dropped the H bomb in Korea. So the fact that we saw these weapons, how awful they are, they became the ultimate deterrent.

 

They became the line that must never be crossed precisely because we actually saw what they did. And had we not seen what they did, I can't imagine a world, you guys can comment on this more than me, where the U.S. and Soviet Union did not drop hydrogen bombs on cities at some point during the Cold War.

 

So that demonstration of just how awful they were had actually an enormous salutary effect for getting through the Cold War without their use.

>> Bill Whalen: Right.

>> Condoleezza Rice: And the article John mentioned actually became a book by John Hersey.

>> Bill Whalen: I actually read it on a recent airline trip I took.

 

He accounts what happened to six survivors of the blast. It's quite remarkable to read. Actually we have just a minute left, so I'll give you the final word.

>> H.R. McMaster: No, it's important to read Hersey's book Hiroshima, as you mentioned. It's also important to, to look at really the, the, the strategic bombing of World War II broadly.

 

George Kennan's essay in his, in his collection of essays, Sketches From a Life, when he, when he visits Hamburg and sees and then makes the argument we should never have to do this again. This is one of the reasons why I think it's important to develop a range of military capabilities that allows you to fight and win in war without the indiscriminate death of civilians.

 

And of course, there are those who want to try to make war such that it could be resolved quickly from standoff range and so forth, will make the argument, you know, for strategic bombing, the use of less discrimination. And it's important for us to kind of revisit just what Thomas Aquinas told us about just war theory.

 

But there's also, and 2 we have more time to talk about, there's a lot of bad history around, around the dropping the atomic bomb and, and as Neil knows, well, like this, what was it called? The, the atomic diplomacy, the school of atomic diplomacy and others who just put false arguments out there that, you know, you know, that Japan was about to surrender anyway.

 

And so I think it's important to approach the body of work on this with a deal of skepticism, read broadly and understand the decision in context of the time.

>> Bill Whalen: Okay, gentlemen, great conversation. We'll leave it there. And I hope you enjoy the rest of your summer. We'll see you back here after Labor Day in the US on behalf of my colleague Sir Niall Ferguson, Lieutenant-General H.R. McMaster, John Cochrane, the director of the Hoover Institution, Condoleezza Rice.

 

All of us here at Hoover, we hope you enjoyed today's show. Until next time, take care. Thanks again for watching.

>> First we got the bomb, and that was good because we love peace and motherhood. Then Russia got the bomb, but that's okay cuz the balance of power is maintained that way.

 

Who's next? France got the bomb, but don't you grieve cuz they're on our side. I believe China got the bomb, but have no fears. They can't wipe us out for at least five years. Who's next?