Trump

Ambassador Curtis Chin

Ambassador Curtis Chin served as the US ambassador to the Asian Development Bank.  In doing so, he became only the fourth US ambassador of Chinese heritage. As one of the world’s foremost experts on the Asia-Pacific region, Curtis now serves as the Asia Fellow of the nonpartisan Milken Institute and works with a range of startups and impact funds in Asia. Curtis joined Misha Zelinsky for a chat about the US-China trade war, what a deal looks like for both countries, the future of global trade and governance, and how the world should respond to countries that want to break the rules.

TRANSCRIPT

Misha Zelinsky:                  Curtis Chin, welcome to Diplomates. How are you?

Curtis Chin:                           Hey, doing well. Great to be with you.

Misha Zelinsky:                  And I should just reference for the audience, that we’re doing this through a web chat interface, so you’re currently in Bangkok, which is three hours behind Sydney time. So thank you for joining us. You’re an American in Thailand, but thank you for joining us as an international guest.

Curtis Chin:                           Delighted to be with you. I think though with so many of us, it’s one city one day, another city the next day, but very clearly, I spend most of time here in Asia, really Southeast Asia. And I’m with the Milken Institute out of Singapore, but yeah, from the US, but back and forth between the US and Asia-Pacific. So great to be with you today, chatting about Asia-Pacific, sharing some thoughts on Australia, the rest of the region, and some of the big stories of these weeks, and probably the whole year, which is the front and foremost, China and the US.

Misha Zelinsky:                  Yeah. I think that’s actually a good place to start. So you’re obviously an Asia-Pacific expert, you spend a lot of time in the Asian region. Big news at the moment, and certainly the last six to twelve months has been this question of trade, and certainly this trade tensions between China and the United States, and what increasingly now looking like a trade war. So I suppose the first question is, is this a trade war and what should the world make of the sort of these trade tensions between the United States and China?

Curtis Chin:                           First let me go back to your comment that I’m an expert, I don’t think there’s anyone that’s an expert in terms of what’s going on right now between the US and China. I mean, it really is unprecedented. You know, I was very lucky to serve primarily in Republican administrations, but I was lucky to serve also in the Obama administration as our US ambassador to the Asian Development Bank. And I’d say for a long time Republicans and Democrats … and no one’s really been a big fan of tariffs. So today we’re at a situation where back and forth, whether you call it a trade war, or let’s say a tariffs war, we’re seeing the United States and China continue to raise tariffs on each other’s products. For me in the short run, clearly not a good thing. In the long run my hope is that both sides will come up with a way that will lead to a more balanced, more sustainable relationship between China and the US.

Curtis Chin:                           But also if both sides succeed in moving this forward, it will be to the benefit of the entire region, of all of Asia-Pacific, including Australia. When you think about countries that in my view, have become so dependent on China as a source of purchases of their commodities, Australia comes to mind, but also as a place where you move supply chains because labor costs have been cheaper there. So you’ve seen this movement over the what? Last decades, but that needs to change. One, it’s already changing even before these tariffs back and forth, because the cost of production in China is getting more expensive. But also I could say quite frankly, that as we think about China’s behavior, what might have been acceptable two or three decades ago … I mean, clearly China was a poor country, is not acceptable today. Bluntly we might say it’s time for China to grow up and take on some of the responsibilities that come with being again, a great economic power.

Misha Zelinsky:                  It’s interesting you said there, you touched on that for a long time the bipartisan consensus in the United States, certainly globally too, is that free trade is good, tariffs are bad, interventionism is bad. What’s interesting is … I suppose firstly, and I’m keen to get your take on this, a lot of people will say that this is a Trump thing, but it’s actually, interestingly, perhaps the only thing that both sides of the United States, of the aisle politically agree on, which is that sometimes the war on trade is popular and bipartisan, because you saw Trump tweeting as he does, about tariffs that he’s going to put on, and being encouraged by the House Speaker, Nancy Pelosi, and the Senate Minority Leader, Chuck Schumer, saying he was doing the right thing and to keep going. So it’s interesting the US in a very quick way, in a bipartisan way, to have a more assertive approach to Chinese trade in the United States. So I’m curious to get your take on what that journey is and how the United States has gotten itself to this point.

Curtis Chin:                           Well, you know I think your points, it’s clearly not just a Trump thing, I think President Trump to his great credit, has really captured kind of the moment, the feeling, the frustration of not just Americans, but people all around the world who have tried to engage with China. Clearly the world has benefited from less expensive products made in China because of traditionally what have been lower labor cost. And in may ways it was a gamble, with purchasing products from China, with making products in China, lead also to a more economically, politically liberal nation. That gamble has not paid off. We’re seeing a China today that is much more strict in term of how it treats its own people, in terms of its crackdowns on Christians and Muslims, in terms of its behavior on human rights. And it shouldn’t take away from the successes that China has achieved in lifting really, hundreds of millions out of poverty. But again, I think to one of my earlier points, China also has to evolve, China has to grow up.

Curtis Chin:                           And so Trump has in a way, come into this moment, really perhaps, he was the president for this moment, and even China in the past has said this trade imbalance between the United States and China is not sustainable, because ultimately it will lead to a pushback, and we’re seeing that, not just in the United States, but really throughout the Southeast Asia region in particular. Again, I’m based mainly in Southeast Asia, and when I speak to chairmen, CEOs, senior leadership of Southeast Asian businesses, you also find tremendous support, tremendous sympathy for the points that Donald Trump is making. I was out actually recently with the chairman of a Southeast Asian company, he stepped down as CEO from his role, and what he said to me was very interesting, he said that in many ways, they would all love to go on record and say what Trump is saying, but China has been a vindictive nation, that we’ve seen records recently, of where they’ve punished companies for doing things that went against China’s foreign policy.

Curtis Chin:                           One specific example would be South Korea. In South Korea, there’s a big conglomerate called Lotte, big South Korean company, respected company. The South Korean government, to protect its own people, made the decision to install kind of like a missile defense system. The land that was used was once owned by Lotte. So what happened? China sought to punish Lotte in terms of its business transactions in China. So just one very real example of how the Chinese government behaves against individual companies. President Trump to his great credit is saying, “We the United States will speak up on these issues,” because in many ways I think his language was, “China has been ripping off the US and too much of the world. We need to rebalance that.” And that rebalancing also will be to the benefit of China itself. I’m sure China is not happy with it being kind of like the country that’s increasingly kicked around in rhetoric not just in the US, but in public and in private, in parts of Asia.

Curtis Chin:                           That’s not good for China. China really should be embraced for what it has done in terms of lifting millions out of poverty, but its treatment of foreign businesses, both in China and outside of China really has to stop. And so where I would say that I think the Trump administration needs to evolve, is they’ve identified very clearly and spoken out very clearly on the issue, but I think they have to evolve in a way that also brings in their many natural allies to come together, to help China move forward in this situation.

Misha Zelinsky:                  Yeah. One of the things I’m curious about, Trump sort of is always promoting himself as the great deal maker, but the question of tariffs is obviously that it sort of punishes the country that’s taking their export for some sort of practice, but at the same time it obviously lifts prices for households. Now, a figure I saw was that if they end up putting up this 25% tariff on all Chinese imported goods into the United States, we’re talking about $2,500 a year per household increase in the cost of living. The thing I’m curious about is does this have implications for Trump in the domestic policy sense, and also to your mind, what does a deal look like? Trump focuses a lot on trade deficits, but what does a deal look, and what does victory look like in this situation, because the grievance is clear, but it’s not as clear one who wins, households in the United States get punished, and secondly what does a deal look like in the minds of Trump or other experts?

Curtis Chin:                           Yeah. A number of interesting points you raise. First, when you have tariffs … and I’m no fan of tariffs. Tariffs openly I hope, are means to a more balanced relationship between the United States and China. The other is that question, who pays for a tariff? So let’s say you’re selling a product, a tariff is imposed, one question will be, “Can that tariff be passed on to the end consumer?” Right, then of course the consumer will most ultimately pay. Will that company though first try to absorb it because they’re afraid of losing the business? It’s a little bit more complicated than what people say. But I also underscores, there are always winners and losers when it comes to tariffs. Another tricky point. We talk about the impact of tariffs on the American consumer, but I remember I did one interview where someone said to me, “But don’t you benefit from cheap products at Walmart?” Though again, it’s a big American store. Of course we do, but clearly I can only afford those cheap products if I have a job, and have I lost my job because of all those cheap products?

Curtis Chin:                           It’s really kind of a balance that we need to seek, and then likewise, when people raise the point of American consumers ultimately in the short term pay, I wonder if people will pose that same interpretation to China, or is it just China cares less about its consumers, and they’re thinking that the US will worry about its consumers but China will not, as it tit for tat, tries then tariffs the other way around? So I think we need to look at the individual winners and losers. I think the Chinese are now trying to target agricultural areas, big support areas for President Trump. As we think about the politics of trade also, President Trump of course, is running for reelection. Election is next year, next November. That’s a lot of months before that election, to get a deal done. So we’ll see how it plays out with this timing. Your second point, what will a deal look like?

Curtis Chin:                           My fear is that ultimately there will be a face-saving deal, where each side claims victory, but really nothing changes. And so that goes to you, what is success? For me success isn’t simply that Chinese buy a lot more US exports. Clearly that’s a short-term win. But it doesn’t address the longterm issue that many countries … maybe the US is at the forefront, but many countries are facing with regards to China, which is theft of intellectual property, which is forced technology transfers, which are non-tariff trade barriers. It’s a range of things that companies, whether they’re Australian, or American, or from somewhere in Southeast Asia are facing. For me a real success would be if some of these things change. You know there was some talk that actually, that the Chinese as part of the negotiation process, had agreed to some of this, because perhaps they saw that it was in their interest too.

Curtis Chin:                           On this war, who knows the backstory and all these reports and tweets? But then you saw, most recently, leading up to the latest announcement by President Trump, about really, a move to impose tariffs on all Chinese exports, was this point that China reneged, that China moved backwards in terms of edits on the agreement that the negotiators had already agreed to. So only the people involved will know the truth to that, but I can tell you as business person who’s worked in Beijing, who’s worked in Hong Kong, and now worked throughout Southeast Asia, business people from all kinds of companies, American, Australian and others, have seen that same reality, where something that you thought was negotiated with a Chinese counterpart, all of a sudden doesn’t seem so negotiated as the process moves forward. So I would not be surprised that there is quite a bit of truth to that comment, to that tweet from President Trump, “The Chinese reneged, the Chinese moved backwards.” And so again, that needs to change.

Curtis Chin:                           So again when we talk about what is victory, victory ideally is a victory for both sides. That both sides, China and the United States, to go back to their really important domestic constituencies, and say “We’ve come to an agreement, we moved these things forward.” But then ultimately that victory will be a more sustained trading relationship between the United States and China. One of the point I always want to make though, is that we looked at some of the drivers of where we are today. Clearly for decades the Chinese have in a way, been gaming the system, taking advantage of the system, something that might have been tolerated when they really were a much poorer nation and a less militaristic nation than they are today. So that has to evolve. But I think one thing that we need to think more about more, and hopefully media can talk about more, is that in the world today, exports are both of goods and services.

Curtis Chin:                           So we talk a lot about things that were made, or grown, and exported, but we also need to think about the services. United States, developing nations, are also trying to move this way, but the United States has moved to develop the economy, where a lot of things we produce are services, are intellectual property, are things that again, are of great value, of greater value added than something simple that might have been made 10, 20, 30, 40 years ago. As we talk about the balance between nations in terms of what they import or export, I think we should ideally spend also more time talking about both goods and services, versus the focus on the easy number to understand, which is how many widgets or bushels of this has a nation purchased. Out of all this I think back about our evolving sense of trade, of Asia. Ultimately, and I say to people, “Things have moved forward, it’s a positive thing. Trade has been a wonderful thing.”

Curtis Chin:                           But the reality also is that in this more globalized world, this globalized economy of ours, many people have not done so well. So Trump has captured that moment, and spoken to people about what can he do to fight for them. But I see that across this world of ours, and across Europe, but very much across here and Asia, where in the Philippines, they had a recent election also, a very populist leader, India is going to an election, Indonesian had its own election, where leaders have to respond to their vast number of citizens who maybe don’t see that they’ve become better off as part of this globalized economy.

Misha Zelinsky:                  And we’ve certainly seen that with Brexit as well. I think you’re right. I mean, the question of trade and who benefits, and it might … it looks good in a headline number, but often say trade destroys and distributes unevenly. And I think there’s a lot of people that have been left behind or dislocated, and it’s expressing itself in this politics in a worrying sort of way. So I think certainly a lot to think about there for policymakers. One thing I’m curious about is, and you sort of talked a lot about the trade relationship, that seems to me now that the United States very much considers itself or it sees China now as very much a strategic competitor.

Curtis Chin:                           I think in every US administration, every country around the world, even your government hopefully, is working to give its citizens a better life. And so I think what we’ve seen is this continuing movement to a richer world, but also a more unequal world. And so you’ve seen so much talk about inequality kind of bubbling up over these last, really two decades, and I think we’ve reached that point where people are trying to look for what are the drivers of this inequality, how do we address that? And so very clearly, the two biggest economies in the world, China and the US, ought to be very much part of that conversation. You raised an intriguing question when you talk about China and the US, China versus the US. For me taking a step back, in many ways I see things also as not just China versus the US, but a US-driven system versus an alternative that China is pushing when it comes to concepts of competition, economics, of trade, and governance.

Curtis Chin:                           In general, I think no country wants to chose and say, “I’m on the US’s side or on the China side,” but I would say to nations, I would say to the people of Australia and elsewhere, “It really it’s up to you to decide which system is better for your own people.” For me, clearly I’m biased, I am for a system of free markets, free trade, and free speech. This is not what China is for, right? But often people will say, “But I got to follow the money, I got to pay the bills, I got to do what I need to do. It’s China that is the big customer.” And so that’s what people think to think through. It’s a very difficult question sometimes. I spoke recently at a Bloomberg event in Singapore on this whole same issue of China and the US, and I was struck by one of our fellow panelist, a friend … he’s actually from the Democrat side versus Republican side, but clearly we’re both Americans. Kirk Wagar, the former US ambassador to Singapore.

Curtis Chin:                           It was very interesting when he made a comment, and that comment was basically, “Western businesses, when they deal with China, the big question for them is, ‘Do you have to sell your soul, or to what degree do you sell your soul?’” So I’m paraphrasing his comment, but that’s that challenge of you’re going to make so much money hopefully dealing with China, the reality is many companies lose money dealing with China. But in pursuit of that market, or in Pursuit of that cheaper production base, do you simply look the other way on all the terrible things that China is doing? Maybe case number one, we see these days are these reports coming out of Xinjiang, this Northwest part of China, of where they put, by some accounts, one million to two million people into camps. Some would say concentration camps, of all the terrible connotations that raises from World War II. But they put people there simply because they’re Muslim.

Curtis Chin:                           That clearly, I would hope the world would speak out about. But we’ve seen how Muslim nations, many nations have looked the other way. “It’s China’s right,” I think one Saudi leader said, “as to how they deal with what China perceives as a terrorism threat.” But for me, maybe I’m not getting any business in the near term in China, because I want to speak up on behalf of all Chinese people, whether they’re Muslim, or Tibetan, or Han Chinese. You know I’m ethnic. People can’t see me on your podcast, but I think my great-grandfather went to the US way back in the late 1880s to help build the railways or something. I’m ethnic Chinese, but for me it shouldn’t be about your ethnicity, really even your nationality, but people should willing speak up on behalf of those that really need speaking up on behalf. So clearly the Muslims, the Tibetans, but even Christians. We’re seeing reports that the Chinese have been particularly aggressive in tearing down Christian churches, which they don’t recognize. These are all not great things.

Curtis Chin:                           But what if you want to do business in China? Do you say nothing because you’re going to make some money? That’s a very difficult question for people who again, who have to pay the bills. But for me, you can’t, in my mind, simply chose to say nothing because you want the money. There is some balance and each individual, each company needs to think through what is that … and in the long run, my hope is that all Chinese people will appreciate this notion that every single individual has value. There I go sounding like an American.

Misha Zelinsky:                  Well, that’s okay. It’s good to be of your people. But it’s so curious, you were touching quite a bit there about the rule of law, I think largely, I mean. And the United States is larger] since World War II certainly, in this so-called rules-based global order. China’s really bumping up against that now, and one of the things I’m sort of curious to take on, I mean, where are the areas that you think that the United States is prepared to turn the other way? So for example, if you take South China Sea where Barack Obama, President Obama sort of didn’t do a great deal as the Chinese government sort of constructed these artificial islands in the South China sea, and then militarizes on, has in effect sort of annexed a part of the South China sea.

Misha Zelinsky:                  How do you see things of that nature when it comes to getting the Chinese government to obey and respect maritime law in that instance, where the international courts very clearly ruled against China, and it essentially ignored them? How do make your earlier point that China, and they need to be a responsible grown up actor? How do you actually enforce that with the Chinese government?

Curtis Chin:                           I think the reality here, even when I go back thinking about that question you asked, the reality is it cannot just be China and the US deciding. What are the regional bodies, global bodies that can play really, a shaping role? I mean, the reality is that at the end of the day, and sadly this goes back to a statement, even when you think about Chinese history that, “Power grows out of a barrel of a gun,” Mao famously said in the civil war in China. And the reality is that when you look at some our regional institutions like ASEAN the Association of Southeast Asian Nations, they act by consensus. Many of those nations have a stake in the South China Sea, and the Philippines even calls it the West Philippines Sea, but China has been very aggressive in building up … I don’t know, we call them [islandets00:25:55], or little islands, or fake islands, I don’t know. And then despite saying they wouldn’t, moving into to militarize them.

Curtis Chin:                           But China’s got the guns, and maybe other countries don’t have the guns, or they want Chinese investment. So lets deal with that. But to your point, I would hope that a nation let’s say like Australia, can step up. It’s what we call like freedom of the seas, freedom of navigation, trips to the South China Sea. That nations throughout the region can seek to come together to engage with China. The Chinese strategy has always been one of like picking off countries, some would argue that ASEAN already has in a way, been nullified because China has bought out Laos and Cambodia. And for a associations that acts by consensus, if Cambodia has in the past said, “Well, no, no. We’re not going to issue a joint statement because we Cambodia, don’t agree,” it blocks efforts. So hopefully that will evolve and all. Your question also raised this point about systems, and organizations, and governance.

Curtis Chin:                           One I know very well, is this whole issue of how will we support and fill the financing gap? How will we support the building of infrastructure in the region when there’s been a big gap? The region’s infrastructure needs and how they will be financed. So four years, nearly two under Obama, nearly two under Bush, I served as our US ambassador to the Asian Development Bank. For those who don’t know, that’s kind of like an Asia-Pacific base, Philippines headquartered version of the World Bank, primarily focused on ending poverty in this region, mainly through building infrastructure, a lot of core infrastructure, roads, power, water systems, sanitation. Really doing good things there. But how do you build those infrastructure projects? So World Bank, Asian Development Bank, they’re all in this region. For the last couple of years we’ve seen Chinese rivals.

Curtis Chin:                           And so we’ve first and foremost seen the rise of the Asian Infrastructure Investment Bank. We’ve seen something called the New Development Bank, some people call it the BRICS bank after Brazil, Russia, India, China and South Africa, the key players there. That one’s based out of Shanghai. We’re see moves by bilateral financial institutions like the Chinese development banks, or that will be just working with one country, versus these multilateral banks. We’re seeing a lot of new players challenging that old, what they call this old Bretton Woods type institutions to finance and move Asia forward. In many ways that’s a good thing, hopefully it makes some of those old bodies, like my old colleagues at the ADB, a little bit more hungry, innovative, focused on acting quicker to serve the needs of this region. But it’s a bad thing if what it is, it’s also a push to the bottom, who will get the money out the fastest. When I was on the board of the Asian Development Bank, I visited a nation whose engagement with the ministry of finance, is they seek to get funding for key infrastructure projects.

Curtis Chin:                           ADB, I think to its great credit, like the World Bank and others, we’ll try to push for certain, what we call safeguards, so that if you put in an infrastructure project, the environment would be in some ways be protected. There’d be … the lingo today is ESG, so there’d be like environmental, social, governance safeguards put in place. These are all good things, but then it makes a project take a little bit longer to develop. So if you’re a country just in search of financing, what if all of a sudden there are Chinese-backed banks? There’s nothing else. “We don’t care about those ESG, those safeguard standards, we trust you as the borrowing country to decide what’s right for your own people.” You can see there will be sympathy for that, “You decide what’s right for your own country in term of protecting the environment based on your own spot in that kind of development line.” But then the Chinese might say, “But if we do the financing for you, maybe Chinese state-owned enterprises were going to do a lot of the work, maybe it will come with 500 to 1,000 Chinese employees and workers.”

Curtis Chin:                           So I think any nation, they decide. It’s their money, they ultimately have to pay it back, but read the fine print. So don’t think that because maybe the Chinese aren’t insisting on certain safeguards that others might, that it doesn’t come with other things that they might well insist upon. And so that’s how it should be. As long as it’s transparent, these institutions are accountable, that’s how it should be. Let the market compete. What the big problem is though, and we’re beginning to see it even in China’s One Belt, One Road initiative, this is a big infrastructure funding push, is that what if decisions aren’t made fairly? What if corruption is involved? What if money changes hands? And case in point has been what we’ve seen has happened in Malaysia. In the last year or so, Malaysia brought back its longtime prime minister, probably the oldest prime minister in the world, Mahathir came back in with … was swept his party back into government, overturning the rule of, I think for decades, of what is not the opposition party.

Curtis Chin:                           And when Mahathir came back in as leader of Malaysia, he raised questions, it certainly raised eyebrows in China, but he raised question about some of the big infrastructure deals that were signed by his predecessor Najib, with the Chinese government. And to his great credit, forced renegotiation. And so one that’s come up most recently is … I think is calling it like an East Rail, a project … Really so much money in his huge infrastructure projects. Mahathir was ultimately able to shave the cost of the product or project. Not exactly apples and oranges because the project did change somewhat, but shaved the cost of that project by a third. And so it makes you wonder where was that extra third, you were talking really tens of millions of dollars, where was that money going? Into Chinese pockets? Into construction company pockets? Into Malaysian pockets? And then a question for the region, for countries that haven’t had this kind of democratic revolution bringing back an old prime minister, focused now on corruption.

Curtis Chin:                           What about all of those countries with deals other than the One Belt, One Road initiative, that haven’t had a Mahathir, to try to renegotiate and bring those costs down by a third? Where has that money gone? And so these are some of the questions that I think individual citizens may well raise when they see deals signed with China. But sadly in so many nations, those citizens are ignored, because the deal is done with leaders, and those leaders know for good and for bad, where that money has gone or will be going. So yes, China can be a constructive force in this region, but for that to happen in this changing world of ours, China too must evolve. And so bringing this all kind of full circle to how we began talking about China and the US, clearly we see this rivalry between the Chinese and the US government at this time. Hopefully it’s not a rivalry between the peoples of these nations, where people just want a better life for themselves.

Curtis Chin:                           But it’s also a rivalry, I believe, between different systems. So this Chinese system is one again, of subsidizing their own companies. To what degree is that acceptable or should it be acceptable, and then how do you have a level playing field when you’re up against a state-owned enterprise that’s completely subsidized by the second largest economy in the world? And I think these are important questions, that again are just not US versus China questions, and hopefully they’re questions that are also being asked within China. But we’re seeing now in some of the reports that are coming out of China, few and far between, where China itself is cracking down on its own Chinese economists and their own people who would dare challenge what Xi Jinping is pushing through right now. As I think a Chinese American, as somewhat Asian American, someone who’s living in both the US and Asia, I in particular want China to move forward and to succeed just like every other nation, but China must evolve, and my hope is that it’ll be done peacefully versus all the turmoil that China has gone through this last century.

Curtis Chin:                           My hope is that that does not come back. In a weird way, that may be what Xi Jinping fears, but is he putting in place a system which might encourage or increase the odds of that coming back. A case in point, Xi Jinping, president of China, pushed through a way for him to serve as really president for life. So in a way governance has moved backwards in China. Xi Jinping has a lot of rivals within China that maybe aren’t so happy with how he’s done things. This US-China back and forth, this trade war really emerged under his watch. So there’s a lot of questions within China about he’s doing things, but those people are increasingly kind of squashed. In the old days, if you were a senior Chinese leader, maybe you’d wait out whoever the president was, you’d wait five years, you’d wait 10 years, but that has now changed. Maybe there is no waiting out Xi Jinping.

Curtis Chin:                           And so are people moving sadly, back to that old system? Are they trying to bring him down, stab him in the back? Things that are not good, because that’s how China has evolved. It’s evolved backwards, and it’s gone back to the system where actually it’s almost like there’s a new emperor in town, that emperor is Xi Jinping. And what happened to emperors in the past? They either died or were overthrown. So that’s not a good thing for China, and I think no one should welcome turmoil in China. And so again it’s in China’s own interest to rethink about how it treats not just the US, but how it treats all its neighbors. The Chinese version of rule of law is not one that I would hope the world seeks to emulate. We look right now at an imprisoned … out on parole I think, the technical term is, but an imprisoned Huawei, this big Chinese tech company CFO in Canada under the Canadian version of rule of law.

Curtis Chin:                           I think that Huawei executive has just moved from one of her multimillion dollar houses in Vancouver to another multimillion dollar house in Vancouver while she goes through the Canadian legal process as will she be extradited to the United States regarding charges of was she really directly involved in her company’s trying to avoid sanctions on Iran, create shell companies, all these things. Right? So the rule of law is proceeding. Meanwhile in China, and I dare say it’s not coincidentally, but connected, China has retried one Canadian, I think sentenced him to death. China is now putting I think two Canadian citizens under arrest, alleging that they’re spies. There was one, I think social media post, that’s never all …. as you know never sure how accurate some of these posts are, but this particular social media post contrasted the treatment of those Canadians under the Chinese version of the rule of law, versus the Huawei CFO, her name is Meng, CFO Meng, among under the Canadian rule of law.

Curtis Chin:                           And so I say to countries, I say to people, “As you think about the systems that are really contending now, a Chinese way of doing things, a Western way of things, what is better for you?” And so my hope is that this notion of East versus West isn’t one of really of East versus West, it’s really what’s right for a nation. And as I think about even one person … I did an interview when someone said to me on air, “Well, isn’t this stealing of property by the Chinese cultural?” And I had to push back, one because I’m ethnic Chinese. But when you think about what does that mean, culture, because very clearly when I go to a dynamic place like Singapore, or a dynamic place like Hong Kong, or Taiwan, mainly Chinese people, ethnic Han Chinese people, I don’t see them ripping off and stealing other countries’ or other companies’, other countries companies’ intellectual property like you do in China.

Curtis Chin:                           So if it’s cultural, it’s because of a business climate that the communist Chinese have created, it’s not because people are ethnic Chinese or Caucasian or whatever. And I think that’s how we need to look at things in order to move things forward. And again, I keep coming to this point that moving things forward are also in the interest of the Chinese people. And so it’s always intriguing where people say that, “How long will you as a citizens stand for tariffs?” If indeed those higher costs are passed on to them. But then we can throw that same question at the Chinese, how often will Chinese citizens stomach and tolerate all that their leaders do, then impose this higher cost and burdens on them, whether it’s the money they spend, the lives they live, or what they can say? And unlike in a democracy, where the Chinese citizens say, “No, we want to change things. We’ll have different leaders,” how do people change things in China? Their track record has not been good when it’s been a system where the Chinese people have no way to peacefully speak up. And that’s the challenge for our world today.

Misha Zelinsky:                  So the question I have … So you sort of talked a lot about this sort of the competing models and the hope that I suppose, over time the theory always was that China would gradually adopt Western norms of global leadership and rules-based order. The thing that is curious in all this is that the United States has always been the underwriter of these systems and has always had great confidence in these systems. One of the great strengths of the United States model of global leadership has been its alliance system. Now, people have thought about Trump’s approach to the strategic rivalry with China, but one of the things I’d like input is Trump’s administration approach to United States’ friends in a way that has attacked NATO allies, it has attacked allies in Asia region, such as South Korea for not pulling their weight, etc. How can the United States’ friend believe in the system that United States has underpinned and expect China to adopt a system that perhaps the United States itself seems to be walking away from somewhat.

Curtis Chin:                           I don’t know if the answer is walking from a system that we’ve all benefited from, this global trading system, but very clearly, the United States is saying it needs to be change and fixed. One case and point I look at is think about all these global bodies, and that’s where my hope … We talk about West versus East, but I hope some of these global bodies are really seen as global bodies, because I think part of the challenge is we say it’s a Western system or, “I’m from the East. I don’t want that system.” But I would argue that things like human rights, free speech, worship whatever you want, your religion, or whatever your faith is, isn’t a Western concept, but then I hope would be more universal concepts. So going back to your point, so one of the institutions that I think needs to evolve, one example would be the World Trade Organization, and I think even the WTO leadership has said, “Yeah. We need to change too.” And it’s the Trump administration that is pushing for some of these changes.

Curtis Chin:                           One example would be under WTO rules right now, that China is still treated as a developing nation. So maybe it’s allowed to do certain things, can it have more state-owned enterprises, more support for state-owned enterprises, but then a developed nation can’t? So doesn’t that need to change? For me it’s kind of ridiculous also that this second largest economy in the world that is China, some would say largest economy based on purchasing power parity, that this nation still borrows money from the World Bank, still borrows money from the Asian Development Bank, because they say, “Oh, we’re a poor country.” So again it goes back I think, to these metrics, but very clearly, China has resources that other nations do not have. China again, amazing, has put like this little rover on I think, the far side of the moon, and yet it still borrows money from the World Bank and the Asian Development Bank because it says, “Oh, we’re a poor country, we need these subsidized loans to help us fight poverty.”

Curtis Chin:                           And so I think these institutions need to change, WTO, ADB, World Bank, and how they treat a nation like China. And what’s great about these rules-based organizations also, it would be that, it’s not just about China. If it were another nation in that same kind of role as they move up, they also should in a sense, graduate from these kinds of assistance like grants and subsidized loans. And so I think, we think about this China and the US, I think that’s part of the challenge that right now because of this tariffs war, it’s seen as China versus the US. But in many ways, there will be many allies in the battle if they could speak freely, and also many more allies in a sense, if the Trump administration to your point, I think were more adept in how it handles its long time allies and friends. The US relationship with Australia, with Thailand, with Singapore, with the Philippines, these are relationships that will continue to evolve, but really are foundations for moving things forward in a way that will I think, benefit the countries involved, but also benefit this region, this Indo-Pacific region as well as the world.

Misha Zelinsky:                  So one question I want to ask you, are you a member or do you have an involvement in the International Republican Institute, the IRI which is responsible for promoting democracy globally? There’s a sister organization to Democrats version of them. Traditionally people have always thought that China would grow rich and then it would grow democratic. What we’ve seen as it’s grown richer, unfortunately it’s become more autocratic. You touched on the fact that Xi has made himself emperor for life. With your sort of background in what makes democracy great and how democracies flourish, do you hold any sort of hope … is there anything to hope for people that want to see China become more democratic, or is that just a lost hope now to your mind?

Curtis Chin:                           Are both the International Republican Institute and this National Democratic Institute, they’re both come under this umbrella, National Endowment for Democracy, which really comes out of … started to work way back when I began my career, like an intern under Ronald Reagan. But something that Ronald Reagan sought to encourage, was the spread of democracy. So these are nonpartisan groups, even though one sounds Republican one sounds Democrat. And their job really is to encourage democracy, but I think more importantly and this goes to the heart of your question, to encourage institutions, and systems, and processes that allow democracy to flourish. I’m usually always like the most hopeful person in the room, even though like the room’s falling apart. And so I’m always hopeful that things will be moving forward. But I think it’s important that we talk about democracy, that we realize that democracy is not just elections, democracy is about balance, it’s about systems, checks and balances, it’s about institutions.

Curtis Chin:                           And so like the work of both IRI, NDI, would be things like encouraging political parties, it doesn’t matter which party you are, but encouraging political parties to think through the use of research, degree that is allowed or easily done in a given country, so that they can better understand what citizens are worried about, what they’re concerned about, and then think through how they can best address those concerns. It’s about how do you strengthen a democratic process? Where people don’t like whoever is running, there’s a chance to get rid of that person. So yes, I’m hopeful for China in the long run, but clearly what we see in these last what? Five years, is a China that’s become much more economically assertive and militarily aggressive in the Indo-Pacific region. And so what will happen over time? The reality is that it won’t just be China and the US contending, it will be the other rising powers in this increasing … what they call multipolar world.

Curtis Chin:                           They will also have to contend with a rising China. One day we’ll see India come into its own, we will see Indonesia, the largest economy in Southeast Asia come into its own. How will China engage with an India, with an Indonesia, with a stronger ASEAN, Association of Southeast Asia Nations? How will they deal with this? Probably one of their biggest headaches is their friend, North Korea. At the end of the day, I believe, here I’m being hopeful again, I believe that Korea will be united one day, but clearly when it unites, the reality will most likely be a democratic, in a way, westward-oriented democracy, versus the model that China and North Korea itself now present to the world. That’s really what holds back these two nations from coming together, North Korea and South Korea, is China. China would probably prefer kind of a somewhat unstable North Korea on it’s border than a united westward-looking Korea.

Curtis Chin:                           And so China has a lot of headaches to contend with, this trade war is really just one of them. And as you think about the calendar of this year, China has so many worries to contend with. An anniversary of the June 4 Tiananmen, I say massacre, Chinese doesn’t like that word, incident, I would say. But when we think about the June 4 anniversary coming up, when you think about labor unrest in China, Xi Jinping is in a difficult situation, and maybe in some ways much less secure and stable than he would like the world to think he is. And so this trade war at a time of an already slowing but still growing Chinese economy, is not good for him either. And so maybe he will pursue the route of again, trying to unite the Chinese people in a very nationalistic way. You’re seeing some of the rhetoric coming out of China, “China will never back down.” Very nationalistic, trying to unite his own people against an enemy, when the reality that maybe his biggest challenge is what’s happening at home, in his country.

Misha Zelinsky:                  Thanks. I could probably talk to you about this all day I think, it’s so may fascinating different areas we could go to, but of course you’re a busy man, you’ve got things to do. So as I always do, very clunkily segue to the fun part of the show. I get a lot of good feedback on this really lame question that I ask everyone. But of course you’re an American guest on our show, just curious about the three Australians that are coming to Ambassador Curtis Chin’s barbecue and why? And I should disclose, earlier he said, “What if I can’t think of three Australians?” I said, “Well, just do your best.”

Curtis Chin:                           Yeah. What if I can’t think of three Australian? But yeah, I kind of laughed when you asked me that question earlier, because in the United States when we think of Australians, they’re like people we’ve taken from Australia like Nicole Kidman and Keith Urban, but I think … wasn’t Keith actually born in New Zealand? But again, I think they live in Tennessee right now. So I’m going to cheat and only give you two, but because they live in Tennessee, I bet they have some of the best barbecue in the United States. So I’d certainly love to have them because then maybe we wouldn’t talk politics, or we wouldn’t talk about China and the US, and we’d just have a great time …

Misha Zelinsky:                  Well, it’s funny you should say that …

Curtis Chin:                           … and enjoy American-Australia hospitality.

Misha Zelinsky:                  It’s funny you should say talking about Americans stealing Australians, because Australia is very famous for stealing New Zealanders like Russell Crowe. So it’s sort of … it’s all just [crosstalk 00:52:52].

Curtis Chin:                           That’s right. I think Keith Urban, I think he’s really a New Zealander. I don’t know what he is, but …

Misha Zelinsky:                  I’m not sure, but that’s a cute …

Curtis Chin:                           Nicole Kidman is Australian for sure …

Misha Zelinsky:                  She’s absolutely Aussie.

Curtis Chin:                           … and maybe they both Americans, I don’t know. But let me close by just saying that US-Australian relationship is a great one, it’s a solid one. I think United States, we can learn from Australia. I mean, look at your economy, you haven’t had a recession in a long time. A lot though has been driven by China, and so also how will Australia deal with this evolving economic world. Australia also, I think for a while, kept changing its prime ministers, I don’t know. It seems like there was a new one all the time, but maybe that’s also a broader point for all of us, that no matter who’s in charge things will be okay if we leave it to our people to run things, just American, Australia, Chinese whoever. They just want to move things forward, but maybe it’s the politics that gets in the way of everything. And sometimes when government does nothing, maybe things just move on forward.

Misha Zelinsky:                  A very positive message of hope to finish on there, Curtis. Thank you so much for joining Diplomates, mate.

Curtis Chin:                           All right, my pleasure. Take care.

Misha Zelinsky:                  Take care, mate.

Steve Glickman

Steve Glickman, the CEO and founder of Develop Advisors, is the world’s foremost expert on Economic Opportunity Zones. Steve joined Misha to give his predictions on the mid-term and 2020 elections, discuss solutions to geographic inequality, dissect the problems with a UBI and explain what’s gone wrong with global trade. Steve also gives tips on how to overcome partisanship in the legislative process.  It’s a BIG chat.  

A young gun in US politics, Steve was an advisor in the Obama Whitehouse and started his career as Special Assistant US Attorney. 

While at the Economic Innovation Group  – which he co-founded with Sean Parker – Steve developed the radical ‘Economic Opportunity Zones’ that are tasked with kickstarting capital investment and job creation in areas of the US suffering from high inequality and low capital investment. He is now bringing EOZ’s to life via his new investment firm, Develop Advisors. 

It’s a great and really fun chat. For policy nerds, there’s a really fascinating critique of the Universal Basic Income.

We need this guy to run for President some day (no pressure, Steve).

 

 

EPISODE 2 FULL TRANSCRIPT: 

Misha Zelinsky:                  Steve Glickman, how are you? Welcome.

Steve Glickman:                 Thanks for having me.

Misha Zelinsky:                  I should say that it’s in the evening in DC right now. Is that right?

Steve Glickman:                 Yeah. It’s 5:40. So all the government bureaucrats have already gone home

Misha Zelinsky:                  Very good. So I should say we’re obviously recording this across time zone. So it’s early in the morning here in Australia. But yeah, the wonders of technology bringing people together. So Steve, I was actually just going through your CV before. You and I first met through the American-Australian leadership dialogue where youth delegates. I’m a little bit surprised at the depth of your CV. Are you sure that you actually youth delegate or are you fudging things a little?

Steve Glickman:                 Well, you know, I make up most of the stuff that I do or talk about on the spot so you can pretty much assume it’s all one big running lie.

Misha Zelinsky:                  Well, just on that. So your main role, and we’ll talk a little bit about your broad career as we go along. But your main role is that to you are the co founder and CEO of the Economic Innovation Group. I was hoping that you might be able to tell us a little bit about what the EIG is and how and why it was set up.

Steve Glickman:                 Yeah. I think a good way to think about us is we’re social entrepreneurs. So we are trying to find a new pathway at addressing big economic challenges in a very crowded marketplace of think tanks and political organizations, and other groups that are trying to make their mark in DC. We were founded in early 2013. It was really, much of this was the brainchild of Sean Parker, who as you know is the co-founder of Napster and the first president of Facebook. And when he and I got connected at the end of 2012, early 2013, he was really focused on how you leverage the private sector to solve big economic challenges. Particularly, how you drive more private sector investors to a bigger part of country.

Steve Glickman:                 And that was really our DNA from the beginning was could we get a group of Democrats and Republicans, conservative and liberal thinkers, private sector, public sector actors to really come together around the notion that we could create a new incentive system to change the flow of capital markets in the US?

Steve Glickman:                 And as we started unpacking that problem and that approach, we found ourselves doing a lot of research around what drives inequality on a community level around America, and what the depths are of that inequality and what the impact is. And the more and more we unraveled that onion, the more questions we had and the more we realized that we think we had stumbled upon maybe the most important economic policy challenge that wasn’t really being addressed by either political party and that gave us a pretty strong feeling that we were onto something meaningful. So we’re really intensely focused just around that problem, and bringing in a whole new set of actors from the private sector to solve it.

Misha Zelinsky:                  Yeah, that’s really interesting. So we’ll talk a little bit about the bipartisan part of the EIG. But I’m just curious. I mean, I think a lot of people talking about inequality. I think what’s interesting about what the EIG does is that you are very focused on can I say, in an American sort of way, is that it’s focused on capital investment and enterprise. I was wondering if you could maybe just unpack that a little around how you see the role of enterprise in lifting people up out of inequality and rather than it being perhaps a government led solution.

Steve Glickman:                 I think our approach to it is that it involves both, but that the government at all levels. Whether it’s the federal government or local governments in the US, which is unique to the US structure that we’ve got that federalist system. That a lot of the programs initiated by government having worked very well, but even more importantly, it’s both politically, financially, they’re broke. There’s just no capital based on the changes in our tax system and the changes in the political acceptability of big government programs to do a lot more out of the public sector. And some of that’s just a factor of the economy and our debt, and the fact that between social security and Medicare, and defense spending, and payments of the debt, there’s just not a lot of additional capital to go around unless you hike up taxes.

Steve Glickman:                 And certainly in America, the political trends are in the opposite direction where you’ve been lowering taxes, or have had pretty low taxes for 30 or 40 years. So if you, go ahead.

Misha Zelinsky:                  Sorry, keep going.

Steve Glickman:                 So if you’re gonna solve the problem of how you create more economic growth, it costs money from somewhere. And the private sector is to contrast to all those trends in the public sector has never been wealthier, more profitable. The stock market’s never been higher than ever before. So clearly there’s a lot of capital that’s resting there. From our standpoint, the capital markets aren’t broke, they’re just broken. And they’re not working in the way that they could or should work. And if you’re not driving more capital places, you’re not ultimately creating more businesses places. And if you’re not creating more businesses places, there’s no other way to get jobs. So we subscribe to the notion that to change economies, it starts with the ground up. You have to create local, homegrown businesses and you can’t do that without capital.

Misha Zelinsky:                  Now, that’s really interesting. And I think you talked a lot about tax cuts there. And tax cuts at the moment, corporate tax cuts are on the agenda in Australia in a very contentious. There’s a lot of argument from both sides of politics. I think what was interesting, obviously those are major tax cut I’m brought in by the Trump administration and the republican congress. But what was within that was a small piece of a very innovative policy that the EIG championed. I was wondering if you could maybe tell us a little bit about the role that the tax cuts have played in helping the EIG actually get some rubber on the road in terms of things you just talked about.

Steve Glickman:                 Well, so the program you’re talking about is called opportunity zones. And let me separate it out a little bit from the overall tax reform package. It was a vehicle to make a certain set of tax changes, but I think it’s a little bit different in the tenure of what you see from many other parts of that tax reform package. It’s designed to do something that the US tax code has done for a long time, which is if you want to incentivize certain types of behavior, and in our case it was incentivizing moving private capital to low income parts of the country. The tax code is the most important and most powerful, most systemic way to do that. And of course we do that in the US to stimulate a charitable contributions. We do it to stimulate people buy houses, we do it to stimulate companies to make investments in research and development. We do it to stimulate the clean energy economy.

Steve Glickman:                 So it makes total sense and if you think, and we do think that community level inequality using most important problem to solve and there’s lots of capital in the private sector. Let’s utilize the tax code to systemically change the flows of that capital. And that’s basically what the opportunity zone program does. It’s essentially a deal between the federal government and private investors that we as the federal government will give you some level of tax forgiveness if you’re willing to make longterm and economically productive private investments in communities that are cut off from capital markets.

Steve Glickman:                 The program is obviously more complicated than that and we can get into whatever level of details you want, but at the end of the day, that’s what it’s about. It’s about getting capital off the sidelines. By our calculation there’s about 6 trillion with a T, $6 trillion in unrealized passive capital gains sitting in the economy. that’s in the stock market, in the real estate market that has been booming for at least a decade now. And if that money can be funneled to distressed communities around the US, there’s a pretty powerful tax incentive attached to it and we think it will move markets, it’ll change the way the market works.

Misha Zelinsky:                  That’s really interesting. So yeah, obviously taxes. It controls the flow of money. You’ve talked a lot about the role of capital in these distressed communities. I know the EIG talks a lot about the geographic role of inequality. I’m just wondering about the role. How do you see the role of responsible business in addressing inequality? And obviously we want to see capital investment in distressed communities creating jobs, but what do you think, what’s the role of the business community in addressing wage inequality and lifting up people and making sure that we don’t have a situation where you have people working one job or multiple jobs, and being unable to sustain themselves?

Steve Glickman:                 There’s no doubt that how stagnant wages have been an America is a big source of inequality on a number of different levels. And this was one of the stories of the recession and the recovery was that we gained back all of our high wage jobs. We gained back way more than we lost in terms of low wage jobs, and we didn’t gain back those middle wage jobs. And a big reason for that is the industries that really never came back were a lot of those middle wage industries like manufacturing. Now a lot of thinkers and policymakers in both parties understand that. But then your solution set gets all over the place and a lot of it has been focused for years on well, if we want to bring back those type of jobs, we have to bring back those sectors, and that’s not our perspective.

Steve Glickman:                 It’s manufacturing has fundamentally changed. But those communities that were manufacturing communities need similar quality jobs to replace it. And jobs that fundamentally don’t require a college education. On the democratic side, you hear a lot of talk about how everyone should go to college and that’s just not really a practical solution at least in the US. So you’ve really got to create new business activity in order to change that. And listen, I don’t think you’re going to be able to get there by forcing the corporations to do that, at least not in traditional ways. There is a big competitiveness problem in the US economy. It is much harder for new businesses to start and grow. We’re on this huge 40 year decline in our ability to create. So there’s this myth that the US is this entrepreneurial economy, and of course in some ways we’re more entrepreneurial than many other places around the country. But that edge that the US has is rapidly declining, and in part that’s because we’re creating businesses in such a smaller number of places around the US.

Steve Glickman:                 So again, we think it’s a homegrown problem, and that there are entrepreneurs everywhere. And the way to get at solving that problem is by getting more and more of those entrepreneurs capital. Let me give you one quick stat. If you look at the venture capital industry which is the source of much of the high growth entrepreneurship in the US, nearly 80 percent of that capital is invested in only three states. So three out of the 50 states, Massachusetts, New York, and California get nearly 80 percent of the capital. And that’s true across many other parts of our capital markets. Including how banks lend and where banks are located around the US. So this is a big problem to unravel and we think it starts with how capital flows.

Misha Zelinsky:                  That’s really interesting, and I think it gives us an opportunity to talk a little bit about this geographic inequality, these distressed communities. It’s been discussed a lot and I’m curious to hear your take on it as someone who’s a Democrat and perhaps has a slightly a nuanced view of the election. The geographic role that inequality pied in the US selection, you of course grew up in Michigan. That’s a state that’s blue state gone red, so to speak. But I think that what’s interesting is you talked about there was the loss of jobs, Trump zeroed in on very acutely around this loss of jobs and the promise to bring back steel jobs mining jobs in those distressed communities. And whether it was true or not, it certainly resonated. So I’m curious just a little bit about the geographic role that inequality played in the US election.

Steve Glickman:                 So I think there’s a couple answers to that. One is let’s take a look at how people evaluate the economy. So in a time when the national economy was booming, our unemployment rate was close to four percent and the stock market had been growing for this long bull market. That national level economy was just not resonating to people because frankly, it’s just not how people evaluate the economy. They evaluate the comedy based on what they see happening in their community. And people are really good at evaluating how well their local economies are doing. And as it turns out, a lot of national policy makers and the media don’t fully understand what the country looks like outside of big markets like New York, LA, San Francisco, and DC because that’s where they spend most of their time.

Steve Glickman:                 It looks much different than the rest of America. We for instance looked at swing districts, at places that voted for Barack Obama twice and then voted for Donald trump. And those are places it’d be hard to say that the difference in the election was based on race because they elected for an African American president twice. And much more likely, the driving force there was the economy. And if you look at those counties, and there were 200 plus of them that voted for Barack Obama twice and then voted for Donald trump. The big tying factor for all of them is that three quarters of them lost businesses during the recovery years and lost jobs on net during the recovery years. So while our national unemployment rate is going lower, in those places unemployment rate is not being affected at all. In fact, they’re losing jobs.

Steve Glickman:                 And one of the stories about the economy that people don’t fully understand even now is when we talk about the recovery, we’re talking about a recovery that really disproportionately benefited the top 10 or 20 percent of the country, that the rest of country kind of stayed even. And that the bottom 20 percent of American communities lost jobs and even a greater trajectory than they did before the recession. And in a lot of those places, it was totally rational to say the status quo establishment economic thinking from both parties isn’t working for us. It’s not changing our trajectory. So we’re going to vote for something different. And, one of the things they’re voting for is how to maintain their quality of life, maintain a community where their kids can stay and achieve the American dream.

Steve Glickman:                 And we know the reality is changing in those communities. The tragic thing is I don’t think either party is really giving folks a viable solution for how they change their trajectory. Because a lot of these jobs aren’t coming back. And a lot of the problems for their current economic situation isn’t as simple as trade, or immigration, or any number of issues that have become the threshold issues in our debate. It’s really a much more complicated, long term structural change of communities that haven’t kept up with the how fast the economy’s been changing and having diversified the industries and the opportunities they’ve given to people who have lived in a lot of these cities.

Misha Zelinsky:                  That’s the challenge, isn’t it for progressives I think is that the difficulties of the problem cannot be explained in neat, make America great again, type sloganeering. So that is always the challenge. But what’s interesting as well as you talked a lot about there about the main economies LA, New York, San Francisco. But what’s interesting as well is this so called red state blue state thing where people look at them on a headline map. But what’s actually interesting, if you dig into a blue state, you’ll see that it’s actually perhaps a blue dot or a blue island on a red ocean. And maybe just talk a little bit about the differences between outcomes and metropolitan people versus outcomes in those sorts of non metro rural areas. And the tensions that are building there.

Steve Glickman:                 And I think the problem is even a little more complicated than that. So listen, the geographies that do really well in our economy typically are the suburbs. And the suburbs can be republican or democrat. Some studies going to do really well and some cities tend not to do well. And a lot of those cities, you have large population groups, particularly minority population groups that are doing much worse than whites even in rural areas. But ultimately, I think this comes down to a trajectory. If you’re living in an African American or Hispanic community, even one that’s on absolute terms not doing as well as a lot of white communities, you’re probably doing better than your parents or your grandparents did. And that’s not just an economic issue. That’s also a social justice, civil rights status that have improved for many, many millions of Americans despite a whole set of current challenges.

Steve Glickman:                 If you’re in the white working class community and a lot of those are small town and rural America, your trajectory has gone the opposite direction. You’ve lost. Particularly if you’re in a manufacturing community, you’ve lost those industries. You’ve lost those quality of jobs. You’ve lost your main street. It’s been replaced by a minimum wage jobs. Whether it’s working for really big companies or for distributors or call centers, or whatever is left. And the quality is just different. There are rural communities and small towns in America that are doing great, but disproportionately the parts of the country that are doing the best are cities that are connected to global markets, connected to immigrant communities, and connected to the digital economy. And those are places like you mentioned, like New York and DC and San Francisco and LA, and also other towns that are, cities that are taking advantage of it. In the middle of the country, like Denver and Austin. And Minneapolis and other communities.

Steve Glickman:                 But those are the exceptions. And so the reality is this is not a rural versus urban issue. There’s just huge amounts of distress in both communities, and it’s not even a black versus white issue. But a lot of this has to do with trajectory. And, if you see yourself going the wrong direction, if you see your kids have less opportunities than you do, it makes people angry. And rightfully so. And I think at a starting point, and this goes back to our conversation around Trump, people want to be seen. They want to know that you understand their problem, and how their problem is unique and different because of where they live. And I think to Trump’s credit, he understood it and was able to articulate it. And whether or not you have a good solution for it or not, more politicians on both sides have to articulate that as the biggest problem we need to solve with this country.

Misha Zelinsky:                  I think that’s interesting. And you’ve talked a bit about Trump, but I think what’s interesting and puzzling to a lot of Australians is that you had people that voted for Obama. We had eight years of Obama, and then suddenly those very same people turned around and voted for Trump someone that not only was the antithesis of Obama, but was the leader of the birther movement. So it is quite puzzling from an Australian point of view. But I’d be curious to get your views as someone who worked in the Obama administration in an economic portfolio. Could the Obama administration done more for people, in terms of making sure that those communities weren’t so left behind in the recovery? Because I think Obama rightly put a lot of focus on saving Detroit with the auto bailout and focused very heavily on making sure that those working class jobs were not lost. But should the Obama administration done more and should the Democratic Party have detected this problem that was out there?

Steve Glickman:                 So the short answer is yes. I mean clearly, the Obama administration should have done more. I would separate a little bit the first term from the second term and not just because I served in the first term and not the second.

Steve Glickman:                 But I really think in the first term, the big focus was on the economic infrastructure of both America and the world. Which as you probably remember was teetering. And even right coming out of the recession, people were extremely nervous. Not just about the US, but Europe was going to collapse. That Italy and Spain and Greece, were going to default. And that meant the end of the EU and a new global recession and we would have all been screwed. And so that sucked up a lot of the bandwidth in the first term all the way through. And the bailout and TARP and the stimulus package, and the auto rescue in Detroit. And I’m pretty proud of the role I think the president played in, not just in America but globally in stabilizing the economy.

Steve Glickman:                 In the second term, I think we could’ve done a lot more. In part, we didn’t have as much political capital as we had in the first term for sure. And we didn’t have congress anymore. And that makes it difficult to do real big meaningful things including things that require for instance, changes to the tax code, which you need an act of Congress. Congress controls really all the spending in the US political structure and they were openly at war with the president and vice versa. So, the White House was really limited to what it could do through executive order, which is a much smaller set of authorities then you can do through law. So I think a lot of bridges had been burned by then, and all that political capital had really been used on creating health reform and creating universal access to healthcare, which I think is part of the problem you’re talking about.

Steve Glickman:                 But this is a problem that we could have focused more in on in the second, could have done more about. It’s also a really longterm problem. So the recession was not a turning point for most of these communities except in degree of distress. Most of these places where it had been distressed for at least 10 years before the recession and probably decades beforehand. Detroit hit its peak in the 1950s where it was one of the wealthiest economies in the country and had been in a downward slide as the US lost manufacturing shares to other world economies. And that’s just the way the economy works. So I do think the White House has some blame and the administration has some blame. But at the end of the day, this is as much an issue about local leadership as it is about federal leadership. And there are certain places now that are just well much better prepared to take advantage of this economy than others.

Steve Glickman:                 And once they got lazy and passive, and decided they were gonna hope and pray for another company or another manufacturing plant to take the place of the last one they lost instead of how do we take advantage of this new tech enabled economy and use our infrastructure of universities, I mean don’t forget, places like Michigan and Ohio and Pennsylvania have had world famous engineering research universities. University of Michigan, Carnegie Mellon, Ohio State, and so you have the raw firepower to take advantage of the new economy. But it requires a local leadership and local vision to get there. And I think too few places had that until the last couple years or so.

Misha Zelinsky:                  That’s really interesting. And I think you’ve touched a little bit on trade and touched a little bit on the effects of job replacement in communities where you’ve seen perhaps a steelworks shut and not be replaced with anything. One of the things I’m very fond of, and we certainly see similar things in Australia. I certainly see that in my role in the Australian Worker’s Union. One of the things I always say is that trade is good, but fundamentally trade destroys and distributes unevenly. And I think we’ve certainly seen it in the US, but I’m curious at Trump has been putting forward a very muscular focus on trade. He sees trade in a binary sense where a trade balance if it’s negative, the US is losing. And if it’s positive, the US is winning, he sees it in a zero sum manner. Just curious how do progressives grapple with this question of trade which can hurt people, and how do you make sure communities aren’t left behind in the process?

Steve Glickman:                 So there’s no doubt that trade, as a lot of people will say, the benefits of trade are dispersed pretty widely and the impact of trade and the challenges with trade tend to be very concentrated. And that’s certainly the case in the US economy. The economies that were most dominant by manufacturing, not necessarily most dominated by trade because the trade rich, trade dependent economies, some of them are booming. And a lot of the places we mentioned like Seattle and Los Angeles and New York, which are big hubs of trade are doing really well. But if you’re a dominant sector and is manufacturing and you don’t have a diversified economy, than the impact of trade can be huge. And one, as the Democratic Party or either party. I think we need to start by doing a better job giving communities the tools that they need to adapt.

Steve Glickman:                 Some of that is capital and how they access capital so they can build new industries. Some of it is how they retrain workers. We have a terrible and a terribly outdated worker retraining system in the US. It requires you to lose your job. It retrains you into sectors that aren’t producing jobs. It’s both inefficient and ineffective for people. And this is really a place where the private sector can and should play a huge role. If you’re not creating a workforce training system where the private sector is at the table to talk about where their hiring needs are and how government can offload some of that training with the guarantee or the commitment that private sector interview and hire people coming out of these programs, until that works better it’s really hard to solve this problem. But this conversation has been one that progressives have been good or even better at talking about for a long time.

Steve Glickman:                 So if you look at the height of progressivism, you’re really talking about the thirties, forties, fifties, sixties, even going into the seventies. So from like FDR through Lyndon Johnson where we had massive policies around retraining, around settling the west. And I think just as importantly and something that the Democratic Party is starting to talk about more around competition and corporate consolidation. So we really have the most consolidated and economy in the US we’ve had since the depression, since the 1920s and thirties where a smaller number of big companies control a bigger part of our economy. And that leads to a lot of this inequality and wage suppression and lack of investment, which we’re all seeing. Because workers and communities are less able to compete. And if you look at where airline hubs have gone from when you’ve gone from having 10 airlines to having four airlines. Or where banks are located. Bank of America shut down 10,000 of their branches over the last 10 years. And community banks are growing at a slower rate than ever, which means small business lending in this country is basically plateaued at a 20 year low.

Steve Glickman:                 So it matters what the private sector is made up of, not just what they do. And if they’re made up of lots more of, many more companies that are growing and more dispersed as opposed to a few really big companies, it makes a big difference in the economy. And so this question around how you create a more competitive economy in the US is really important. And Democrats used to talk about this all the time, and we really stopped talking about it in the last 20 or 30 years.

Misha Zelinsky:                  It’s interesting. It’s interesting, the concept of competition. It’s a bit of an anathema sometimes to those on the progressive side of politics, but competition is inherently good for the economy. It’s also good for consumers, which fundamentally the people that we seek to stand up for which are families, people buying things. And you want to see competition in wages, making sure that wages are going up and competing for labor, but also that you want to see competition in the cost of goods and reducing the cost of living for people. So it is interesting the level of concentration, but also what you’re seeing increasingly is a global phenomenon. We certainly see it here in Australia with many US firms where it’s winner takes all markets. And, one of the things I’m curious actually if your take on this and I think perhaps I could already know your answer. But one of the solutions being advocated is universal basic income. If there’s no jobs and jobs that are being inherently more and more consolidated into mega firms and you’re seeing market’s up ended and people unable to work, that we should have a universal basic income, which is basic principle.

Misha Zelinsky:                  Everyone gets, no matter if you’re a billionaire or dirt poor, everyone gets a certain income and then off you go to try to do best from there. But I think that there are certainly some problems with that idea, but I’m curious about your take on that because I think fundamentally, the better outcome is you want to see a good job. If you lose a good job in a steelworks, a unionized job, it’s well paid that it’s replaced with another good job and it’s not that you’re on your own driving Uber and trying to make ends meet.

Steve Glickman:                 So I dislike almost everything about UBI. One I think it’s an American. We already really have a UBI through our social security system, and it’s just for people who can’t contribute to the economy. People who are disabled or a retired, or for reasons that are no fault of their own no longer working. And then it makes sense to have a massive safety net, one that’s growing with the way the economy’s changing, for people who are no longer contributing. But otherwise our system is premised on people working. And I believe people want to work and want quality jobs where they’re contributing to their economy and being, their wages reflect their contribution.

Misha Zelinsky:                  Well there’s a dignity in work as well, right?

Steve Glickman:                 Of course. But in UBI is like giving up. It’s a form of charity and saying we can’t solve this problem of how we create new businesses and new industries and train people with new skills. So we’re going to pay people, but we’re going to pay them a poverty level wage. And I believe even if we could afford it, which we couldn’t because you gotta think in the US, if you’re paying for 350 million people, but let’s assume half of those are workers, so 150 million workers and you’re paying them $15,000 a year, you’re talking about a program in the trillions of dollars a year. And the US doesn’t have that type of capital. It can’t afford that program. And even if it could afford that program, it would suck away from every other single domestic spending program we had. We’ have a UBI program, and a Pentagon, and social security and Medicare. And that’s all the economy could withstand. The US budget $4 billion dollars a year. You’re talking about this would be something like 40 or 50 percent of our budget.

Steve Glickman:                 So I don’t think it’s either politically or economically viable, which is why I don’t spend too much time thinking about it. But I think conceptually it’s also a broken. And we shouldn’t be giving up. On the Republican Party, I think as they see the economy particularly in the lens of this new republicanism, it’s very focused on how we separate ourselves from immigrants and our trading partners. And I think that’s a big mistake, and it’s particularly a big mistake in the context of immigration.

Steve Glickman:                 Immigrants, there are very few economic thinkers who would tell you that immigration is not a large net positive to any economy. These are people that want to be here, that want at work, that are disproportionately business owners and the creator of high growth businesses. Something like half of our venture backed businesses in the US, 50 percent are backed by immigrants or immigrant co-founders. So they’re a huge part of our economy. But on the democratic side, there’s this theory around the future of work that robots and artificial intelligence are taking over and there’s nothing we can do about it. So let’s just pay everyone, five or 10 or $15,000 a year. And to me that’s just as big of a cop out.

Misha Zelinsky:                  It’s technological determinism, so that we have no control over the technology that we can’t shape it to our way either, right?

Steve Glickman:                 Well first, yes. And there is no evidence of that. Our economic evidence shows a low productive, low wage, low unemployment economy. And if there were tons of robots and artificial intelligence, productivity will be super high. Wages would be higher and there’d be a lot less jobs because robots would be doing it. So that’s not the case right. Now that even if you thought that was the case 10 or 20 or 30 years from now, which I don’t subscribe to, the fatalistic way to your point that we look at this is sad. Because there are lots of things we should try. If we thought robots were going to take over the economy in 30 years, then the solution is let’s not give everyone charity so they’re making a poverty wage. The solution is how do we prepare more American communities and more American workers to take advantage of that technology enabled economy? We need more thinking about that, not more thinking about how we’re going to spend more money to spend our way out of this problem. At least in my view.

Misha Zelinsky:                  I subscribe to that view too. I don’t think the UBI, whilst it’s interesting, I think it’s under the assumption that there’s no work, and I don’t believe there will be no work. So I think it’s actually making sure that the work we have is well paid and people are skilled for it accordingly. But so I’m just curious. You touched on immigration there and the role that immigrants play. And I think any policy person would agree with you, but that’s certainly not the mood in the community globally. You’re seeing it in Europe, you’re seeing it in Australia, you’re seeing it in the United States, suddenly with Trump with his wall. How can progressives articulate a positive view of immigration and not purely on an identity basis, but on an economic basis?

Steve Glickman:                 Well listen. Fear and economic scarcity or the perception of economic scarcity drive bad policy decisions, and they drive anti-immigrant thinking for hundreds and hundreds of years.

Misha Zelinsky:                  This is not new. That’s important.

Steve Glickman:                 No. And I think for a lot of these issues, the question like for instance, the answer to trade is not making a better argument for trade. And the answer for immigration is not making a better argument for immigration. It’s ultimately solving that perception people have of economic scarcity and that they’re in decline. And so these are all first order questions. It starts with if you want to get those issues right, and we may get them wrong for the next four or five or six or seven or eight years. And it’s not because people are in my view, hateful or mean or irrational. It’s because they don’t see any other option. So I think we have to give people other options. We have to convince them that there’s a way they’re going to get skills and there’s gonna be new programs, new cooperation between the public and private sector around how we upscale people.

Steve Glickman:                 I think they have to see that investors are rebuilding a bigger part of this country because they buy the fact that there’s a future in more places than just a handful of cities around the country, and they have to see new businesses start in their backyard so the trend lines aren’t just Kmart and Target, and then came Walmart, and then came Amazon, and out went all the local businesses that thrive and grow in these economies.

Steve Glickman:                 And by the way, the notion that San Francisco and LA, and New York, and DC are better places because everyone’s crammed into them looking for opportunity and they have to pay outrageous amounts to buy condos. It costs over a million dollars to buy a one bedroom condo in San Francisco now, and they’re losing more people than they’re taking in because nobody wants to live there anymore, because it’s unlivable. The fact that that’s a better outcome even for those economies is crazy.

Steve Glickman:                 So this requires dramatic action. The market’s not going to work it out. People are not mobile. We have lower rates of mobility in the US than we’ve ever had before because people don’t have the connections, the skills, the capital they need to be able to move to places that have these industries. The only solution is to create more industries and more businesses in a bigger chunk of the country. And I think there’s plenty of interesting entrepreneurs and you, I think at this point earlier. We know there’s plenty of work because there’s plenty of problems to solve. Work is just a function of solving problems for other people. Whether it’s the problem of how you create stuff in mass or how you grow stuff in mass, or how you provide certain services to people. And most of those jobs you can trade away.

Steve Glickman:                 Our economy like the Australian economy is mostly a services economy. And those services are locally provided. They’re your restaurants and dry cleaners, and they’re your bars and your doctors, much of this stuff you get locally. So a lot of the economy is not going to change dramatically. We’re really talking about the parts of the economy that are globally connected, and if you just focus in on that part of the problem, there are solutions there. At least in the US, we have a huge infrastructure around our capital markets and our labor markets and it’s just working really efficiently, and we as a society and the government can fix that if we wanted to.

Misha Zelinsky:                  That’s a really interesting point. So earlier on, you touched on this concept of unamerican. I think as an Australian, I certainly understand what you mean by that and I think many people in the world would. What’s a lot of people asking at the moment is what is it that America stands for? And I know that’s a broad question, but we talked a little bit about immigration and Trump’s take on that. And, we talked a little bit about trade. The US, for many, many decades now since certainly since World War II is been the guarantor and the prorector and advocate of an open global system. Be it of immigration, be it of trade and has also added support that with its institutions. Now in recent times, the US is turning in on itself. So I’m curious about how does the US with these challenges that it has around inequality, around the negatives around trade and around the negatives around immigration and the political impacts of that is happening, and the political part is detecting that? But at the same time, the rest of the world, countries like Australia, other western liberal democracies are looking to the us to say how is it that the US can help underpin the challenges we’re seeing from China, from Russia, from other models. From non-US models. And how can the US juggle both its challenges at home but also help us friends abroad?

Steve Glickman:                 Well, listen. There’s no doubt we’re at an unprecedented point in our politics where leadership that our friends around the world who are used to seeing from the US is lacking, at least in terms of our role in the global economic stage. With that being said, nothing in my view so far has fundamentally changed. We’re still a part of an active participant in the WTO, the World Trade Organization. We still have, with some very small exceptions given the size of our economy, a very open market both for investment and portrayed. We still have a immigrant rich country, that takes in large numbers of people every year and it brings a large number of tourists here, and large number of people are educated around the world in US universities. So I think the tone and the rhetoric is certainly off in terms of where the US is traditionally lead.

Steve Glickman:                 I’m not sure anything has fundamentally changed yet in terms of how the American economy and the American immigration system fundamentally works. Now of course, some of it is starting to change. I think it’s an open question of whether Congress pushes back against that. Our system is, the president’s got a lot of authority, particularly around foreign policy issues, but very little unilateral authority around core economic issues. And that includes trade, taxes, and even immigration where the president’s powers are limited. So congress ultimately has to come along, and I think what you’re not seeing is an acceptance from either party, including the Republican Party that their norms have fundamentally changed around trade or even that our national consensus has changed around immigration yet. I wish we were letting in far more immigrants than we are now, and I wish we had not pulled out of the transpacific partnership, which I think would have put us on a much stronger footing to be closer allied to Australia and Japan, and Korea, and other countries in the region in dealing with China. That was a big I think self inflicted wound.

Misha Zelinsky:                  Let’s talk about TPP. Let’s just talk about TPP.

Steve Glickman:                 But I’m not sure how much has fundamentally changed in the US beyond that.

Misha Zelinsky:                  Yeah, because I think TPP is interesting because you talked about trade. And you said the US president has limited powers. But the TPP, I think there are a lot of problems with that deal. But nevertheless, the TPP was seen as the US as part of Obama’s pivot into Asia is about setting the rules of the game, setting the rules of the road. And the US 2016 election pulled, both parties away. I mean the Republicans got pulled away first through trump’s challenge internally, but then Hillary Clinton was also pulled to the left by a firstly Bernie sanders and then Trump himself who she was effectively crucified over NAFTA and the impact that NAFTA had rightly or wrongly at least in a perception sense on the communities we talked about earlier. So that’s I think one real world example, and China are filling I suppose the vacuum around TPP with their one belt, one road initiative, certainly in the Asian region. So I think there’s certainly already observable impacts from new us retreat from an open liberal system.

Steve Glickman:                 Yes. I mean you’re totally right. I wouldn’t buy too heavily into any of the campaign rhetoric, at least from Hillary Clinton’s camp around TPP. She was one of the architects of TPP when she was the secretary of state in the Obama administration. And if you look back at the history of trade agreements, it’s typically been democratic presidents who have done the heavy lifting on trade despite the stereotypes of the party. Bill Clinton got NAFTA done. I’m, Barack Obama did most of the heavy lifting around the TPP. Kennedy was really the initiator of the first big trade expansion in US history, and Roosevelt and Truman were big supporters of how you use economic diplomacy to solve big means here. I think what we got wrong in the TPP debate was that it’s fundamentally an economic agreement. It’s fundamentally a political agreement. I think the biggest, most important part about TPP was securing our place and our alliance within Asia and dealing with any number of issues that balanced powers in East Asia that would give us better footing from everything from North Korea to the South China Sea, to engaging with Russia and elsewhere.

Steve Glickman:                 And that should’ve been the debate we were really having because that’s where it has the biggest impact. It would have honestly marginal economic impact even though these are really big markets because we had agreements with most of these countries. The only one that we didn’t have a meaningful agreement with was Japan. And that’s where a lot of the tussling was at the end and it was around really small issues. Most of the tussling and these agreements, for instance, TPP happening around Ag. And the AG sector in the US is .5 percent of our GDP. 99.5 percent is something else. Manufacturing, services, natural resources. This is a really small part of the US economy and that’s not really what the agreement was about. It was about a new political order or at least preserving a political balance in Asia. And unfortunately we’re losing some of that.

Steve Glickman:                 What’s interesting is that the president’s in Singapore right now trying to create a new political packed with the Koreas, and we’ll see if that works and we’ll see whether his shoot from the hip model is effective. I’m not ruling it out. It’s not the only way to get there. But I do think when we take away the tools from our tool box, which trade is a big one of those tools, we hurt our standing around the world and thus hurt US security and foreign policy interests.

Misha Zelinsky:                  So you talked about China and the South China Sea. One of the things that Australia focuses a lot on is the role of China and trying to grapple with the economic underpinning relationship that we have with the Chinese, and also the challenge that China brings to the liberal world order, but also the challenges that it brings to our launches with the United States and other like minded countries, and they’ve been very city in the South China Sea.

Misha Zelinsky:                  So there is a lot of nervousness around the US’s continued role as a strategic guarantor of freedom of navigation in South China Sea. But also, do you see that the US is focused enough on the challenge that China has brought? The US tends to be at its best when it’s challenged. Much like in the Cold War, but also with the rise of Japan. And do you see that it might actually bring the best out of the US in terms of raising its own standards, but also reaching out to friends around the world?

Steve Glickman:                 Well, China is the most complicated national security foreign policy issue the US has to deal with. And we have a really complex, multifaceted conversation with China that’s ongoing and has been ongoing for years. However, I think 2018 is not the 1940s and 50s. I think that across the world, countries that have long relied on the US as a guarantor have to start taking care of their own backyard. And that’s both Europe and Asia. I think the Europeans have to step up and play a bigger role in world affairs. They’ve got the resources, they have the military technology and the military powers to do it. I think it’s the same thing in Asia. I think that Japan’s, the current construct that Japan is going to be taken care of by the US is one that’s been outdated over the course of 70 years, and that everyone needs to play a role in keeping up their own backyard.

Steve Glickman:                 The US is not the sole world power. It’s undoubtedly still be richest and most powerful country in the world, but that margin has decreased across a number of different factors. And that means other countries have to step up. And the US, listen. I have no doubt that over even the medium term, the US will know its allies from its friends and be there for its allies when push comes to shove. But it’s a lot easier if our allies have leverage in their own regions. I think frankly, not to preach to the choir here, but Australia has done a really good job of this. Australia’s emerged as a powerful force in Asia. It’s a tiny country, because it has stepped up, and stepped up in a lot places have where it’s had the US back where it didn’t really need to, in I think asserting its roll and influence. I’d like to see Japan step up in a similar way and I’d like to see Germany step up in a similar way in Europe. These are the two richest country in the world aside from the US and China, and they need to step up.

Misha Zelinsky:                  Yeah, I think that’s an interesting point. And I know the Japanese certainly are looking at amending their constitution. But I do think even from a leveraging resources standpoint, it’s important that every country unifies. Because people often look at it as though it’s a United States versus China, but when you actually look at it, if you add the liberal democracies. You add Europe, you add the US, you add the UK, now Australia and other countries. You put those together, the GDP between those countries is extraordinarily huge. And you can certainly leverage that in a number of strategic ways, further the projection of a broader liberal order.

Misha Zelinsky:                  But I just want to take it back to domestic politics. You are, as I said earlier, a senior figure in the Democratic Party. And you’re also based in Chicago, which is endlessly fascinating. From a political standpoint, it’s obviously the political home of Barack Obama. I’m curious, you didn’t grow up there, but you’re now in there. So maybe you could give us some insights as to how you ended up in Chicago from a political standpoint, and we’ll talk a little bit about the midterms as well.

Steve Glickman:                 So two small corrections. One, very few people would describe me as a senior figure in the Democratic Party.

Misha Zelinsky:                  I’m being generous mate.

Steve Glickman:                 And two, I don’t live in Chicago. I live in Washington DC.

Misha Zelinsky:                  Oh yes you do. But you are Chicago Bears, Cubs fan?

Steve Glickman:                 I do. My dad and my grand father grew up in Chicago, so spent a lot of time there growing up and a big Chicago cubs fans.

Misha Zelinsky:                  Someone needs to do better research for me.

Steve Glickman:                 No, I chalk it up to the time zone change. That’s probably what’s contributing to this.

Misha Zelinsky:                  That’s right. So your family is from Chicago. That’s right, isn’t it? And that is a very democratic political city.

Steve Glickman:                 Yeah, although every city is a Democratic city these days for the most part. But yeah, there are these very storied democratic roots in the, in the city of Chicago.

Steve Glickman:                 Listen, I think that there’s this, what’s I think interesting to me now is there’s been this incredible comeback story of the role of cities as almost replacements from actors on the federal level. There’s lots of ways you’re seeing this in ways that are kind of surprising, if you look at climate change and the pact Eric Garcetti, the mayor of Los Angeles has pulled together by getting a large contingency of mayors to subscribe to certain climate change goals. Even with us pulling out of the Paris Accords. Or whether it’s the role cities are playing in creating new economic future for their citizens without relying on the federal government to step up and do anything dramatic. The most interesting I think politics right now are city level politics. And some of these cities, their economies are so large, whether it’s LA, New York, Chicago, and elsewhere. That they rival many countries around the world, so they’re starting to pursue their own trade missions, and starting to pursue their own commercial diplomacy around the world.

Steve Glickman:                 And so I think those are really fascinating trends of the rise of cities around the world, and I wonder whether they’ll start to displace the role of federal governments everywhere when there’s more interesting things happening in the city level than on a national level.

Misha Zelinsky:                  And so just coming up to the midterms and a lot of attention on the elections. A lot going on. It will be very important, at least to Trump’s presidency, whether or not the Democrats can secure either of the houses. How do you see that probably playing out?

Steve Glickman:                 So I think as is typical in lots of midterm elections, the opposition party does really well. And I expect Democrats in 2018 certainly in the house. There’s a much more challenging playing field in the Senate in 2018 because Democrats are defending so many seats in the Senate. But I expect us to do very well in the house. I think Democrats will take over leadership of the house, and I think there’s a lot of signals you’re getting from existing members of Congress, including in the Republican Party where you see a number of senior retirements among Republicans in the house. Which is a pretty good signal that they don’t have a strong feeling they’re going to hold onto power next year. Now with that being said, being in control of one house of Congress only gives you so much when the presidency is the other party and the Senate is the other party, which I think is like most likely to be the case. Although the Democrats have a fighting shot to take over the Senate. We’re only down two seats. 49 seats are held by Democrats in the Senate and 51 are held by Republicans.

Steve Glickman:                 But it will make a difference in at least slowing down the agenda that President Trump has in the White House because he’ll be forced to work with Democrats. I think it might be a very interesting paradigm though, because I think President Trump has shown that he’s willing to work with Democrats and Republicans when the circumstances are right. And so I wonder if he’s going to have some issues he can work on with a democratic house.

Steve Glickman:                 I think the other big looming question is whether a democratic house moves forward to impeach the president, which they can do with-

Misha Zelinsky:                  I’m curious to ask you about that because you’re a former trial attorney at the Department of Justice, so it’d be remiss of me not to ask you on the Trump Russia investigation, how you see that playing out.

Steve Glickman:                 Yeah. And there’s also an investigator for congress. I investigated the wars in Iraq and Afghanistan. And so a sense for how that process works. So all democrats would need is a majority vote in the house to impeach the president. And they should I think have the numbers to do that if everyone voted that way, I’m not sure everyone would. I think right now, I think the grounds on which to impeach the president are pretty late. I think that there would be some unintended consequences of this creating some sympathy for the White House and a distraction for an agenda the Democrats may want to start to lay out going into the 2020 presidential election. And I don’t think it’s likely to result in the president being removed from office because Democrats would need two thirds of the Senate, which is likely to be controlled by Republican to be pretty close to 50/50.

Steve Glickman:                 And so they would need a number of Republican votes. Unless there’s a smoking gun that comes out of the Bob Mueller investigation of the Trump campaign, and their connections with Russia which at least I’ve not seen or heard yet. I don’t think that’s very likely to be successful. And I’m not even sure whether that vote will be taken in the house because it comes with a lot of political risk. So I think the president is likely to serve out his term and I think there’s likely to be a Democrat who’s speaker of the house. And that brings us to 2020, which I image you’re curious about as well.

Misha Zelinsky:                  Yeah you’re well ahead of me mate. You’re just naturally guiding yourself to the questions. But so 2020, you’ve talked a lot about I think a bit of a different democratic agenda for certainly in respect to the campaign that the Democrats ran in 2016. So I’d be curious to see what you think are some of the lead candidates are to take on Trump in 2020 in the assumption that he’s there, and then who you might favor?

Steve Glickman:                 So I’ll answer both those questions maybe a little differently than how you asked them. One, let me just talk about the context now. So if you ask voters, and I’ve heard this pretty recently from very experienced public opinion researchers who have looked at how voters view the Democratic Party and the Republican Party, and the president. I think you get some surprising results. One, the president’s a lot more popular than people give him credit for. And in part, I think it’s a factor of the fact that the economy is still really strong, and the president’s viewed as very strong on the economy. And he’s viewed as someone who a while his unfavorability rates are still very high and they had been all the way through the campaign, even when he won. People view him as pretty strong, as someone willing to stand up to what he thinks is right. And someone who’s good at business and good at the economy.

Steve Glickman:                 And that still holds true. And if you ask voters what Republicans stand for, it’s pretty clear to them they stand for less government spending, lower taxes, and for big business. Now as a Democrat, I think that’s a very vulnerable set of associations to have with voters, because people like a lot of the things government provide. And they’re I think skeptical of large businesses, but you have to give them an alternative vision. And when you ask voters what they think about Democrats and their economic vision, there’s a series of like 10 question marks in that answer. No one has any idea.

Steve Glickman:                 I was close with Hillary Clinton’s economic team when she was running her campaign for president. And I could not tell you what her priorities were, and I can easily tell you what Trump’s priorities were. In fact, he stayed pretty focused on them. I may disagree with a number of them, but you know what they are. And so Democrats first and foremost, they need a positive vision for the economy, which is the only game in town. People don’t vote in foreign policy issues, and they don’t vote on social issues, at least on a federal level. They really vote on the academy, first and foremost. It’s issues like one through five for when you ask people what’s most important to them, it relates to the economy. It’s healthcare, it’s housing, it’s a good job. It’s my community, etc. Wages. So we need to give them a reason to vote for democrats. We really need a new economic world view and vision and philosophy. And ultimately that boils down to a new generational thinking of this.

Steve Glickman:                 There’s this very outdated notion in I think both democratic and republican circles that we’re still having a debate that’s left versus right or left versus center. When really we’re having the most important debate is one that’s new versus old. It’s a new generation where you’d see a lot of agreement around certain issues among new republicans in new democrats. A new generation of them, let’s say under 45. And the old views of what the parties stands for, and that I think is the most important debate in the country. Now, democrats are going to run 20 candidates for president. And lots of them are impressive and maybe might be very good presidents. I’d give you some who I think are going to be front runners.

Steve Glickman:                 I think you’ll see Cory Booker, the senator from New Jersey do well. I think you’ll see Terry McAuliffe, the former governor from Virginia do really well. I think you’ll see Jason Kander, a young rising star from Missouri who ran for senate and has now become a national figure. I think you’ll see him do very well. But I think all of them are going to have a really tough time beating the president. It’s very hard to beat incumbent presidents. It’s very hard to beat incumbent presidents in a really good economy. It’s really hard to be incumbent presidents in a good economy who’s maintained a pretty high level of popularity in his own party. And he’s extremely popular in republican circles. The notion that he’s vulnerable is a total farce. His approval rating in the republican party is 80 percent or higher. This is like George W. Bush numbers after 9/11. He doesn’t have to win by much to win. So I think you need a democrat that’s got a real affirmative vision that people want. It’s got to be more than being anti-Trump. And frankly, I have not heard much of that breakthrough in the party so far and it makes me very nervous the democrats are not prepared Well for 2020.

Misha Zelinsky:                  Well that’s a very sobering analysis and we’ll leave it on that note on the serious. All our guests are asked, so I know you’ve been to Australia and this is about making, the show’s called Diplomates. So it’s about making some mateship across the ocean. So just curious about having visited Australia, who are the three Australians that you would invite to a barbecue, and obviously you’d invite me. So I’d be there anyway. So I’d be looking for you to think of three others mate.

Steve Glickman:                 Yeah. Well I need someone to drink all the beer. So that’d be you. So I’m going to stick in the political and economics lens around three Australians I’d like to have dinner with. So let’s start with politics. We’re bipartisan, so I’ll take a bipartisan approach to this. So on the left, definitely Julian Assange, I’d want to have him at the table. When I think about Australia-

Misha Zelinsky:                  You might have to get him in by Skype mate. I don’t know whether or not he’s going to be allowed out of the embassy, but …

Steve Glickman:                 You didn’t say it had to be practical. You just said who I want. If I’m thinking about someone who to me represents Australia, it’s Julian Assange on the left. On the right, the most famous Australian, most consequential Australia I can think of is Rupert Murdoch. So he’d be the Australia and I’d have from the right. I’m sure you’re loving these choices. You’ll like choice number three.

Steve Glickman:                 So choice number three would be an economics focused choice. And the person I have in mind gave probably the most compelling analysis of what happened in the economic crisis of anyone I’ve seen, American or Australia. And do you know who that would be? She’s from a very famous movie you may know.

Misha Zelinsky:                  I ask the questions on this thing mate, so I have absolutely no idea. But you’ve got me on tender hooks right now with Julian Assange and that Rupert Murdoch.

Steve Glickman:                 So number three in this trio would be Margot Robbie, because there’s no one I’d rather listen to on the economy then than Margot Robbie. I think she, Julian, and Rupert all in one room would be a tremendous Instagram photo at least.

Misha Zelinsky:                  Well, Steve Glickman, Margot Robbie, Rupert Murdoch, and Julian Assange would make quite a group. I don’t know whether or not either Rupert or Julian would want me there, but I’d certainly be happy to get along and at least drink couple of those beers you talked about. Steve, thanks so much for your time. I think it’s been a fantastic chat, a lot of great insights and good luck with everything. Hopefully if we don’t see on the ticket in 2020, hopefully see 2024, 2028 Glickman. I’ll be there handing out for you mate.

Steve Glickman:                 Well, I appreciaTe that. That will never happen, but I do appreciate you having me on the show anyhow and love talking with you. Good on your Misha.

Misha Zelinsky:                  Never say never mate. Thanks a lot.

Steve Glickman:                 Talk to you, bye.