This is an edited transcript of our podcast episode with Niall Ferguson, published 10 March 2023. Niall is the Milbank Family Senior Fellow at the Hoover Institution, Stanford University, and a senior faculty fellow of the Belfer Center at Harvard, where he served for twelve years as the Laurence A. Tisch Professor of History. He is the author of sixteen books. This includes the international bestseller, The Ascent of Money: A Financial History of the World. His most recent book is Doom: The Politics of Catastrophe. In addition to his academic work, he is the founder and managing director of Greenmantle LLC, an advisory firm. In this podcast, we discuss the proper way to do historical analysis, the correct historic parallels to today’s geo-politics, the start of Cold War 2, and much more. While we have tried to make the transcript as accurate as possible, if you do notice any errors, let me know by email.
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Now, on to this episode’s guest, Niall Ferguson. Niall is the Milbank Family Senior fellow at the Hoover Institution at Stanford University, and he’s a senior faculty fellow at the Belfer Centre at Harvard University. He’s author of 16 books. This includes the international bestseller, The Ascent of Money: A Financial History of the World. Niall’s most recent book is Doom: The Politics of Catastrophe. In addition to his academic work, he’s the founder and managing director of Greenmantle, LLC, an advisory firm. Now, on to our podcast conversation.
Greetings, Niall. It’s great to have you on the podcast. I’ve been looking forward to this for a long, long time.
Niall Ferguson (01:23):
Bilal Hafeez (01:24):
Great. Now, before we go into the meat of our conversation, I do like to ask something about my guests’ origin stories. So tell me a bit more about your origin story. What did you study at university? Was it inevitable you would’ve ended up going down this academic route, quite illustrious academic route that you’ve ended up going down?
Niall Ferguson (01:41):
Historical inevitability is one of these things that I’m sceptical about. My own life is no exception. I was born in Glasgow in 1964 to a doctor and a physics teacher, and grew up. Part of my early childhood was in Kenya, but mostly I grew up in the west of Scotland. I discovered early on a facility for writing. I was a decent mathematician, but I was really good at writing, and enjoyed it and was encouraged — My grandfather, who was a journalist, he’d been the chief sub-editor of the Glasgow Herald — to think of writing as a legitimate profession. Which I don’t think was a standard view, but he certainly made me feel that I could think of writing for a living, and that appealed.
I didn’t know what kind of writing, though. I remember discovering a book by AJP Taylor in my parents’ library, an illustrated history of the First World War when I was really very young, and that impressed me deeply. He became a hero. And I thought, ‘Well, I should go to where he teaches.’ This was all before the internet. So I had this book, and it said that he was a fellow of Morton College Oxford. So I thought, ‘Well, I’ll go there.’ It never occurred to me that he might have left. So by the time I got to Oxford, he’d gone. But the project of history as a route to writing was there from relatively early on. I just tried everything else first.
I, like a lot of my generation, thought of Oxford and Cambridge as the places that produced Monty Python, and so I went through a phase of acting and comedy. Then I tried journalism. I tried a whole variety of different activities. Failed at them all and concluded after a couple of years, better stick to writing history. That seems to be what works. I’ve been doing that ever since with reasonable success, and I guess that’s what I’ll keep doing.
But I don’t know. Maybe if I’d had a lucky break earlier on, I’d now be a comedian. And maybe if Sacha Baron Cohen, who was one of my students, had been a little bit more conscientious, he might’ve ended up being a professor. So there’s a lot of contingency in human life. I don’t regard any of this as inevitable. I’ve just been quite lucky.
The Proper Way to Do Historical Analysis
Bilal Hafeez (04:04):
Actually, you kind of told me off there a bit about inevitability and history. You seem to have a very clear view of the contingency of history, so can you talk a bit more about that? Because there is this sort of sense, maybe it’s a Marxist thing or something, it’s inevitability. We’re all kind of going in the same direction. From your writings, you take a stand apart from that or away from that. In opposition to that, I should say.
Niall Ferguson (04:27):
Yes. Many years ago, 30 years ago, I think it must be now, I edited a collection of essays on counterfactuals, what if questions in history. That book was called Virtual History. It came out of realising that there are two profoundly different philosophical approaches to the past. The deterministic approach is to say that what happened was bound to happen, and therefore there’s no point in asking what if questions. They’re merely a kind of entertainment.
And that’s not just a Marxist view. There are lots of different ways of thinking of history as deterministic. For example, Tolstoy’s War and Peace ends with an essay in which he says essentially it was bound to happen the way it happened. It’s just an illusion that we have agency, an illusion that we have free will. So it wasn’t just the Marxists. A lot of different 19th century theories of history were deterministic.
I felt from very early on in my innermost being that this is wrong, and that in reality the historical process is very open. Open to individual decisions, open to accidents, to contingencies. And that our human desire to have a kind of closed deterministic history, which is at some level predictable, is just an aberration because we can’t handle the uncertainty of a highly contingent historical process.
So in the book Virtual History, there’s a long introduction, which is really my philosophy of history. And in it, it says the truth is that the world’s a complex system. It’s characterised in many ways by chaos, and that means that we need to be aware of counterfactuals and contingencies to understand the past. And the example that I spent a lot of time on then was the outbreak of World War I, which is an over-determined event in most of the literature, but in reality happened because of a series of miscalculations at the highest level of the great powers of Europe. In the cabinet meeting where Britain decided on war on August the 2nd, 1914, Lloyd George might well have argued against war. That’s kind of what you’d have expected based on his record as a man of the left, a man of the people, but he didn’t, and that surprised his colleagues who were on the dovish side.
That’s the kind of thing that interests me. There’s a parallel universe where Lloyd George does argue against intervention and Britain stays out, and the war is not a world war. It’s a short issue, European war that’s over by 1916. I much prefer to think of the historical process in that way, because I think it captures the uncertainty of the present better.
You and I don’t really know what’s going to happen this year, maybe even tonight. And so how can it be that the historical process is deterministic if we can’t even be sure what the terminal rate of fed funds will be, if we can’t be sure if there’ll be a war over Taiwan or not, if we can’t be sure if the war in Ukraine will end or not. We live under great uncertainty, and so did people in the past.
Nobody in 1914 on the morning of August the 2nd, including members of the cabinet knew that Britain was going to decide on war that day. And it’s much better to embrace that uncertainty and recognise the role of contingency, and realise that to the contemporaries there are plausible futures. There are other futures including one in which Britain stands aside of the war. That’s really my credo. And I’m absolutely sure that philosophically that’s correct, and that those people who argue for deterministic models of history are wrong. They’re really profoundly wrong. The amazing thing is that they remain dominant in the academy. They shouldn’t be. They should have lost this argument long ago.
Bilal Hafeez (08:29):
I was going to ask you that. I mean, why haven’t they lost this argument? Because it sounds quite compelling. When you translate it to today, that we don’t know anything about Fed terminal rate. It makes so much sense. Why have you had so much opposition with this counterfactual view? It’ll take time. 20, 30 years, it’ll move. But is there something inherent about this determinist way of looking at things that’s very attractive?
Niall Ferguson (08:49):
I don’t know how to answer that question, because it’s so clearly correct. Any statement of a causal nature — this is well known to philosophers and philosophers particularly of the law — implies a counterfactual. If we say that Brexit wouldn’t have happened if Boris Johnson hadn’t backed it, then there’s a counterfactual implied in which Johnson decides to stick with Cameron and Osborne, and the referendum goes a different way. So we implied the counterfactual.
Now, if you’ve implied it, then why not make it explicit? And what’s amazing to me is that the opponents of counterfactual historiography say Richard Evans, the former regius professor at Cambridge, in their own books they state that there are contingencies. In his own history of the Third Reich, he acknowledges that there were moments that things could have gone differently. So to me, completely baffling that a man like Evans doesn’t see therefore that counterfactual approaches to history are not just legitimate, but they’re indispensable, or all your causal statements are just worthless assertions.
I think it’s hard. I mean, the truth of the matter is just much easier to tell history like a story with a beginning, a middle, and an end, and the end’s kind of a foregone conclusion. That’s just easier. Whereas, the counterfactual approach implies multiple historical worlds, multiple 20th centuries in which things don’t go the same way, in which there’s a kind of Monte Carlo simulation. In at least some of those 20th centuries, Britain enters the war, but perhaps in a majority it doesn’t. And that’s just harder. It’s just more challenging intellectually.
It’s also difficult to do in practise. If you’re going to write history which is alive to the counterfactual, there have to be some constraining rules, and one of the ones that I proposed was that you should only consider counterfactuals that contemporaries considered. That’s really a good constraint, because we know that there were people in 1914 arguing against British intervention, and therefore it’s quite legitimate to talk about that scenario. There weren’t I don’t think many people who were arguing that Britain should take Germany’s side, and so that’s not worth discussing. There are kind of rules to apply. I’ve just observed over time that most people who want to be historians and get paid to be historians don’t want to think that hard.
The Correct Historic Parallels to Today’s Geo-Politics
Bilal Hafeez (11:14):
Yeah. Yeah. I can see where you’re coming from. Now, we did talk about World War I, and some people have been saying that the Russia-Ukraine War currently is the beginning of a World War III. You have a war in Eastern Europe going on. It could spill over, break up things in Europe. I mean, as a historian and somebody who looks at contemporary society as well, how do you look at something like the Russia-Ukraine conflict?
Niall Ferguson (11:42):
Well, I saw it coming. I remember in September of 2021 coming back from Kyiv thinking there is going to be a war, because Putin had published his article on the historical unity of the Russian and Ukrainian people. And the US response had been, ‘Well, if you do that, we’ll impose such terrible sanctions on you as you’ll ever have seen.’ And that was obviously not going to deter Putin.
On January the 2nd of 2022, I wrote a piece for Bloomberg which began ‘War is coming.’ I don’t think that this particular war has the potential to lead to World War III in the way that the war over Bosnia that broke out between Serbia and Austria-Hungary had the potential to become a world war, because there aren’t the same chain reactions that can happen that would bring other European powers into the conflict, some on the side of Ukraine and some on the side of Russia. That’s not the risk here.
The risk here is much more analogous to the risks of the Cold War. And I think this war is much more like the Korean War than it is like anything that happened in the run up to 1914 in the Balkans. The Korean War was the first hot war, the first real hot war of Cold War I, and the war in Ukraine is the first hot war of Cold War II. Cold War II’s different because it’s primarily between the United States and China.
The question of the moment is how far will China support Russia, not just economically, which it is doing, but with lethal aid, which the US says is a red line. The US is already, of course, supplying Ukraine with massive amounts of lethal aid. In fact, it’s the key reason why Ukraine is still in this war. If China continues increasing its support to the point of supplying, say, drones or missiles, that will take us into very dangerous territory comparable with the early 1950s. And that’s I think a much more useful analogy, because I think Cold War II is the right framework for thinking about the world today.
The real danger is not actually in Eastern Europe unless you take Putin’s threats of using a tactical nuclear weapon very seriously and literally. The real threat is actually what happens elsewhere at the same time. If you simultaneously get a crisis over Iran, say, Israel attacks Iran to degrade its nuclear weapons capabilities, and at the same time China attacks Taiwan, then you have something that is quite world war like, and it’d be very difficult for the United States and its allies to cope with that simultaneous three-region crisis. So that’s the way I’m thinking about this war. It’s a war that’s not about to stop in a hurry, because wars like this just keep going. I will be very surprised if it’s not still going in a year from now. Rather, like the Korean War, it’s going to get into a phase of attrition that’s already kind of there, and it will be hard to stop. The big question is not, does it escalate in Europe? I don’t think Russia can escalate in Europe. It’s barely able to hold its own in Ukraine. The question is, does it escalate elsewhere? And do you get real coordination between Russia, China and Iran? That’s already kind of happening. There is a real axis there, and American and indeed US-allied policymakers should be very worried about that.
The Start of Cold War 2
Bilal Hafeez (15:31):
You talk about Cold War II, and this is something you were very early on talking about in this conflict. First of all, what are the similarities with Cold War I, and what are the differences with Cold War I?
Niall Ferguson (15:43):
Well, it’s a great question, because World War I and World War II weren’t exactly the same, but people still use that nomenclature. I think it’s appropriate here, too. Sure, there are some obvious differences, of which the biggest is the extent of the economic interpenetration of the United States and the People’s Republic of China. That’s unlike anything that we saw between the United States and the Soviet Union. It’s also very significant that the Chinese economy is much larger partly as a consequence of that interpenetration than the Soviet economy ever was. On a purchasing power parity basis, it’s larger already than the United States economy, not in a current dollar basis.
So those are two important differences, but in every other respect I think it’s the same. There’s an ideological dimension to it. Some people deny that. I was debating that with Martin Gurri yesterday. Of course, it’s ideological. Xi Jinping has explicitly said that he is hostile to democracy. He’s hostile to the rule of law. He’s hostile to a free press. Those things can’t be taught at Chinese universities. So I think it is ideological.
It’s also obviously geographical. There are certain regions that are being contested. But above all, it’s a technological race, which is what cold wars tend to be. Cold War I was a race particularly in the realm of nuclear arms, but also space and satellite technology. This Cold War is about those things, but it’s also about artificial intelligence and quantum computing and much else, battery technology for that matter. So I think it’s sufficiently similar to be described as Cold War II, and I think it’s a very heuristically useful nomenclature.
Up until I started making this argument, which was in 2018, Americans were totally asleep. They didn’t realise that from the Chinese vantage point, the Cold War had already begun. I think Xi Jinping basically started it by aspiring to primacy, or at least parity in the Indo-Pacific region, and by embarking on a really extraordinary programme of rearmament, by seeking explicitly to challenge the United States and to establish China as an equal if not superior great power. All of that’s been going on for more than 10 years, but Americans were really kind of asleep until of all people, Donald Trump woke them up.
Trump intended only a trade war, not a Cold War. The Cold War kind of happened almost despite him, because in the course of his presidency, more and more Americans said, ‘You know what? Tariffs aren’t enough. We have to stop Huawei taking over global coms. We have to do a bunch more.’ And that’s, I think, how the Cold War was born in the United States, almost as an unintended consequence of Trump’s tariffs.
Can There Be No Cold War 2?
Bilal Hafeez (18:39):
I mean, is there a way for the two powers to just coexist than for it not to be a war of whatever kind, hot or cold war? Can’t you just have two big powerful blocks, two military blocks? They trade with each other. They may not like each other’s ideology, but let’s not have a war about this.
Niall Ferguson (18:57):
Well, if Graham Allison, my old friend at Harvard were here, he would say, ‘Ask the Spartans and the Athenians,’ or, ‘Ask the Brits and the Germans in the 20th century.’ The truth is that kind of coexistence between two comparably large powers is quite rare historically. It proved difficult even in Cold War I to achieve. If you remember, by the time of the late ’60s when Vietnam had gone terribly wrong and the arms race had become almost insane because both superpowers had such vast arsenals, there was an attempt to achieve peaceful coexistence. It was called Détente. It was central to Richard Nixon and Henry Kissinger’s approach, and it got quite far.
Gradually in the course of the ’70s, it dawned on Americans that really the Soviets were not good faith participants in Détente. They intended to use every opportunity that presented itself to advance their geopolitical and ideological interests, and so Détente died by 1979. It basically lasted 10 years. It became one of the bases for Ronald Reagan’s presidential campaign, that he was against it and believed in a much tougher approach, and that tougher approach in the 1980s worked and led to US victory.
So I think the lesson of the first Cold War is that while it would be nice to have peaceful coexistence, it takes two to tango, and totalitarian regimes aren’t that good at it. They’re always kind of tempted to exploit the opportunities that present themselves, and that was what happened. I mean, the Soviets couldn’t keep their hands off Sub-Saharan Africa. They couldn’t keep out of parts of the world where opportunities arose, and that I think helped to undermine the Détente. So I think at the moment there are people in Washington and Beijing who would quite like to do Détente, but I bet they fail.
Bilal Hafeez (20:59):
Yeah. And in terms of the ideology … I mean, again, going back to contingency, could there have been a path or is there a path for China to become a liberal democracy like Japan or Korea or not?
Niall Ferguson (21:12):
Well, I don’t think those analogies work. Once the Communist Party is in power, it is highly unlikely to accept a transition to multi-party free elections, because it’s obvious that that would be curtains. So in particular with China, the lesson of the Soviet experience is don’t do what Gorbachev did. I mean, that is the thing that Xi Jinping thinks before he has breakfast every day. ‘Don’t be Gorbachev. Don’t make those mistakes. Don’t allow transparency. Don’t allow people to criticise the way things are run, because the legitimacy of the regime will collapse. You’ll end up with not only a kind of dysfunctional democracy, but a completely collapsed economy.’ So there was no way the Chinese Communist Party was ever going to do glasnost and perestroika. They regarded that as just a kind of insane act of self-immolation by Gorbachev.
I think that it’s possible in our lifetimes that the Chinese Communist Party will experience what their Soviet counterparts experienced, namely that without economic growth and in the face of structural dysfunction, the legitimacy of the regime disintegrates. I think there are lots of things very wrong with Xi Jinping’s China. The demographics are terrible. The debt dynamics are terrible. The growth rate is clearly heading to low single digits. They also find themselves, I think, confronting a quite dangerous isolation. I mean, who are their allies? That would be Russia, North Korea, and Venezuela. That’s not a great list to invite to a party.
So I could see ways in which the Soviet failure could replay itself in China, it’s just the timing that’s hard to call. Plus, if we go in hard on issues like Taiwan or Hong Kong or Xinjiang, the more conversive the US is, the more inadvertently we legitimise the regime and allow Xi Jinping to play the nationalist card to salvage the reputation of the CCP. So in a way, Cold War II serves China’s interests, too. It serves the CCP’s interests, too, because in that atmosphere internal dissent is harder to sustain and easier to suppress.
Will China Attack Taiwan?
Bilal Hafeez (23:46):
I mean, how will this Cold War II unfold? Some people are talking about a Chinese attack on Taiwan. Is that still likely given Russia’s struggles with Ukraine? And in other dimensions. I mean, how do you think this will unfold?
Niall Ferguson (24:01):
There’s no question that China is considering the possibility of an invasion of Taiwan, but that’s a very risky thing to do and a very difficult thing to do. Amphibious landings are hard at the best of times. Taiwan’s a real tough one because the straight is quite a hard thing to get across. But that’s not the only scenario that I think we should think about. The one that I think a lot about is what I’ll call the Cuban Missile Crisis scenario, where China quarantines. That was the language the US used with respect to Cuba. Quarantines, blockades in effect Taiwan, and then defies the United States to send a naval force to break that blockade.
I could imagine that happening and that being extremely difficult for the United States to contend with, because it would be in the position the Soviets were in 1962 of having to send a naval expedition a very long way away to run a blockade. So I worry about that, because that was the most dangerous moment of Cold War I, and I really don’t want us to replay that game over Taiwan when the economic stakes would be much higher. What was Cuba 1962? Nothing much. Taiwan is central to the global economy because of the role that TSMC plays in producing the most sophisticated semiconductors. So war over Taiwan would be economically very bad. And of course a war between the United States and China would be on a much larger scale than Ukraine v. Russia, and it would have a significant risk of turning nuclear given the nature of the forces that would be deployed.
So this is a very bad scenario that we should all be thinking about how to avoid, but it’s the way that I think we’re currently headed, because there is a bipartisan consensus in Congress that the US should have a less ambiguous commitment to Taiwan. Both parties are quite hawkish on the issue, and they both seem strangely unaware of how lacking in credibility American war plans currently are.
Can Europe Become a Superpower?
Bilal Hafeez (26:09):
We’ve talked about the US and China, but obviously there’s another big economic block in between. Europe. Where does Europe stand around all of this? I mean, obviously they initially try to be friendly towards Russia with Nord Stream 2 and so on. That’s backfired on them. Is this the moment where Europe stands up with a much more assertive foreign policy, stronger defence and so on? How do you see it?
Niall Ferguson (26:30):
Well, that was the language pre the war in Ukraine. Strategic autonomy was one of President Macron’s favourite phrases. I can remember being at a conference in Italy in 2021 when Bruno LaMer had almost a standing ovation in saying that Europe should be a superpower in military terms as well as economic terms. Well, this all looks pretty silly at this point, because what the war in Ukraine revealed was that the US is European security. It is European defence. The Europeans got nothing. They really do not have anything resembling strategic autonomy, and they’re years and years and billions of euros away from having it.
So I think the way to think about this is that in Cold War I, there was no question that Western Europe had to be aligned with the United States because it was directly menaced by the Soviet Union. Cold War I was this trans-Atlantic conflict, which was why the North Atlantic Treaty Organisation was so central. In Asia by comparison, there were conflicts in Korea, later in Vietnam, but there was no alliance system nearly as powerful as NATO and the Warsaw Pack, the Soviets response to it. In Cold War II, I think it’s a trans-Pacific conflict, and what will matter a lot more will be the relationships between the United States and Japan, Australia, South Korea, India, whereas Europe will not be the central battleground of Cold War II. Indeed, some Europeans are probably thinking to themselves, ‘Hey, can we be non-aligned like the Indians were in Cold War I. Can we be the non-aligned people this time?’ The German business community would love to be non-aligned. The problem for them is that their security depends on the United States. Pretty hard to be non-aligned if you are that reliant on one of the superpowers.
So I think Europe has this rather uneasy path ahead of it. It’s inextricably dependent on the US for the foreseeable future for its national security. It can’t plausibly achieve strategic autonomy. It’d be too expensive. It just doesn’t have the means. And yet, it would really like to have an ongoing trade relationship and investment relationship with China. It’s going to be really hard for Europeans to come to terms with the fact that that’s probably not a viable future, that you’re going to have to choose. I think that choice may be made in the course of an escalation around Ukraine. If the Chinese ignore American warnings and supply lethal aid to Russia, I don’t know that the Europeans will have any choice but to start to reduce their ties to China.
Bilal Hafeez (29:25):
I kind of wonder with Europe. I mean, is there any path for them to become a global superpower or just more influential globally? They always seem to just not step up when the time is needed for them. I mean, what would we need to see for that?
Niall Ferguson (29:39):
It’s really expensive to achieve strategic autonomy. You’d have to spend a lot more on defence. Of course, one of the consequences of Olaf Scholz’s Zeitenwende is that Germany is going to spend more on defence, but I remain to be persuaded that it will spend it sensibly. Part of the problem in Europe is not just that the defence budgets got squeezed. It’s also the defence sector is a bit like the automobile sector. It’s really good if you’re still in the 20th century, but in the 21st century it’s not. It will take a long time for Europe to be competitive in the new world of drone technology and all that goes with this.
So I don’t know how Europe can get out of this. It seems to me that Europe is the opposite of an empire. I called it an impire, I-M-P-I-R-E, in a book called Colossus that I published 20 years ago. The idea being that Europe is big, but it doesn’t do what empires do. What empires do is project power. What Europe does is to kind of bring countries into its trading zone, and to some extent monetary zone, and provide them with certain institutional incentives. I mean, European expansion has been very good for the East European countries that participated in it. They wouldn’t be doing as well if there hadn’t been European enlargement. But it doesn’t make Poland more secure to be in the EU. It just makes it richer. It makes Poland more secure to be in NATO. We shouldn’t pretend that it’s the EU that gave Europe peace. It was NATO that gave Europe peace by successfully deterring the Soviet Union from expanding any further west than it did.
The Role of India
Bilal Hafeez (31:26):
And where does India come into all of this? India sort of sees itself as a rival to China. They’re worried obviously about China across the border. With Russia-Ukraine, they’ve been non-aligned, you could say, along with many other countries from the so-called Global South. But where does India fit into this?
Niall Ferguson (31:43):
I think it’s no longer non-aligned. That’s important because it’s non-alignment in the first Cold War sometimes verged on leaning towards the Soviets. That was of course a consequence of the US tilting towards Pakistan. Today, I think India is clearly closer to the United States than it’s ever been, and that has important implications. From a Chinese vantage point, I’ll never quite fully grasp this. The policy seems to be inflame India, kind of get into border fights with sticks and clubs and make sure as a result that India is aligned with the United States. I just don’t get why they’re doing that. On the other hand, I don’t think India will be of much use if there’s a war over Taiwan. I can imagine Narendra Modi being suddenly very busy when that phone call comes in from Washington, because it’s not clear to me that India would gain anything from that particular conflict, whereas Japan will be all in. I think in that sense, the Quad has created a slightly sub-NATO level of political alignment in Asia. I don’t think the Quad is anything close to being NATO for Asia, because I think as we’ve seen in the case of Ukraine, India will pick its fights according to its national interest. That rules out Ukraine. It rules out Taiwan too, I suspect.
New Middle East Conflicts Coming Soon
Bilal Hafeez (33:15):
You touched on Iran and Israel earlier. In the Middle East, lots of things have been changing. There seems to be lots of realignments. What are your thoughts on the Middle East at the moment?
Niall Ferguson (33:24):
It’s a powder keg. I’m afraid that’s a cliche, but it’s true in a number of respects. Firstly, Iran is inching closer to having weapons-grade uranium, and the attempt to resuscitate the Iran nuclear deal has clearly failed. Nobody in Washington any longer thinks that’s going to fly. The Iranian regime meanwhile has survived a wave of popular protest and is as radical as ever. At the same time, Israel has a government under Benjamin Netanyahu that is right-wing and I think committed also to stopping Iran getting to be a nuclear weapons power.
Iran is taking pot shots at Saudi Arabia. The Saudis and the Emirates are kind of falling out, and it’s going to blow at some point. I’m not sure quite how. Perhaps there’ll be an Israeli attack on Iran’s nuclear facilities, or perhaps there’ll just be a third intifada, but there’s no way the Middle East is more stable 12 months from now than it is today. And that’s something that investors need to be very mindful of, because if you are hoping for a soft landing, if you are hoping that the Fed contain inflation without having to do too much more, you really don’t want a Middle Eastern crisis, especially if the Iranians get into a real fighting war with a neighbour or near neighbour.
So that’s kind of where I’m at. There are all kinds of wheels within wheels as always in the region. Israeli domestic politics is going through an extraordinary fractious phase, and I don’t pretend to know how that will turn out. But I think the likelihood that you have stability in the next, let’s say, 24 months is pretty low.
Bilal Hafeez (35:19):
Yeah. And in terms of other risks, I mean, we’ve covered a lot of risks so far. Have we missed anything out? Because I can’t see that we have. But in case I’ve missed something.
Niall Ferguson (35:30):
Well, I mean, the geopolitical risks are clear. Eastern Europe, things drag on, maybe escalate. Iran or its neighbourhood blows up, and then Taiwan. Those I think are the big three. Let’s not forget North Korea. There’s another member of the kind of axis of ill will which could indeed give us a shock, because it’s not as if it’s stopped acquiring and developing weapons of mass destruction. That would be the fourth to mention.
But of course, what we’ve learned in the last few years is that risks take many forms. We’ve come through the biggest pandemic since 1918, ’19. It’s not really entirely over, because the virus has not gone away and is capable of further mutation. There is always, I think, a risk of a bigger geological shock than you thought possible. We’ve just seen a bigger earthquake in Syria and Turkey. The world’s gone through a quiet time geologically in our lifetime. There haven’t been really huge volcanic eruptions.
I keep reminding myself that that’s the kind of thing that can completely blindside you when it happens. As I try to argue in my book Doom, these things happen sufficiently infrequently and without any pattern that you can forget completely the possibility of a massive earthquake where I live. You complain about the rain here, but if there was a really big earthquake, you’d soon forget about rain.
Bilal Hafeez (37:04):
You’re in California, just for our listeners. Yeah.
Niall Ferguson (37:07):
Correct. I also spend time in Montana where there is a super volcano that one day will blow, and then all talk of global warming will become irrelevant because the world will become a very clouded, cold place. Those things are worth remembering just so we don’t get complacent. And of course Manchester City could overhaul Arsenal and win the Premier League, dashing the hopes of all right-thinking football fans. How much more can we worry about in one podcast? I think that must be the limit.
What Is Wrong With US Universities
Bilal Hafeez (37:36):
Yeah. Now, I did want to ask something about academia and the state of universities in the US. I went to University of Cambridge in the 1990s, and there was a certain environment. But today, what I hear what it’s like in universities, especially in the US, it does seem like there’s been a shift in the culture at universities where it’s much harder to be open. There’s a lot more focus on how you talk about things and the language you use and not causing offence. Is that just hyped up in the media by old conservative people? What’s it like on campus? I mean, do you worry about the academy or not?
Niall Ferguson (38:15):
It’s understated in the media, because a lot of journalists are about your age and they remember university in the 1990s. I taught at Cambridge in the 1990s, and I think I enjoyed as complete free speech as it’s possible to achieve. I was at Peter House, and we were regularly, almost routinely outrageous in the things that we said in supervisions as well as at high table and in public. Things are terrible. In the United States in particular, the elite universities have become hotbeds of intolerance and illiberal behaviour as well as thought. This has happened quite quickly. It wasn’t true when I first taught at Harvard back in the early 2000s, but by 2016 it started to be obvious that the classroom and campus culture had changed much for the worse.
Jonathan Haidt and Greg Lukianoff have a book, The Coddling of the American Mind, that offers an explanation for this. The new generation, Generation Z who are currently undergraduates are strangely fragile, hypersensitive and thin-skinned because they were given cell phones too early or because their parents are too protective. Jonathan Haidt’s doing a lot more work on this and emphasises the smartphones and social media, but that is not enough in my view to explain what’s happened. It may explain why the students are very ready to go and denounce one another or their professors, but you also have to explain why vast administrations of diversity, equity, and inclusion officers and Title IX officers have sprung up eager to take the side of fragile students.
That’s a very peculiar American pathology. We have more administrators at Yale now than undergraduates, and that army of bureaucrats I think are probably more damaging than the fragile undergraduates. And then you’ve got the traditional monstrous regiment of woke professors. It’s a pretty unholy trinity therefore of snowflake students, woke administrators, and right on professors. They seem to have, and this is surprising, created almost a totalitarian culture. It’s sort of Cultural Revolution-light in which denunciation is routine. People are constantly writing emails denouncing colleagues, contemporaries, professors, and unleashing these very legally dubious investigations, which often lead to cancellation. Tenure doesn’t mean anything as Joshua Katz found at Princeton.
It’s a mess. And it’s depressing, because these are the commanding heights of American education. It can’t be healthy for a generation that will be running the country one day to have four years in this atmosphere of self-censorship and mistrust. But that’s where we are, and I do think it’s much worse than the media coverage would lead you to believe. You just have to actually be on a campus and experience the mutual suspicion and paranoia to appreciate how much worse things are than they were when you were an undergraduate at Cambridge.
Bilal Hafeez (41:35):
I mean, does that make you worried about the American Project? Because I know in your writings in the past you’ve been very positive about the American future. I mean, does this concern you or not?
Niall Ferguson (41:45):
Well, my writings are not, I think, unambiguously positive about the American future. Colossus was published 20 years ago or thereabouts, and it was the decline and fall of America’s empire. That was the subtitle. The book Civilization warns that the period of Western pre-eminence is coming to an end, and I still think that’s a significant risk. The Great Degeneration warned that the biggest threats to Western predominance were from within, and I think The Square and the Tower, and then Doom provides supporting evidence. The brawl of the internet, I think, has not been on balance positive for our American political culture.
In Doom, I make the point that the worst thing in the 20th century, the most disastrous thing was totalitarianism. That was what killed the most people prematurely. And to find students, and indeed in some cases professors behaving voluntarily, without there being a dictator in power behaving like characters in 1930’s Russia or 1960’s China is deeply shocking to me. If people are capable of writing letters of denunciation, they’re capable of anything. To me, it’s an act of grotesque moral turpitude to write a letter of that sort. And yet, within the current generation of students, this is regarded as almost a heroic act.
So we are in a very dangerous situation to the point that I don’t think the existing universities can be salvaged. That’s why I’m involved in creating a new university in Austin, Texas, in the belief that if one institution can model real academic and intellectual freedom, there’ll be at least some pressure on the others to copy it, because we’ll start attracting the smartest students. Students hate all this. The really smart people don’t want to be in a woke version of North Korea. And so if we create a university that’s for real about the Chicago principles rather than just stating them and then not applying them, we’ll start attracting talent. So that’s a big part of what I’m currently engaged in doing.
Bilal Hafeez (43:56):
That’s great. Is there a name for that university or project? I mean, is there some-
Niall Ferguson (44:00):
Well, it’s not allowed to be a university until it’s been accredited, such as the power of bureaucracy. We call ourselves UATX, which is short for University of Austin, Texas. So UATX is the project, and it’s part of a concerted effort I’m making to found new institutions on both sides of the Atlantic that will advance the cause of individual freedom, which is central to the Western Project. If we lose that, then we lose everything.
Bilal Hafeez (44:30):
Okay. Wow, that’s quite a sobering thought there. I mean, I did want to round off with a couple of personal questions.
Niall Ferguson (44:35):
Bilal Hafeez (44:35):
Perhaps one which may be apt is around, what advice would you give to youngsters who are leaving university?
Niall Ferguson (44:42):
Leaving it or going into it?
Bilal Hafeez (44:43):
Leaving it to enter the job market and entering the wide world. I mean, what advice do you give such students?
Niall Ferguson (44:50):
Read. Read. And don’t just read what they tell you to read. The most serious problem for anyone aged around 20 is you’ve almost certainly not read enough, because you’ve been distracted in ways that my generation weren’t. Reading is the key to all the achievements of civilization, nearly all of them. If you haven’t read War and Peace, do you really understand war and peace? To give just one example, if you’ve never read a novel by Thomas Hardy, do you really understand the nature of contingency in human relations?
So read. Just read. You haven’t read enough. You are way off. You’re way behind. You need to spend much more time reading, and you need to stop doing things that stop you reading. That means avoid doom scrolling, don’t watch television. Just focus on reading.
Bilal Hafeez (45:41):
Less TikTok and more reading. That’s great advice.
Niall Ferguson (45:43):
Zero TikTok. You should never go on TikTok. It’s actually an instrument of the Chinese Communist Party.
Bilal Hafeez (45:49):
Yeah. And speaking about reading, you’ve written lots of books. I write as a researcher as well. I want to know, how are you able to write so many books? What’s your secret? Your productivity seems to be incredibly high.
Niall Ferguson (46:03):
By Scottish standards, I’m thinking here of Walter Scott and John Buchen. I’m a slouch. I have long believed that in order to benefit from the reading that you do, you have to be able to distil it into your own thoughts, and so all my books really arise from a desire to understand the world better and to explain it to myself better. I’m always engaged in writing, even if it’s only maintaining notes on the week as it unfolds. I have a book project at the moment which is proving enormously intractable, the second volume of my biography of Henry Kissinger. That’s an Everest-like challenge because there’s so much material.
Writing a book is the easy part. The hard part is thinking. You can gather all the material, you can read and read and read, but at some point you have to think and order the material. I think we aren’t good at that. We don’t teach students to do that very well. When I was a teacher, I would spend a lot of my time trying to get students to leave space between the reading and the writing to do the hard bit, which is thinking. Now most people don’t know how to think. They’re really mentally amazingly unfit. If their bodies looked like their brains, they’d be covered in shame. So most people need to train much harder to think, to order their thoughts, to make sure that in response to a question they can quickly structure their answer. And I think that’s the part of writing that’s hard. Once you’ve thought it through, then it’s just a question of overcoming repetitive strain injury to get it down on paper.
Books Recommended by Niall
Bilal Hafeez (47:51):
And speaking of books, I mean, were there certain books that really influenced you in the way you look at the world?
Niall Ferguson (47:56):
I’ve mentioned War and Peace, which was certainly a book that turned me towards history, even though it’s a historical novel. I’ve mentioned AJP Taylor. The Struggle for Mastery is one of his great books and a masterpiece of elegant prose. Anybody who wants to write history needs to read at least part of Gibbon’s Decline and Fall of the Roman Empire. I was made to do as an undergraduate at Oxford. I could go on. I’ll pause there, because like many an Oxford don, I have this urge to give people long reading lists off the top of my head.
Bilal Hafeez (48:33):
I’m getting cold sweats just thinking about supervisions now and getting those reading lists. Your most recent book was Doom, about the pandemic and catastrophes. You’re current-
Niall Ferguson (48:44):
Well, it wasn’t really about the pandemic. The last few chapters were, but it was really a history of disaster with the subtitle, The Politics of Catastrophe. The argument being that all disasters are at some level politically constructed, whether you call them natural or man-made.
I’m proud of that book because a lot of what it said, it was written in 2020. A lot of what it said towards the end about where the world was going turned out to be very right, in particular that a pandemic would likely be followed by a war, and that China would turn out to have done much worse than everybody thought in 2020. So those were good calls, and they tell me that I’m working on the history of the present and future quite successfully.
Bilal Hafeez (49:26):
Yeah. As well as your academic work, you also have a number of other initiatives and companies that you run. What are some of the ones you want to highlight, and what’s the way people can follow your work?
Niall Ferguson (49:38):
Well, I realised in, I think it was 2011, that at least the world of academia was going mad. I created something called Greenmantle, which is an advisory business. It’s very deliberately not public. Only clients of Greenmantle get Greenmantle research, and we have a very exclusive group of clients ranging from giants like Citadel and Blackstone to some of the smaller but most impactful hedge funds.
I’m very happy with the way that’s evolved, because we really just do applied history. Our basic framework is everything has some kind of historical perspective. If you want to think about it, the bond market or Fed policy or the next presidential election or the war in Ukraine, you need some historical perspective, and that’s what we provide. I publish a fortnightly column for Bloomberg Opinion, which is I guess Greenlmantle-light. Often it contains insights that we’ve come up with at the company, and that is I think pretty accessible. I don’t think those columns are behind a paywall.
So that’s really it. That plus the books and the podcasts, of which I’m now doing too many. I really must dial it back, especially as somebody pointed out to me. My 11-year-old son pointed out that a podcast doesn’t induce people to buy a book. It’s a substitute for buying the book. And so when you talk about a book on a podcast, you are more or less guaranteeing a reduction in book sales.
Bilal Hafeez (51:10):
Well, I’ll make sure to add a link to your book soon, the most recent one for sure, and a link to Greenmantle and perhaps your most recent column as well so people know how to get to you.
Niall Ferguson (51:19):
That would be good.
Bilal Hafeez (51:19):
I would urge people to read your book, your most recent book Doom. It’s very, very good. And I look forward to the volume two of Kissinger. I don’t want to put any pressure on you inadvertently in any way.
Niall Ferguson (51:29):
Well, I need to get back to that as soon as this call is over, back to the intricate manoeuvrings of 1974, which is where I currently am.
Bilal Hafeez (51:37):
Yeah. With that, I mean, it’s been fantastic speaking to you. I really look forward to just reading all of your work going forward.
Niall Ferguson (51:45):
Bilal Hafeez (51:45):
It’s been a really great conversation with you.
Niall Ferguson (51:47):
Thanks a lot, Bilal. It’s been a pleasure. Always nice for an Oxford man to talk to a Cambridge one.
Bilal Hafeez (51:54):
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