00:00 Neil Ferguson There are two scenarios. 00:01 Scenario one, Ukraine loses. 00:03 Finally, they just can't sustain defense anymore. 00:06 Or there's a compromise peace that stops the war and gives Ukraine some breathing space. 00:12 There is no third possibility. 00:14 Scott Galloway Press pause. 00:15 The third possibility, we armed them with Tomahawk missiles and the requisite infrastructure and technology to start taking out more of Russia's oil infrastructure, which results in a compromise peace which isn't as onerous or as one-sided as the current envisioned compromise peace. 00:29 Neil Ferguson that greatly understates how strong the Russian war economy remains. 00:36 Because, because, just let me finish, Scott. 00:43 Scott Galloway We're here with three or four-time guests, one of my favorite guests, and also I'm going to go out on a limb here and call you a friend. 00:51 Yeah. 00:53 Historian, public intellectual, and also people who know this about you, you're actually a pretty savvy entrepreneur. 00:58 Anyways, Neil Ferguson, always good to see you. 01:00 Great to be with you, Scott. 01:02 So we're here at Davos at the annual meeting. 01:05 By the way, how many, I bet you've been to like 40 Davoses. 01:08 Do you come here every year? 01:09 Not every year. 01:10 I've rather lost count, but it feels like 20 years on and off. 01:16 I would think you're very much an intellectual support animal for the Davos crowd. 01:21 So I'll just simply put, you obviously just saw President Trump's talk. 01:28 Attack that from any angle you want or compliment it from any angle. 01:32 What are your observations around what he said here and how you think the mostly European audience is reacting to it and kind of set the table for us around this new world order or this new world vision, if you will? 01:47 Neil Ferguson Well, President Trump, as you know, is extremely good at leading the news, setting the agenda, and being the number one topic of conversation. 01:56 And he's done that extremely well this year by raising the issue of his claim on Greenland, which is carefully calculated as an issue to cause the heads of European leaders to explode, not to mention Canadian leaders. 02:11 So if the object of the exercise was to dominate the conversation 02:16 at the world economic forum mission accomplished uh so that's i think the obvious uh thing to say first why so why would he do that i mean there are a couple of reasons most of which i think uh are missed in the conversation here one is to distract us from something else this is something that president trump has a record of doing 02:37 We weren't talking about Iran immediately before the bombing of Fordow last June. 02:43 And I think most people here have completely forgotten that the Iranian regime has just killed between 10,000 and 15,000 of its own people. 02:51 That President Trump threatened to take action if they did that. 02:55 and that the USS Lincoln Aircraft Carrier Group is not far away from the Persian Gulf. 03:00 So one distinctly obvious point, in my view, is that this is Maskirovka, as the Russians say, is a huge distraction operation, which has ensured that the Europeans don't spend the week saying, please de-escalate in the Middle East, which is what they would be saying if we were still talking about Iran. 03:16 So that's point number two. 03:18 And the third point I would make is that, as usual, 03:22 President Trump delivers the key message very, very carefully wrapped in so much riffing and joshing and trolling that you almost miss it. 03:35 But the message was, oh, I'm not going to take military action over Greenland. 03:39 Don't be silly. 03:40 That was the message. 03:41 The markets picked it up because the markets were a little bit unhappy yesterday about this escalation in US-Europe tensions. 03:47 And I think we now see... 03:49 Scott Galloway as usual president trump loves the brink he likes to go up to the brink and he saw how the markets reacted which was pretty negatively and as usual back we go away from the brink so i think a lot of people would say would agree with your distraction thesis but would say it's a distraction from the epstein files not from an impending attack on iran do you believe that in fact it's a bit of a head fake and that u.s and there's some evidence to support this the u.s military forces are coordinating and choreographing around a potential 04:18 military strike. 04:20 You understand geopolitics as well as anyone. 04:23 Where would you put the odds that there is something resembling some sort of a military strike impending on Iran? 04:31 Certainly north of 40%. 04:34 Neil Ferguson I mean, I think that the president made a very clear threat to the Iranian regime. 04:42 I think the Iranian regime has, by the standards of totalitarian regimes, been astonishingly brutal towards its own people. 04:50 It's hard to think of a single day of repression in any context in which more than 10,000 people have been murdered. 05:00 But I also think that... 05:02 President Trump has a strategic concept to an extent that people underestimate here. 05:08 We've already seen that in Venezuela. 05:10 Venezuela was part of the Axis sphere of influence. 05:13 By the Axis, I mean China, Russia, Iran, North Korea, the bad guys, the authoritarians who've been working together very overtly, not only in Ukraine, but elsewhere. 05:23 And by decapitating the Venezuelan regime, which is only a couple of weeks ago, 05:28 President Trump sends a very clear signal that he is capable of deploying lethal force in a way that nobody else is. 05:36 The Chinese couldn't do this. 05:38 Scott Galloway The Russians certainly couldn't do this. 05:39 Well, Putin's tried for 35 months and Trump did it in 35 minutes. 05:45 Neil Ferguson So Putin is approaching year five of a war against Ukraine that he thought would be over in a matter of days. 05:53 The Chinese love to do demonstrations of their sea and air power in and around Taiwan, but could they actually fight, you know, a war? 06:01 Well, none of their commanding officers has ever seen combat, whereas the United States has a great deal of combat experience. 06:09 So I think part of what's going on here is a global reassertion of American power that is ultimately directed at Russia and China, 06:20 The unfinished business is still the negotiation of an end to the war in Ukraine. 06:24 That, as President Trump said today, has proved much harder than he expected. 06:28 He acknowledges that. 06:29 But I don't think we should lose sight of that. 06:31 I'd far rather be talking about Ukraine than Greenland. 06:34 And I did manage to at least spend some of the time at the Ukraine house today talking about what's happening there, which we should come back to. 06:40 But then ultimately, the big problem is China. 06:43 And China is the real adversary in today's geopolitical moment. 06:48 You used the phrase New World Order. 06:51 It's not a phrase I've ever much liked since I think George H.W. 06:55 Bush gave it currency. 06:57 What we're seeing is actually a familiar Old World Order of Cold War. 07:02 We are in Cold War II. 07:04 China has taken the place that the Soviet Union used to occupy, and that's the dominant strategic reality. 07:09 And I don't think everybody here at Davos fully understands that even yet. 07:15 And so there's a tendency here to misread Trump. 07:19 They've been doing that for a decade. 07:21 But I think also to misread the world and to think it's all about them. 07:25 But it really isn't all about them. 07:27 It's not about Europe. 07:28 except insofar as Europe can't seem to help Ukraine effectively without the United States. 07:34 And it's certainly not all about Denmark and Greenland. 07:37 I think that is a very conscious distraction that President Trump has chosen. 07:43 And there's an air, I think, of... 07:45 of almost like-heartedness. 07:48 When you talk to members of the US delegation here, they know that they're driving the Europeans nuts. 07:55 And they're quite enjoying it, because they're the first American administration in my lifetime that has said out loud what many others have felt and said privately about the Europeans, that they're impossible. 08:06 They're entitled, they're always striking moral attitudes, this international law, that international law. 08:12 They don't pay their share of the costs 08:14 european security and i think what's fascinating is to hear an american administration saying out loud what their predecessors used to say privately back in washington about dealing with the europeans so there's some overlap here and then some things we we would disagree on so i think it's hard to argue that what 08:33 Scott Galloway I would argue the greatest performing organization in history is the U.S. military. 08:37 And what happened in Venezuela is a flex. 08:39 I can't imagine it hasn't sent chills down the spine of every world leader. 08:43 When Madeleine Albright, Secretary Albright said, our reach as far in our memory as long has never been more apparent, right? 08:50 The issue is in kind of a double-barreled question here. 08:54 our adventures or misadventures overseas are like a Bond film. 08:58 They always start great. 08:59 Bond films always nail the opening. 09:00 And then they go on to be bad, mediocre, or amazing films. 09:04 And oftentimes, we start off, we nail the opening, and then things come off the rails. 09:10 And already in Venezuela, we're talking about taking their oil. 09:13 It hasn't been regime changed. 09:14 Same regime is there. 09:16 And it doesn't appear there'd be a quote-unquote plan. 09:18 First barrel of the question. 09:19 Second, 09:21 My sense is that you see this as sort of like, 09:25 bumping up against the EU, it's all, I wouldn't call it good fun, but shouldn't be taken seriously, but not literally, or literally not seriously. 09:35 Whereas I see that our power has come from not being 25% of the world's GDP, but effectively being the leaders of an alliance that was 60 or 70%, and that we're rupturing that alliance, and ultimately we're gonna be much weaker and unable to promote Western values around the world. 09:50 Whereas my sense is you don't see the same level of rupture 09:53 that I see. 09:54 So let's start with Venezuela. 09:56 I'm more worried about the rest of the Bond film. 09:59 Tell me what you think the prospects are of a Venezuela post this unbelievable military operation. 10:05 And two, I would argue that this rupture or the spring of alliances is long term, very unhealthy for America and the West. 10:14 Neil Ferguson Neil. 10:15 Well, I think this was never intended in Venezuela to be regime change in the sense that there was regime change in Iraq in 2003. 10:26 And President Trump very deliberately said the other day, we aren't going to make the mistake they made then of entirely dismantling the regime and then seeing the country descend into chaos, a chaos that the US owned. 10:40 This is regime alteration. 10:42 So it's an alteration. 10:44 Obviously, it's meet the new boss, more or less the same as the old boss, because it's in effect Maduro's deputy. 10:51 But the alteration is she doesn't report to Xi Jinping, Vladimir Putin, and the Cubans anymore. 10:57 she reports to President Trump and she better report the right things or she too could have a one-way ticket to a New York courthouse. 11:06 So I think that's an important change, but it's not to be confused with regime change where the Americans say, and now you're going to hold elections. 11:14 And people we really like are going to win them. 11:16 And then we have a stock market we'd like to liberalize, et cetera. 11:19 I mean, those days are long gone. 11:20 And I think the Trump administration rather prides itself on not having an idealistic vision, but be entirely realistic. 11:29 Stephen Miller was boasting about this the other day. 11:31 We're the ultimate realists. 11:33 And insofar as it takes Venezuela out of the Chinese camp and makes it essentially part of the Western sphere of American influence, that is an important alteration. 11:44 What happens next? 11:45 Well, I think the issue of the oil is mainly about denying it to China, because part of the way that the world has worked lately is that 11:52 the sanctions get imposed on bad actors and the chinese essentially evade the sanctions and then get the oil at a discount they're doing this with the russians they've done it with the iranians for years and i think part of the game here is to end that uh so it's not a meaningless change that's happened it's disappointing uh if like my friend ricardo husband like all my venezuelan friends pretty much you you really wanted to see the chavistas gone and the opposition the democratic opposition in power 12:19 We may get there, but I think it was never going to happen in a hurry after the bad experiences of Iraq. 12:26 Could Iraq be the wrong analogy? 12:28 Yeah, not perfect. 12:29 So what else could be said? 12:30 When Trump's national security strategy was published in November, was it? 12:36 Or was it early December? 12:38 Everybody was very preoccupied with what it said about Europe. 12:42 I said, that's not the interesting thing. 12:44 The interesting thing is the Trump corollary. 12:46 Because the Trump corollary was this allusion to the Roosevelt corollary of 1904, Theodore Roosevelt, I should say. 12:54 which said, not only is the Monroe Doctrine true, that Europeans can't interfere in the Western Hemisphere and Latin America and the Caribbean, but also we, the United States, reserve the rise to change governments we don't like in this part of the world. 13:09 So we're back to that world. 13:12 And to go to your movie analogy, the movies back then never turned out that well. 13:19 The United States intervened in, let's see, Haiti, Nicaragua, Cuba, Mexico, I'm sure I'm missing Dominican Republic, and it, you know, 13:31 often ended up with, well, he may be a son of a bitch, but he's our son of a bitch, or it ended up with, ah, the revolution, think Cuba, and then you're really looking at a mess. 13:41 Can that be the story here? 13:42 I think that's the downside risk for the Trump administration, that if they repeat the history of American interventions post 1904, then you either end up having a nasty regime that you kind of own, 13:57 or you end up with another revolution against it. 13:59 I think it'll be hard to avoid that because Venezuela has been very deeply and seriously damaged by the Chavistas. 14:06 It will take a while to repair if indeed it can be repaired. 14:10 part two look the standard view in this part of the world is alliances have been absolutely crucial uh the reason the united states won the cold war was its alliances and many american secretaries of state have have said this it's almost a standard form for administrations up until this one 14:33 And what distinguished President Trump in both his first and second term is his disdain for allies and his view that they're essentially on the take, that they take advantage of the United States. 14:46 And he set out to change that. 14:48 Now, before you say this is terrible and crazy and, you know, we all should prepare for the end of civilization, 14:55 Bear in mind that for 50 years, American presidents have said to the Europeans, hey, you know what? 15:00 You guys really don't pay like enough considering that you're as rich as we are pretty much. 15:06 Why is it that we bear 60 or more percent of the cost of NATO? 15:10 The first president to get the Europeans to act, to commit to a significant increase in their defense spending is President Trump. 15:19 And that commitment that happened last year, I think was important, but 15:24 it hasn't really translated into much meaningful rearmament so far even in germany which has certainly voted the means they've passed very significant fiscal measures but rearmament is going at a snail's pace and certainly not fast enough to meaningfully alter the situation in ukraine so i think part of what we're seeing here is more pressure on the europeans 15:49 to make them think, gee, the Americans might really check out a NATO. 15:52 They might really do that. 15:54 We really need to get serious. 15:56 Now, I don't think that President Trump will one day announce, I'm done with NATO, or for that matter, go to war with Denmark. 16:04 This is all classic Trump bluff. 16:06 The goal is to force the Europeans to take seriously their own rhetoric. 16:11 Scott, for the last 10 years, I've heard European leaders here and elsewhere talk about strategic autonomy, and how important it is that Europe should become a real superpower. 16:22 But it was all talk. 16:23 Macron was especially good at giving these speeches, but did the French defense spending meaningfully rise? 16:29 No. 16:30 So I think part of what we're seeing here is a deliberate and conscious effort to provoke the Europeans into getting real about defense spending and rearmament and really taking ownership of the crisis in Eastern Europe that began when Russia invaded or fully invaded Ukraine. 16:48 So I'm not so sure that the goal here is to dismantle the alliances any more than it is to dismantle the alliances that the US has in Asia with Japan or with South Korea. 16:59 Those countries, of course, didn't like having tariffs imposed on them and it made them very nervous. 17:06 But it's not like the US is about to tear up its defense alliances in Asia, especially when China poses an obvious threat to those countries. 17:18 The truth is that America's allies don't have a better option. 17:23 Mark Carney may think that he can go to China and make nice with Xi Jinping, and this will somehow impress Donald Trump. 17:31 But I don't think it does, because is Canada really going to join the Chinese Greater East Asian Co-Prosperity Zone? 17:40 What would that actually imply? 17:41 Would it really be in Canada's interests to have Chinese Communist Party surveillance of their tech stack? 17:50 I'm thinking no. 17:52 So the truth is the United States can really treat its allies in an almost abusive way, knowing that they don't have anywhere else to go. 18:00 And that in the final analysis, if it makes them step up and make a bigger effort, particularly a bigger military effort, then it's probably worth trolling them at Davos for a week. 18:12 We'll be right back. 18:17 Scott Galloway Support for the show comes from Built Rewards. 18:20 These days, you can earn loyalty points on just about anything you buy. 18:23 But until now, you couldn't earn points on what, for many people, is the biggest monthly expense, rent. 18:29 Built is a loyalty program for renters that rewards you monthly with points and exclusive benefits in your neighborhood. 18:34 With Built, every rent payment earns you points that can be used towards flights, hotels, Lyft rides, amazon.com purchases, and so much more. 18:42 And starting in February, Build members can earn points on mortgage payments for the first time. 18:47 Soon, you'll be able to get rewarded wherever you live. 18:49 Plus, using Build unlocks exclusive benefits with more than 45,000 restaurants, fitness studios, pharmacies, and other neighborhood partners. 18:57 You can redeem Build points for Build home delivery services gift cards at over a 19:01 120 brands, and even student loan balances. 19:05 Join the loyalty program for renters at joinbuilt.com slash prop G. 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Make sure to use our URL so they know we sent you. 19:21 Support for the show comes from boot.dev. 19:23 So you want to learn code? 19:24 The good news is that there are endless tutorials and classes that'll teach you. 19:27 The bad news is that a lot of them can be pretty boring. 19:30 And when you're bored, chances are you're not going to retain the information being thrown at you. 19:34 Boot.dev teaches you to code through gameplay, quite literally. 19:38 It's an actual game, and Boots is a bear wizard and your personal AI tutor who guides you through the training grounds, a place where you can practice your coding skills 19:46 and complete challenges before you forge ahead in your coursework. 19:50 Boot.dev is free to read and watch. 19:52 And if you decide to upgrade to a paid plan, you'll unlock interactive features, including hands-on coding, AI assistance, progress tracking, and game mechanics. 20:00 Earn XP, levels, achievements, complete quests, and fight bosses while 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research publications, and it comes in packs because you can't fit the amount of nutrients Gruenz does into a single gummy, like six grams of prebiotic fiber. 21:08 That's like eating two cups of broccoli, but in one tasty little snack pack. 21:12 Kick your new year off right and save up to 52% off with code PROPG at Gruenz.co. 21:18 That's code PROPG at G-R-U-N-S dot co. 21:30 I think people from both sides of the aisle would acknowledge the point that the EU and NATO, or as it relates to NATO, have been unfairly free-riding off the largesse of US military spending. 21:42 Where I think, where we part company is, I actually thought Mark Carney's talk yesterday was the most powerful. 21:50 And what I see is Canada 21:52 who was basically 75% of their exports are coming to the US. 21:58 And I feel like in so many words he said from that great movie, Animal House, let's be honest, we fucked up, we trusted you. 22:07 And I'm not as optimistic, Neil, that these other great economies don't have options outside of the US. 22:13 And what I actively see is a lot of, 22:15 big economies purposefully and deliberately and maybe permanently, or at least for a while, reconfiguring their supply chain and their economic activity around and away from the U.S. And while China, who I think I agree with you, could accurately be described as our adversary, 22:35 While their imports, the percentage of their exports just got dropped from 17 to 10% in the U.S., their exports into other countries has increased. 22:46 China just registered its largest export trading surplus. 22:50 It strikes me that the fraying or rupture of these alliances is benefiting China and hurting us. 22:58 I haven't seen the uplift or the benefit of us kind of 23:03 flexing our muscles, other than what you talked about in terms of Venezuela, military might, and getting the EU off the couch in terms of military support, what I see or what I fear, and I'm not sure I sense the same fear from you, is that we're going to be less prosperous as nations spend a ton of time and energy trying to figure out a way to have the same type of incredible economic alliances that we've enjoyed for a long time. 23:27 And I would say taken for granted. 23:30 Your thoughts? 23:30 Neil Ferguson Well, the difference is that the United States is, in a sense, a kind of empire of consumption. 23:35 And the United States has run, for many decades, a current account deficit. 23:40 The United States is a fantastic market to sell to for foreign companies. 23:46 Even after the imposition of tariffs, it's still a fantastic market to sell to. 23:51 The problem about China is it's not really a fantastic market to sell to, because what the Chinese are all about is selling you stuff. 23:56 That's why they have a colossal trade service. 23:59 Scott Galloway Their imports have been flat. 24:00 Their exports are up 40% since COVID. 24:03 Neil Ferguson And we're not too far from the most important European economy, Germany, as we sit here in Davos. 24:07 And the Germans are having their lunch eaten. 24:11 Their manufacturing sector is being hit extraordinarily hard by Chinese competition. 24:16 And Chinese competition is now in multiple domains. 24:19 You know this, Scott. 24:20 The Chinese have not only made electric vehicles the market that they dominate, not only batteries, not only solar cells, but they're now doing stuff in chemicals in pharma that we never thought was possible. 24:33 And so a huge swathe of the German economy is suddenly feeling a competitive blast from China. 24:41 that poses a really profound threat to the German economy's future prosperity. 24:46 So it's not a good swap, because Xi Jinping really isn't offering you great market access in China, except if you want to come and have your technology stolen. 24:56 Because market access in China is, remember, you come, you set it up, we clone it, and then we say bye. 25:02 That's why I don't think there's a really great choice on the table here, no matter how disgruntled Europeans, Canadians, and Asians may feel with President Trump. 25:13 Remember, President Trump is president for three more years. 25:18 Probability is that his power wanes, as that tends to happen in a second term. 25:24 particularly if the Republicans lose the midterms, and, you know, time passes and the gravitational forces of American politics do what they do, it's still the United States. 25:35 And the next president will doubtless be quite a different person from this president. 25:40 So would it really make sense to reorientate your entire strategy towards a one-party state run by an avowed Marxist-Leninist Maoist, a regime that doesn't have the rule of law, 25:53 uh that routinely uh incarcerates and disappears uh people that uh fall foul of it a regime that has labor camps indeed concentration camps in Xinjiang etc i mean we can all say that the united states has its faults 26:09 but you take it from me you would not want to live in a world in which china was the dominant power and in which you had to have a subservient relationship to beijing that would be a much inferior world even to the world of donald trump's uh uh uh donald trump's extraordinary uh an egotistical style of american leadership when i look at 26:35 Scott Galloway this, I don't know what you would call it, new framework. 26:38 I don't want to use the term new world order. 26:40 It feels to me more less Monroe Doctrine and more, well, maybe it is part of the Monroe Doctrine, but spheres of influence. 26:47 And I worry that we're withdrawing from 26:50 I think the most valuable companies in the world, Apple and Alphabet, are basically operating systems upon which everything else is built and they get a tax for everything and they set the tone. 27:00 I feel as if American economics, policy, rule of law, mostly democracy, has kind of been the operating system for the majority of the West. 27:08 And now people are deciding maybe they'll try and find their own operating system or shifting off of it. 27:13 And we're moving to these spheres of influence where we have these regional superpowers, China and Asia, the US and the Americas, 27:20 I don't know, they fight it out in Europe. 27:22 You're not worried or you don't see it as kind of a withdrawal. 27:26 You see it as flexing, which will ultimately potentially increase U.S. dominance and kind of get the Europeans in line to stop, quite frankly, bitching and moaning and live up to their rhetoric that music has to match the words. 27:39 I see it as a withdrawal to a smaller America around spheres of influence that will embolden Russia and China in their spheres. 27:47 You don't see that. 27:48 Neil Ferguson Well, it's conceivable. 27:50 I guess this is sort of Gideon Rachman's view that in the end, Trump's just another strong man who wants to carve up the world with Vladimir Putin and Xi Jinping. 27:59 But I'm not sure that that's really what we're seeing here. 28:02 I mean, last I heard, Indo-Pacific Command is still by far the most important of the military commands of the United States. 28:10 And its role in life is to deter China from 28:14 uh seeking to establish itself uh as uh in control of taiwan or uh extending its power in the south china sea it's it's a real and formidable force and i don't think if you spoke to admiral sam paparo the commander of into pacific command he would say yeah we're just winding this up because we're all going to the western hemisphere i think we have to distinguish here between rhetoric and reality the rhetoric of the trump administration particularly trump 2.0 28:42 is quite consciously borrowed from McKinley and Roosevelt. 28:46 It's a sort of circa 1900 vibe. 28:48 I don't know who gives Trump this stuff, because for sure he's not sitting there reading biographies of Theodore Roosevelt. 28:55 Somebody thinks it's a good idea, maybe it's JD, I don't know. 28:58 Somebody thinks it's a good idea to make these allusions to an America before the New Deal, an America which was an America still... 29:08 on the rise as a as a power not even really regarded as a great power by the rest of the world so this rhetoric has clearly some appeal uh in uh to members of the administration maybe to voters i don't know how many voters have heard of the roosevelt corollary not many i suspect but the reality remains that the united state is a global power with military capabilities throughout the world and the international trading system doesn't look remotely like spheres of influence 29:37 If you look at Hyun Song Shin's work on the networks of trade, of supply chains and interlocking balance sheets, it's still a very, very extraordinarily complex global trading system. 29:49 And when President Trump uses a 19th century tool like tariffs, all that happens is that the supply chains get reconfigured and the Chinese goods get to America with two stops along the way, rather than just the one of 2018. 30:03 So I think we need to just 30:06 take Trump seriously, but not literally. 30:09 This was the key insight that Selena Zito had way back in the 2016 campaign when she pointed out that journalists took him literally, but not seriously, voters the other way. 30:20 So we don't, I think, need to take the national security strategy literally as a document. 30:25 We just need to look at what the US does. 30:28 And what it does is to maintain military superiority in all 30:34 of the major zones of the world, including Europe. 30:38 So here's the thing that the Europeans never want to face, that throughout the period since 1945, certainly from 47, 48, 49, they have relied on the US for their nuclear security. 30:52 Nuclear deterrence is not really provided by the French force de frappe, certainly not by a British trident. 30:57 It's an American public good. 31:00 that is made available to Europeans. 31:03 It's not included in the NATO budget. 31:06 It's America's strategic force that says the Russians can't have Central or Western Europe. 31:13 And if they try to have it, they risk obliteration. 31:16 That's been the position really since the late 40s. 31:19 And that has been the position 31:22 despite the end of the cold war now nobody likes talking about this in europe because strategic autonomy if it were to be meaningful would mean that the europeans would need a proper nuclear arsenal which they can't remotely afford and i don't think they would have the political will to build so what 31:37 What is the alternative, really? 31:40 There isn't one. 31:41 The United States is the thing that deters Russia. 31:44 And as China is now in the midst of building a huge nuclear arsenal that will at some point be as big as the Russians, you really need the United States. 31:52 Otherwise, you're completely at the mercy of the great Eurasian autocracies, which I don't think even the most Trump-phobic European liberal could regard as a good outcome. 32:04 Another thing that's important when we get to reality is that geopolitics doesn't change that much because the world's geography is pretty constant over time. 32:14 And whether you're looking at now, or if you want to look at the 1940s, or if you want to go back to the early 1900s, there are really two great geopolitical formations. 32:27 This goes back to the early theorists of geopolitics, Mackinder and Spikeman. 32:33 There's the great Eurasian land mass, which has historically been dominated by large authoritarian empires. 32:41 And then there are the Rimlands, which are kind of Western Europe, British Isles, the Americas, and then Japan, the Asian equivalents. 32:53 That's geopolitics. 32:54 Nightmare scenario, the great Eurasian authoritarian regimes dominate the whole Eurasian landmass, and you're just left. 33:03 in the United States with the Western Hemisphere. 33:06 That would not be a good outcome. 33:09 It wouldn't have been a good outcome if Hitler had won World War II, which is why, of course, the United States ended up fighting Germany. 33:17 So I think you can't change that. 33:20 You can act in a way that makes the probability of China plus Russia plus Iran plus North Korea winning. 33:30 or you can work to stop them winning. 33:32 And I think the Trump administration is doing a better job of stopping them winning than its predecessor did. 33:37 The Biden administration was really quite unsuccessful in checking the formation of this axis. 33:44 Indeed, I would say that the axis didn't really exist in 2020, but it was fully in existence by the end of Joe Biden's term. 33:51 So whatever we hear when President Trump is riffing as he was earlier today, 33:58 or whatever we read in his truth social account, which shouldn't really be called that, it should be called truthy social, because it's kind of truthy in the way Stephen Cole Burr used to talk about truthiness. 34:08 It's truthy social. 34:10 About half of what he says, he kind of means, and about half, he's just shooting the shit. 34:17 If we shouldn't get too fixated on what Trump says, we should be much, much more focused on what the United States does. 34:25 And what it does seems to me a pretty strong advertisement for American allies staying with America and not contemplating the possibility of joining those lovable guys, Xi Jinping, Vladimir Putin, Supreme Leader Khamenei, Kim Jong-un. 34:41 I mean, is that the club we want to be associated with? 34:44 Not me. 34:46 We'll be right back. 34:50 Scott Galloway Support for this show comes from LinkedIn. 34:52 If you've ever hired for your small business, you know how important it is to find the right person. 34:56 That's why LinkedIn Jobs is stepping things up with their new AI assistant so you can feel confident you're finding top talent that you can't find anywhere else. 35:04 And those great candidates you're looking for are already on LinkedIn. 35:07 In fact, according to their data, employees hired through LinkedIn are 30% more likely to stick around for at least a 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Ukrainian people and the Ukrainian army is in fact NATO, and it feels as if America has withdrawn a lot of at least vibe support from Ukraine, and that I would argue the EU has stepped up. 38:56 You don't agree with that? 38:58 Neil Ferguson Well, let's be clear. 39:01 The European Union cannot, without American support, provide the assistance that Ukraine needs to survive. 39:12 The war is dragging on towards its fifth year. 39:19 this is gonna be harder and harder for Ukraine to sustain. 39:23 There is a manpower problem at the front. 39:27 There's an air defense problem in the cities. 39:29 Although the Ukrainians have been heroic and also tremendously innovative in the drone warfare and technology, the Russians have more or less managed to keep pace with that so that the Ukrainians have an edge on quality, but the Russians have an edge on quantity. 39:49 The Europeans, when American aid was first cut off back at the end of Biden's presidency, could not fill the gap. 39:58 That was immediately obvious because the minute the American aid stopped, you'll remember that the house cut it off. 40:04 Then Ukraine started to lose. 40:07 The United States isn't supplying much aid since President Trump was sworn in, but it's still playing an important part. 40:14 In technologies, surface-to-air missiles, yeah. 40:17 It's important to recognize that if that went, then the Europeans would not be able to make up the difference. 40:24 europeans have handed a lot of weapons as well as money to ukraine they have not built an awful lot of weapons anew the danes are in especially weak positions because they've given pretty much all of their military hardware to ukraine they don't have actually much defense capability at all at this point so until the europeans do serious rearmament 40:45 and I especially mean until the Germans do serious rearmament, Ukraine needs the United States to remain engaged, or it risks losing the war. 40:53 I was down at the Ukrainian house earlier today, and there's a fantastic video, you must go and see it, an AI-generated video imagining Russian drone strikes on Paris, 41:06 on Brussels and brilliantly on Davos. 41:10 And the Ukrainian point, which I wholly agree with, is that Europeans just find it really hard to believe what you said earlier, that Ukraine is in fact fighting for Europe. 41:20 They just can't imagine that the Russians would ever do to their cities what the Russians are doing to all the major Ukrainian cities every night. 41:30 to the point that Kyiv, at this point, has almost no heating and electricity in really large parts of town. 41:36 I mean, there are people I know whose apartments have no heat in midwinter, and it's bitterly cold there. 41:43 So I think we don't, and the Europeans as well, don't fully understand how fragile the situation is, how overstretched Ukraine is, how hard it is to sustain this war, and how desperately we need the war to stop. 42:00 Peace in the sense of the Russians all leave and Ukraine gets the Donbas back, maybe even the Crimea. 42:08 This is a total fantasy. 42:10 That is not how wars like this end. 42:12 There are two scenarios. 42:13 Scenario one, Ukraine loses. 42:15 Finally, they just can't sustain defense anymore. 42:18 Morale crumbles. 42:20 This is how these wars typically end. 42:22 The line is very long. 42:23 The Ukrainians don't have as many men. 42:26 there's a scenario in which they lose and the russians after all the slaughter of the past uh four years are able to advance further into ukraine that can't be ruled out as a scenario it's actually the most likely scenario in a historical framework 42:41 or there's a compromise piece that stops the war and gives Ukraine some breathing space. 42:48 That is the better outcome, obviously. 42:52 There is no third possibility. 42:54 There's no possibility where Ukraine wins. 42:55 Scott Galloway Well, okay, press pause. 42:56 The third possibility, we arm them with Tomahawk missiles and the requisite infrastructure and technology to start taking out more of Russia's oil infrastructure, which results in a compromise piece, which isn't as onerous or as one-sided as the current envisioned compromise piece. 43:11 Neil Ferguson I think that greatly understates how strong the Russian war economy remains. 43:19 Just let me finish, Scott. 43:22 The Ukrainians already did take out most of the Russians' oil refining capacity last year, and the Russians just kept shipping crude. 43:28 That was 13%. 43:30 No, it got up to 40%. 43:31 and higher that the the ukrainians actually don't need the tomahawks that much because their own deep strikes with drones are highly successful and have been incredibly effective except that russia's big and it has enormous capacity particularly when it comes to exporting hydrocarbons you blow up the refineries they just then ship the crude yeah 43:54 And the sanctions regime has failed doubly. 43:57 It hasn't succeeded in stopping the Russians shipping crude in the so-called ghost fleet. 44:01 And it also hasn't stopped the Europeans and others trading with Russia through third countries. 44:06 I mean, European countries export a suspiciously large amount of stuff to Kazakhstan and Tajistan and Kyrgyzstan. 44:13 It all goes on to Russia. 44:15 So under these circumstances, there isn't really a way in which the military balance can decisively be shifted against Russia. 44:25 The Russians have been held, and it's been an incredibly impressive success, they've been held, they've barely advanced, despite casualties on a monthly level, 44:37 that the US suffered in a year in Vietnam at the height of the war. 44:40 They haven't gained much ground. 44:42 In fact, somebody told me the other day, he calculated that a snail would have got further in the direction of Pogrovsk than the Russians did last year. 44:50 So that's pretty good. 44:52 But I'm not sure there's much more that can be done with Ukraine's capability. 44:56 I think greater economic pressure on Russia is still needed to get Putin to the negotiating table. 45:03 But you also need a deal that he can take, that he can accept. 45:06 We're talking here, Scott, about a compromise piece. 45:09 That's the nature of the beast. 45:11 And for that to happen, Putin is going to have to say, I achieved my victory. 45:17 He's going to have to be able to sell something to his people to justify all the slaughter. 45:21 I think that probably involves him abandoning his original goal, which was to take the whole of Ukraine and turn it into another Belarus. 45:31 I think we've pretty much told him that's impossible. 45:35 And we've also, I think, pretty much told him, you're not going to destroy NATO either. 45:40 But I think we have to give him some territorial, uh, win to end this war. 45:46 And that is why I think that the 28 point plan, the original version was not a bad starting point for negotiation in that the Russians were prepared to talk about it. 45:55 And the fact that the Russians were prepared to talk about it so much so that they even claimed authorship of it meant that you were getting somewhere. 46:03 This was why the involvement of Jared Kushner was so important. 46:08 He is a highly skilled negotiator. 46:11 Steve Witkoff on his own was not getting very far. 46:14 Bring Jared in and you start getting results. 46:17 We've seen that in the Middle East. 46:18 I think we begin to see it with Ukraine. 46:21 It's tough. 46:22 But I don't think the Europeans have helped at all. 46:25 In fact, what happened was that after that 28-point plan did the rounds, the Europeans said, no, no, no, this is far too good for Russia. 46:31 We insist on changes. 46:33 And they insisted on changes that, for example, left the Ukrainian army even bigger. 46:38 and of course the russians said no i mean i can understand some of the american frustration it wasn't the original 28-point plan doesn't it feel like it was written by lavrov it felt like a russian peace plan it wasn't written by lavrov it may have been written uh by another uh russian or co-authored it certainly wasn't written by 46:56 American diplomats, but I think it's fair to say that it was agreed between Russians, Ukrainians, Witkoff, Kushner. 47:06 I think that's what happened. 47:07 The Ukrainians were actually ready, because they desperately need a break. 47:11 They need a ceasefire. 47:13 And then the Europeans were the ones who said, no, no, no, we need to make it much, much tougher. 47:18 And that killed the negotiation. 47:20 That's an important point that is not, I think, widely understood. 47:24 And I think I can speak with some authority on this. 47:28 So we have to recognize that this piece won't be pretty. 47:31 It will involve almost certainly territorial sessions. 47:36 The language of that's important. 47:38 In the original plan, it wasn't that the Russians acquired de jure ownership of Donbas. 47:44 It was de facto. 47:45 The language here matters a lot because if you could put it that way, then you haven't permanently ceded the land. 47:52 to Russia. 47:54 It's a temporary state of affairs, and it recognizes roughly where the line of contact is. 47:59 So I think this is the only way the war can end well. 48:02 It can end really badly if we hold out for the perfect peace that will satisfy the men in Brussels and in Berlin. 48:09 If we hold out for a really good peace, we could end up with a Ukrainian defeat. 48:14 And that is a nightmare scenario for Europe, which is why I can't really understand the lack of realism here. 48:21 This is a time when you have to get some breathing space. 48:23 Scott Galloway I just want to press pause because we have six more minutes and you've said a lot there. 48:26 Just under the auspices of realism, you don't worry that if Putin is allowed to quote unquote claim a victory here and not end this with something resembling a black eye, that all we're doing is scheduling with this piece the next war, that eventually it's the rest of Ukraine, Poland, 48:40 Neil Ferguson Of course, if we did nothing after such a ceasefire or peace, then we only deserve another war. 48:48 But if you get the breathing space, you can start the reconstruction of Ukraine. 48:52 Scott Galloway The Ukrainians are our military power. 48:54 Who's going to invest in a Ukraine where we feel like Russia is just going to rearm and then invade again? 48:58 I'll invest in Ukraine. 48:59 They have the best defense technology companies in the world. 49:02 We'll take their drones, but will anyone invest in the civilian infrastructure thinking that Russia's just going to rearm and take the rest in another war in five or seven years? 49:09 Neil Ferguson ever been to south korea so south korea is interesting because it's a complete heap of rubble in 1953 and it has a neighbor who is uh clearly as dangerous as neighbors get and yet here we are so uh it's one of the so you think the west and the u.s might be willing to participate in that type of 55th parallel or whatever it's called that would guarantee some sort of security such that people would be willing to invest in ukraine would have some sense of autonomy and self-governance 49:37 And I've said from the outset, I've said it to President Zelensky, your best outcome is to be South Korea. 49:43 Your worst outcome is to be South Vietnam. 49:45 That is the nature of the relationship you have. 49:47 The United States has supported you, but you need to lock in 49:52 what you've got and then build it rebuild it and then you'll be able to show because on the other side of the line there'll be continued uh putinism kleptocracy criminality poverty uh and on the western side there'll be the european south korea 50:11 which i think is not an unrealistic vision given the talent there is in ukraine given them what they've shown themselves capable of credible courage incredible innovative uh energy i'm i'm a passionate supporter of ukraine's bid for freedom passionate supporter i do not want to see it fail because uh europeans set too high a bar in these negotiations i believe if you can get a breathing space 50:38 Two things will happen. 50:39 First, Ukraine can begin to rebuild. 50:41 It now has a formidable army, the biggest in Europe, and it has shown itself to have formidable military technology. 50:47 Now take that and scale it in Germany. 50:50 If the Germans today, Friedrich Merz, are you listening? 50:54 did operation warp speed for rearmament instead of what they are doing which is going through the usual incredibly slow bureaucracy of procurement if they just did okay gigafactory in brandenburg we take ukrainian drone designs and we don't just do 3 million a year we do 20 million a year how about that putin now if the germans did that 51:14 they could do it they have the manufacturing infrastructure they have the workforce they have a crying need for instance days of selling automobiles to the chinese are over they did that that would be a game changer unlike tomahawk missiles because if the russians saw german rearmament really happening 51:34 that would be the clearest sign a that putin had made a huge strategic blunder b that ukraine had a future so i think there are ways to to solve this problem they just require far more energy 51:49 on the European side, far more commitment, and above all, something of what we still see in the United States, an ability when the chips are down to cut through the bureaucracy and do things really fast. 52:01 So I just wish we could have sort of Elon Muskian rearmament, you know, the SpaceX approach. 52:07 you could scale what the ukrainians do you know what's really tragic is they have fantastic technology they cannot scale it they don't of course have the space or the security they're trying to build drones in a war zone under daily bombardment if you did all that stuff at scale in germany a you would create meaningful deterrence b this is the beauty of the thing you'd actually see german economic recovery 52:32 And that's like a win-win if ever there was one. 52:35 Scott Galloway So I'm getting a bit of a red light here. 52:37 So I just really crisply, you said something that really resonated. 52:41 My sense is there's this historic opportunity to defenestrate, replace, whatever the term, defeat the Islamic Republic. 52:52 And I'm really hoping, I've never seen a greater case for greater ROI 52:57 Neil Ferguson then limited whatever you want to call it strikes on civilian suppression centers and kind of tip over the regime if you will regime alteration that's what that's what we have to hope is coming it will transform the security of the middle east it will transform life for iranians and i believe it will be a huge contribution towards a peaceful end to cold war ii because it will signal 53:22 that whatever Chinese project produced the relationships with Russia, Iran, and North Korea was not a realistic geopolitical project. 53:28 That's my hope. 53:29 Scott Galloway What do you think the chances are that the regime holds if there is an intervention, a coordinated intervention, say US and Israel, whatever it might be, intelligence, limited strikes, 53:38 What do you think is the likelihood that the regime survives without Western military intervention? 53:43 Neil Ferguson Very high indeed, like 90 percent, because they've crushed the protests brutally. 53:47 And the regime's repressive apparatus showed no sign of cracking. 53:51 So if there's no intervention, that regime lasts. 53:55 I mean, it's like the Soviets had a little bit of a revolt in 1962. 53:58 They utterly crushed it. 54:00 1962 was pretty early in the Cold War. 54:03 In fact, a dangerous time in the Cold War. 54:04 So, no, if we want to get rid of the Islamic Republic, which has been a source of mischief and mayhem and murder since 1979, President Trump has to do what I think he is going to do. 54:18 Scott Galloway Yeah, your lips to his ears. 54:20 And the most important thing we haven't covered, but we'll have to cover it quickly, Scotland's group draw in the World Cup, Neil. 54:27 We're in with Morocco and Brazil, is that right? 54:30 I mean, come on. 54:32 Anyways, what are our chances? 54:34 Neil Ferguson Henry Kissinger was a great football soccer fan. 54:38 One of his great maxims was every success is an admission ticket to the next crisis. 54:44 And after Scotland heroically won their qualifying game in one of the greatest football games I've ever watched. 54:50 Is that one of the best players in the world? 54:51 now it was a fantastic thing i said to my son by the way every success is admission ticket to the next crisis then the draw came when they said dad we know what you mean so we got haiti to beat and the otherwise i think we just have to do damage limitation against brazil and morocco yeah it's too bad but you know i think it was a glorious glorious glorious game we'll all remember scott mctominay's goal as long as we live that that was one of the greatest matches in football history and are you back in london 55:17 I spend quite a bit of my time in Oxford more than in London, and between Oxford and Stanford, I'm always just permanently jet-lagged, never bored. 55:26 Scott Galloway Yeah, it's a rough commute. 55:27 It is. 55:28 And just give me 30 seconds, and I talk about this a lot. 55:31 I would say the difference between Europe and the U.S., 55:34 is U.S. still the best place to make money, Europe the best place to spend it, and the difference between the U.K. and the U.S. is you're the ones that stayed. 55:42 The risk gene has been starched out of the U.K. gene pool, and it's been very damaging. 55:48 How would you, as someone who's bi, not bi-coastal, but bi-country, how would you try to summarize the big difference between the U.K. and the U.S., and what could the U.K. learn from it? 55:59 Neil Ferguson I'm a dual citizen and I look at both and think a lot about this. 56:04 I think if you take AI or quantum, take the cutting edge of technology, the UK is clearly a source of real talent. 56:15 What's the problem? 56:16 It's not the lack of talent or entrepreneurship, it's the capital markets are utterly unfriendly. 56:23 to scaling a really dynamic company, which is why Demis Hassabis and Mustafa Salayman and others have all ended up in the United States, because you have brilliant company. 56:33 I mean, DeepMind's the most important AI company in the end. 56:37 It's a much more important, historically innovative company, but it's a British company that ended up 56:43 being acquired by Google, because there was no other way to scale it. 56:46 So I don't think these are cultural problems. 56:48 They're institutional problems. 56:51 And you can see these as, in a sense, Britain reverting to its 1970s bad habits, which Margaret Thatcher temporarily cured Britain of. 57:00 If you could bring Margaret Thatcher back to life and redo Thatcherism, then I think there would be a chance, at least, of revitalizing Britain's capital markets, which, you know, 57:11 are potentially extraordinarily broad and deep. 57:15 I mean, very liquid. 57:16 But institutionally, the incentives are terrible. 57:19 You know, the way like pension funds deploy capital in Britain would make you weep. 57:24 So I think there are fixes here that the next, and I hope it will be a conservative government, can address. 57:30 I want Kemi Wiedenhoch to be Black Thatcher and to do all the things again that we learned the hard way we had to do starting in 1979. 57:40 Scott Galloway Neil Ferguson, historian and public intellectual. 57:43 I love having you on. 57:44 I disagree with most of everything you say, Neil, and yet I learned so much, and you really do open my mind, and I'd like to think a lot of our listeners' minds to, you just have this unbelievable ability to thread history with economics and logic, even if you get to a place that kind of sends chills down my spine. 58:02 I just love speaking to you. 58:04 I really appreciate your time, and I appreciate how, quite frankly, like, 58:08 unfiltered you are. 58:09 That's really refreshing. 58:10 So boring if we agreed about everything, but we agree about football. 58:14 There we go. 58:15 That's dialogue. 58:16 All right. 58:16 Thanks again, Neil. 58:17 Neil Ferguson Good to see you. 58:18 My pleasure.