S1 | Entertainment

Stephen A. Smith: Becoming a Difference-Maker | SALT Talks #133

“For better or worse, there's only one me. I just say what I feel based on the facts and the information that I have before me.”

Stephen A. Smith is co-host of ESPN2’s First Take and is ESPN’s most recognizable personality and studio analyst. Before ESPN, Smith was a newspaper beat writer and columnist for 18 years.

Authenticity is critical in connecting with an audience. Combining hard work with that authenticity ultimately drives success. This means falling in the love with the process and committing yourself to the less glamorous behind-the-scenes work that viewers don’t see. Using fear can be a great motivator in driving that commitment to process. “Get caught up in the process… If you’re not enjoying that, you’re not going to enjoy your job.”

The social influence of athletes is greater than ever. Colin Kaepernick represents a major shift in the approach athletes are taking by speaking out on societal issues, particularly racial, that plague the United States. The influence and power that athletes wield will inevitably force corporate America to lean in and serve as allies in the push for change.

LISTEN AND SUBSCRIBE

SPEAKER

Stephen A. Smith.jpg

Stephen A. Smith

ESPN’s First Take & SportsCenter

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:07)
Hello everyone. And welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology, public policy, and sometimes sports and entertainment which is the direction that we're going in today. We're very excited for today's SALT Talk. The SALT Talks is a digital interview series with leading investors, creators, and thinkers. And what we're trying to do on SALT Talks is replicate the experience that we provided our global conferences, the SALT conference, which we host twice a year, once in the United States and once internationally. And what we're trying to do on these SALT Talks and at our conferences is provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big and interesting ideas that are shaping the future.

John Darsie: (00:55)
And we're very excited today to welcome Stephen A. Smith to SALT Talks. Stephen A. is a former newspaper beat writer and columnist for 18 years, and he's become unquestionably ESPN's most recognizable personality and most visible studio analyst. Since joining ESPN in 2003, Stephen A. has been a fixture on sports center, primarily as the worldwide leaders premier NBA analyst, which included NBA shootaround and NBA fast break. And he also hosts sports center with Stephen A. Smith.

John Darsie: (01:26)
In 2005, he was given his own national television show, Quite Frankly, on ESPN2 with Stephen A. Smith, which was a one hour weeknight show featuring sports, news, opinions, issues, headlines, and interviews, which lasted for 327 shows from August of 2005 to January of 2007. Stephen A. has been the co-host of ESPN2's First Take since May of 2012, which moved to the main network ESPN in 2016. From a clerk and a writer at the Winston-Salem Journal in my home state of North Carolina from 1991 to 1992, to an editorial assistance position at the Greensboro News and Record in 1992 and 1993. From a high school writers position at the New York Daily News from 1993 to '94 to a career at the Philadelphia Inquirer from '94 to 2010.

John Darsie: (02:19)
He started as a college beat writer to now becoming the foremost NBA analyst. And one of only 21 African-Americans in American history elevated to the position of general sports columnists in 2003 in March at that time. Smith considering his success in all three mediums by all accounts is one of the most successful journalists and commentators of the modern era. And again, we're very excited to have Stephen A. with us on SALT Talks today. If you have any questions for Stephen, you can enter them in the Q&A box at the bottom of your video screen on Zoom. And hosting today's interview is Anthony Scaramucci, the founder and managing partner of SkyBridge Capital, which is a global alternative investment firm. Anthony is also the chairman of SALT. And with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (03:07)
John, you left out one thing, he's probably been voted best dressed by GQ at some point in his career. I'm old enough to remember Lindsey Nelson who used to wear those flamboyant sports jacket. Stephen A. welcome to SALT Talks. It's an honor to have you on. How did we go from sports journalism to ESPN? What was the trigger?

Stephen A. Smith: (03:30)
For me, I was breaking stories a lot. I was a newspaper writer for the Philadelphia Inquirer. I started my career as a high school scores reporter for the New York Daily News from '93 to '94. And then I went to the Philadelphia Inquirer in 1994. And in 1998, there was an NBA lockout. The owners had locked the players out in pursuit of a new collective bargaining deal. And at that particular moment in time, everybody was trying to figure out what was going on as negotiations stalled, halted, progressed, et cetera, all different types of things that were going on as you well know that's what happens in that world. And during that particular moment in time, I was breaking a lot of stories. I had sources that were on the executive committee that was on the negotiating committee for both respective sides. I was lucky and fortunate enough to get access to a lot of information that a lot of people didn't have.

Stephen A. Smith: (04:21)
And so when the television networks needed somebody to talk about these things, Comcast locally, mainly in Philadelphia, Bruce Beck, who works at NBC in New York City now at the time was working for the NBC in Philadelphia. And he would have me on, and others would have me on Comcast and they couldn't afford to pay me. I told them, you don't have to, just make a copy of my appearances and give me a copy of it. I used that and I used those appearances and turned it to a portfolio. And then I showed it to CNN/SI, that was CNN Sports Illustrated which was an existing sports network at the time. And CNN had partnered with Sports Illustrated. And I started off. They hired me on the spot and then that developed into a deal with Fox sports Net two years later in 2001. And then in 2003, ESPN came calling. So that's really how the television portion of my career in terms of sports broadcasting actually started.

Anthony Scaramucci: (05:25)
You and I both know, television is not easy, 17 years on television, and you have this very unique style. You reek of authenticity, Stephen Thoreau, budding television presenters, sports journalists, broadcasters, et cetera, are watching today. What would you say to them about the travails of television? What's your experience there? What do you recommend to them and how did you develop your style?

Stephen A. Smith: (05:55)
Well, the last part of that question is always the most difficult for me to answer because I didn't have any kind of broadcasting training whatsoever. My attitude, when I looked at broadcast was that you needed to smile and know how to read a prompter. The latter part was very easy for me, the former, not so much because I'm not a smiler, I'm not the George Foreman type as they say. I don't just cheese for the cameras. You make me laugh, I laugh. You make me smile, I smile. But I'm not going to fake it just to show to give a pleasant view or a pleasure to meet you, that's just not my MO.

Stephen A. Smith: (06:25)
And so for me, when I had the newspaper background, I knew that there was substance attached to me because I was a reporter and I was digging for information. I was in constant pursuit of the truth, not just looking for the license to editorialize and opine. And as a result, because I knew that I had that content, okay, when you get in front of the camera and the lights come on, there really is just all I had was for me to be me. So the manner in which I speak, the way I articulate myself, the way I disseminate information, et cetera, that has always been my way.

Stephen A. Smith: (06:55)
And as a result, it just stuck. So when people ask me, "How can I do this? How can I be like you or whatever?" I'm like, "Well, for better or worse, there's only one me. I just say what I feel based on the facts and the information that I have before me. This is where I stand. This is how I feel in the moment. I'm not afraid to correct myself. I'm not afraid to admit I'm wrong on a rare occasion that I believe that I am." And that's just my mentality.

Stephen A. Smith: (07:22)
And as long as you're coming from that perspective, there's a level of humanity that's attached to your willingness to admit that you're wrong or willingness to be real and authentic because what I'm trying to convey to the audience, I want them to know they can trust me. And what I mean by that is not just trust my information, but trust that I believe what I'm telling you. If I need to be corrected, I need to be corrected, but I'm not faking anything. I'm coming at you from that perspective. And because of that, that I believe is what has been able to propel me.

Stephen A. Smith: (07:51)
So when I look at people in this industry, I would tell them all that glitters isn't gold. Be ready to put your head down and go about the business of doing the work. Don't get caught up in the sizzle, get caught up in the work. Don't get caught up in the culminating point, the end result. Get caught up in the process because there's usually a long and lengthy process that comes before the actual accomplishment. And if you're not married to that, if you're not enjoying that, then you're not going to enjoy your job.

Stephen A. Smith: (08:22)
And the difference between most people's job and my job is when I'm speaking to people, hundreds of thousands if not millions, actually at this point in time of my career, it's tens of millions of people per day. The bottom line is, is that if I don't enjoy it and I'm not passionate about it, and I don't feel what I'm talking about, the first people that are going to notice is that audience. And before long, they'll be gone, looking to find someone else that inspires them or that ingratiates themselves with them to a point where they're willing to gravitate towards them.

Anthony Scaramucci: (08:57)
All right. But you've got this unique thing going, you know and I know it, and God bless you for it. For me, I was getting hit in the head with a wooden spoon by my Italian nana. I had to fight it out at the dinner table on Sundays with my cousins, and that was my media training. Where did you get the media training from? Was it from your family?

Stephen A. Smith: (09:19)
Well, if you put it that way, I mean, that's easy. I'm the youngest of six. I have four older sisters that were living with-

Anthony Scaramucci: (09:25)
I'm surprised that you have a 32 inch waist, if you're the youngest of six [crosstalk 00:09:30].

Stephen A. Smith: (09:30)
It's actually 36 and counting is going down. But the point is, is that I've got four older sisters that beat me up figuratively. Literally at times, they were my litmus test per se. A few of them, no sports, my dad-

Anthony Scaramucci: (09:46)
You've taken all of that out on the Dallas Cowboys, right? All of that like pop.

Stephen A. Smith: (09:50)
For me with the Dallas Cowboys, it's really not about them, it's about their fans. I think Dallas Cowboys' fans are the most disgusting nauseated fan base in American history. They make me sick and there's nothing in life that makes me more happy when it comes to sports than to see them miserable. I think Dallas Cowboys' fans are the worst human beings a lot. It doesn't matter if they go one in 15 and the season ends on a January 5th at 7:00 PM. By 7:10, 7:15, they'll be telling you, "You know we're going to win the super bowl next year?" They don't take any time to smell themselves at how stink they are. And that's what I can't stand about Dallas Cowboys' fans, which is why I like rubbing their nose into it.

Stephen A. Smith: (10:29)
And I must be thankful to the Dallas Cowboys, because I like Jerry Jones. I really do. I like Jerry Jones a lot. And the Cowboys allure the $5 billion franchise brand that they are. Major props to him. But because of their fan base, nothing pleases me more than to watch the Dallas Cowboys lose, especially during the holidays. I don't like it when they win. They lose in September, October, but they'll win in January, February. No, I want them to lose around Thanksgiving and I want that to flow right through Christmas so the whole holiday season is ruined. I don't wish anything like that upon anyone on this planet, but the Cowboys' fans.

Anthony Scaramucci: (11:09)
I'm going to take mayor of Dallas off of your second act career. No problem. You still-

Stephen A. Smith: (11:16)
He might not be a Cowboys fan. He might not be a Cowboys fan for all we know. You never know.

Anthony Scaramucci: (11:22)
I don't know, but you might be governor of Texas. I mean, because some of the Texas is antidotal suit. Well, let me ask you this because this is something I absolutely love about you. Of course I've been watching it like everybody else for the 17 years. You take absolutely no bullshit ever from anybody. You call people out on it on the air, you interrupt them when you know that they're giving you malarkey. And so how did you get that detector going? Is that from your sisters too? Where did that sound detector come from?

Stephen A. Smith: (11:54)
That's the streets. Born in the Bronx, raised in Hollis Queens. Walking the streets like thank God I had the most wonderful mother on the planet I didn't got arrested. That kept me off the streets in terms of me engaging in any illegal activity. But I certainly was surrounded by, in terms of the people that I knew. I grew up with drug dealers. I grew up with drug runners. I grew up with guys that were relatively violent or what have you. When you from the streets and you have to survive in that stratosphere, particularly when you're operating on the right side of the tracks, instead of the wrong side of the tracks, you've got to have your sense and you've got to be alert at all times. And you got to be able to decipher what's real from the BS. People trying to set you up, trying to put you in compromising positions and things of that nature. You got to be alerted to all of that.

Stephen A. Smith: (12:45)
And so growing up at a very young age, I knew that if I needed to survive in the streets, Ronald Reagan once said it best if I remember correctly, trust but verify. If I remember, I think that came from him and that's been my mentality a lot. I'm fortunate and blessed to have great friends and family members in my inner circle who are tremendously loved by me. They're very knowledgeable. They're very smart and what have you. But even with them, I'll double check what they have to say. I'll triple check what they have to say. That's just my MO and it comes from Ronald Reagan.

Anthony Scaramucci: (13:23)
In my neighborhood, out on Long Island, there was a prolific drug culture. My uncle owned a motorcycle shop. I worked in that motorcycle shop. I've learned how to shoot craps at age 11. I learned how to drive a three speed Dodge van at age three. So everybody who I'm running money for right now is redeeming on my phone, which is fine. But I knew despite that rough crowd, that I was going to try to go straight and I was going to try to do the right things and stay away from that stuff. You did too. So there was a moment, there was a seminal moment where that popped into your head. That little bubble popped into your head, Stephen, you said, this is the where I'm going. And so offer some guidance and perspective to some of the young people that are listening to us right now. What happened? Why did that bubble pop into your head and catalyze you in the direction that you're in?

Stephen A. Smith: (14:15)
Well, a couple of things. Number one is love. The love of your loved ones closest to you who have your best interests at heart. That definitely goes a long way because even those who are operating on the wrong side of the tracks, they'll tell you, you don't need to be there. I have literally had drug dealers that would sit around and say, okay, this guy is trying to get a basketball scholarship. He's going somewhere. Do not bother him. And would instruct the people working for them do not bother him. Let him shoot his hoops at 192 park and Hollis, Queens, New York on 204th street. Let him shoot his 200, 300 jumps shot. Do not bother him. And then when it was time for them to do their business, they would say it's time for you to get on out of here. So that was love right there.

Stephen A. Smith: (14:56)
Number two violence. Because I saw somebody get gunned down right in front of my face. He got his head blown off right in front of me when I was 10 years old. So that definitely went a long way and we sort of knew his background and what he was doing. And so it crystallized in your mind that if you're doing these kinds of things in all likelihood, that's how your life would probably end. And you have to ask yourself whether or not you wanted that. And then for me personally, again, I keep bringing up my mother because she worked so hard and she made so many sacrifices. When you have someone that you love as dearly as I loved my mom, you want to make them proud, you don't want to disappoint them. And so you got to think about those things as you're striving to be something and to make something of yourself.

Stephen A. Smith: (15:42)
And a lot of times when we see youngsters out there, they've got this, what coach the John Chaney, the legendary coach John Chaney, who used to coach at Temple University, their basketball squad. He called it the microwave society. He despised the mentality that youngsters have wanting everything now and wanting everything to leapfrog the process without really working and maneuvering your way through it. And what I would encourage young people to do is not only should you go through the process, you should enjoy it because it elevates your level of knowledge. When you have to go through a certain terrain, a minefield, in order to get to where you want to go, then guess what? Once you get there, first of all, no one can question you because you've got there the right way. And number two, nobody can question your knowledge because you have experiences that most people didn't have. Look at you, Anthony, and all the things that you've been able to accomplish in your career and in your life.

Stephen A. Smith: (16:36)
The number one reason people should recognize that you're on TV a lot of times talking, when I see you on CNN and other places, is because of your knowledge and experience. It's not just your ability. Yeah, you have the ability, but you have a knowledge and a level of experience that comes along with it. So when you're talking, I see people listening to you and want to debate you. But then there are other times you're talking and people instinctually know to shut the hell up because you've been places they haven't been. That experience really buffers and augments you to another level that will ultimately enable you to speak with a level of authority that could ultimately make you successful at whatever you do. And that's my philosophy.

Anthony Scaramucci: (17:19)
Let me tell you something, Stephen, I'm going to be clipping that and playing it for my wife who happens to be the most expensive makeup artists in the world. She thinks it's all about her makeup is the reason why I'm on television. I want to make sure-

Stephen A. Smith: (17:31)
No, no, wait a minute. I got to give you a piece of advice, let her believe that.

Anthony Scaramucci: (17:35)
Okay. All right. I take it back. [crosstalk 00:17:39] because she loves Stephen. You cut this piece out.

Stephen A. Smith: (17:45)
This is the way.

John Darsie: (17:46)
We'll cut that.

Anthony Scaramucci: (17:48)
Of course we're not cutting anything, we're doing this live. The thing I want to say to you that is so admirable of you is the grounding. I can feel the grounding wire and you have soared my friend and congratulations to you for that. And I hope you continue to soar to ever higher and higher Heights, but there is a grounding wire. You can see it on the air. I can see it right now in this interview. Is that coming from your mom? Is that coming from your spirituality? Is that coming from your grace in terms of your gratitude at the way life has unfolded for you? Tell us about your grounding wire and how you've been able to maintain.

Stephen A. Smith: (18:29)
Well, it's all of the above, but it starts with mama. Because mama was the one that worked hard. Mama was the one that worked 16 hours a day, seven days a week, had one week vacation a year, just to feed us. Even though she was married to my dad for many years. Let's just say he wasn't as responsible as he should have been. And that put a lot of the onus on my mother's shoulders. And so to witness that, and to witness her struggle, first, it was an aspiration not to disappoint her. Then ultimately it became an aspiration to make her proud. And then in the process of doing that, then you run into other people along the way who gravitate to you because of the character she helped instill in me.

Stephen A. Smith: (19:11)
And so then, from a spiritual perspective, I go to Christian Cultural Center in Brooklyn, New York. My pastor is A.R. Bernard. He's a phenomenal, phenomenal, man. I love him dearly. He's always been there for me. And he's somebody that I trust implicitly. And so to have that kind of guidance, definitely helps. Then you think about the family members that you have, that my mother influenced, the people in the neighborhood that I grew up with, that I know that I could trust. Because it's not always about people being the way you want them to be, it's about them being their unapologetic selves. They don't disguise it from you, you know who they are. And as a result, you can trust them to be exactly who you know them to be. And there's a benefit to that as well.

Stephen A. Smith: (19:56)
And so all of those things come together and it helps develop you into the adult that you aspire to be because the challenges that inevitably are going to come your way, you know that you're prepared to deal with whatever, because you've seen so much of it, because you've been so thoroughly prepared by the people you love and the people that love you that are a part of your inner circle. They buffer your knowledge. They buffer your conscience. They buffer a lot of different things that help make you better at what you do.

Stephen A. Smith: (20:25)
So when I'm grounded, I'm grounded because of them as well. Because just the same way I feel about them, they feel about me. Because there's a trust there, they can tell me anything. They could tell me when they think I'm wrong. They can tell me when they think that I don't know what the hell I'm talking about. They can tell me when they say, excuse me, you need to do this, you need to do that. They might lecture you. They might pester you. Sometimes you even want to listen to them. You don't want to hear it. But in the end, when you know they have both knowledge, and two, a spirit and a heart about them when it comes to you that makes trustworthy, you end up wanting to listen to them because you value them.

Stephen A. Smith: (20:59)
The people I surrounded myself with are what keep me grounded right now. Because even though I'm Stephen A. to them, I'm Steve or I'm Stephen. I'm not Stephen A. I'm the same dude that grew up in Hollis. Yeah, I might be a little bit more successful and certainly more recognizable. But the bottom line is, they will not tolerate chillings from me, because they love me just the way that I was.

Anthony Scaramucci: (21:24)
Well, I mean, listen, I totally identify with that. I live two miles from where I grew up. I'm one of the few people that went to college in my family. Everybody's named Anthony because we're Italian. That's my great grandfather-

Stephen A. Smith: (21:37)
You know my middle name is Anthony, right?

Anthony Scaramucci: (21:38)
Right, right. I know that. Of course I know that. Come on, man. Stephen A. But let me just say this, we got Anthony Auto Glass, we have Anthony Clamor, we have Anthony Pizzeria. I'm just having to be Anthony hedge fund on Christmas Eve.

Stephen A. Smith: (21:52)
I'm quite sure they would grab the hand of the hedge fund.

Anthony Scaramucci: (21:56)
Trust me, they treat me like, Anthony, you know what? Low on the bottom of the shoe, which is all good by me. Before we get back to sports though, I got to ask you this, I'm really identifying with this conversation. And it's a Tyson thing. Everybody's got a plan until they get smacked up in the face, had setbacks. There's no way you're getting to be Stephen A. from Stephen, Hollis, Queens to where you are right now without setbacks. So describe your resiliency. Describe the methodology behind your resiliency and describe all of that positivity that has gotten you to where you are.

Stephen A. Smith: (22:35)
You call it positivity, I wouldn't. Matter of fact, fear is a great, great motivation for me. Fear of failure, fear of disappointment, fear of having to live with myself knowing that you may have failed because you didn't give it you all.

Anthony Scaramucci: (22:55)
Fear of poverty, Stephen. I've had the fear of poverty thing going my whole life.

Stephen A. Smith: (22:59)
And fear of poverty is a big thing. And I'll tell you something right now. The latest, I mean, obviously I grew up or what have you, but the latest was in 2009 ESPN elects not to renew my contract. We had a contract dispute. They elected not to renew my contract. And for a full year, I was unemployed living off of my savings. More importantly, even though I thought I had established myself in the business, clearly I hadn't because no one was knocking on my door, willing to hire me to be in television. And when you got to taste a bit, I made my first million dollars in 2005, thinking that I had arrived and what have you.

Stephen A. Smith: (23:38)
And then all of a sudden, just four years later, everything, and I do mean everything, falls apart at the time that I was expecting to be a daddy. It was incredibly scary because I grew up poor and I did not want my children ever grow up poor and struggling and starving and things of that nature. And I was literally, literally scared to death. And so that level of fear. For some reason, I put my head down, I do what I always do. I put my head down, I went to work. I pounded the pavement. I was tenacious. I persevered. And then I got back. And when I got back two years later at ESPN, because after one year I got hired by Fox Sports Radio to do their morning drive show for a year. And then after that, ESPN can call me again.

Stephen A. Smith: (24:25)
And I remember that my boss, was my boss to this very day, my immediate supervisor, his name is Dave Roberts. Phenomenal boss. I told him I'm taking over. I said the fall from grace, if you thought I couldn't be more motivated than I was before, watch out now. And so he always laughs and reminds me of my work ethic, my dedication. I remember that one of the big bosses, his name was John Wildhack. He was an executive VP over production for ESPN. He's now the athletic director at Syracuse University. And he introduced me to talk to the football team one time. And he said, I've been in the business for 35 years. I'm about to introduce our next speaker, talking about me. He said, he's the first man in my 35 years that I had to make, take vacation. The dude doesn't stop. And that is a reputation I love to have. When am I off? When the job is done. When am I finished? When the job is done.

Anthony Scaramucci: (25:30)
I love it. I love it. And I'm going to tell you something funny about Dave Roberts. I'm on CNN on the morning show and I'm doing it from my home studio, of course, because of COVID. My wife comes down with the cordless phone and she says, "Do you know a Dave Roberts?" And I said, "No." And she said, "Well, there's a guy by the name of Dave Roberts on the phone. He wants to talk to you." I'd just gotten off the air. I pick up the phone. I said, "Hello. "He says, "I'm Dave Roberts from ESPN. I got your phone number by looking it up on Google," there's my phone number. He's cold calling me, "Because I just want to tell you man, you're awesome on television and keep up the good work." And that's Dave Roberts, am I wrong about that? Or no?

Stephen A. Smith: (26:13)
That's him.

Anthony Scaramucci: (26:14)
And now him and I probably talk once or twice a month about what's going on in the world and sports and life and everything else.

Stephen A. Smith: (26:22)
He's a winner. He's a winner. Whatever he touches, turns to gold, as far as I'm concerned.

Anthony Scaramucci: (26:27)
He absolutely loves you. I have to turn it over to John Darsie in a second because if we don't get these millennials in, we don't get the ratings that I want. I got to let Darsie in in a second. But I just got to ask you two more quick questions. I want your favorites for the Super Bowl, you've been thinking about it. Who are your favorites?

Stephen A. Smith: (26:51)
Well, I had Tampa Bay at the beginning of the season, but right now I'm thinking the Kansas City Chiefs versus the Green Bay Packers.

Anthony Scaramucci: (26:58)
All right, that'd be an exciting game. Second question, of the leagues, COVID-19 who handled it the best, of the pro leagues?

Stephen A. Smith: (27:08)
Without a question the NBA, that's an easy one right there. When you consider the sacrifices that the players made combined with the team and the league itself, how organized they were. They went like the last couple of months or so, I'm talking about that whole time in the bubble. They didn't have one single positive test. It was unbelievable. You have players holding other players accountable. One player snuck some woman in there, and he didn't even get a chance to test positive. They sent them home. They didn't play. The NBA was on their game. The players were on their game. And I can't say enough for two people. I can't say enough. Of course, Adam Silver, the commissioner, did a phenomenal job. Of course, Michele Roberts and the Players Association, she's the executive director. They did a phenomenal job.

Stephen A. Smith: (27:53)
But two people really, really stand out. Chris Paul, who is the president of the Players Association and perennial all-star future Hall of Famer. This guy in terms of his willingness to play and play to the level that he played while at the same time, negotiating deals and stipulations on behalf of the players to make sure play could resume. You just can't say enough about the phenomenal job that he did and the level of credit that he deserves.

Stephen A. Smith: (28:20)
And more importantly, just as important is LeBron James. We can slice it any way we want to. This is the greatest play in the world right now. He ended up winning a fourth championship, but to be stuck in a bubble for 96 days, to be away from family loved ones and friends, to play the way that he played and keep his team as motivated and as focused as they needed to be in order to capture a championship and still carry that Baton while bringing attention to the George Floyds of the world, the Breonna Taylors of the world and others when we were talking about African-Americans and law enforcement officials, you just can't say enough about all the stuff that was on LeBron James' shoulders and the way that he handled himself and his team, enabling the Los Angeles Lakers to walk away with the 17th title in franchise history. You just can't say enough about it.

Anthony Scaramucci: (29:14)
Well, I'm going to turn it over, but I just let if you ever come to my office and visit me in New York, I've got a huge picture of Jackie Robinson in my office. And on the other side of the office, I got Muhammad Ali. Who are two of my heroes because they were originals and you know how much Jackie Robinson took to be in the Major Leagues. And a lot of the peace and social justice that we have found in our society has been moved by men and women of sports who had that level of courage and had that level of tenacity. Of course the champ, when I think about the GOAT, Muhammad Ali, what he was like in the sixties and what he stood for which everyone is still fighting for today. I got to turn it over to Darsie here, Stephen A., but if we get close, I'm going to start calling you Anthony, after your middle name. You'd be known as Steven Ant. All right?

Stephen A. Smith: (30:08)
No problem.

Anthony Scaramucci: (30:10)
Go ahead, Darsie. I know you've got some audience participation questions.

John Darsie: (30:12)
Yeah, I couldn't let Stephen A. out of here without talking a little shop with the GOAT, when it comes to TV personality. I grew up watching SportsCenter. It was appointment television for me when I was younger. Sports media has evolved with the advent of the iPhone and on-demand clips. Stephen A., in my opinion, has become the appointment television for ESPN in 2020, and even prior to this.

John Darsie: (30:39)
I want to build on that conversation about social justice issues a little bit and LeBron James. I always find that amusing that sometimes the hate that's directed at him for certain things that he does and people accuse him of being inauthentic. But I think as much as anyone, he's given other athletes the courage. You had people like Colin Kaepernick who stepped forward as well, but given players the courage to really make social justice a big part of their identity. Do you think that we're at a tipping point in our society today? And do you think athletes have led us to that tipping point where we're really going to see some of these social justice and racial justice issues start to turn and reach a more equitable society?

Stephen A. Smith: (31:19)
Well, my direct answer to that question is that we better be making the turn. We better be moving in that direction. Because if not, athletes today are more empowered than ever before. And as a result, there's going to be a hefty price paid by corporate America and beyond, make no mistake about it. What a lot of folks don't realize is that they keep forgetting the communities these guys come from. You might become rich and famous. You might become wealthy, but to a modern day athlete in particular, you never forget home. Because if you do, they may not forget about you, but you'll be a pariah. And nobody wants to feel like a pariah from their own hometown. You just don't want that. And when I say hometown, I'm talking about the streets that you come from, it could be inner city streets across the United States of America.

Stephen A. Smith: (32:07)
On many occasions, I've often told white bosses this, white folks come to work with a job to do every day. Black folks come with a responsibility. When Trayvon Martin got hot by George Zimmerman, the black community looked at me and said, "Stephen A., you got to talk about this. Stephen A., you got to say this. You got to say that." Now, I never feel compelled to say what anyone wants me to say. I say what the hell I want to say, what I feel, but I do feel compelled to make sure their voices are heard. I do feel compelled to make sure that whatever message the collective whole of our community has that they want disseminated. That I make sure that I express that and disseminate that to the masses. So the masses will know.

Stephen A. Smith: (32:51)
I feel no obligation to agree with it or disagree with it, but I do feel an obligation to make sure that people from our community are heard. And I think if I feel that way, imagine how some of these athletes feel. Now they're not on national TV every day, and I get that, but they do have social media accounts, Twitter, Instagram, Facebook in the millions, in some cases, the tens of millions, in some cases, over a hundred million. And so their reach is incredibly extensive. When you combine that with the wealth that they have at their disposal or rather, I like to say rich, because to me, wealth and riches is two different things, but these guys are rich. And so they've got enough cache, enough muscle in the public eye to really, really make some noise and resonate in a very, very profound fashion.

Stephen A. Smith: (33:38)
I would caution corporate America to make sure they hear that loud and clear and they operate accordingly. Because one thing is absolutely positively true, the days of these dudes being timid and shy and apprehensive have rapidly come to an end, at least for some of them. Too much influence in social media and beyond, too much influence with the younger generation is what they have to sit idly by and ignore some of the transgressions that have taken place in our society. That's what they were doing this summer. That's what they were doing since COVID took place. That's what they were doing since George Floyd got killed and what have you. And I don't anticipate that that's going to stop. If they're able to look at America and say, you haven't changed one bit, you're the same damn way you've always been. If America elects to be that way, there's going to be a problem.

John Darsie: (34:32)
Yeah, we've had really successful prominent African-American business people on this program. And we've heard them talk about how they don't always love having to speak up about these types of issues. Throughout their career, they attribute some of their success to just blending in and not having to consider themselves different than everybody else, but today they have no choice. They feel like, you know what? I have to lift up my brothers and sisters and I have to speak out and I have to be active on these issues because I have no choice.

Stephen A. Smith: (35:03)
It's important that everybody also understands why. It's not just because of that, it's because the choice of being quiet no longer exist. That's the real issue here. So because you are now compelled to speak up, that means you have to take a side. Now, you can take the side [inaudible 00:35:25], or you could take the side of your community and speak up and speak out about issues relevant to your community. These athletes find themselves in that untenable position and they have no choice, but to embrace it, some love it because they love having a voice. And they finally get an opportunity to express themselves knowing millions are going to hear them. Some are very reluctant to do it because they know how they feel is going to cost them in some capacity, either in corporate America or it's going to cost them a price with their own community.

John Darsie: (35:57)
Right. I want to shift gears a little bit to talk about sort of the business of sports and the business of sports media. Disney just announced they're giving you another show on their ESPN+ streaming service. We're seeing this massive movement towards streaming. You have Netflix that's disrupted the entire entertainment industry. Warner Media announced they're going to start simulcasting their movies on HBO Max. Disney+ has obviously been a great success at your parent company. How do you think we're going to continue to see sports media evolve in a world where media rights are so valuable and expensive and so entertaining people in different ways on different platforms is going to be so important.

Stephen A. Smith: (36:36)
Well, I think you're going to see cable suffer to a degree because outside of live events, why not go direct to streaming? Why not go direct to consumer? It's a more feasible and profitable way it appears to go about doing your business. When you have to pay cable operators and things of that nature, that's going to compromise your bottom line to some degree, which is why I think you've seen layoffs across the board everywhere.

Stephen A. Smith: (36:57)
As it pertains to me, my show is going to be called Stephen A's World. It's going to be the lighter version. I'm going to be looking to have fun and make people laugh and enjoy themselves and have a good time because we all know I'll bring the heat on ESPN, whether it's on SportsCenter, whether it's on First Take, whether it's when I'm hosting my own NBA show that Stephen A. is going to always be there. But there is a lighter, more fun side to me, sort of that late night feel because my ultimate aspiration is to actually own the late night show. The way Arsenio Hall and Jay Leno and David Letterman and guys like that ones did.

Stephen A. Smith: (37:29)
My ultimate aspiration is to actually do that one day. So that's an aspiration that I have. And I think that this is going to go in the direction of showing my willingness and hopefully my ability to do such a thing. But again, to answer the question directly, when you see these athletes getting involved, athletes are exploring the business side of things. They understand content a little bit better than they've been given credit for because they bend the content providers, not just because of their plate on the court or field of play, but the interviews that they've done, the statements that they've made, the way that they've resonated in social media and beyond. The means that they've seen put out there in social media and what have you.

Stephen A. Smith: (38:10)
It gives you the impression that you might have an elevated level of knowledge when it comes to content providing. And as a result, it makes you gung ho about sticking your fingers into that bowl to sort of see where that will take you, because we all know that no matter what people make in front of the camera, there's always people making a lot more that are behind the camera. And so these guys see those kinds of things transpire. You also have to take into account, the individuals that they run into. Go to a Lakers game, you'll see folks from Disney, you'll see folks from Fox and other networks. You'll see directors, producers in Hollywood and beyond. When these folks go about the business of ingratiating themselves with you and allowing you to do the same and you make those kind of connections. And then you see the kind of things that they want to do in the world of television streaming and beyond.

Stephen A. Smith: (39:03)
As it pertains to content, it gets you excited about the possibilities of what you might be able to do if you were so lucky to be afforded such an opportunity. So those kinds of things, these players are thinking about because they want a stream of revenue. Remember, our careers going on. I'm 53. And as far as I'm concerned, I'm literally barely in my prime. I got about 15, 20 years left in this business as far as I'm concerned. You guys, the same thing. These players, most guys careers are over by 30. They're lucky enough, some at 35, some football players, the Tom Bradys of the world, Drew Brees of the world are very fortunate to be in their forties.

Stephen A. Smith: (39:45)
Well, what the hell are you going to do with the rest of your life? You start thinking about those things. And that's why they venture into this business realm to the degree that they're doing so. Because they're looking for an outlet, they don't have to step away. From the cheers, the adulation and all of these other things to being obsolete. They want to play different roles. They don't mind stepping away from the cheer, the crowd, but they don't want to step from stardom to be an obsolete. That's a bit too extreme for them in the stomach. And as a result, that's why they are hungry to do things in this business. And I don't blame them.

John Darsie: (40:19)
All right. Switching gears again, I want to talk about leadership a little bit. I'm a native North Carolinian, but you're a New Yorker. Anthony's a New Yorker. You guys have suffered through many decades of subpar performance from your professional sports franchises. I'll leave it there. It brings me to a question. We have a lot of corporate executives that tune into SALT Talks and so relating business leadership and sports leadership and sports business leadership, what in your observation, viewing up close the dysfunction of some of the New York franchises and also having relationships with the very successful franchise owners and leadership and those organizations, what are the characteristics of a good and bad franchise in sports?

Stephen A. Smith: (41:03)
Well, first of all, the bad characteristics are people that hate working for you, for a multitude of reasons. You cut corners. You take shortcuts. Winning is not your top priority. Mediocrity is not something that you appear to have a problem with. Those kinds of things definitely give you a sour taste in your mouth if you're a professional sports team, a professional athlete, or what have you. You really don't want to have much to do with that. Those that have winning situations, yeah, it's associated with excellence, but it involves the excellence of the culture as opposed to the bottom line.

Stephen A. Smith: (41:42)
If you're a performer, what you want to do is look at your superiors and say, "I have everything I need to win. It's on me." You're not running from the challenge of it being placed on your shoulders. You're despondent in fact, when you're in an environment that you don't deem to be conducive to winning. It's an incredibly, incredibly tough situation to be in when you know that you could be doing better and your product could be doing better, but the decisions by the higher ups is what's holding you back. Because when you see something like that happen, you don't want to hear them talk to you about winning because you know that they could snap their fingers and make decisions that are conducive to winning, and they just refuse to do it. And so as a result of that, that's certainly not a winning formula. That's something to take into consideration.

Stephen A. Smith: (42:31)
But what a winning formula is, particularly as it pertains to bosses, inspiring people to want to work for you, to want to work with you. Being committed to excellence, showing them that it's not just about your excellence, it's about theirs as well, and how we all rise together. Magic Johnson was famous by telling his teammates, man, we all should. "You could see me on the commercial doing something for Converse or McDonald's or something like that, but trust me, endorsement deals are going to come your way. Popularity is going to come your way, the perks and the cache that comes associated with success and winning they're going to come your way."

Stephen A. Smith: (43:09)
And he was unapologetic about it. And he was very sincere and projecting that kind of imagery and it came to fruition. They saw that he was right and then inspired them to perform with him and for him even more. When you look at Pat Riley and South Beach with the Miami Heat, well, he's got rings. LeBron James wants to depart from Cleveland and he comes to Miami. And even though he had already talked with Dwayne Wade and Chris Bosh about joining forces, when he sat down with the Miami Heat and everybody had presentation and films and all of these other things to appeal to LeBron James, Pat Riley, sat in front of him and put down five rings and said, "Do you want one of these? Yes or no?" And that's what it took.

Stephen A. Smith: (43:54)
We taught that to the business world. Larry Bird's got a group of 13 other people, and they're trying to buy the Charlotte Basketball franchise at the time. The asking price is $300 million. And Larry Bird's group has about 250, 260, they're about 40 million short, but he's Larry Bird. And they want to give them time to get the assets necessary in order to buy the franchise, et cetera, et cetera. All of this stuff is being talked about. But Bob Johnson, former owner for BET knows Jerry Colangelo. Both of them went to the University of Illinois. There was a connection there. What happens, Jerry Colangelo, owner for the Phoenix Suns at the time, he's got an in with the NBA owners because he's been associated with the NBA since the sixties. So he gets Bob Johnson to the negotiating table.

Stephen A. Smith: (44:46)
And Bob Johnson sits at the negotiating table and tells these board of governors, which consist of each owner for the team or the chief executive they choose to appear as their board of governor. And he shows up and he said, "I appreciate the greatness of Larry Bird. He's done a lot for the NBA. Very, very special. But last time I checked, this was a business deal. And here is my financial portfolio." And his financial portfolio was worth $1.7 billion. And the next words out of his mouth was, "Who do I cut the check to?"

Stephen A. Smith: (45:20)
We have to understand, it's networking. It's connections. It's all of that stuff too. But at the end of the day, what's the rule of the game that you're playing. He knew the rules and it was finances. Pat Riley knew the rules, it was rings. Magic Johnson knew the rules, it was competing for and putting yourself in a position to win championships. And they made sure to articulate and aluminate that agenda for all to see. Showing that it wasn't just a benefit to them, but to the very people they were trying to appeal to. And as a result, everybody bought in because of it. And that's why they are who they are, and most of us aspire to be who they are.

John Darsie: (46:05)
And Bob Johnson proceeded to name the team after himself, the Bobcat's and then we [crosstalk 00:46:14]. And then we flipped it to our good friend, Michael Jordan, who I still think Michael is going to turn it around. He's a North Carolina guy like me.

Stephen A. Smith: (46:18)
I hope so. He's a friend.

John Darsie: (46:21)
So last question, we can't let the preeminent NBA analyst in the world leave without giving some predictions for the season that starting next week. Who do you think wins the NBA championship this year? Lakers are going to repeat? [crosstalk 00:46:35].

Stephen A. Smith: (46:35)
You had a champion and you had the best off season. And that off season, Dennis Schröder and Marc Gasol and Montrezl Harrell. I mean, my goodness, they had the best off season.

John Darsie: (46:50)
Horton-Tucker looks like a player.

Stephen A. Smith: (46:52)
Yeah, he does.

John Darsie: (46:53)
So what are some teams and players that may be not on the mainstream radar or people that follow the NBA less closely that you think are going to take a big step forward this season?

Stephen A. Smith: (47:03)
Listen, in the Western Conference, the elite teams are the Lakers, the Clippers, the Dallas Mavericks. They definitely stand out. There's no question about that. Houston is taking a step back because Russell Westbrook is gone. James Harden doesn't want to be there. A trade seems eminent at some point. So they're not going to be the same, but in terms of an up and coming team, look out for the Phoenix Suns, Devin Booker is a star. You've got Deandre Ayton and others that can play on this squad. There's something special. Don't ignore them. Chris Paul is there now as well. So we can't ignore that.

Stephen A. Smith: (47:39)
You got to pay attention to the Warriors. I know Klay Thompson is out for the year, but Steph Curry has returned. They drafted this kid, James Wiseman and number two out of Memphis, even though he only played about three games. They still have some of the pieces. They picked up Kelly Oubre. They've got Andrew Wiggins. This kid Paschall that was on a bench and averaging 14 a game last year. He's going to play an integral role as well. When you consider that, they should be a playoff team. And when you consider once that Klay Thompson gets back, not this upcoming season, but next year, they might be right back in the championship picture.

Stephen A. Smith: (48:14)
When you look at Portland, they picked up Robert Covington to pair with CJ McCollum and Damian Lillard and those boys. You can't ignore them either. As the Western Conference, I would say Phoenix to answer your question directly. In the East, you've got Philly, Boston, Toronto, Miami and Milwaukee, especially with the Greek Freak agreeing up for the five years, $228 million for the-

John Darsie: (48:33)
Were you surprised about that? Were you surprised about him re-upping?

Stephen A. Smith: (48:34)
I was a little surprised because I thought that he would weigh his options. I thought that Pat Riley in South Beach would have a chance, but if you saw the documentary on him and his family, how poor he was, how much they struggled and starved and what have you, to be embraced by the Milwaukee community the way that he was, for the organization to do things for his family, like his brother is on the roster for crying out loud, no disrespect for his brother, but there's no way in hell his brother would be on an NBA roster if it were not for him, but that's the case. They took care of him in every way. And so they appealed to him in a way that said, hey, you know what? He's like, I'm in a great, great situation. They love me. So I'm going to stick with that.

Stephen A. Smith: (49:20)
I look at those teams and Milwaukee, anybody can come out from those teams, Milwaukee, Boston, Miami, affiliate of four. We'll see about Boston even though I love Jason Tatum and Jaylen Brown, I question their depth. But the team that I'm looking at right now is Atlanta in terms of what could end up happening to them. I mean, this was a horrible team last year, but Trey Young could really, really play. They've got some other pieces. They just added Rondo to their squad as well, who's a guy that knows how to run a basketball team. And so you got to keep your eyes on one of those up and coming teams. Not that they're going to win the championship or anything like that, but that they could make things interesting than it once was.

Anthony Scaramucci: (50:01)
We knew the kid was going to get signed because we had Mark Lasry, the owner of the Milwaukee Bucks on a SALT Talk. And you could tell from the way he answered that question, he wasn't letting that kid out of Milwaukee.

Stephen A. Smith: (50:13)
Right. Well listen, all you can do is offer them all the money in the world, but it's up to them to take it or not. In the case of Kevin Durant, he turned it down. In the case of LeBron James, he turned it down. In the case of Anthony Davis, he turned it down. So it wasn't a matter of the money because you knew that they were going to offer him the max. It was just about what he wanted to do, but he said it best. He said, they embraced me when no one else would. They were looking at me, they saw this kid out of Greece. You got to remember the Greek Freak, he's gained 57 pounds of muscle since he arrived in the NBA. He's a freak of nature that ... No one saw that coming. No one saw that coming.

Anthony Scaramucci: (50:53)
Stephen, see if you can get me introduced to his trainer, can you help me with that? Because I need 57 pounds of muscle.

Stephen A. Smith: (51:00)
I don't think any of us need 57 pounds of muscle at this age, but I will tell you this, I can use some of those muscles. Ain't no doubt about that. I can still use a stamina. I can tell you that.

Anthony Scaramucci: (51:09)
Tough kid. Well, you've been absolutely terrific. Thank you so much for joining us on SALT Talks. I wish you and your family an amazing Christmas holiday and great New Year's. Hopefully we'll get you back. We got a lot to talk about. We could have 20 SALT Talks with you, Stephen A.

Stephen A. Smith: (51:27)
Well, thank you so much. I appreciate it. And if you don't mind me giving myself a plug, remember Stephen A's World debuts on ESPN+ January 11th, Monday, January 11th. I'll be on every Monday, Tuesday, Thursday, and Friday, because I'll still be doing my NBA show on Wednesday.

Anthony Scaramucci: (51:45)
Twitter handle? What's your Twitter handle?

Stephen A. Smith: (51:47)
Oh, @stephenasmith.

Anthony Scaramucci: (51:47)
All right.

Stephen A. Smith: (51:47)
All right.

John Darsie: (51:47)
Stephen A's World, go out and get that Disney bundle. I have three young kids, Disney+ is a hit in my household. I got my ESPN+ for when they go to bed and I can consume some sports content and you also get Hulu is the best deal in the world. And now let's make Steven's parent company happy. Go and get that Disney bundle and watch Steven A's World on ESPN+ starting January 11th.

Stephen A. Smith: (52:13)
Thank you so much. I appreciate it. Oh, by the way, I want to say this to y'all too. Not only am I hosting it, I'm the executive producer of it. And my production company is co-producing it, Mr. SAS Productions. So I'm the executive producer, the host and co-producing it as a company. I'm stepping into your world, Anthony, I'm trying to learn from you now.

Anthony Scaramucci: (52:33)
Now, I know it's going to be super successful. I knew it before that, but now I triple know it.

Stephen A. Smith: (52:36)
I'm glad, man.

Anthony Scaramucci: (52:38)
Well, you be well. God blessed you, mam. Hopefully we can get you to one of our live events before too long.

Stephen A. Smith: (52:42)
Absolutely. Looking forward to it. God bless and happy holidays to y'all.

Anthony Scaramucci: (52:45)
You too, brother. Thank you.

Saifedean Ammous: “The Bitcoin Standard” | SALT Talks #127

“Bitcoin is the hardest money that we have ever discovered or invented.”

Dr. Saifedean Ammous is the author of The Bitcoin Standard: The Decentralized Alternative to Central Banking, the best-selling groundbreaking study of the economics of bitcoin. The book was a pioneer in explaining bitcoin's value proposition, and the implications of its unique properties.

As a peer-to-peer software for operating payment network, Bitcoin acts as the native currency. Bitcoin is totally protected from inflation because Bitcoin’s source code makes it mathematically impossible to exceed 21 million Bitcoins- a fixed monetary supply. The entire world was effectively on the gold standard, because it was the hardest money at the time, but more gold can continually be introduced into the supply. “Anything that gets held as a form of money, the value of it rises, and because the value rises, it gives people an incentive to make more of it.”

Bitcoin offers a way to remove the third-party intermediaries in the financial transaction. The decentralized nature of the blockchain, on which Bitcoin exists, creates security via transparency. There is no one single point of failure in the way that a third-party financial institution, entrusted with money, must secure itself from hackers or thieves.

LISTEN AND SUBSCRIBE

SPEAKER

Dr. Saifedean Ammous.jpeg

Saifedean Ammous

Author

The Bitcoin Standard

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello, everyone, and welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology and public policy. SALT Talks are a digital interview series where we talk to leading investors, creators and thinkers. And our goal on these SALT Talks is really to replicate the experience that we provide at our global conferences, the SALT Conference, which we host twice a year. One in the United States, one internationally. Obviously this year we were unable to host our conferences, but we look forward to hopefully resuming our in-person events starting again in 2021.

John Darsie: (00:47)
What we're trying to do at our conferences and on these SALT Talks is provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And we're very excited today to bring you the latest installment of our digital asset series with our guest today Dr. Saifedean Ammous. Dr. Ammous is the author of The Bitcoin Standard: The Decentralized Alternative to Central Banking, which is a bestselling, ground breaking study of the economics of Bitcoin. And for people who are looking to get introduced to the space, we thought this was a great place to start.

John Darsie: (01:22)
When I was going through my personal Bitcoin education one of the first books that was recommended to me was The Bitcoin Standard. So we're very excited to have Saif with us today on SALT Talks. The book was a pioneer in explaining bitcoin's value proposition and the implications of its unique properties. Bitcoin's supply is completely irresponsive to demand, making it the hardest money ever discovered, and making hard money available to everyone worldwide.

John Darsie: (01:48)
Saif has been at the forefront of the study of the economic implications of this new technology. And he teaches and researches the economics of Bitcoin on his online learning platform Saifedean.com. Dr. Ammous holds a PhD in sustainable development from Columbia University, where his doctoral thesis studied the economics of biofuels and alternative energy sources. He also holds a Master's in development management from the London School of Economics, and a Bachelor of Engineering from the American University of Beirut.

John Darsie: (02:20)
Just a reminder, if you have any questions for Dr. Ammous. During today's talk, you can enter them in the Q&A box at the bottom of your video screen on Zoom. And in terms of today's format, we're going to do something a little bit different with Dr. Ammous. He's a fantastic presenter and has fantastic materials that sort of take you even if you're a Bitcoin novice, you can start to understand some of the economics and the value proposition of Bitcoin and cryptocurrencies. So we're going to have Dr. Ammous, give a presentation and share his screen for the first 25 to 30 minutes of today's talk. And then I'm going to come in and moderate audience Q&A and ask some follow up questions from my end as well. So with that, I'm going to turn it over to Dr. Ammous to give his presentation.

Saifedean Ammous: (03:01)
Thank you very much, John, thank you for having me. And for your very kind introduction. It's a pleasure to be here. Can everybody see my slides?

John Darsie: (03:11)
I think so. I can see them.

Saifedean Ammous: (03:13)
Okay, cool. So, in today's talk, I'm going to go over some of the main concepts in my book, The Bitcoin Standard. And I'm going to begin with explaining what is Bitcoin, the definition that I came up with for Bitcoin. And then we bitcoins monetary uniqueness? What is it about Bitcoin that makes us so unique? What is Bitcoin good for? And what are some of the implications of the use of Bitcoin? So my definition of Bitcoin is that Bitcoin is a peer to peer software for operating a payment network with its own native currency that is protected from unexpected inflation, without having to rely on any trusted third parties.

Saifedean Ammous: (03:53)
I think this really captures the essence of what we have here. It's a form of software that is peer to peer in that it's distributed over the Internet, and anybody can download it and use it and any member of the network is a peer with other members. So it's perfectly voluntary. And what that software does is that it operates a payment network between participants on the network. And that payment network runs with its own native currency, which is digital, and whose supply is protected from unexpected inflation, there's no way for anybody to make more of that money, which I think is the most important economic property of Bitcoin.

Saifedean Ammous: (04:32)
And all of that is done without having to rely on any single trusted third party, there aren't intermediaries that you need to rely on in the transactions that take place on the Bitcoin network. The significance of Bitcoin, in my mind, lies in two main properties. The first one is that it is the hardest money that we have ever discovered or invented. And I'm going to discuss this in a little bit more detail now. And second is that it is the only working alternative to central banks for international payments settlement.

Saifedean Ammous: (05:02)
So first of all, when we think about the hardness, if you think about it, anything can be used as money, there's no reason why anything can't be used as money, anybody who decides to hold something, not for the sake of consuming it, but for the sake of exchanging it for something else later on, is choosing to hold that thing as a form of money.

Saifedean Ammous: (05:26)
But anything that gets held as a form of money, the value of it rises, and because the value rises, that it gives people an incentive to make more of it. So anything that is easy to make ends up being a lousy money, because people can make more of it and the value of it will drop. And so if you look historically, you find that the things that have been used as money, historically, are usually things that are hard to make. And in fact, you find that whatever is used as money is whatever is the hardest to make at any particular point in time. And so, there are these examples, which I discuss in more detail in my book. But if you look at the beginning of the 20th century, you see the entire world effectively was on a gold standard, or the vast majority of the world was on a gold standard. Because at that time, gold was the hardest money that we had ever had.

Saifedean Ammous: (06:19)
And for a very long time we know that gold supply is only increasing at around one or 2%. This has been the case for about a century, we look at global gold production, we see that every year it goes up at around 1.5%. And that is, in my mind, what makes gold the most likely monetary asset, the most popular monetary asset in the market all over the world at the beginning of the 20th century, because it is the hardest money. And even the supply continues to grow at a very low rate. So there's no way for anybody to make increasingly large quantities of gold and to bring them onto the market.

Saifedean Ammous: (07:00)
Now, why is this important? Because if you look, today, you see that Bitcoin is basically the hardest money ever. Bitcoin's supply grows, but flattens out, it stops growing at around 21 million Bitcoin. There will only ever be 21 million Bitcoin. And that's it, there'll never be more and so the supply growth rate starts off quick starts off high, but then begins to drop as the already existing supply increases, and the new supply becomes less and less significant.

Saifedean Ammous: (07:36)
So the current annual growth rate is around 2% to 3% for Bitcoin, and over the next two, three years, it's going to be a little less than 2%. And then in 2025, it'll drop again to under 1%. And then it'll continue to drop under 1% until effectively it reaches zero sometime in the next century. So, this is quite unique. And this I think makes Bitcoin quite interesting as a monetary technology, because it is the first money that we have whose supply is completely irresponsive to demand.

Saifedean Ammous: (08:12)
In other words, with everything else, if they get if something gets chosen as money, more people will be trying to produce more of it, and so the supply will increase. But with Bitcoin, there is no way of producing more of it because of something called the difficulty adjustment. When you try and make more Bitcoin, you don't make more Bitcoin, you just end up expanding more processing power and electricity on making Bitcoin more secure.

Saifedean Ammous: (08:39)
And so the way that I like to present this, is if you look at it with every other form of money that we've ever known, if people use it as a store of value, the price will rise, there will be more profit to be made from mining it. And that leads to an increase in the supply, which then leads to a drop in the price. But with Bitcoin, on the other hand, this process is a cycle. And the reason for that is that we have the first same three steps, the store of value demand increases, it causes the price to rise, it causes mining to become more profitable. But in the case of Bitcoin, if you start mining more Bitcoin, you're not able to increase the supply, there's no way of increasing the supply of Bitcoin.

Saifedean Ammous: (09:26)
So instead, what ends up happening is that more hashing power goes to mining, so more people are spending more resources on mining, and mining becomes harder, and the supply of coins stays the same. That's how the difficulty adjustment works. Instead of the reward for mining rising, the reward stays the same, but mining becomes harder. And so no matter how many people are using Bitcoin and how many people are trying to mine Bitcoin, we're only going to get a certain number of Bitcoin produced every day, around these days, it's around 900 coins, and for the next three and a half years, it's going to be 900 coins a day, regardless of how many people are trying to mine Bitcoin.

Saifedean Ammous: (10:09)
The 900 coins a day is a set reward, and the difficulty of mining adjusts in order to make sure that we continue to average around 900 coins a day. And that's how this has been working. So in other words, when mining becomes more profitable, more hashing power is going toward mining, but the supply does not increase, instead more hashing power is effectively protecting the network. So the network becomes harder to attack, it becomes more expensive to attack the Bitcoin network becomes more expensive to make the Bitcoin network unusable. And that gives Bitcoin the ability to survive longer, which makes it more attractive as a store of value which attracts more store of value demand.

Saifedean Ammous: (10:55)
And this in my mind is the only way that we can explain and understand the incredible rise in the price of bitcoin that we've seen over the last 10 years. Bitcoin has basically gone up... Well 11 years now. Bitcoin has gone up about one and a half to two billion percent in 11 years, and nothing has ever gone up like that. Ever. And I think this is really the only way to understand it, because bitcoin's supply is completely irresponsive to demand with anything else. If there's more supply, if there's more demand, we can always make more. We're always able to make more of anything else. But with Bitcoin, there's a strict fixed limit on how much we can make from it.

Saifedean Ammous: (11:38)
Because of this thing that we call difficulty adjustment, so the difficulty adjustment really is the most amazing technology in Bitcoin in my mind, it's the magic sauce that makes Bitcoin work. Because it protects the network from inflation. And it ensures the supply is auditable, and verifiable by all network members. And it converts people's inevitable incentive to increase bitcoins supply into network security. So it makes the network more secure. And it does that by using the incentive of people to increase the supply of the currency.

Saifedean Ammous: (12:11)
So it's the reason why I like to call Bitcoin and all conquering juggernaut of economic incentives. Whereas everybody competes to inflate all other monies. Whereas everybody's competing to increase the supply of every other currency that is out there, people compete to secure Bitcoin, not to inflate it. So people compete to make Bitcoin more secure, which ends up making it more attractive. So Bitcoin really solved the inflation problem in the most neat way imaginable, because instead of providing people with an incentive to increase the supply, it provides them with an incentive to make the network more secure.

Saifedean Ammous: (12:49)
And how secure is Bitcoin? Bitcoin has no single point of failure, it has no single piece of critical hardware or infrastructure, no single critical individual or organization, it basically can't be stopped. It's a protocol that is always open to anyone who wants it at any point in time, around every 10 minutes, a new block of transactions is released. And this has basically never failed in the 10 or 11 years that has been going on. And it's never confirmed a fraudulent transaction. So far, nobody has managed to spend money they don't have on the Bitcoin network.

Saifedean Ammous: (13:22)
So the hardest money that's ever been invented is basically available worldwide for anyone who can receive two megabytes of data every 10 minutes. You don't even need a computer or an internet connection. There are ways to get around that to use Bitcoin. It's purely voluntary. It does not read regulation enforcement or the police. And it's chosen and valued freely on the market. It's sound money. It's money that gets its value, because the market gives it value, not because anybody forces its value. So what is Bitcoin good for then?

Saifedean Ammous: (13:53)
Well, for me, I think the most important use case of Bitcoin is that it is a store of value. And it's an obvious use case, because it's the first strictly scarce liquid asset that we've ever had. And in fact, if you think about it, one of my favorite books is a book called The Ultimate Resource, written by economist Julian Simon. And in this book, Julian Simon explains that the ultimate resource in the world really is human time, because with human time we're able to make more of any other resource. The limit on how much we have of oil, or silver, or gold, or copper, or nickel or zinc. The limit on how much we have of all of these metals is simply how much time we dedicate toward mining and producing them. The amount of them that exists in the crust of the earth is far beyond our capability to process and consume.

Saifedean Ammous: (14:54)
And the limiting factor really is just the time that we are able to dedicate to producing those goods versus other goods, we could always make more of anything. And that's why we never run out of these metals. No matter how much we find, no matter how much we consume, we keep digging and we keep finding more. Because the limit is not how much exists on Earth, because that's so far larger than we can even ever imagine or calculate, the earth is enormous. The limit is how much time we have for other things. The limit is the opportunity cost in terms of our time, in terms of other things.

Saifedean Ammous: (15:29)
And so, before Bitcoin, anything that we chose, as a store of value in this world, had the imperfection that its supply will increase in response to it being chosen as money. But Bitcoin doesn't have that. So naturally it ends up working out really well as a store of value. And so ultimately, the only thing that is scarce is time. And Bitcoin is the second thing that is truly scarce. And so, for me that's a natural match between the two, if you want to store the value of your time in money, you would want to store it in the money that is scarce like your time.

Saifedean Ammous: (16:02)
So this is why I like to call Bitcoin the most advanced technology for transferring the value of time into the future. The second thing that Bitcoin I think is good for is that it is the decentralized free market alternative to central banking. Until the year 2009 if you wanted to send money from one country to the other, the only way that you could do it was you had to go through financial institutions that are operated by central banks. So central banks have a national monopoly on this process in every country. And they're able to monopolize the market for sending money in and out of the country. And it's had terrible consequences in many places for many people. And in many of those places, and many of those times people didn't have an alternative, because where do you go? How do you trade with people outside your country, if you can't have a bank? You can send physical gold in reliable ways that are cheap and economical.

Saifedean Ammous: (17:08)
And there was no alternative. So you have to have your savings always with the local banking system, which was also lending to the government and likely to witness significant devaluation. Bitcoin offers us the first alternative to that. It really is the first working alternative to international payment settlement. It's digital and yet it does not require the supervision and the control of national central banks.

Saifedean Ammous: (17:41)
And one important aspect that I get into detail in my book, is the issue of how Bitcoin grows and how Bitcoin scales. There is, I think, a common misconception that Bitcoin is a payment network that you can think of Bitcoin and compare it to PayPal. But in my mind I try and explain the idea that Bitcoin is actually more... Is better understood as being a settlement network, it's a network for a small number of high value transactions. And this is the way in which the network has been evolving over the past few years, it's growing in this direction, where the number of transactions conducted on Bitcoin every day has been roughly constant for maybe five, six years now at around 300,000 to 500,000 transactions a day. But the value of that is transacted continues to increase significantly. More and more value is being sent on the Bitcoin network, even though the number of transactions is the same.

Saifedean Ammous: (18:37)
So in that sense, Bitcoin is growing as a settlement network. And I think, in this regard, we're going to see it grow more in this capacity. And I think you see more and more of the businesses that are being built around Bitcoin, at this point, are focusing on this kind of use case. And an important part to this is the fact that we see it with corporations now looking into using Bitcoin as a cash settlement... As a part of their cash reserve assets, rather than thinking of using Bitcoin for payments.

Saifedean Ammous: (19:24)
So a few years ago, a lot of people used to think that when is Starbucks going to adopt Bitcoin? When is McDonald's going to adopt Bitcoin? In their mind ideals, you would be able to pay for your coffee or your burger with Bitcoin. But I think what we're seeing is that we're going to be witnessing Bitcoin transactions being performed... Bitcoin coming into those companies from the balance sheet, not from the... They're going to hold it as cash rather than accepted for small payments. And I think eventually, we will see small payments being built on Bitcoin eventually, but for now, I think that the compelling use case is to hold it and use it for large amounts of settlement rather than for daily small transactions.

Saifedean Ammous: (20:12)
So this is why in my book, I analogize Bitcoin to gold because similarly with gold, the trade was happening with a gold certificate. So we'll see second layer solutions built on Bitcoin, similar to second layer solutions built on gold, I think, and the interesting security question then for Bitcoin is whether it can resist being centralized, like gold was in central banks.

Saifedean Ammous: (20:41)
Some implications for Bitcoin I discuss in the book. One that I find extremely important is the issue of time preference. I think a problem of easy money is that it loses value and so it makes the future less certain for people. And because it makes the future less certain, it raises the cost of providing for the future. And therefore it makes it less likely for people to save for the future. And that reflects on all manner of decisions and outlooks on life which gives people more of a present focused orientation rather than a future focused orientation. I think we see the same... We see the opposite happen under hard money.

Saifedean Ammous: (21:25)
So if you think of the 19th century to today, people used to save much more in the 19th century. And if you look at what has happened as western economies went off the gold standard, you see that savings rates declined, continues to decline. The one country that continues to have higher savings rates was the last country to go off the gold standard, and that is Switzerland. So I think there's something there that suggests if we do move to a Bitcoin standard, effectively, the world would have far less debt and far more saving is the way that I would see it if you move to a hard assets.

Saifedean Ammous: (22:00)
Don't have much time to explain this in detail. But if you're familiar with the Austrian School theory of the business cycle, from that perspective, effectively easy money and the ability of governments to manipulate and central banks to extend credit, unbacked by real savings, effectively manipulating interest rate downward and increasing the money supply, that is effectively the cause of the business cycle, and inflation and recessions. And for me, this is my favorite chart to illustrate this again, look at Switzerland, up until the 1970s when they went on the gold standard, they basically had no unemployment, there were no recessions, there was really no unemployment. And then that started happening as they went off gold and started having a more conventional 20th century monetary policy.

Saifedean Ammous: (22:52)
One other important application in my mind is that it will end the... Having Bitcoin could offer us the way out of the Tower of Babel, that is the foreign exchange market. Which is trading something roughly in the sea of the size of 25 multiples of GDP, in terms of volume. All of it essentially, because we've unsolved the problem of money in the 20th century by going off gold, which was one universal international apolitical money and going to many different political monies, which effectively create the system of international partial barter around the world.

Saifedean Ammous: (23:34)
So in conclusion, I think Bitcoin, if I were to summarize what Bitcoin is, I would say Bitcoin is a technological and apolitical solution to two problems. The first is international value transfer. And the second is saving, or transferring value to the future. Bitcoin offers us essentially a technological solution for those things, it makes those things, the use of them similar to using a computer, you're able to store your value in computer in a way that is much more reliable and predictable and auditable than the traditional solutions that we have.

Saifedean Ammous: (24:12)
And I think the intriguing possibility of Bitcoin is that it offers us the prospect of a real free market in money savings, capital, and investments. That is all for the presentation. Thank you very much for inviting me. My website to saifedean.com. The Bitcoin Standard, my book is available in 24 languages now. You can find them all listed on my website. And you can also sign up to receive chapters from my two forthcoming books that I'm working on right now the Fiat Standard, which is the sequel to The Bitcoin Standard, and also a textbook in economics, Principles of Economics. Thank you very much.

John Darsie: (24:50)
Well, Saif. Thank you so much for that presentation. We already have a few questions in the queue. But I want to remind anybody who's watching, if you have any questions for the remaining 15 to 20 minutes of today's SALT Talk, if you're on Zoom with us, you can enter them in the Q&A box at the bottom of your video screen. If you're watching on Periscope on LinkedIn, or on our YouTube channel, you can email any questions you have to info@salt.org and we will try to get those in before we let Saif leave us.

John Darsie: (25:19)
The first question that's being asked and one of the reasons why we did this with you Saif is that we had some people in our community who are crypto curious but have yet to really dive in educate themselves completely about what Bitcoin is and the long term implications of cryptocurrency. So we have just a very basic follow up question from Victoria, who asks, "How is Bitcoin mined? And what's the process going to be for mining the rest of Bitcoin over the next decade and into infinity?" As we know, Bitcoin, halving works. But could you just explain what the process for mining Bitcoin is?

Saifedean Ammous: (25:53)
Yeah, the way you think of mining Bitcoin is it's almost Bitcoins are handed out, kind of like medals or trophies in a sports competition, in that they're handed out at a specific period of time. So let's say every four years, there's going to be a gold medal for the 100 meter dash. And it doesn't matter how many people compete for it all over the world. There are only going to be one metal, no matter how many people try and get it. So you can't control the supply through mining more or less. And the way that works is that the reward for mining is pre-programmed and constant. And then if more people try and compete for the reward, then all the people that are competing end up getting less and less out of the reward.

Saifedean Ammous: (26:41)
So the way that it works is that you use a computing power, you get a machine, initially you could do it on your own computer with any basic personal computer, but now it's become more sophisticated and complex, and it needs its own computer to be done economically. So you'll get this machine, which will try and solve mathematical problems to effectively win that reward.

Saifedean Ammous: (27:12)
So all these machines all over the world are mining Bitcoin by trying to find the solution to a mathematical problem. And then whoever provides the correct solution ends up winning a reward. So those rewards are handed out at a rate of six and a quarter, plus a little bit for transaction fees every 10 minutes. So there's six bitcoins being handed out every 10 minutes, roughly six to seven bitcoins more or less every 10 minutes. And that adds up to around 900 bitcoins a day, today.

Saifedean Ammous: (27:44)
So these will be handed out to people who use their computing power and their electricity to solve these mathematical problems. And the more computing power you direct towards the problem, the more likely you are to find those solutions, the more likely you are to have a profit, to make a profit. So what this leads to is that mining ends up being just a very competitive market were only the people who are the most efficient, who have the lowest cost of power, and who can secure the best hardware are able to continue to mine profitably, because it's competitive.

Saifedean Ammous: (28:22)
So the people who have the lowest electricity prices are the only ones who are going to be able to turn out profit because everybody else, they won't be making that award because it won't be economical for them. If your electricity is expensive, then that award that you make will not be worthwhile. So the point behind it is to make it so that the supply of Bitcoin is regulated by the mining process, so that it doesn't increase beyond what it is meant to be increasing at.

Saifedean Ammous: (28:53)
So the schedule right now, the schedule brings us to 21 million in around 100 years from now. We're already at 18.5 million roughly today. So we already have 18.5 million bitcoins that have already been mined. So there's only two and a half million bitcoins to be mined over the next 100 years. And the growth rate is just going to continue to decline over time.

John Darsie: (29:18)
All right, fantastic. What do you say to critics who talk about energy efficiency as it relates to mining and computing power to run the Bitcoin network? That's one criticism that's leveled at Bitcoin is that it's very energy inefficient.

Saifedean Ammous: (29:32)
I think Bitcoin is extremely energy efficient in that it is constantly punishing anybody who has expensive energy. So if you're trying to mine Bitcoin with grid power, you're not going to mine Bitcoin profitably. There are no grids that are basically competitive with a Bitcoin network, because the people that are able to be turning a profit in Bitcoin mining are those who have power that is essentially stranded, that is oversupply at places where it's not easy to move in.

Saifedean Ammous: (30:04)
And power is not easy to transport the capital power a lot. So Bitcoin is essentially a buyer of last resort of power from people who have excess power that don't know what to do with it. And that's why it's mainly mined in hydroelectric dams where they have a lot of spare capacity. And in methane fields, I think is another one where it's going to start growing, it's not now, but I think the potential for that one is enormous, because methane fields, they flare a lot... Sorry, in oil fields, they flare a lot of methane that is not economical to ship, because methane isn't very energy dense, and so it's not really economical.

Saifedean Ammous: (30:40)
And so usually they just burn it, but if you use it to mine Bitcoin, you can recover a lot of your costs. So I think Bitcoin is efficient, is highly energy efficient, uses extremely cheap energy, and it encourages innovations in finding cheaper and cheaper electricity. However, there's no denying that Bitcoin does consume a lot of energy. But I think here I find this question strange.

Saifedean Ammous: (31:04)
It's very common for people to think that consuming a lot of energy is a bad thing. But if you think that consuming a lot of energy is a bad thing, then why would you buy a washing machine? Why wouldn't you wash your clothes with your own hand? Why would you get into a car? A car consumes more energy than a bicycle and an airplane consumes more energy than both.

Saifedean Ammous: (31:23)
And we use those things precisely because they use more energy because burning energy is an extremely cost efficient way to get things done, much more cost efficient than using human input. And so for the same reason, I think that we got rid of telephone operators and we use automated telephones, Bitcoin essentially automates monetary policy and gets rid of discretionary monetary policy and automates international settlement clearance. And I can't think of a better use of electricity.

John Darsie: (32:04)
So we have a few questions around this theme of Bitcoin being digital gold, or an alternative store of value. And some people enjoyed your last slide comparing the total value of the FX market. What do you think the ultimate market cap for Bitcoin could climb to? Is it capped at basically, taking some market cap from gold, and those two assets being your two main alternative stores of value? Or how large of a market cap Do you think Bitcoin could eventually have? And what's the path to getting there?

Saifedean Ammous: (32:39)
Really, it's a scary question to consider, because you try and draw the line on where demand can stop and you keep struggling. So you could say gold, I think de-monetizing gold is a realistic goal and turning golden into an industrial metal, that can happen. So Bitcoin can eat that market. It won't mean gold will go to zero, obviously, it'll become just a expensive industrial metal.

Saifedean Ammous: (33:06)
But you have to also remember that a lot more of global markets are essentially just looking for a store of value, or they're not looking for investment that yields returns. There's a lot of money that is just looking for a store of value. And so a lot of real estate, a lot of people buy homes that they don't really need, because that beats inflation. And a lot of people invest in all kinds of things like bonds, for instance.

Saifedean Ammous: (33:38)
So Bitcoin could eat into the market for real estate, could eat into market for bonds. And so these things could lose a significant amount of the demand that comes to them. Because people don't have a solid store of value that can just offer them... That can be the base of your portfolio that you don't take risks with. And Bitcoin, if it grows into this kind of digital gold, it can offer people that. And so you can imagine, then it would reduce the demand for other markets. And then really, the sky's the limit, I guess.

John Darsie: (34:18)
So we have a few questions about Satoshi Nakamoto, who is the anonymous figure that basically created Bitcoin, there's been speculation about it being an individual or a group of people. But to this day, the identity of the people who started Bitcoin remains a question mark. And we've had a few questions like this on other digital assets, SALT Talks we've done about whether you think ultimately we'll find out who created Bitcoin, and whether you think that would enhance confidence in the system. And who you think, Satoshi Nakamoto is.

Saifedean Ammous: (34:55)
I don't know who it is. And a lot of people have spent a lot of time digging into it. And I don't think there's any satisfactory answer. I think it's hard to explain who he is or what happened. But what we know... In my mind, I think, the disappearance and there's the fact that the person who created this left is probably an essential part of what makes Bitcoin work. I think, if Bitcoin had continued... And I don't know if he did it deliberately, because he didn't indicate whether he wanted to do that. Maybe he did it deliberately, or maybe something happened.

Saifedean Ammous: (35:32)
But I think the fact that there was nobody in charge, and the project continued to survive, is what makes it extremely tough, because it's what makes the monetary policy set in stone. It's what gives it digital value. Because this is a network that is out of control of anybody. There's nobody out there who can take over this network and change the money supply.

Saifedean Ammous: (35:55)
And potentially, I think, if the owner of the guy who started it was still around, they might have had this power and they have this power, they'd set the precedent of doing something like this at an early stage. The whole thing would have become much more political. And in my mind, it would not have this value proposition. It would be far more of like an interesting startup. More than this neutral protocol, which is what Bitcoin is right now. So I think the disappearance of the creator was an enormously important factor in the growth of Bitcoin in a way in which it had become neutral and controlled by nobody.

John Darsie: (36:42)
Correct me if I'm wrong on this, but my understanding is that Satoshi whether that's a person or a group of people still owns a substantial part of the Bitcoin float that exists out in the marketplace. And in general, Bitcoin ownership is very concentrated among a small group of people who are early evangelists of the cryptocurrency. What do you say to people who level the accusation that those groups of people are simply talking their own book and trying to hype up Bitcoin as a way to enrich themselves, and maybe staying anonymous as a way to avoid accusations of conflict of interest as they try to drive Bitcoin higher?

Saifedean Ammous: (37:21)
Well, I mean, part of the mystery is that we don't know who the person is, and they haven't touched their coins. So while we don't really know whether they are his coins to begin with. But given the current value is probably something in the range of, I think, $10, $20 billion, or something like that. It's a lot of money for somebody to be sitting on. I think they probably would have wanted to cash on it earlier. So it's-

John Darsie: (37:51)
They've had a pretty nice return.

Saifedean Ammous: (37:53)
Yes, but they haven't cashed out. So that is quite mystifying but I think in terms of the early adopters, in a sense, yes. But you have to remember that as the thing goes up, as the price goes up, as demand increases, the early adopters sell, because the prices go up in ways that become life changing, and so they sell significant chunks of their assets.

Saifedean Ammous: (38:23)
Now the fact that it's insiders that are promoting it. I guess you could say that about anything but the key difference with Bitcoin. And the reason why I think it's completely meaningless to call it a Ponzi scheme, is that none of the insiders have the way of creating more liabilities to draw on the wealth, or backed by the wealth that is parked in the network.

Saifedean Ammous: (38:49)
So in a Ponzi scheme, people would bring in money into it, and then you're getting new money from new people, and you're using that to pay off the old people. So the same money is being given as liabilities out to several people, and then the whole thing comes crashing down, but nobody can do that in Bitcoin. You are the only one who can own your own keys, and nobody can generate more liabilities, nobody can make more Bitcoins.

Saifedean Ammous: (39:15)
So the rules of the game are open and transparent for everybody. And in a sense, this sounds little more than just sour grapes, like yes, some people took a risk early when you were mocking it and laughing at it and saying it was stupid. And the market found out that maybe it wasn't very stupid. So it seems to me that it is a little bit unfair to be turning around now and saying that it's unfair that the people who took the risk that you derided it and didn't take, took the reward for it.

John Darsie: (39:48)
So your book is called The Bitcoin Standard. Obviously, you're very enthusiastic about Bitcoin. Are you a Bitcoin maximalist? Meaning you think it's going to be a winner take all type scenario in the digital asset space where Bitcoin is going to be the overwhelming winner, and you're going to have maybe a few other coins out there that lag well behind Bitcoin? Do you think this is a space that's going to develop as a mature asset class, and you're going to have other coins and cryptocurrencies and digital assets that have tremendous value as well?

Saifedean Ammous: (40:17)
No, I think it's really it's Bitcoin or bust. There's really only one protocol, one neutral protocol here, and there's only neutral protocols. But I think the use case, ultimately, of the tokens that underlie value transfer, it has to be one protocol. And the only one that can make a claim for being a neutral protocol that is controlled by nobody, that isn't controlled by anybody, is Bitcoin. And that's really ultimately... It's what I see as the value proposition that... It's the guarantee that this thing should have value. The reason these digital bits of data are able to have economic value is because there's a guarantee that nobody can go and change the supply, which is trivial in my mind with all the other digital assets.

Saifedean Ammous: (41:05)
So none of them can demonstrate to me that they have anything like the resilience that Bitcoin has. Because we saw with Bitcoin in 2017, some of the most influential Bitcoin companies and some of the most influential Bitcoin developers and some of the bigger investors in Bitcoin all I tried to change one simple metric and parameter in the Bitcoin network and failed. But you don't see that happening with any of the other currencies, which are to be frank, after Bitcoin, if any of these has made a name where people have heard about it, it only made that name because it had a group of people behind it, working in a concerted effort.

Saifedean Ammous: (41:43)
And for those people, changing the supply and controlling the supply is more or less a bit of a trivial problem. And we've seen with some of the bigger ones that they've... That they don't even know what their supply is going to be like. So for me, I think the value proposition is just not there, in having any of these digital tokens attain the scarcity that is necessary for them to have reliable market value in the long run. And that's why you see that a lot of these copycat coins come into the Bitcoin space. There's a lot of hype initially, but then eventually, they crash. And essentially, they all flatline and head towards zero next to Bitcoin.

Saifedean Ammous: (42:28)
It's happened with thousands of them. And I think we're still at a point where in terms of market cap, which is a very flawed measure, Bitcoin is about 70% of the market. But in terms of real world liquidity, the real world liquidity for the other currencies, it's more likely than Bitcoin is about 90% of the total real liquidity, not just the kind of market cap, which can be easily spoofed.

Saifedean Ammous: (42:58)
So if we're talking about a world in which the market has for 11 years, after 11 years of all these thousands of competitors coming in, and they still can't get to more than 10% of the liquidity of Bitcoin, I think it's time to consider this is not Pepsi and Coca Cola. This is not different providers of different software packages. This is a neutral protocol versus really proprietary currencies. And it's more like there's the internet. And then there are other people trying to sell their own local work network as being the other internet. But there's only really one protocol for the web itself.

John Darsie: (43:44)
So you're a believer in the Austrian School of Economics. And you think that our current Keynesian, fiat monetary system is inevitably flawed and eventually going to implode as we try to inflate our way out of our problems. What do you think the ultimate path for Bitcoin is? Do you think it's something that the United States government and other global governments are going to eventually acquiesce and come up with regulation that allows it to coexist with something like the US dollar? Do you think if the system starts to collapse a little bit that they'll start to crack down on cryptocurrency with capital controls and try to prosecute people that use cryptocurrencies? What do you think the ultimate path to acceptance and mainstream use for Bitcoin is over the coming decades?

Saifedean Ammous: (44:30)
I have to say, I don't really necessarily think that this current system has to crash, it's been going around 50 years and for all I know, it could go for another 50, maybe even more. And in my mind, I don't really have much of the idea that Bitcoin is... It could be that Bitcoin is the savior from hyperinflation and it certainly was my savior from hyperinflation in Lebanon, where I used to live until recently and the currency collapsed. So I think if hyperinflation does happen, Bitcoin is a great thing to have.

Saifedean Ammous: (45:05)
However, I don't think that Bitcoin needs a hyperinflation scenario, in order for it to rise. I think this is a point that I keep trying to communicate, which is that we need to stop thinking about it, in terms of this system is going to collapse in Bitcoin is the only answer. I think we need to just think this is just a better technology, this is just a more advanced system. And it's likely to take over just because apolitical settlement that is accessible and verifiable, for anybody, anywhere around the world, at a very low cost is just a much more powerful proposition than having to go through political institutions every time you want to send and receive money. And having to go through political institutions that have a monopoly that can devalue the currency.

Saifedean Ammous: (45:53)
So I think, by being harder money and by offering international clearance independently, Bitcoin is just a new ecosystem. And in my mind, I don't see that it is necessary for the Fiat system to collapse for Bitcoin to grow. I think the two can continue to coexist for a long period of time, while Bitcoin grows. And it's not implausible in my mind that just Bitcoin continues to grow peacefully next to a relatively shrinking Fiat economy, and then effectively we upgrade to a scenario where we're using more Bitcoin.

Saifedean Ammous: (46:30)
And I think the use case, ultimately, in my mind, I like to compare it to dynamite. When dynamite comes up it changes... Or gunpowder, it changes the dynamics of power. And if you have an army of soldiers who have swords, you don't like gunpowder. So what do you do? Do you ban gunpowder? Banning gunpowder is not going to be effective, because the people who are going to fight your soldiers are not going to-

John Darsie: (46:58)
Good luck with that.

Saifedean Ammous: (47:00)
Exactly. You're just bending your own soldiers from having gunpowder. So for me, I think individuals, corporations, and governments will start just understanding the massive potential for Bitcoin as effectively digital dynamite gold. And see that their own interest is better served by using Bitcoin rather than fighting Bitcoin.

John Darsie: (47:25)
So in your view, what are the biggest risks to Bitcoin becoming this major store of value that we're talking about as a digital gold, and an alternative to other stores of value that you've described?

Saifedean Ammous: (47:37)
I think the main risk to keep an eye on is the decentralization of the network. If the number of nodes, and that's really the key metric to keep an eye on, if the number of nodes in the Bitcoin network declined significantly, then there's... Or if the cost of running a node rises significantly, then you expect that the number of nodes would decline. And as a result, you would have a smaller number of nodes. And then that becomes more concerning because it becomes more plausible that they could collude with one another, to change the supply.

Saifedean Ammous: (48:10)
So if you have a situation where there develops an asymmetry between the people using Bitcoin and the people who are able to validate the blocks, and are able to validate the consensus rules of the network, if that split becomes too big, and the number of the nodes becomes too small and concentrated, then in my mind that really compromises the value proposition, because it makes it likely that you could get some kind of collusion or it's more likely at least that you could get some kind of collusion that could alter the monetary policy. So this for me is the main risk, the decentralization.

John Darsie: (48:50)
For people who are interested in owning Bitcoin what do you think is the optimal path to buying Bitcoin that's currently available in the marketplace today? So you have some over the counter investment products that have started to emerge, but you have yet to have a SEC approved and registered ETF. For example, you have exchanges like Coinbase, Gemini, and others that you can buy and sell Bitcoin, in your view what's the most secure, safest method for buying Bitcoin today?

Saifedean Ammous: (49:20)
I mean, it's not an easy question, because it depends on who's asking it and how they want to do it. Obviously, there are many commercial options for individuals and for institutions. For my personal, I work with a company called the NYDIG, the New York digital Investment Group, and they offer a full suite of solutions, institutional grade solutions fully regulated, and they have the BitLicense.

Saifedean Ammous: (49:49)
So that would be the kind of solution that I would recommend for institutions. With individuals, I recommend, the most important thing is that you hold your own keys of Bitcoin. If you don't hold your own private keys of Bitcoin, for your Bitcoin, then these are not your bitcoins. And I recommend personally, individually holding your own Bitcoin for yourself. But obviously, that might not be feasible with institutional money, which might require more elaborate custody arrangements. And for that there's NYDIG. But yeah, I think that it's difficult to recommend something too specific, just because there are too many options. And it depends on what the person prefers. And for their own security, the best solution is the one that makes sense for you, that you're likely to stick to safely.

John Darsie: (50:45)
There you go. That's responsible advice. Dr. Ammous, Saif, it's been a pleasure to have you on, we look forward to hopefully having you at one of our in person SALT conferences here in the future, as we talked about before we started and as you can see, by all the episodes of SALT Talks that have covered digital assets, we have a growing enthusiasm and interest in the space. So we look forward to continuing our journey, both academically and potentially in practice in the future. But thanks so much for joining us, and we'll look forward to seeing you soon.

Saifedean Ammous: (51:15)
Thank you very much for having me. This was a lot of fun.

Strauss Zelnick: The Future of Esports | SALT Talks #124

“With interactive entertainment, you not only have great graphics, great stories, great characters, great gameplay, but you can consume the experience with your friends and with communities, both existing and new, all around the world in real time.”

Strauss Zelnick serves as Chief Executive Officer and Chairman of the Board of Directors of Take-Two Interactive Software, Inc. In addition, he recently served as Interim Chairman of The CBS Corp. Board of Directors.

Quitting a role as a film studio president in order to launch a video game company 25 years was a major risk, but this relatively new genre of entertainment showed signs similar to motion pictures in the 1920s. On top of the meteoric rise in video games and interactive entertainment of the last couple decades, the pandemic has accelerated its growth and adoption as people spend more time at home. The technological developments of video games have made human interaction central to its experience, offering a social element for many who wouldn’t have it during a stay-at-home period. “We like to consume entertainment with other people; we like to participate with other people; we like to watch with other people.”

Esports represents a new frontier in the video game space with over 250 million viewers. It even serves as the primary entertainment for 125 million. The industry will continue to grow and likely evolve into an ecosystem similar to the professional sports leagues.

LISTEN AND SUBSCRIBE

SPEAKER

Strauss Zelnick.jpeg

Strauss Zelnick

Chief Executive Officer & Chairman

Take-Two Interactive

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:07)
Hello everyone and welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology and public policy. SALT Talks are a digital interview series that we launched during this work from home period with leading investors, creators, and thinkers. And what we're trying to do during these SALT Talks is replicate the experience that we provide in our global conference series, the SALT Conference. And at our conferences and on these SALT Talks, we're trying to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And we're very excited today to welcome Strauss Zelnick to SALT Talks. Strauss founded ZMC in 2001, he has a long history of leading media and communications enterprises, and is deeply involved in originating investments, advising executives and guiding strategic and operational initiatives across all portfolio company investments.

John Darsie: (01:07)
Strauss serves as the Chief Executive Officer and chairman of the Board of the Directors for Take-Two Interactive Software Incorporated. In addition, he recently served as interim chairman of the CBS Corp Board of Directors. Prior to forming ZMC, Strauss was president and CEO of BMG entertainment. And before joining BMG, Strauss was the president and CEO of Crystal Dynamics, a producer and distributor of interactive entertainment software. He spent four years as president and COO of 20th Century Fox, where he managed all aspects of Fox worldwide and motion picture productions and distribution business. Strauss holds a BA from Wesleyan University, as well as an MBA from Harvard Business School and a JD from Harvard Law School, which he shares with our moderator today. He is the author of Success, a concise guide to having a life you want, and Becoming Ageless, two great books.

John Darsie: (02:07)
And Strauss is also a workout fanatic. And he has a few years on me, but he's in much better shape than me. That is for sure. Reminder, if you have any questions for Strauss during today's SALT Talk, you can enter them in the Q and A box at the bottom of your video screen on Zoom. And hosting Today's talk is Anthony Scaramucci, the founder and managing partner of SkyBridge Capital, a global alternative investment firm. And with that, I'll turn it over to Anthony for the interview

Anthony Scaramucci: (02:30)
Just pointing out John, that it's like calling your aunt a woman, that Strauss Zelnick is in better shape than you. I just thought I would just mention that before we get the-

John Darsie: (02:41)
I left you out of it, Anthony, but-

Anthony Scaramucci: (02:43)
You didn't have to overstate the obvious. Okay? So Strauss, welcome to SALT Talks. Great to have you on. You got such a story background, but I always ask this question. Tell us something about you that we couldn't learn from Wikipedia or from doing a Google search.

Strauss Zelnick: (03:07)
Thank you for asking, Anthony. It's great to be here. It's great to see you, although first seeing you in person. And Anthony, among his many attributes, is also share something that I pride myself on which is if you text Anthony, you get an answer in about 30 seconds. I try to do the same. And I will say that during this political period leading up to the election, that was a great source of information and at times comfort. So it's been-

John Darsie: (03:39)
Or misinformation, Strauss. Don't give him too much credit.

Strauss Zelnick: (03:41)
[inaudible 00:03:41]. I was basically lying to you with overconfidence [inaudible 00:03:46].

John Darsie: (03:46)
You could have heard him on election night, he was yelling at me. He said, "You were too confident. You made me confident. What were you doing?"

Anthony Scaramucci: (03:52)
I won at nine o'clock. It was a little dicey. Okay? But that was the whole Trump design. He was still trying to get all those votes get counted after the fact. Okay, fine.

Strauss Zelnick: (04:01)
Anyway, so it's great to be here.

Anthony Scaramucci: (04:04)
Let's move on. We were talking about you being a fatso, Darsie. Let's move on. Okay? We got other more important things to talk about. But guys, [inaudible 00:04:09].

Strauss Zelnick: (04:09)
So let's see. Probably the thing that you wouldn't-

Anthony Scaramucci: (04:11)
You grew up in mass, right? You're from Mass.

Strauss Zelnick: (04:13)
The thing that you wouldn't be able to tell from Wikipedia is that I started off wanting to be a performer. So even though I spent my whole life in media and entertainment specifically in the movie business, television business, the music business, the video game business, the broadcast television business, but like many people who find themselves in an executive position in entertainment, I started off wanting to entertain. The only problem was that... I had a small problem, which was an utter and complete lack of talent. So that's where I started off. So I was-

Anthony Scaramucci: (04:45)
[inaudible 00:04:45] did you go on an audition? Were you-

Strauss Zelnick: (04:46)
Oh, yeah. I was actually... I was a singer songwriter. I wrote lots of songs. And that was sort of my area of great interest. I was a novelist. And in fact my thesis at Wesleyan was creative writing. When I was in high school, I made money by being a magician at kids' birthday parties. And I also did some acting. And in fact, I just nearly missed getting cast in a major motion picture when I was 17 years old. So I went through a sort of, one of those group auditions and I was second to last and ultimately didn't get it. And they ultimately didn't make that picture, made it many years later, but not that particular one. So I had a number of sort of a near success experiences, but I just didn't have the talent for it. And I had the presence of mind to understand that before it was too late to turn my attention to the business side of the equation.

Anthony Scaramucci: (05:37)
But you stayed in media. You like media entertainment, you like that whole sector of the US economy. Why? Why do you like it so much?

Strauss Zelnick: (05:47)
Well, first of all, again, having fallen in love with the all forms of entertainment from the point of view of a potential creator or performer, the closest I could get was to being the business side, because I seemed to have some story for business. And this is true. Many people who work in the entertainment industry, I have an enormous respect for creative talent, for performers and for creators, and to be able to help them bring their amazing creativity and talent to audiences all over the world, it gives me enormous satisfaction. It's also not lost to me that there are some great business opportunities. And the one that's been biggest in my career has been interactive entertainment because for some reason, I was able to identify that as an opportunity when I was still in the movie business many years ago. And I took an enormous risk and did something no one ever does, which is I voluntarily left the position of president of a major film studio, took a 95% pay cut and moved to Silicon Valley and started a video game business well before it was sexy to do so.

Anthony Scaramucci: (06:55)
And what did you see? So what the vision was, people would spend more time at a video game than they would actually even at a motion picture? Or what did you see? What was the insight?

Strauss Zelnick: (07:05)
No. I think this is not so long ago. What I saw was, this is the beginning of a burgeoning entertainment business, and this has all the earmarks. So the motion picture business in the 1920s before there were sound movies and before there were color movies, but you could see that this was going to be a huge business. And there were a bunch of entrepreneurs who saw that and built what became today's major studios. And I thought the same opportunity existed about 25 years ago and I was part of that with Crystal Dynamics. That was my first video game business. The second one was at BMG Interactive and the third was of course, Take-Two,

Anthony Scaramucci: (07:49)
But things have changed for the entire entertainment landscape as a result of COVID-19. However, in the interactive space, one could argue that it's actually gotten better in some ways. It's perhaps more robust. What are the changes that Take-Two has experienced? Where do you think things are going? Am I correct in that observation? That's not me doing anything scientific. It's just me observing my children, what they're doing in this period of time.

Strauss Zelnick: (08:19)
Well, of course this pandemic has brought terrible tragedy and privation so many, and then we need to be mindful of that, respectful of that. And it's hard to want to take a victory lap in that context. That said, there's no doubt that sheltering at home caused people to consume more entertainment of all forms that they could consume at home. So it took an enormous toll on live entertainment and sports and benefited linear entertainment, motion pictures that you can watch at home television, distribution, music, and of course, benefited interactive entertainment as well. But it disproportionately benefited interactive entertainment. And I think the question you're posing is why would we get a disproportionate benefit? And I think the answer is that people realize it with interactive entertainment, you not only have great graphics, great stories, great characters, great gameplay, but you can consume the experience with your friends and with communities, both existing and new, all around the world in real time, as you're consuming the game.

Strauss Zelnick: (09:20)
And we like to consume entertainment with other people. We like to participate with other people, we like to watch with other people. What a great thing to be able to play a multiplayer game as a character and to compete with, or cooperate with Anthony, even though Anthony is a 100 miles away or a 1000 miles away or 3000 miles away. And you can do that with interactive entertainment. You can't do with anything else. People love watching movies with other people, but I don't think during the pandemic Anthony, you're sitting at home watching a movie and you're in a group chat with friends in France who are watching the same movie. But you specifically are doing that when you're playing Grand Theft Auto online. That's exactly what you're doing.

Anthony Scaramucci: (10:02)
Yeah. No, I think it's fascinating. Amazon's obviously trying to do that now with Amazon Prime to try to link you to other people while you're watching the movie, but you're not interacting, you're not competing, there isn't a story arc like there isn't Grand Theft Auto that you can actually participate in, which makes it very sexy, particularly to younger people. But I want to ask you this question because there's constant product innovation, you have PlayStation 5 coming out, Xbox Series X. Both of them are out effectively, a shortage on both of them. How do you guys adapt your business model to the hardware component to this stuff? Do you make the stuff sexier? Has it been more appealing? The graphics, where are you from a vision perspective?

Strauss Zelnick: (10:51)
Well, what's great about these new platforms is they give our creative folks the technical ability to build better experiences. Whether they load faster, or the graphics are better, or the interactions are more realistic because memory is better. And the rate of data transmission is faster, or what you can do graphically is deeper or all of the above. Business model doesn't really change, although certainly new technology has enabled new business models most specifically, the ability to keep consumers engaged in between big releases and then to monetize that engagement. But this new array of platforms, including upgraded PC platforms, really doesn't have much of an influence if any, on the business model.

Strauss Zelnick: (11:41)
It does however, potentially increase the size of the market when people say, wow, that NBA 2K21, that looks like real basketball. Step back from the screen just a little bit, squint a little bit, I can't tell the difference between NBA 2K21 and a basketball game. This is amazing. And you're going to see even more of that in the next five or 10 years. And I don't think it'll take 10 years. We will be able to create video games with computers that look exactly like live action. I'm not saying we will, by the way. People may still... Our creative folks won't necessarily choose to do that. We'll still have titles of like Borderlands looks like a graphic novel. But you'll be able to do that if you want to do that, and that's going to be very intriguing.

Anthony Scaramucci: (12:26)
You're bringing up an NBA 2K, which... My kids wanted me to ask you this question. I'm dying to ask you this question. It's about esports. And so, you have this contract with the NBA, you have NBA 2K and then you have the introduction of this new sports franchising even where players are playing in arenas, players are playing in Las Vegas. Is this a fad in your opinion, Strauss? Or is this the next frontier in sports and entertainment?

Strauss Zelnick: (13:00)
Well, for sure, it's not a fad and for sure it's a frontier. The question of course, is always how high is up and that I can't speak to. I know the 250 million people love watching esports. 125 million people say that it's a primary entertainment activity for them, but this is still not a heavily monetized market. The entire esports business is about a billion dollars. And most of that goes to one title, incidentally, not our title. I don't think esports will be found in 50 different leagues doing 50 different things, any more than professional sports are. I think you'll have five titles in the same way we have five big, massive worldwide sports that matter, or so. And I'm hopeful that in the NBA 2K league will be one of them because it's based on something that we know people love to participate in and watch, which is the NBA.

Strauss Zelnick: (13:53)
So unlike some of our competitors, we don't believe that we can put out an array of titles in it. Any given time, we can take a new intellectual property and turn that into an esport. I think that's going to be very difficult to do, but I remain immensely hopeful that the NBA 2K League will become a very big business over time. It's going to take a while. It's still a very, very small part of our business, not a material part of our business yet.

Anthony Scaramucci: (14:16)
So I want you to put your traditional entertainment hat on and your interactive hat on at the same time. And I want you to think about where we are in terms of COVID-19. And so, my friends in the media business or traditional media business are slowed down, there're delays in production, they can't release movies because many movie theaters are closed or there's only 25% occupancy in the movie theaters. And so, the first part of this question is, what do you think happens to that side of the entertainment industry? How quickly can it recover or is it permanently changed? And then the secondary element of the question is, and so how was that overflowed and impacted you at Take-Two and what I would call the interactive media side of the business.

Strauss Zelnick: (15:05)
Look, I think with WarnerMedia's announcement that they're going to go day and day to their digital platform, along with a theatrical release. That puts a fine point on the possibility that post pandemic theatrical distribution is going to be challenged on an ongoing basis, but that really wouldn't be a big change. That would just be an acceleration of a prior trend. And I think one of the things that many people have said is that the pandemic has accelerated prior trends. It's been great for ZMC because we try to bet on trends that we expect to come to fruition in 5, 10, 15 or 20 years. Well, acceleration is fantastic for the companies that we already own and interesting for the companies that we'd like to own. So I think theatrical distribution is challenged. Motion picture business has been a challenge business for a very long time, much longer than most people acknowledge.

Strauss Zelnick: (15:57)
And I think that will continue to be the case, but of course the television business has been, if anything, benefited. By sheltering at home, people are consuming more television along with more interactive entertainment. So I don't believe that we're seeing any kind of tragic consequence for legacy traditional linear entertainment. I think we're just going to see more happening that was already happening. And I think there'll be great opportunity for great creators, largely in the television space. I think if you want to dig in to what will happen to all the various subscription platforms and television, I think there's not going to be a winner takes all, and there's going to be a whole bunch of losers. That's a separate conversation.

Strauss Zelnick: (16:40)
Now juxtapose that against our business. Look, we're booming. The average age of our consumers, 37 or 38. People consume for the rest of their lives the entertainment they fell in love with it at the age of 17, you know that. You know that the music you like most, no matter what you say, is the music you loved when you were 17. The entertainment you loved at 17, that's always been your love. That will stay your love. So when you turn 39, you don't stop playing video games, but new people are coming into the market. That cohort's going to grow for the next 20 or 25 years just naturally. Does that mean that we do well? Not necessarily. We have to execute every day. We have to make hits, but it certainly is nicer to have meaningful tailwinds than headwinds. And the interactive entertainment space has loads of tailwinds. Again, accelerated by the pandemic undoubtedly.

Anthony Scaramucci: (17:30)
See Darsie, what Strauss is saying, that means that NSYNC is going to be in your life for the rest of your life. I just thought that I would [inaudible 00:17:39].

Strauss Zelnick: (17:39)
I hope so. NSYNC was one of my acts. So [inaudible 00:17:42].

Anthony Scaramucci: (17:42)
Yeah, I remember. That's I'm bringing it up.

Strauss Zelnick: (17:43)
Yeah.

Anthony Scaramucci: (17:44)
Just to let you know, Darsie, you when you're 95 years old, you'll be listening in NSYNC. Imagine that. So, Strauss before he can-

Strauss Zelnick: (17:51)
I still listen to James Taylor. So I'm sure it's true.

Anthony Scaramucci: (17:54)
[inaudible 00:17:54] who's kidding who.

John Darsie: (17:55)
North Carolina guy.

Anthony Scaramucci: (17:57)
Before he gets to me, I'm going to interrupt to keep moving. I want to ask you about Quibi, if I'm even pronouncing it right.

Strauss Zelnick: (18:04)
Quibi.

Anthony Scaramucci: (18:04)
Quibi. I thought it was a fascinating idea. Some of the smartest people I know were involved in it and it failed. And it was a billion and a half dollar loss and it failed pretty quickly. And so my question to you is, did it fail because of the idea? Did it fail because of COVID-19? Is it an idea ahead of its time? Or is it the DeLorean where it was just never going to catch fire?

Strauss Zelnick: (18:37)
Well, it's hard to say. I mean, the first thing is it's so tempting to be critical of someone else's failures and to claim here I am, I'm so smart and I knew it all along. Innovation is really hard and I have enormous respect for what Jeffrey tried to do, what Meg tried to do. And they... In record time, they were able to aggregate extraordinary talent and they took a chance. And for an array of reasons, it didn't work out. And again, it's tempting to be critical of those reasons. I think ultimately, launching any kind of consumer proposition in a big way is really hard. And I do think launching something that didn't exist before into the pandemic is very different than what we faced.

Strauss Zelnick: (19:30)
And we already had a business. We had a very successful business. We already had numerous successful titles. NBA, Borderlands, Grand Theft Auto, Red Dead Redemption, the list goes on. And so, we had an ongoing business generating consumer engagement. We could build that business. And of course, we were benefited by sheltering in place. But I can't say to you that had we tried to launch our business from scratch with loads of investment in mid-March, that it would have gone well. Seems to me it would have been very, very difficult. So I admire what they tried to do greatly. It's terribly unfortunate that it didn't work out and I think it may be that they were ahead of their time. And that remains to be seen. Now, look, our approach to innovation tends to be smaller scale. I'm very conservative. I hate losing money, so we tend not to make big splashy moves.

Strauss Zelnick: (20:28)
So we tend to make smaller incremental moves. And the good news is that making smaller, incremental moves, it means that you're unlikely to have significant losses. And I'm very grateful for the fact that in my career I haven't had any at all. I've always created a return for shareholders, I've never failed to repay debt. But equally you may lose the opportunity to have that extraordinary, massive groundbreaking win. And to each person, to each entrepreneur, their own style and approach.

Anthony Scaramucci: (20:59)
Now we're talking.

Strauss Zelnick: (21:00)
I pursue the style and approach that works for me, but boy, took a long time to create the success that we've had with Take-Two and the success that we've had with ZMC. As I like to say, the only overnight successes are other people's successes, certainly not mine and onto the next. But is short form entertainment one of the past to the future of entertainment? Unquestionably. Will it be realized in a way that's additive to what already exists on Snapchat, TikTok, YouTube and other platforms? Unquestionably. We have not seen the full expression of short form entertainment, not even close. So it may turn out that what was tried with Quibi will really inform what's tried in the future.

Anthony Scaramucci: (21:46)
Well, I mean, it just to give you such a how little I know. I didn't get the opportunity to invest in Quibi, but I would have invested in it. I thought that that was a brilliant idea. And I have an enormous amount of respect for Meg Whitman. I think she was a classmate of yours, right? Or was she at Harvard Business School with you or-

Strauss Zelnick: (22:02)
Not with me, but I think she did go to Harvard Business School. Jeffrey and I obviously, worked together in the motion picture business sort of at the same company, but we were on the board of the MPA together. And I've always obviously, admired what he's been able to achieve.

Anthony Scaramucci: (22:18)
It's just one of these things. When I was back in college, one of my cousins worked for AT&T and it was 1981 or 82. And he was explaining to me that we were going to be able to play Atari Pong over the phone lines. And he was explaining to me how it was going to work and then AT&T disbanded it. And I remember him saying, well, they disbanded it because it was too costly. They couldn't figure out a way to make it work the way we're making it work today in terms of the innovation. So I do think it's something just slightly ahead of his time. You mentioned ZM-

Strauss Zelnick: (22:52)
By the way, I worked at AT&T. My first desk job was a summer internship at AT&T.

Anthony Scaramucci: (22:57)
Out in New Jersey by, right. Or [inaudible 00:22:59]?

Strauss Zelnick: (22:59)
Across Basking Ridge, New Jersey.

Anthony Scaramucci: (23:01)
Yeah.

Strauss Zelnick: (23:01)
Best corporate cafeteria ever. I think that was in 1979 or 1980.

Anthony Scaramucci: (23:06)
Yeah. So my cousin's name is Michael Saka, not that you would have overlapped with him, but he worked there for many years. And he always said that the breakup of AT&T... And this is something we've had monopolist and anti-monopolist on SALT Talks to talk about these things. Because the breakup of at AT&T actually unleashed a tremendous amount of technological growth. All those patents, as you know, Strauss, from Bell Labs, there were licenses that were able to be doled out. And sometimes what happens is monopoly power suppressed technological innovation because they're making such great economic rent from their existing structure. You don't go from copper wire to fiber optic if you don't need to, so to speak.

Anthony Scaramucci: (23:49)
But what I want to ask you about ZMC, which is a private equity firm that you are also the founder of. You've mentioned it a few times. And you basically take a position, correct me if I'm wrong, that you're looking for the future. The portfolio of companies there is what is the next trend? It's sort of a private equity firm that sees around corners, if you will. So what things should we be watching for in 2021 and beyond, as you manage to grow that portfolio?

Strauss Zelnick: (24:20)
The theme that... We're theme driven. So we don't get books from bankers and say, well, that's interesting and then send in a bid. We pursued 10 to 12 investment themes at the time, then we proactively try to find companies that are operating within that theme. Companies we believe have great futures ahead of them, and then try to invest in those companies or buy those companies. And that's what we've always done. And that's led us to stay away from themes that we thought we'd be challenged in the early part of the 2000s. We didn't buy consumer magazines, we didn't buy newspapers, even though they were... believe it or not, sexy at that time. We didn't buy broadcast radio or broadcast television, even though that was very sexy at the time, of course, multiples have come way down. It's pretty hard to make a great return when you have multiple dilution.

Strauss Zelnick: (25:08)
We did however, invest in online market research before that was a thing and television direct marketing before that was really a thing. And we've invested in businesses that enabled the growth of mobile communications before that became obvious into such businesses. The theme that I am most excited about is the explosion of data which I would express this way, however much data you think consumer and enterprise will need in five years, you're wrong. It'll be more. There was an explosion of data and the consumption storage and transmission of data. And so, we're investing in businesses that enable the consumption, storage and transmission of data first and foremost. So it's hard to do because we're not buying stock and Facebook.

Strauss Zelnick: (26:02)
I don't think our limits would think that that was a very good thing for us to do for them. They can do that without us, if they wish. We're typically buying businesses that are enabling enterprises or software enterprises within that space. There are numerous other areas that we like, but that's the theme that I find most exciting. Or said another way, Anthony, you know those to be true. There're a lot of people who say the most exciting parts of the media business and the entertainment business are behind us. The 50 years between 1930 and 1980, that was really exciting.

Strauss Zelnick: (26:35)
I think actually the next 40 years will be the most exciting time for media and entertainment and that'll live mostly be supercharged by technology. I also think there are people who say we have the internet, we have digital communications, we kind of know what that looks like now. It's all pretty mature. And I think the answer is no, it's just the beginning. I'm on an iPad today, it's great device. But in 10 years, I'll be on something that's way better, way cooler, way lighter, way cheaper. Take a look at this device. This is a super computer in your hand, but in 10 years it won't be this form factor, it won't be this heavy. It'll be a much smarter, much better, it'll look and feel different. And that's just two examples that are close at hand. So what we're trying to do with ZMC is think about what does the world look like in 5, 10, 15, 20 years and skate to where the puck is going, not where it is.

Anthony Scaramucci: (27:33)
So for somebody that doesn't understand the transition from say 4G to 5G, people think that that's incrementally 20 to 25% more improvement, but it's way more massive than that. So how would you describe that to a layperson, the move from 4G to 5G?

Strauss Zelnick: (27:55)
The opportunity will simply be that you'll be able to do more with wireless connections than you can do now. So what can we do now with a wireless connection? Well, I don't know. Right now I'm in Westchester County in New York and sometimes I have conference calls when I'm driving from Westchester into Manhattan. And what are the odds that I can make a high quality conference call completely uninterrupted from Westchester and Manhattan? The odds are about zero. Well, 5G will make those odds much higher. Just as an example. Once you have full 5G coverage. Or if I wanted to do right now, I'm on a Wi-Fi connection and I get pretty good connections, pretty fast and pretty [inaudible 00:28:36]. But if my Wi-Fi went down and I had to switch to my cellular connection, it wouldn't be as good.

Strauss Zelnick: (28:41)
In fact, it's possible that my video would be really choppy, while with 5G it wouldn't be. So just think about it as more data, quicker. And all of the uses that you find are currently constrained by existing cell distribution, are less likely to be constrained with 5G. It's as simple as that. It's otherwise not a game changer, but the biggest game changer is if you want to have super high quality wireless connections right now, you basically need fiber. And then you need a great short connection wirelessly. 5G can offer you much higher quality for longer distances, but I don't actually think this is how it'll be used. I still believe that the bulk of the high quality transmission will be fiber for very long distances. It's not like it would make sense to do that wireless if you don't have to.

Anthony Scaramucci: (29:32)
So before I turn it over to John Darsie and the ton of audience questions that are coming in. I've got a question about one of your books, being ageless. Basically, you wrote a terrific book. You gave a copy of it to my wife and I. And the title of it, it's called Becoming Ageless. Bill Maher, the American comedian, Strauss, he's a friend of mine, he's my nutritionist. And he basically told me three words that I should abide by as my nutritionist. And I'll tell you what he said, "Don't eat bread." That's his whole nutritional mantra. But you wrote a great book, you're living that book. You look about 15 to 25 years younger than you actually are. So I won't give up your age, but tell me something that we can share with our SALT delegates that they should be doing for their health and their wellbeing.

Strauss Zelnick: (30:32)
Well, first of all, I'm not shy about my age. I'm 63 and older than you, Anthony. And I'm not wiser, just older. And in terms of what I recommend-

Anthony Scaramucci: (30:43)
Cut Strauss's video, Darsie. You are my friend now. Can you cut his video, please?

Strauss Zelnick: (30:49)
So the first is, what is it that you want? So if you're happy with your current lifestyle, then the answer is don't do anything differently. But if you want to live as healthier life as you can, you can affect your health span. It's actually somewhat hard to do affect your lifespan. Even if you do everything right, you may not really affect your lifespan depending on your genetics or just serendipity. Terrible things can happen or good things can happen. But first and foremost, if you want to have a good health span and a good lifespan, there are a couple of things you don't do. Like, don't smoke. That is the factor most highly correlated with a short, bad life, is smoking. So don't smoke. Second factor most highly correlated with a shorter worst life is alcohol abuse, believe it or not.

Strauss Zelnick: (31:37)
So those two things, if you stop smoking, if you smoke, we can stop there. That's such a game changer. If you drink too much alcohol and you just drink less, that's a meaningful game changer. Now, beyond that, what steps can you take? And you talked about diet. We all kind of know what we should and shouldn't eat. I don't agree that don't eat bread is a whole answer. Because if you're saying, good, I'll stop eating bread, but I'm going to have 14 diet cokes a day. That's not going to go so well for you. So we know what's bad for us, we know what's good for us. And whole foods, staying away from processed foods, not drinking soda, not drinking fruit juice, which is just sugar and eating plenty of fresh fruits and vegetables, lean protein and limiting your processed carbs. That's probably a pretty good diet.

Strauss Zelnick: (32:25)
The second piece of advice is go to the doctor and do what the doctor says. Whenever people say, "Oh, I never go to the doctor. I don't need to. It's totally fine." You know what? It's not totally fine. You're making a terrible decision because there are a few illnesses for both men and women that are easily detectable. And if you happen to have them, if they're detected early easily curable, and if they're not detected early, they will kill you. For example, colon cancer. So if you don't go to the doctor and you don't have the appropriate tests, you could get that, not know you have it and it'll kill you. So go to the doctor, do what the doctor says. Another characteristic associated with a long, healthy life is actually taking the medication that is prescribed to you.

Strauss Zelnick: (33:05)
The third is move, some kind of exercise. I am a fanatic. You don't need to be a fanatic, but you should try to move five days a week. If all you do is walk for half an hour, a day, five days a week. That's great exercise. It's a great start. You want to do more than that, you're going to more than that. And finally, have some kind of spiritual life. Some kind of connection with other people, some kind of connection to the world outside of you. And whether that takes the form of religious practice, or meditation practice, or a yoga practice, or perhaps taking a walk quietly, or reading, or sitting quietly, but have some kind of spiritual life preferably that connects you to like minded people. Those things taken as a whole, I think will lead you to a healthier and better, longer life.

Strauss Zelnick: (33:53)
And when I say becoming ageless, by the way, no, I don't think I look 20 or 25 years younger, although thank you, Anthony. But I feel like I'm 25 years old. I try to operate as though I'm 25 years old. And I feel just great. And if I can continue to feel this way, it allows me to be my best self in every part of my life. My relationships, my work, my fitness, my leisure and it allows me to hold up well under stress too. So that's what I advocate [crosstalk 00:34:27], but for some people, honestly, they're just happy the way it is and God bless them. That's fine.

Anthony Scaramucci: (34:31)
I'm just letting you know the Botox stash that I have in my garage, none for you, Strauss. But I'm going to turn it over to John Darsie. And by the way, I really do want to recommend this book because it is a game changer and I will attribute a lot of my exercise regime to what I read in Becoming Ageless, just in terms of making it a priority like you would a meal, or savings, or investing, or spending time with family, you got to make yourself a priority during the day as it relates to exercise. So with that, let's turn it over to John Darsie. Who's got a ton of audience questions for you, Strauss.

John Darsie: (35:11)
The Botox is a very... it's a very important part of Anthony's mental health routine. He's very vain, and when he looks at the camera-

Anthony Scaramucci: (35:19)
It's just like Darsie reads Playboy for the articles, Strauss. I use Botox for my migraines. I just want to make sure everybody knows that. Okay? Go ahead, Darsie. Go ahead.

John Darsie: (35:30)
So we have a question about virtual reality and augmented reality. You talked about you're on an iPad, you have an iPhone, it's a super computer, but those, if you look 30 years into the future, our grandkids or our kids might look at us and say, wow, you used to use an iPhone? That seems very archaic way to access the internet or game or to interact with people. What types of forms do you think gaming and entertainment might take over that type of time period? Let's say 20 to 30 years. Are we going to see true augmented reality? We've seen some startups like Magic Leap that have gotten a lot of hype, but haven't really delivered. At least on a consumer level, we've seen some virtual reality like Oculus and others having quite delivered on their initial promise, but... And then you have people like Elon Musk who think we're going to implant chips in our brain. We're going to basically live experiences through our mind. What do you expect that form factor to look like?

Strauss Zelnick: (36:26)
So it's really hard to predict 30 years in the future. I mean, I think the only thing that is predictable is it will be very, very different than what we have today. And I wouldn't be at all surprised if we have certain devices implanted in ourselves. Virtual reality, what that conjures up today now is a vision and hearing occluding headset, where you embark in a world that is created for you and you move around that world. And no, I don't think that's the future of entertainment at all. First of all, it's solitary. We don't like to consume entertainment of solitary way. Second, it requires dedicated space. Third, it's really expensive. Fourth, it makes you not nauseated. And that's a real problem because nausea and entertainment, they don't really go together so well. So I don't really believe in the current expression of virtual reality is the future of entertainment, but I wouldn't rely on anything for 30 years from now.

Strauss Zelnick: (37:19)
Augmented reality means adding characters to the setting that you're currently in. Pokemon Go is a great example of that, it can be a lot of fun. Properly executed, I think that could be a great opportunity, but I don't think it will redefine the business any more than 3D redefine motion pictures. Or even frankly, any more than color redefined motion pictures. It was there, it was a tool. Great. It didn't give any company in particular leg up. So the end of the day, we like to tell stories and told stories and linear entertainment will always do that and will always exist in one form or another. And we like to compete and play games and interactive entertainment will exist for that purpose as well. And there'll be some merging of the two.

Strauss Zelnick: (38:05)
And I have zero doubt that the form factor for the devices on which we consume these properties will change and become lighter, quicker, cheaper, more convenient. But at the end of the day, storytelling has been around for a really, really long time. And playing games has been around for a really, really long time. And I suspect that won't really change. And music has been around for a really long time. Those core parts of the entertainment business won't change. Their expression will change greatly and our job as an enterprise is in fact to be at the forefront of that change and to try to innovate. And that's what we're trying to do with Take-Two and more broadly with ZMC. We'll see how we do.

John Darsie: (38:47)
So remote work is one of these mega trends that's been accelerated by the pandemic. You've seen stocks like Zoom, go to the moon and others who are enabling remote work. You're seeing big companies, Goldman Sachs recently indicated they're going to move some of their asset management business down from New York to Florida because of more favorable business climate down there. How do you think the gamification of work might play out in an environment where you're seeing more people work remotely? Obviously there's pluses and minuses to having people work in a decentralized setting. And one of the minuses is lack of interpersonal interaction and team building setting that you get in person. So how can we use things like virtual communities or video games or gamification to take some of the interpersonal interaction that you would normally get in an in-person setting and transfer it to a remote work environment?

Strauss Zelnick: (39:43)
Well, I mean, people are doing conference calls inside Red Dead online and inside Grand Theft Auto online, for example. That'd be I think, an example of what you're talking about, but I actually don't think the world is going to shift to total remote working. I think the companies that are saying, oh, we don't care if people work from home endlessly, that's fine. Or maybe we can pay them less if they do or we'll cut our real estate footprint. I don't think that is going to make any sense at all. I think you lose the ability for serendipitous interactions and team building. And the fact that you're able to do something when pressed to do it does not mean it's a great idea to do it all the time. What I do think will permanently change is first a willingness to understand that at times remote work can make sense.

Strauss Zelnick: (40:27)
Secondly, I think we are all going to be less likely to travel. I think we're going to say what, that trip that I thought I had to make, I can probably do those meetings via Zoom more frequently than before, but I don't think it will get rid of business travel at all. So for example, I think you'll still have a SALT Conference in Las Vegas when you can because I mean, it's to get people together and that's how you build connection and community. And I'll be there if I'm invited because I think it'll be fun. But I don't think you need to do SALT Talks in person five days a week. I think you can do this very effectively on Zoom.

Strauss Zelnick: (41:04)
So I think you'll see a move ahead where both will be true. We will be able to work remotely when necessary. We will primarily still work together in a physical setting because that allows for all kinds of unexpected and unscheduled interactions, it can yield great things. We'll still travel when necessary, but we may do so more selectively. And I think that is an acceleration of a pre-existing trend, but to believe it goes all the way to the other side, we need to ask ourselves, how do we gamify that thing that went to the other side? I'm going to beg the question and say, we're not going all the way to the other side in the first place.

John Darsie: (41:41)
So I'll leave you with one final question, it's something we like to ask CEOs. And you've led a lot of very successful companies, you invest in successful companies and you've obviously, catapulted your company during this work from home period as a result of the pandemic. What leadership qualities do you think are important when an organization is tested with a curve ball, like we saw come out of nowhere with a global pandemic that causes everyone to be basically quarantined in their homes for the better part of a year?

Strauss Zelnick: (42:10)
Well, first preparation. My prayer is not a business plan. The reason that Take-Two was so effective in this pandemic is that we have an incredible IT department run by Scott Belmont that had been totally focused at great expense on disaster preparation. And they were ready to do work from home test in early March and then guess what? Everyone had to work from home. We were able to roll out work from home in a week. We had 6,500 people, seven days after starting working effectively from home on enterprise quality computer setups. We had invested in a backbone that allowed us to do that. So it's all... it's tempting to talk about leadership thing, words, but leadership is based in actions and we were prepared and we try to be prepared for any eventuality that can occur. Then once you get into that situation, I think leadership is always being a player coach, being right there with the team, being engaged, being concerned. And the other part of leadership is making decisions that are in service of the common good.

Strauss Zelnick: (43:19)
So I have peers who said, wow, we're a very big strong company, but you know what? This tough time, a lot of companies are firing people. You know what we're going to do? We're going to do a 20% across the board pay cut because we can. We didn't cut any salaries, we didn't furlough any people, we didn't use it as an opportunity to reduce any head count, but we have a compact with our colleagues that we're going to take care of each other. And one of the reasons that we've been disciplined and careful and ultimately successful is so that we can withstand tough times.

Strauss Zelnick: (43:50)
So we didn't see this as an opportunity to take a pound of flesh from our colleagues and we'll come out of this. And as a result of that, I think have even better morale than before and maintain our incredibly low attrition rates, which is coincidence with having a high degree of success. We've seen those companies who said, yeah, we cut our footprint, we cut our costs, we cut our salaries. Well, that's great. When things come back to normal, you tell me how loyal your teams are. So at the end of the day, leadership is about actions not words. The words only matter if they reflect the actions that you take. And finally, I think leadership is about empathy and kindness. Something that forms an enormous part of our mission.

John Darsie: (44:31)
Well, Strauss, that's a great way to end it. Thank you so much for joining us on SALT Talks. Anthony, do you have a final word for Strauss before we let him go?

Anthony Scaramucci: (44:38)
Well, I just want to... well, read out the two books that Strauss is an author of. So the first one, which was literally last one, Becoming Ageless, the one I read. I [inaudible 00:44:49] recommend everybody. And I'm going to be out there, Strauss buying Success, a concise guide to having the life you want as well. So those two great books from Strauss Zelnick. Thank you for joining us. And yes, I see a SALT Talk in your future on a live stage somewhere, Strauss. You're not going to be able to get away from us. And congratulations on all the success that I'm sure that your team's looking forward to the these new gaming console. So I'm sure that they're already taking good advantage of. So all the best [inaudible 00:45:19].

Strauss Zelnick: (45:19)
They are. Thanks so much for having me.

Anthony Scaramucci: (45:20)
Happy holidays [inaudible 00:45:22].

Strauss Zelnick: (45:23)
Great to see you all.

Anthony Scaramucci: (45:23)
[inaudible 00:45:23] soon.

Strauss Zelnick: (45:23)
Thanks, Anthony. Thanks, John.

John Darsie: (45:24)
And we're very excited too. We were talking before we went live and we were actually joking about it a few weeks ago, but Strauss has agreed to do a workout session under the SALT Talks banner. So he does... he leads workouts for the Take-Two team internally that are religiously attended by I think, several hundred employees at Take-Two. And he has graciously volunteered to embarrass us by leading a workout session that none of us will be able to keep up with. So we're very excited to do that in the coming weeks.

Strauss Zelnick: (45:54)
Thanks again, guys.

Anthony Scaramucci: (45:55)
All right.

John Darsie: (45:56)
Thank you.

Anthony Scaramucci: (45:56)
All the best.

Joe Scarborough: Knowing How Washington Works | SALT Talks #117

“With Joe Biden, you have somebody like Harry Truman who knows how Washington works.”

Former Congressman Joe Scarborough (R-Fla.) is co-host of MSNBC’s "Morning Joe" alongside Mika Brzezinski. "Morning Joe" starts each weekday conducting interviews with top newsmakers and discussing the day's headlines. In 2016, Joe, joined by co-host Mika, was inducted into the Cable Hall of Fame.

President Franklin Roosevelt met with his vice president, Harry Truman, only two times while in office. Upon FDR’s death with World War II still ongoing, Truman faced some of the biggest decisions in American history. He made the fateful decision to drop two Atomic bombs on Japan in an effort to prevent a prolonged war. In the years following, as the world was reshaping, he introduced The Truman Doctrine which stated that the US would intervene on behalf of any country under the threat of communism. Truman and his advisors also played central roles in establishing the global multilateral institutions like NATO that remain vital to this day. “They put together a structure, an analytical construct for foreign policy that we have followed for 75 years.”

Truman and his advisors like General George Marshall and Dean Acheson knew they needed to learn from the mistakes of post-WWI US foreign policy. They understood that its move towards isolationism ultimately produced disastrous results. “[The US] refused to get involved in the League of Nations, refused to stay engaged in Europe which created a void, which allowed for the rise of Adolf Hitler.”

LISTEN AND SUBSCRIBE

SPEAKER

Joe Scarborough.jpeg

Joe Scarborough

Co-Host

MSNBC’s Morning Joe

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:06)
Hello everyone and welcome back to SALT Talks on a rainy day here in New York. Our guest today is sitting in sunny Florida, he's figured something out that the rest of us haven't.

John Darsie: (00:16)
But I'm John Darsie I'm the managing director of SALT which is a global thought leadership forum at the intersection of finance, technology, and public policy. SALT Talks are a digital interview series that we launched during the pandemic with leading investors, creators, and thinkers.

John Darsie: (00:32)
Really what our goal is during these SALT Talks is to replicate the experience that we provide at our global conference, the Salt Conference. And that's to provide a window into the mind of subject matter experts as well as provide a platform for what we think are big ideas that are shaping the future.

John Darsie: (00:48)
And we're very excited today to welcome Joe Scarborough to SALT Talks. A former congressman, Joe Scarborough is today the co-host of MSNBC's Morning Joe, alongside his wife Mika Brzezinski.

John Darsie: (01:00)
Morning Joe starts each day conducting interviews with top newsmakers and discussing the day's headlines. In 2016 Joe was joined by co-host Mika and they were both inducted into the Cable Hall of Fame.

John Darsie: (01:14)
Joe was named to the prestigious TIME 100, the list of the world's most influential people and Vanity Fair named both Joe and Mika to their 2012 list of top media power players, and their influence in the media has only grown since then.

John Darsie: (01:29)
In addition to his television career, Joe is a two-time New York Times best-selling author. His work Rome Wasn't Burnt in a Day predicted the collapse of the Republican majority and the U.S. economy due to his party's reckless spending.

John Darsie: (01:43)
His second work, The Last Best Hope: Restoring Conservatism and America's Promise draws on the forgotten genius of conservatism to offer a roadmap for the movement and the country.

John Darsie: (01:55)
Joe's most recent book, Saving Freedom: Truman, the Cold War and the Fight for Western Civilization recounts the historic forces that moved Truman toward his country's long twilight struggle against Soviet communism.

John Darsie: (02:08)
Truman's triumph over personal and political struggles that confronted him following his ascension to the presidency is an inspiring tale of American leadership, of fierce determination, bi-partisan unity, and courage in the face of the rising Soviet threat.

John Darsie: (02:24)
A reminder that Joe served as a member of Congress from 1994 to 2001 and while in office he was a member of the Judiciary, Armed Services, Oversight, and National Security committees.

John Darsie: (02:35)
A reminder for everybody tuning in today if you have any question for Joe during today's SALT Talk you can enter them in the Q&A box at the bottom of your video screen on Zoom and hosting today's talk is Anthony Scaramucci the founder and managing partner of SkyBridge Capital, a global alternative investment firm.

John Darsie: (02:52)
Anthony is also the chairman of Salt and he did also serve in government but for only 11 days as opposed to the seven years that Joe spent in Congress.

Anthony Scaramucci: (03:00)
Had to bring it up. I'm telling you, I mean Joe it's bonus season and he knows he could get fired and we're in a pandemic. He knows he could get his bonus cut. He's got to bring up the fact that I got fired after 11 days right?

Joe Scarborough: (03:14)
Yeah, I'll tell you I almost re-tweeted it but I decided not to. When somebody said we are only two Scaramucci's away.

Anthony Scaramucci: (03:23)
I think you do. I got the whole Scaramucci shot clock going right now. We're 51 days away Joseph so you know we'll see what happens here. We'll talk about him as well but I really want to talk about the book and I want to hold it up for everybody.

Anthony Scaramucci: (03:40)
Saving Freedom by Joe Scarborough. I read the book over the weekend, it is a pretty quick read by the way. It took me about five and a half hours to read it. I did listen to some of the audiotape by Joe Scarborough as well and Joe I love the book for a number of different reasons but the main one is it draws a lot about where we were as a society 80 or so years ago, 75 years ago and where we are today as a society.

Anthony Scaramucci: (04:11)
And basically my summation, there was a lot of very, very good human beings that were willing to work together that understood that a bi-partisan commitment to peace would lead to global prosperity not just for the United States but for the world.

Anthony Scaramucci: (04:26)
So there were a lot of bold decisions made and so my first question to you though before we get into the book is tell us something that we can't find on Wikipedia about Joe Scarborough. You know you're a pretty well-researched guy so what would we learn today about you that nobody really knows?

Joe Scarborough: (04:49)
Oh, man. It's a tough question. I'll say this just so you can laugh, it's the truth but nobody would believe it so I've never even bothered saying it publicly. I hate being on TV. Mika loves it. See you're laughing. I see him laughing at me.

Joe Scarborough: (05:11)
Mika got into TV news when she was 22, 23, and absolutely loves it. If she weren't on TV it would be like she was missing her right arm. I do it bluntly because it pays pretty well and also people seem to think they still want to hear what I have to say but I hate being on TV.

Joe Scarborough: (05:40)
I've never once and this is so unlike me because I'm sure you guys are all this way, when I do something I go back and I look at it. I examine it. I see where I make mistakes, I see how I can be better and I really am my toughest critic.

Joe Scarborough: (05:55)
I've never done that with television because I can't stand to see myself on TV because the few times I have I go, "Why does anybody watch me?" So that's one thing.

Joe Scarborough: (06:07)
The other thing is favorite show, television show remains Peaky Blinders on Netflix. If you haven't seen Peaky Blinders make sure you see it.

Anthony Scaramucci: (06:20)
Yeah, that is a sensational mini-series. It's about the U.K. mob, right? Is that it?

Joe Scarborough: (06:28)
Yeah.

Anthony Scaramucci: (06:28)
Yeah, U.K. mob.

Joe Scarborough: (06:30)
Yeah, guys post World War I that left the war shell shocked and started a gang in Birmingham. But Anthony you don't believe that I don't like being on television do you?

Anthony Scaramucci: (06:40)
No, I get it but look you know the most dangerous place in the world Joe is between me and a television camera. So I would be racing Mika for the camera, right? We all know that right? I mean there's Fallujah and there's that zone between me and the camera, so I get it.

Joe Scarborough: (06:56)
Exactly.

Anthony Scaramucci: (06:57)
Tell Mika I can totally identify with her. Let's go to the Truman Doctrine though because what's fascinating about the book is it's a bubbling up process right? It's not like we look back through history, it was oh the Truman Doctrine, these guys sat around in a room and they came up with the Truman Doctrine, but that's not really how it happened right? It happened through a bubbling up process, a little bit of George Kennan, some of Dean Acheson, some of Harry Truman himself. Tell us how the Truman Doctrine evolved before President Truman made his speech to the joint session of the Congress.

Joe Scarborough: (07:35)
So the Truman Doctrine first of all for those who obviously haven't read the book yet, the Truman Doctrine was when Harry Truman made it clear, it was sort of a follow-up on the Monroe Doctrine where President Monroe said anybody that comes into our hemisphere, you're basically asking for war. Stay out of our hemisphere.

Joe Scarborough: (07:58)
But the Truman Doctrine, it was Harry Truman and the rest of the United States declaring that we would get involved for any democratic country who was under threat from the Soviet Union even though we didn't use the Soviet's name specifically it was very clear what they were talking about.

Joe Scarborough: (08:20)
It came out of a time where Harry Truman had an extraordinary few years. He has been selected in 1944 as FDR's vice president. FDR knew he was going to die. Truman knew FDR was going to die. In fact, FDR famously said to Harry Truman, "Hey don't fly on planes during the campaign because one of us has to stay alive."

Joe Scarborough: (08:45)
Truman also his friends told him FDR was dying and he said he knew it and was scared as hell to be president but knew he'd have to be. After his first cabinet meeting as president of the United States Stimson took him aside and said, "Hey listen I've got something to tell you." And actually revealed to Harry Truman for the first time details about the Manhattan Project.

Joe Scarborough: (09:11)
FDR had been... There's no other way to put it, he'd been extremely reckless. He only met with Harry Truman two times when Truman was vice president. Didn't have him read in on anything. So when we have people obviously in the Democratic party, some of the Republican Party have been in the press worried about this transition process, we've seen a transition process even worse than the one we're going through right now.

Joe Scarborough: (09:38)
And that was when FDR passed the presidency through death onto Harry Truman. But Truman was an extraordinarily quick learner and made the right decisions to help end the war against Hitler in Europe. Then win the war in the Pacific and though the decision was controversial, dropping the atomic bombs, I think most historians recognize he saved one to two million lives. American and Japanese lives by doing it and shortened the war by about a year and a half.

Joe Scarborough: (10:09)
But soon after that, Winston Churchill went to Westminster College in Missouri and made his proclamation about the iron curtain that was descending across central and eastern Europe. And in February of 1947, the British alerted the United States that they were a spent empire, they were exhausted.

Joe Scarborough: (10:37)
Yes, they may have saved western civilization in 1940 in the Battle of Britain but by '45 they were completely exhausted and had no money to continue supporting Greece and Turkey and other countries that were under threat from Stalin and the Soviet Union.

Joe Scarborough: (10:56)
So Truman had a decision to make and he acted very quickly and he got his people together, the best and the brightest people. General George Marshall who was his secretary of state but also was really the architect of winning World War II.

Joe Scarborough: (11:13)
You had Dean Acheson who you brought up. Dean Acheson was the undersecretary of state who really was the architect of not only the Truman Doctrine but also of NATO and also of all the things Truman did over the next few years to contain the Soviet Union.

Joe Scarborough: (11:27)
George Kennan who wrote the Long Telegram on containment. Averell Herriman who was ambassador to the Soviet Union who knew so much about the Soviet Union because he had actually first been to Russia in 1899 when Nicholas II was Czar. So Truman was wise enough to surround himself with the wise men as Walter Issacson and Evan Thomas called his advisors.

Joe Scarborough: (11:55)
And then together your right they put together a structure. An analytical construct for foreign policy that we have followed for 75 years. Through nine presidents, both Republican and Democrat alike. The first president to divert from that is the current occupant of the White House. A guy that you and I know pretty darn well, Donald Trump.

Anthony Scaramucci: (12:20)
You know it's fascinating. There's some great stories in here. One of the stories is Truman not wanting to come to the phone when he's being told he's going to be the vice president. We're dropping Henry Wallace from the ticket. He was more left-leaning than Harry Truman.

Anthony Scaramucci: (12:36)
Harry was told he was told he was the second Missouri compromise, which you write about. You also put in the back of the book which I would encourage people to read, the top-secret memorandum from the state department discussing what happened with the United Kingdom and the fact that the United Kingdom was running out of money and the U.S. needed to step up.

Anthony Scaramucci: (12:57)
But I think the thing that really moved me, Joe, about the book was Arthur Vandenberg who's not well known to contemporary Americans and I'm wondering if you could talk a little bit about the great Republican Senator from Michigan and his relationship with Harry Truman and how important that was to the origination of the Truman Doctrine.

Joe Scarborough: (13:20)
Yeah. You know I'm so glad you brought up Arthur Vandenberg because the Truman Doctrine was a success but it was a bi-partisan success. And I know it's en vogue to be pessimistic. We've heard time and again that our institutions were not going to hold up to whatever threats that they were under.

Joe Scarborough: (13:43)
I always knew the institutions would hold up. I always said the institutions would hold up. I remember back when Ronald Regan was president, the head of the history department at the University of Alabama, I was a huge Regan fan. I said, "What do you think about Ronald Regan?" And he was quiet for a second and he said, "Well I think America's strong enough to even survive eight years of Ronald Regan."

Joe Scarborough: (14:06)
And I sat there horrified because I loved Regan but it was the first time I thought hey wait a second, people who respect each other, who like each other can have completely different views about this country and the best way to move forward.

Joe Scarborough: (14:24)
So I always knew the institutions would hold and I also am optimistic now. People are saying that there's no way Washington can ever work. There's no way Washington can ever be fixed. Listen, I think with Joe Biden you have somebody like Harry Truman who knows how Washington works.

Joe Scarborough: (14:48)
Who built up friendships and relationships in the United States Senate and have built the relationships with Democrats and Republicans alike and with Arthur Vandenberg you actually had a Republican from Michigan who had opposed FDR and Harry Truman every step of the way on domestic matters.

Joe Scarborough: (15:09)
He was a dyed in the wool isolationist for most of his political career. But he and Harry Truman built a great relationship and both of them understood that the United States couldn't make the same mistake that it made after World War I.

Joe Scarborough: (15:28)
And after World War I three million Americans were in uniform. 114,000 were killed in combat and yet the Americans came back home and once again reverted to isolationism. Refused to get involved in the League of Nations, refused to stay engaged in Europe which created a void, which allowed for the rise of Adolf Hitler.

Joe Scarborough: (15:53)
Arthur Vandenberg understood that they couldn't repeat the same mistake after World War II. So Truman and Vandenberg built this great relationship but here's the thing about building bipartisan relationships in Washington D.C. they actually take work.

Joe Scarborough: (16:14)
I mean there was a reason when I was in Congress and I was considered one of the most conservative members of Congress. I was a small-government conservative. People in my own party thought I was too rad when it came to balancing the budget.

Joe Scarborough: (16:31)
But when I came to the chamber I always went to the democratic side of the chamber and I sat down with Democrats, I sat down with Liberals. I worked with them because I knew I had to figure out a way to forge compromises on house bills.

Joe Scarborough: (16:45)
Harry Truman and Vandenberg understood that as well and they had a great relationship and it wasn't just between those to. It was also their staff members. At the end of every day, Walter Isaacson recounted in the wise men how Dean Acheson's staff members and Harry Truman's staff members at the end of the day would go and drive-by Vandenberg's townhouse in Washington D.C and sit around and have drinks.

Joe Scarborough: (17:13)
And they would keep Vandenberg updated with what Harry Truman and the White House had been doing that day. They were in constant communication and they got them engaged in the Truman Doctrine so they felt like they actually had ownership of it.

Joe Scarborough: (17:30)
That's why at the end when the votes were counted most Republicans sided with Harry Truman including Robert Taft, Mr. Republican who as you know was one of the most hardcore isolationists in the United States Senate at the time.

Anthony Scaramucci: (17:47)
Well yeah, I was going to bring up Robert Taft, obviously the son of President Taft. But he moved all of these people, so I guess one of the questions that I have is actually coming from someone who I'm very close to in Washington asking who is the Vandenberg? If Joe Biden is the Harry Truman, Joe who is the Vandenberg of the Republican Party? Or is there not a Vandenberg?

Joe Scarborough: (18:14)
Well, I think we are actually seeing more of a centrist coalition starting to form in the Senate. The media love to talk about how conservative had gotten when conservative members of the Republican Party were getting elected to Senate.

Joe Scarborough: (18:32)
The story they didn't tell was how liberal, how progressive Democratic senators had become. There was a hollowing out of the center when you started having Democrats from red states lose their races and suddenly you had progressives on the left, you had conservatives on the right.

Joe Scarborough: (18:50)
But what we see now after the 2020 election is... Well first of all we saw the American people deliver a very clear message to Washington and that message was we don't trust either of you. We're going to elect a Democratic president because we're just exhausted by Donald Trump but we're not going to turn the keys over to the Democratic congress.

Joe Scarborough: (19:16)
So we're going to actually have a system of checks and balances. So that's what you're having and you also see it in the Senate where you now have in Arizona, two Democratic senators who are going to be more moderate because they're in a Republican state.

Joe Scarborough: (19:36)
You have a former governor of Colorado, Governor Hickenlooper who's also going to be a more moderate, pro-market Democrat. You have out of West Virginia, you have Joe Manchin who maybe basically the bane of progressive's existence in the United States Senate but there's another guy that's going to hold the middle ground in the Senate.

Joe Scarborough: (20:01)
Look on the Republican's side. You have Susan Collins in Maine who won her state by nine points, which was really incredible when you think about the fact Joe Biden won the state of Maine by nine points as well. So Susan Collins has every reason to sit down and make a deal with Joe Biden.

Joe Scarborough: (20:23)
Lisa Murkowski has already said she's going to do that. Has already said she's going to support Joe Biden's selections to the cabinet as long as they're not too extreme. Mitt Romney, you have Mitt there, a guy that you know very well and I know very well.

Joe Scarborough: (20:39)
So you've got six, seven, eight people that are going to be centrists who regardless of which candidates win in Georgia, who are going to find a middle ground. So you may not just have one Vandenberg you may have a series of Vandenbergs and also I have a prediction. It may be a long shot but I've known this guy since 1994. I think Lindsey Graham is actually going to be looking for opportunities to strike deals with Joe Biden as well.

Joe Scarborough: (21:18)
He's safe for another six years in South Carolina. He's a guy that was one of John McCain's closest allies and I think he's a guy who will do deals with Joe Biden so long as they're moderate.

Anthony Scaramucci: (21:38)
There's a passage in the book toward the end in the House Divided chapter which I actually highlighted and it talks about the press and it's President Truman, Joe talking about the press and I'm just going to read the first sentence and take you there. "I want to commend the press." He's saying. He's complimenting them on the manner in which they explain the program.

Anthony Scaramucci: (22:03)
The program to help Turkey and Greece which was the original concepts around the Truman Doctrine and basically say that he wanted to emphasize that it was important for the press to explain this type of legislation to the citizens.

Anthony Scaramucci: (22:19)
So now I want to fast forward to where we are now with President Trump's relationship with the press. Do you think that that's repairable? Do you think that we can get back to that sort of symphony between the government and the press and the press holding the government accountable without the government being so upset about that level of accountability?

Joe Scarborough: (22:41)
I think so. I think there have been elections where you look and you see where the media has been much tougher on one candidate than another candidate. You have a lot of Democrats that are still kicking me around because they think that we were too tough on Hillary and her emails.

Joe Scarborough: (23:01)
Obviously, Trump supporters can look at the press coverage and see that obviously Donald Trump was treated much more tough than Joe Biden was. I've had friends calling me up and saying, "Well why aren't you talking about Joe Biden's position on minimum wage?" Or something like that.

Joe Scarborough: (23:17)
I say, "Well its kind of hard to get there when Donald Trump is telling his attorney general to arrest Joe Biden two weeks before the election." There was always so much being thrown at the wall and Donald Trump wanted us talking about him. That's why he was always, you know it was shock and awe 24/7.

Joe Scarborough: (23:38)
I think you're going to have Joe Biden who is sort of that from the old school being much more respectful of the media. One thing though that he needs to understand that I think sometimes Democrats don't understand as well as I say we Republicans, I used to be a Republican. Is Republicans never go into the White House expecting to get a fair shot from the press because they're never going to get a fair shot from the press.

Joe Scarborough: (24:07)
I'm watching a documentary on Showtime right now on the Regans and I found out that because I support small-government I'm for trillionaires and I'm a racist. It's always biased against small government conservatives. The media is always... They don't understand. Most members of the media don't culturally understand what makes people conservatives.

Joe Scarborough: (24:31)
That said, I think the Clintons, I think the Obama's were always shocked when they got easier treatments during the campaigns but then they got into the White House and found out that the White House press corps was going to tough on them too. So I think the Bidens and the Biden team is going to see that press is going to hold them accountable, going to be very tough.

Joe Scarborough: (24:58)
But again, Joe Biden's old school and so he's going to be respectful to the press and his view toward the media reminds me of Alan Simpson who used to be Wyoming's Republican senator and I remember Simpson early on in my career, we were flying back to Washington together on the plane and he said, "Boy here's the deal. You may not like them but when the media calls, always return their damn call. Do it the same day and just put up with it. Let them know that you're there."

Joe Scarborough: (25:36)
And I followed that advice and it was great advice. I mean there's a natural tension between the press and the presidency. Harry Truman understood that. Joe Biden understands that. Ronald Regan understood that. But you got to deal with them and hopefully, you don't resort to using terms that Joseph Stalin used against his political opponents. You don't call them enemies of the people.

Anthony Scaramucci: (26:04)
You mentioned that you're a former Republican, what do you think the future is for the Republican Party in the aftermath? Let's start on January 21st. Where do you think the Republican Party's going Joe?

Joe Scarborough: (26:18)
Well, I'm far more pessimistic about the Republican Party than most. I think a lot of people think the Republican Party can bounce right back. When I say demographics is destiny, whenever I say that people get shocked and stunned and greatly saddened by it.

Joe Scarborough: (26:33)
It's just the reality. Demographics is destiny. I used to say that as it related to social security and Medicare because I was worried about the explosive growth of entitlement programs where you said, "Have 15 people working in their 50s for every one person on social security." Then we had three people working for every one person on social security and Medicare because of demographics.

Joe Scarborough: (26:54)
Soon it's going to be two people working for every one person on social security and Medicare. Those numbers don't add up. So that's how I used to talk about demographics is destiny. Now, when I look at the electoral map I started saying four or five years ago, look at the electoral map, look at the demographic changes and expect states in the sun belt like Georgia, Texas, and Arizona to start going blue.

Joe Scarborough: (27:17)
I didn't expect that to happen in 2020. I expected that to really start happening in 2024 but I think because of some of the extreme things that have been going on over the past several years we've already seen Georgia and Arizona go blue. I don't think they're going to go back, go red again for quite some time.

Joe Scarborough: (27:40)
Florida's actually become more solidly red which has been a real surprise but Texas let's just talk about demographics. In Texas, John Kornan said nine Hispanic babies are being born for every white, Caucasian baby that's being born in the state of Texas right now.

Joe Scarborough: (28:01)
You look at the numbers, compare, I brought up Regan my God I think 75, 80% of Americans were white when Ronald Regan was president. It's 60% now. Those demographic numbers change and Donald Trump okay great, Donald Trump got 12% of the black vote. Big deal, he still lost 88% of the black vote.

Joe Scarborough: (28:24)
If Republicans keep running around cheering about losing nine out of 10 votes that shows you why the bad situation they're in. And as far as Hispanics go, Republicans are bragging about getting 33% of the Hispanic vote. Anthony, you remember what George W. Bush got of the Hispanic vote in 2004, 45%.

Joe Scarborough: (28:42)
So the numbers are going to keep breaking the Democrat's way and I think unfortunately Republicans didn't listen to the voters after 2012. I remember going to a national review post mortem and everyone was talking about what needed to be done to get the Republican Party's arms around the demographic changes.

Joe Scarborough: (29:11)
I remember George W. Bush telling us in Congress in 1999 and Carl Rowe saying, "Hey y'all need to get right with Hispanics." And he was right. We did and instead Republicans spent the past four years doing whatever they could to offend people of color and even if Trump picked up one or two percentage points there, overall the demographic wave is going to overtake them unless they completely change their approach to voter outreach.

Anthony Scaramucci: (29:45)
So I want you to channel the wise men in this book, wise men and women, and I want you to be the policy wonk of 2020 and 2021. What does the world need from the United States in terms of engagement? What does the world need from the United States in terms of a reset? If there were a Biden Doctrine as an example, that could help re-engineer the world and set it on a course.

Anthony Scaramucci: (30:16)
Frankly, the Truman Doctrine set the world on a course of great peace and great global prosperity. It was uncertain at the time and it took 40 years before we brought down the Berlin wall but what would we need right now Joe?

Joe Scarborough: (30:31)
Well, the first thing we have to do is re-engage with our democratic allies. That's priority number one. We have to re-engage in a positive way with Canada. We have to reengage yes with Mexico an extraordinarily important trading partner. But we have to reengage with Germany, with France, with Britain.

Joe Scarborough: (30:54)
Rebuild that special relationship. I think we can do it. Reengage with NATO in an aggressive way. I'm optimistic that that's going to be the easiest part of what lies ahead for Joe Biden because I think these are countries, these democratic countries need the United States.

Joe Scarborough: (31:18)
And I will say too there's a part of me that is glad that over the past four years some of our allies that said that the United States needed to back off a little bit understand what an indispensable country we are. We still are the indispensable power. The indispensable country in this world.

Joe Scarborough: (31:39)
So the first thing we need to do is we need to reconnect in a strong, positive way with our allies. The second thing we need to do is we need to look at what is for better or worse going to be the most important relationship for this country over the next 40 years. We have got to have a sane, rational approach to our relationship with China and yes, Barack Obama in his biography said that perhaps he was a little too easy on China in some areas but that said, we do not want to get locked into a second cold war.

Joe Scarborough: (32:24)
You figure out the issue. Whether you want to talk about the economy, whether you want to talk about the environment, whether you want to talk about human rights, whether you want to talk about global stability. The United States and China are whether we like it or not, we're going to be the two global powers dominating the world stage for the next 30, next 40 years.

Joe Scarborough: (32:49)
So we're going to have to figure out a way to yes be tough with China but at the same time, be engaged with China. Have a rational relationship and not one that keeps them guessing and keeps the rest of the world guessing. So that's the second thing we need to do.

Joe Scarborough: (33:04)
The third thing we need to do is we've got to figure out exactly how we're going to address Russia in the coming years. We've had three presidents now that have miscalculated badly when it came to Vladimir Putin. Of course George W. Bush saying that he'd looked into the eyes of Vladimir Putin and seen his soul and gave his endorsement.

Joe Scarborough: (33:32)
Then with Barack Obama we obviously had him talking about having Hillary Clinton talking about the reset. Then with Donald Trump well it's hard to say exactly what Donald Trump's relationship was with Vladimir Putin but it is Russia's best interest and it is in the United State's best interest for Russia to get themselves out of the corner.

Joe Scarborough: (33:59)
We're not going to be able to do it with carrots. I don't know that sticks alone are going to help but this is a guy who invaded Georgia under George W. Bush. Invaded Ukraine under Barack Obama and we need to figure out a way forward with Russia and I think again it's not going to be easy, it's going to take diplomacy a lot of hard work but I think we can get there.

Joe Scarborough: (34:30)
And finally, we've got to figure out what we want to be when we grow up regarding trade. What kind of trading partner do we want to be with not only Europe but the rest of the world and for God's sake, we need to reexamine TPP and get re-engaged there.

Anthony Scaramucci: (34:47)
Yeah, obviously I was a big fan of TPP even when I was on the campaign with then Mr. Trump. He would go ballistic on you if you tried to explain to him the benefits of TPP and why that was going to help us contain China and make us more competitive and more powerful in the Pacific but that's for another day. I want to turn it over to John Darsie who's got a ton of questions. We've got great audience engagement, Joe. I'm on that self-promotional as you know right, so I'm not going to promote the book by putting it in front of everybody's face see. Look at that.

Joe Scarborough: (35:21)
I love it. Thank you so much.

Anthony Scaramucci: (35:23)
You know it's a phenomenal book. I really enjoyed reading it and it's a time in our country where we should really look back and think about these men and women that brought themselves together despite whatever their policy differences were, philosophical or otherwise they knew how important it was to progress the United States and put it in a position in the world where it couldn't be isolationists and it had to engage. But with that, John I'm going to leave it over to you.

John Darsie: (35:51)
Joe if you have a communications director at Morning Joe and they go on vacation for 10 days or two weeks and you need Anthony to fill in he's doing a great job of promoting your book. So just keep that in mind.

Joe Scarborough: (36:02)
I love it.

Anthony Scaramucci: (36:04)
Joe, I got to tell you my contract has to be for 12 days, Joe. I got to beat my last record. I just want to make sure you know that, okay.

Joe Scarborough: (36:10)
Much longer than that my friend. Much longer.

John Darsie: (36:14)
Exactly. But we have a question about, you know Trump is obviously still going through the motions of fighting the election results and we have an audience member who's curious about your opinion as somebody who knows him and has spoken with him a lot over the years about whether he legitimately believes that he was robbed of this election or this is all just part of his shtick to maintain some level of enthusiasm for whether it be Trump TV or a future political run.

Joe Scarborough: (36:37)
You know and I call him Donald just because that's what I've known him as for so many years. But Donald knows what he's doing. He always knows what he's doing. I remember one time calling him up during the Judge Curiel controversy back in 2016 and I said, "Donnie, you can't say that about a judge who is an American."

Joe Scarborough: (37:08)
He goes, "He's Mexican. He's Mexican." I said, "No, no, no. He was born in Indiana." He goes, "No, no, Joe you're wrong." And Anthony knows, I go, "Donald, Donald, Donald. Who are you talking to here? Okay, I'm not blanking stupid. Who are you talking to." And he got quiet for a second and he started chuckling, and he goes, "Okay he's American but still."

Joe Scarborough: (37:31)
So first of all he doesn't want to be seen as a loser. He's always worried about what's next and you think about this guy, I've always called him a day trader but I think Maggie Haberman with the New York Times has it best, where Donald Trump has spent his entire life just trying to survive the next 10 minutes. That's how he lives, that's how he thinks and so right now he's just trying to survive the next 10 minutes and trying to get past the embarrassment as he said of being one of the few Republicans on the national stage to lose.

Joe Scarborough: (38:08)
And I also, listen, I don't think he's going to do Trump TV because it's too much work. I think he's going to try to figure out how to make quick money, fast money, easy money by trading on his name and whatever else he can trade-in. But I think he'll talk about running in 2024, I'm very skeptical that he'd actually do that.

John Darsie: (38:34)
So that's sort of a good segue to the next question that I want to ask you is how large do you think he'll loom within the Republican Party over the next four years? There's different theories about whether he's going to continue to be the kingmaker in the party or whether his influence is going to wane and you're going to see new leaders emerge in the party and less of an emphasis on Trumpism and demographics being destiny you're going to find voices that embrace the idea of broadening the tent rather than the last gasp of some white grievance that helped push him to victory.

Joe Scarborough: (39:05)
Yeah, I mean it's a white grievance party right now. I can't believe I'm saying that about my former Republican Party because I was so resentful and felt grievance when people would say that about the Republican Party but that's where Donald Trump took the Republican Party over the past four years and my God, four years from now he's going to be even further away.

Joe Scarborough: (39:23)
They're going to be even further away from majority if they move in that direction. I think that's something that most Republicans will understand. I do think he's going to have an impact over the next few years in the same way that Sarah Palin had an impact in 2010. Sarah Palin of course had her own television show after she and John McCain lost their race in 2008 and there was a time when Sarah Palin could show up in 2010 and a great example of it, South Carolina.

Joe Scarborough: (39:56)
Nikki Hailey was trailing in her race for governor there, Sarah Palin went, endorsed Nikki Hailey. Nikki Hailey won and there were several states in 2010, several races in 2010 where Sarah Palin had that impact but it faded by 2012. I think we're going to find the same thing with Donald Trump.

Joe Scarborough: (40:16)
Donald Trump will be a force in the Republican Party if things continue to play out as they are right now over the next couple of years. But as we move to 2024 and as it becomes more obviously, that Donald Trump is not going to be the nominee in 2024 you're going to find a Republican Party that's going to be scrambling to catch up to the realities of the electorate that they are going to find themselves facing in the 2024 election.

Anthony Scaramucci: (40:45)
Joe, are you going to be the nominee in 2024?

Joe Scarborough: (40:49)
Not for the Republican Party, that's for sure. I don't think I could even get invited to a Regan dinner these days.

Anthony Scaramucci: (40:57)
Trust me I'm persona non grata as well. So whatever party you're going into I could use an invitation, Joe. All right, keep going, Darsie.

Joe Scarborough: (41:05)
Let's figure that out because we're both men without parties, men without countries right now.

Anthony Scaramucci: (41:10)
There's no question about that. It's lonely out here on the frontier Scarborough.

Joe Scarborough: (41:14)
Exactly.

John Darsie: (41:15)
And where you are on Jupiter that's literally and figuratively becoming Trump country down there. You see him renovating his suite in Mara Lago so maybe you guys will bump into each other at lunch down there.

Joe Scarborough: (41:28)
Let me tell you something, we have Trump flags all over my neighborhood. Anytime I go out on a boat there are Trump flags all over the place. I was thinking about putting up a flag that said Biden bitches. They're like "F your feelings. Trump 2020. No more BS. Trump 2020."

Joe Scarborough: (41:50)
Everywhere we went there were Trump flags but you know almost all of my childhood friends voted for Donald Trump. I think all of my family members voted for him. A couple of people lied and said they weren't voting but I know they voted for him.

Joe Scarborough: (42:05)
99% of the people I see every day voted for Donald Trump. So I don't quite understand why. It's not what I fought for as a conservative for 25 years as a Regan and Thatcher conservative for 25 years but you know, they voted for him so we'll see what happens four years from now.

John Darsie: (42:31)
The last question, you can provide a quick answer here. Do you think Biden's up for the job? You talked earlier about how you see some Republican senators that are likely to push for compromise, obviously, you have other Republican senators who are already laying the groundwork for the type of instructionism that you saw in parts of the Obama presidency. Do you think Biden, you know he's talked a lot about wanting to compromise and wanting to bring things back to the center, do you think he's going to be successful in healing these divisions that are in our society and healing our credibility on the world stage? Or do you think we're on an inevitable spiral toward more division and more isolationism?

Joe Scarborough: (43:12)
I think Joe Biden... I have believed for a very long time that this country has been blessed and that the right leaders have come along at the right time. I think after Richard Nixon somebody by the way that my family, my father loved, my family loved.

Joe Scarborough: (43:29)
But after Richard Nixon I think we were blessed as a nation to have Gerald Ford and then yes, Jimmy Carter come along and heal this country. You had two leaders that Americans trusted even if they thought Jimmy Carter wasn't up to the job by the end of it.

Joe Scarborough: (43:46)
You had two fundamentally decent men in the White House and I think Joe Biden is going to fill that role as we move forward. He will be able to talk to Republicans, bring Republicans to the table. Of course, at the end of the day, it's going to be up to Mitch McConnell on whether he wants to make a deal and get things done but Joe Biden understands he can't listen to the progressives in his party. He can't listen to the left-wingers in this party and get things done.

Joe Scarborough: (44:18)
I know that makes a lot of people on Twitter and a lot of people at my network and a lot of progressives in Washington angry, it's just the reality. As Bismark said, "Politics is the art of the possible." Joe Biden understands that. Also, is Joe Biden up to the job? I know I heard from a lot of my friends, "Oh I can't vote for Joe Biden because he's not all there mentally."

Joe Scarborough: (44:42)
I'll just say I heard that quietly from Democrats at the beginning of this process and yet Joe Biden outperformed all expectations every step of the way and shocked the progressives. Shocked the progressive Twitter. Was almost run out of the race, won in South Carolina, won on Super Tuesday, and got better as he went along.

Joe Scarborough: (45:10)
And by the way, it's not Joe Biden who made a disaster of the debate. It was Donald Trump who acted miserably in the first debate and I think most Republican strategists, the smartest Republicans I know say that Donald Trump lost the presidency because of the first debate. That if he'd acted in the first debate like he did in the second debate he probably would have beaten Joe Biden.

Joe Scarborough: (45:40)
So Biden has done what he's needed to do to win and I think he'll do what he needs to do to govern. He's been there since he was 29 years old. He knows Washington D.C., he knows it's players. He knows what's possible, he knows what's not possible and so I'm optimistic that we actually may get some things done for the first time in a long time.

John Darsie: (46:03)
Well Joe it's been a pleasure to have you. Anthony do you have a final word before we let Mr. Scarborough go?

Anthony Scaramucci: (46:08)
We're going to let Joe have the final word but I'm going to hold up the book again. Saving Freedom, Joe congratulations on the book. It's a best seller on Amazon and across the United States and I'm already getting messages into my phone that people are buying it for Christmas Joe, so God bless you with the book, and hopefully we can see you soon in a non-virtual setting. Maybe we'll get you to one of our SALT conferences one day when we can get out of the pandemic.

Joe Scarborough: (46:35)
I'm looking forward to it and let me ask you this because when I give speeches I spend time before the speeches the non-virtual speeches and I'll talk to everybody around the table. How's it going? What's happening with your business? And it's amazing what you learn by doing that.

Joe Scarborough: (46:53)
So if you don't mind, if you'll indulge me here to ask you about 2021 because it's very interesting, when I talk to business owners around Florida, and I'm talking about people that own 30 restaurants and own shopping malls and own strip malls and own commercial real estate up and down the food chain.

Joe Scarborough: (47:20)
Or somebody that just owns one or two restaurants or one or two small businesses. They have a very grim outlook on 2021 and they say they see bad times coming and their advice to me unsolicited advice is hold onto your cash because cash is going to be king in 2021 because we're going to start seeing the dominoes falling from everything that's happened this year.

Joe Scarborough: (47:48)
It's a pretty pessimistic take. When I talk to top bankers, that are running the big Wall Street banks they'll go, "Oh no we're going to do fine." I'm wondering, what are your thoughts, Anthony?

Anthony Scaramucci: (48:03)
So Joe I'm in an interesting position because I own a business in New York City, a restaurant called The Hunt and Fish Club, maybe someday we'll get you there.

Joe Scarborough: (48:10)
Oh, I'd love to be there.

Anthony Scaramucci: (48:12)
And we've got it closed right now and we own this business where we've got about eight billion dollars in capital under management which we've been running for 15 years so what you're referring to is a K what's going on. So the bankers and the Wall Streeters are going up and the small business owners and the small proprietors and the people in the middle income are going down. So that's a K shape of recovery but I'm a little bit more optimistic for the small business people.

Anthony Scaramucci: (48:41)
I would have loved to have seen an Andrew Yang style massive stimulus. I wrote about this in March. They were talking about a one to two trillion-dollar stimulus. I said it had to at least be three or four, John actually helped me co-author that editorial and we need another big stimulus right now.

Anthony Scaramucci: (49:00)
And what I would say to you is that we're at war. We just happened to be at war with an invisible molecule. Imagine if I said to you there was a sovereign nation that killed 250 plus thousand Americans and had killed 1,200 Americans a day. They're on, they've made a land invasion into the United States. They kill a quarter of a million Americans. They're wounding 100 or so, 150,000 a day, killing an additional 1,200. How much money would we spend, how much of our nation's resources would we put together to fight that war if it was a homeland invasion?

Anthony Scaramucci: (49:35)
So for me, I'm really just strongly encouraging people in government to think bigger, think bolder, go back to the second world war. We were borrowing 20 to 25% of the GDP back then and yes we have huge deficits, I've heard you talk about it on Morning Joe. The irony that the Republicans are going to be constrained on deficit spending now even though they were drunken sailors over the last four years.

Anthony Scaramucci: (50:03)
But we need a massive stimulus, Joe. If you get that stimulus, my opinion is going to be more like the bankers and less like the small business people because as the economy recovers I'll take you back to the 1920s, right after the global pandemic in 1918, 1919 we had the roaring 20s. Well, we can get back there. There's a tremendous amount of pent-up consumption.

Anthony Scaramucci: (50:30)
So long term I'm optimistic but I really do think we need a massive stimulus right now and I'm a long term conservative but when you're at war you've got to throw that playbook out the window and you've got to use the government for what it's supposed to be there for is to defend the health and prosperity and safety of its citizens.

Joe Scarborough: (50:52)
All right.

Anthony Scaramucci: (50:52)
All right. So how's that?

Joe Scarborough: (50:53)
That's fantastic. I appreciate it.

Anthony Scaramucci: (50:56)
And there's no distance between me and this camera Scarborough. That's why I'm able to-

John Darsie: (51:00)
That was Anthony's stump speech for 2024 Joe if you want to be a surrogate on the campaign trail we'll sign you up.

Anthony Scaramucci: (51:07)
I'll be the Manhasset dog catcher in 2024 Joe.

Joe Scarborough: (51:11)
I love it. I'm on that campaign. Let me know where to send the check.

Anthony Scaramucci: (51:15)
Just let me know if you need a comm director I need to get at least 12 days in my contract okay?

Joe Scarborough: (51:20)
I can do it. All right, thank you so much. Great seeing you John.

John Darsie: (51:22)
All right, thanks so much, Joe.

Anthony Scaramucci: (51:23)
Great seeing you, God bless on the book, and Merry Christmas to you and your family.

Joe Scarborough: (51:28)
Merry Christmas to you guys. Thank you.

Peter Baker: “The Man Who Ran Washington” | SALT Talks #106

“The resentment towards Washington that fuels President Trump's rise is a resentment toward the establishment that Jim Baker was so much a part of.”

Peter Baker is the Chief White House Correspondent for the New York Times, political analyst for MSNBC, and author of Days of Fire and The Breach. Susan Glasser is a staff writer for the New Yorker and author of its weekly Letters from Trump's Washington, as well as a CNN global affairs analyst. Susan and Peter are married, and their first assignment as a married couple was as Moscow Bureau Chiefs for the Washington Post, after which they wrote Kremlin Rising.

Jim Baker sits relatively under-discussed considering the enormous influence he wielded from the end of Watergate to the end of the Cold War. Baker ran five different national presidential campaigns, served as Chief of Staff in both Ronald Reagan and George H.W. Bush’s White House, Treasury Secretary and ultimately Secretary of State from 1989 to 1992 during which time the Soviet Union collapsed. “Jim Baker as a subject turned out to be, I think, sort of oddly relevant to the moment… Donald Trump had yet to appear on the scene in terms of Washington politics at least… our interest was in a big subject about Washington and understanding ‘how had Washington become such a dysfunctional gridlocked place?’”

H.W. Bush urged Baker to get into politics and started Baker’s multi-decade political career that shaped Washington and how it’s operated in the decades that followed. One can trace the kind of deal-making politics, in which Baker played a major role creating, all the way to today’s climate that has seen a rejection of the status quo, exemplified by President Donald Trump’s ascendency.

LISTEN AND SUBSCRIBE

SPEAKER

David-Rubenstein.jpeg

Peter Baker

Chief White House Correspondent

The New York Times

MODERATOR

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello everyone, and welcome back to SALT Talks. My name is John Darsie. I'm the Managing Director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology and public policy. SALT Talks are a digital interview series that we launched during the work from home period with leading investors, creators and thinkers. What we're trying to do during these talks is replicate the experience that we provide at our global conferences, the SALT Conference, which we host twice a year, once in the United States and once internationally, most recently in the UAE in 2019. What we're trying to do during these talks and at our conferences is provide a platform for subject matter experts, as well as to provide a platform for big ideas that we think are shaping the future.

John Darsie: (00:56)
We're very excited today to welcome Peter Baker and Susan Glasser to SALT Talks. Peter is the Chief White House Correspondent for the New York Times. He's a political analyst for MSNBC, and is the author of Days of Fire and The Breach. Susan Glasser is a staff writer for the New Yorker, and author of its weekly Letters from Trump's Washington, as well as a CNN global affairs analyst. Susan and Peter are married, and their first assignment as a married couple was as Moscow Bureau Chiefs for the Washington Post, after which they wrote Kremlin Rising. Peter and Susan today live in Washington, DC with their son. Just a reminder if you have any questions for Peter or Susan during today's SALT talk, you can enter them in the Q and A box at the bottom of your video screen on Zoom. Hosting today's talk is Anthony Scaramucci, the founder and Managing Partner of SkyBridge Capital, a global alternative investment firm. Anthony's also the chairman of SALT, and with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (01:53)
John, thank you. As I'm wont to do, holding up the book here. Congratulations, guys. It's a brilliant tour de force. A lot of post World War II history in this book, lots of discussion about how we got to where we are today, related to the Republican Party, so very highly recommended. I'd like to start with you, Susan. For those of us that are less familiar, I'm not, but a lot of people may be, with James Baker, who is he, what is his more signature accomplishments, and why did you guys choose to write a book about him right now?

Susan Glasser: (02:30)
Well, first of all thank you for having us in this nice, quiet period in our nation's politics. We can just sit back and talk history. You're right, that Jim Baker as a subject turned out to be, I think, sort of oddly relevant to the moment. That was not necessarily our intention when we began this seven years ago. Donald Trump had yet to appear on the scene in terms of Washington politics at least, but Jim Baker, I think already even then, our interest was in a big subject about Washington and understanding how had Washington become such a dysfunctional gridlocked place?

Susan Glasser: (03:08)
The period that Jim Baker helps us tell the story of our politics, really he was at the height of power from the end of Watergate to the end of the cold war. He has this incredible, unique portfolio where he is both a national political figure of extraordinary accomplishment. He actually ran five different national presidential campaigns, and he also rose to become a principal in his own right. That's Washington speak for big mocker who gets a seat at the table. He was not only Chief of Staff in Ronald Reagan's White House, and later in George H.W. Bush's, he's the only person ever to be Chief of Staff twice, but he also was Secretary of the Treasury when they negotiated and successfully made the 1986 Tax Reform Bill, and then he of course became Secretary of State at the end of the cold war, in this momentous period from 1989 to 1992.

Anthony Scaramucci: (04:08)
If he had a world view, Peter, what was his world view and what were his ideological goals, if there were any?

Peter Baker: (04:17)
It's a great question because we think of Baker, of course, as a pragmatist. Look, he was a Texas conservative, small C, but he didn't let ideology stand in the way of getting things done. I think that he had an ideology. His ideology was make things happen, get things done, move the ball down the field. If he had to compromise to do it, that was okay. That's why his story is so interesting today, because we don't see a lot of that in Washington today. Politics is so zero sum that if you're having a negotiation and you give anything away to the other side, somehow it means you sold out. Compromise is a dirty word. But for Baker, compromise was how you got things done. You could be a ruthless knife biter in election season, but when it was over, you sat down with the other side and you worked out deals on taxes, as Susan said, on social security, on the Contra war of the 1980s. He sat down with the Soviets, obviously, and the Germans and the Arabs and the Israelis. For Baker, while he was a conservative, I think the biggest ideology for him was what do you need to do to get things accomplished?

Anthony Scaramucci: (05:18)
You know, for me, when I was reading this book, it was reminiscent of Robert Moses' book, The Power Broker, which I think is ... Sorry, Robert Caro's book about Robert Moses, known as The Power Broker, because it was a tour de force on somebody that didn't have elected office but was really at the center of monumental decisions and policy. One of the things that struck me about James Baker is that he would recoil from speaking out against policy initiatives or decisions that didn't necessarily go the way he thought they should be, or they were more controversial. I'll give the biggest example. He called President Trump crazy in 2016, yet he went and voted for him. He also refused to break away from him in the 2020 election. What does this say to both of you about the allure of power of James Baker himself, but just what Washington's all about?

Susan Glasser: (06:13)
Well, you're right to point that out. That was an interesting counterpoint to our historical research for this book was also the rise of Trump is happening in real time and definitely Jim Baker saw this as a hostile takeover of the Republican party that he felt that he had given his life to building. In so many ways, he's the un-Trump, in terms of both a sense of personal integrity but also just in terms of ideologically. He's still a very committed internationalist who believed in alliances, a free trader, an enemy of deficits, and in favor of telling it like it is. That's the thing about a pragmatist. You have to have a reality-based view of the world if you're going to be a practitioner of realpolitik as opposed to a non reality-based view of the world.

Susan Glasser: (07:08)
Yet he wasn't able, as you said, to fully renounce Donald Trump. For us, I think that's why the book is a study of power and it's not a celebration of it. It's a way of understanding that for someone like Jim Baker, maintaining your access, that really there's no point in pissing on the outside that you really don't get anything done by simply being a critic. It wasn't just Donald Trump. That was his view of the Iraq war when his best friend's son, George W. Bush, was president. Jim Baker was absolutely against that war. He thought it was a terrible idea, but somehow managed to make his concerns and opposition known but without blowing up his bridges to George W. Bush. I think that's another example of how he thought Washington operated.

Anthony Scaramucci: (08:01)
Well, I guess the thing that struck me about the book, you started writing it during the Obama administration. Then the Trump administration starts to unfold on us. I'm wondering, maybe this is for you, Peter, how do you think Baker's style in politics, did it lead us to Trumpism?

Peter Baker: (08:21)
Yeah, that's a really interesting question because there are ... we talked a little about this before going on air. The resentment toward Washington that fuels President Trump's rise is a resentment toward the establishment that Jim Baker was so much a part of. Now, did he do something specifically to lead to Trumpism? No, he's anti Trump in so many different ways, but I think that there is this backlash toward the elites, a backlash toward a Washington that seemed very comfortable and entitled and part of a ruling class that didn't really understand what it was like to live in so much of the country. In that sense, Trump represented a rejection of not just the Democrats, but ultimately the Republicans of the previous era in that sense. I think that people might not have bought what they thought they were buying in voting for President Trump, but there's no question, I think, that a lot of people were motivated by a sense that Washington had gotten away from them.

Peter Baker: (09:19)
What they lost, though, what they didn't see, I think, is that Washington did actually work in a way that it hasn't in the last four years, and the paralysis of the last four years hasn't made anything better for a lot of people out there who resented what had come before. I think Baker is a fascinating figure in that sense of representing what you say, part of the rejection of Washington.

Anthony Scaramucci: (09:43)
I want to take you back to one of the more fascinating stories in the book. James Baker is the campaign manager, effectively, for George Herbert Walker Bush in 1980. Then win the Iowa caucus, but they go on to lose the nomination. Ronald Reagan ascends in New Hampshire and they get to the convention. Tell us about the selection of George Herbert Walker Bush as Vice President, and then the eventual selection by Ronald Reagan of James Baker to be his Chief of Staff. They were adversaries six, eight months prior to that.

Susan Glasser: (10:20)
Well, that's right. It is one of the most amazing chapters really, because of course, without that-

Anthony Scaramucci: (10:25)
Love that chapter, by the way. Just editorializing right here. Just a fascinating human story. Please, I'm sorry I didn't mean to interrupt.

Susan Glasser: (10:31)
Yeah, no, you're right. Absolutely, because Baker actually wouldn't have become Baker without that incredible period of time. He and George Herbert Walker Bush were best friends from the country club of tennis courts in Houston. Baker had gone into politics really at Bush's urging. He turned out to be great at it. He runs this 1980 campaign and he takes Bush from an asterisk in the polls, literally an asterisk, to be Reagan's main rival for the Republican nomination. But they're not going to beat Reagan, ultimately. Baker, here, I think shows this canniness that he later became known for. He understands that the goal at that point is not winning the nomination that they're not going to win, but in a way his campaign is on now to get Bush that vice presidential nomination.

Susan Glasser: (11:24)
There's a real dance they have to do later in the primaries where Bush is out there, he wants to win. Very competitive guy, just like Baker. He's running against Reagan. He uses the phrase voodoo economics, which was one of the most memorable attack lines on Ronald Reagan that there was. Baker's actually mad at him. He's worried that he's going too far in attacking Reagan, and that ultimately that might doom his chances. In the end actually it was Baker and not Bush, who really forced Bush to pull the plug on his primary campaign. Bush and his family weren't ready to do so. They were resentful of Baker for saying now's the time to get out if you still want to keep your hopes alive. They did it. Bruised feelings, and yet Baker ultimately was correct in many ways, you could say, because they had just left it open.

Susan Glasser: (12:14)
Amazingly, at the 1980 convention, the big talk was that somehow Reagan might actually pick Gerry Ford, the former president. That had the entire convention in an uproar, and it actually faltered at the very last minute on these negotiations. What would it be like to have a former president as the vice president? Who would really be in charge? Ford over-reached, essentially, by asking for too much stature, too much authority, and Reagan just couldn't go there. There was nobody left to call but George Bush, who didn't think he would get it, by the way, interestingly, when the call finally came.

Anthony Scaramucci: (12:52)
Yeah. It's an amazing story. I don't want to give up the intrigue in this story, but it's a human story. It's power politics. It's the practicality of the campaign, what they need to do to beat a sitting president, and as we all know, there's only been three sitting presidents that have lost re-election since World War II, Jimmy Carter being among them. Baker was best friends with George Herbert Walker Bush, but they had a very complicated relationship. What was that relationship? How would you define that connectivity between the two of them?

Peter Baker: (13:25)
Yeah. We interviewed President Bush before he passed away. Obviously we interviewed Jim Baker an awful lot for this book, and both of them used the phrase siblings to describe it, that they were like brothers. If you think about it, brothers of course sometimes fight. Sometimes they have a rivalry, sibling rivalry. They're competitive. They want to prove something to each other at times.

Anthony Scaramucci: (13:43)
I'm so mad at my brother for incidents that took place in 1971. I just want to make sure everybody knows that.

Peter Baker: (13:50)
Exactly, but you love him to death, right? He is your brother. He will always be your brother, and I think that was the case of Baker and Bush. They had moments of friction, like what Susan described when they were upset at Baker for pushing them in 1980 to drop out. In 1992, when Baker was reluctant to come back to the White House to help Bush's flagging campaign for re-election, there was some sourness there. When Bush picks Quayle to be his running mate, arguably without telling Baker, that's kind of an act of rebellion against Baker. Why do I always have to listen to him? I know what I'm doing. I'm the President. In fact, when Baker would get on Bush's nerves, what Bush would say to him is if you're so smart, how come you're not President? There was this kind of sibling push and pull.

Peter Baker: (14:32)
The thing that really tells you why this is such a profound friendship that supersedes all that is the last day of George Bush's life, and that was just two years ago. The person who comes to his house three times that day in Houston is Jim Baker, checking in on his friend. The last few moments of Bush's life, he's by his bedside, literally rubbing Bush's feet in the final moments of his life. That's a friendship that goes beyond politics. As Susan said, it preceded politics. Because they were tennis partners and friends, family pals, their families got together in Houston, they had a relationship unlike any President and a Secretary of State, I think, in American history. I think that gave Baker power, by the way, as Secretary of State, but it's also a very human story, as you say.

Anthony Scaramucci: (15:17)
Look, it's an amazing story. It makes you feel proud to be American when you think about the character of both of those men. Baker recognized something about Washington, that there was a perception to power as much as there was real power. You guys addressed it in the book. He also had a knack for playing the media a certain way. I was wondering if you guys could explain that as well.

Susan Glasser: (15:40)
Yeah, no. Image management was definitely one of his super powers. I'm sure as a fellow practitioner, I'm sure you can appreciate some of these skills which really transfer, even though the media world has fragmented into-

Anthony Scaramucci: (15:53)
I'm not that great at image management, Sue. What you see is what you get, okay? I don't have three sticks next to my last name. Go ahead. Keep going.

Susan Glasser: (16:03)
He was a natural at it, from a purely absolutely selfish journalist point of view. You've got to appreciate a man whose motto was never lie to the press. Now, he might spin them aggressively, and he certainly did so, but Baker's skill was actually in managing the press rather than being at war with them. He took that away from his very first assignment on the national stage in 1976 when he became literally in one year, amazing rise, he went from an obscure position at the Commerce Department to running Gerry Ford's campaign. At the convention in 1976, the last disputed convention, here he is, this novice in politics. He's up against Ronald Reagan. John Sears, the campaign manager for Reagan, basically was a BSer, and he was telling the reporters all sorts of inflated vote counts that turned out to not hold up, whereas Baker was much more cautious and earned this enormous credibility with the national press corps. He carried that lesson with him.

Susan Glasser: (17:05)
In the Reagan White House, famously back-biting, one of Baker's great skills that I think enabled him to consolidate power was not only his mastery of the bureaucratic politics of a White House controlling the paper flow to Ronald Reagan, but it also was ... he would have these Friday briefings with the reporters for Time Magazine and Newsweek, and that mattered still back then. They would do these reconstructions of the big dramatic events of the week, and somehow, of course, Baker, as their background source, would always be in the middle of the event as they were portrayed in this first draft of history.

Anthony Scaramucci: (17:43)
It's an interesting segue to this question, because I was thinking about this this morning. He was a ruthless fighter. He gave it his all during the campaigns, but then he reeled it back and became this pragmatic deal maker. I guess what I'm wondering, as we look at President-Elect Biden today, how do you think he's going to handle the progressive wing of his party? Is he going to be this pragmatist like a James Baker? Will he manage things similarly with his team? Where do you think things are going, and what would Vice-President-Elect Biden, excuse me, President-Elect Biden take from a book like this about James Baker to help him manage the government in its current state?

Peter Baker: (18:26)
We should send him a copy. I do think that Biden is instinctively like Baker in the sense that he wants to cut deals. He wants to work across the aisle. That is his natural instinct, and he's from that era, to some extent. He obviously is an institutionalist, I think, like Baker is. He believes in Washington, he believes in Congress, he believes in working together. Whether this environment allows or not, is a different question. This environment is obviously different than it was when Baker was at the height of his power. You're right, I think that Biden will come under enormous pressure from the left within his own party to be much more sweeping or ambitious than maybe his natural inclination would be, and certainly than the Republican-led Senate, if it stays in Republican hands, as it looks like it probably will, would allow him to be.

Peter Baker: (19:10)
I think Biden would like to be a Baker, I just don't know whether he either has the capacity at this particular moment, given the environment, to be, but I think he'll try. I think he'll try. He and Mitch McConnell do have a relationship together. I do think they may not believe on big, sweeping plans on climate change or health care, but I do think that they will avoid the kind of train wrecks we've seen in the last number of years on government shutdowns and debt ceiling crises. That kind of thing, I imagine that McConnell and Biden could probably work their way through.

Anthony Scaramucci: (19:40)
When you think about 2000 and the stress on the country as we were waiting for the results in Florida, and it has been reported, and you guys can tell me if it's true or not, that the White House reached out to James Baker related to the current electoral outcome. How is it different from today, and if that is true, why do you think somebody like James Baker did not accept the appointment that he accepted from the Bush's in 2000?

Susan Glasser: (20:09)
Well, it's interesting. We did speak with Secretary Baker the other day, and we asked him about this because it was reported that Jared Kushner, Trump's son-in-law, he was in search of not Baker himself, I should say, but a James Baker like figure. Actually Baker told us they did not reach out to him directly, but clearly he's much invoked, and the reason is pretty simple. Because he's perceived as somebody who would both have the enormous stature and credibility that was needed to reassure the country at a time like that disputed 2000 election, but also the knife fighter chops to figure out one way or another a legal strategy that would put them in the right. That was what was interesting about Baker the pragmatist back in 2000 in Florida.

Susan Glasser: (20:56)
Many Republican lawyers felt that, as a matter of principle, that they were believers in states' rights, that matters like state recounts belonged in state courts. Baker, essentially from day one, looked at the situation in Florida and he said we're going to federal court. He had a very my job here is to win perspective on that, and he thought that the Florida Supreme Court was all Democratic appointees and it didn't look good for them. He wasn't sure of the outcome in the Supreme Court, but he felt that that was a better course, and he essentially won the argument over those Republican lawyers, even on his own team who were not so sure about it.

Susan Glasser: (21:38)
Look, the bottom line is that was a really different situation than today. Number one, most important thing, as Baker said to us when we talked to him, we never said don't count the votes. What an absurd thing to say. You can't really make that argument in the United States. The votes had already been counted, and in fact there had already been the automatic recount in Florida. The question was what additional recounting should go on, what to do with questionable ballots with the hanging chads and everything. That was very different. Then the other thing, of course, is that you had two candidates in George W. Bush and Al Gore who both believed in the American system, and in fact their main concern for both of them was how do we get to an outcome that everyone can accept, and how do we make sure that we haven't undermined American democracy in this? Of course, we now have the exact opposite situation, where the President himself is the underminer.

Anthony Scaramucci: (22:33)
What do you think happens?

Peter Baker: (22:41)
Now?

Anthony Scaramucci: (22:41)
Yeah.

Peter Baker: (22:42)
Well, look, I think we're going to see still a potentially volatile 70 day period. The President is still president until January 20th. We've just seen today he's fired the Defense Secretary. There's very likely to be more firings, we think, in the days to come. That could lead to a period of uncertainty and instability. I don't think there's any chance, it doesn't seem like, of overturning the election, just to make everybody understand that. The challenges he's put in court, first of all, haven't gone anywhere. Judges haven't been all that open to him. Second of all, even if he won, there's no actual allegation of any specific fraud that would create so many votes that it would overturn his election. They're literally just flailing at this point by arguing about whether the observers should have been six feet away or 20 feet away, things that don't really change the outcome. I think that he just wants to create enough noise out there so that he can explain that he didn't actually lose. It was stolen from him, and on and on. Will he concede? I don't know. You obviously know him better than I do. I'd love your opinion. Will he actually leave gracefully on January 20th? It's a good question, but he will be, I think, not President at noon on January 20th, whatever he decides to do.

Anthony Scaramucci: (23:53)
Well, let me put it to you this way. Since Scaramucci's now an 11 day time period, he will have been President for 132.78 Scaramuccis, and unfortunately right now for the country, we have six and a half more Scaramuccis to go. I think the last six are going to be really tough on the country because the guy's basically a sore loser and a big time baby, so we'll have to see. Some people have told me, that are very close to him, he's going to take a powder in Mar-a-Lago in December not to be seen again in Washington. That is a real crybaby pants. That is just like in elementary school when some kid had the football and was taking the football and taking it home with him. I hope he doesn't do that, but everything he's going right now is providing more evidence to the American people about why people like myself who worked for him said, okay, you can't have this guy be President. He's just not fit to be in that job. I was a little surprised by James Baker, and I want to ask this one last question because when I've met Secretary Baker in the past, he always struck me as a guy that had this centered, principled nature to himself. Yes, pragmatist, but sensible, principled nature. Were you guys surprised at his support for the President here prior to the election?

Susan Glasser: (25:18)
You know, look, we struggled with this really for four years. In a way, eventually it was less surprising to us in the sense that we asked him the same question over and over again and he never gave a different answer. At a certain point, if somebody tells you who they are, you have to listen. For whatever reason, Jim Baker chose, at the age of 90, the identity of a partisan, choosing his party. When we asked him this multiple times this year, that's what he fell back on, is this idea that, well, there are some terrible possible consequences. The left is going to pull the country too far away. It didn't seem very convincing to us, but again, it was a conscious choice on his part, so that told me both about what his views of his power, and that right now we live in such a partisan moment that you basically have to pick an identity and stick with it.

Susan Glasser: (26:16)
The other thing is, look, we talk a lot about his accomplishments in the book as a statesman, as a negotiator, as Secretary of State dealing with the Soviets, but he was a very hard-edged political player and partisan. You look at the 1988 presidential campaign, and you can see a through line from that campaign to the scorched earth politics of today. Baker and Bush, they didn't govern like that kind of partisan because Washington was different then, but they ran a politics where they took Michael Dukakis, essentially a mild-mannered technocratic governor of Massachusetts, and they turned him into a flag-burning, pledge of allegiance hating, criminal coddling enemy of the state. They understood, in very crass terms, that that was actually the only way for George Bush to win when he was 17 points down coming out of the conventions. You can look at that aspect of Jim Baker's record too, the Willie Horton ads.

Anthony Scaramucci: (27:21)
Lee Atwater, James Baker.

Susan Glasser: (27:22)
That's right. He always had this duality to him, and I think that's what we explored in the book.

Anthony Scaramucci: (27:28)
Okay. Well, it's a fabulous tour de force. There's some great history in this book as well. I love the book. My last question before I turn it over to audience participation, is what did James Baker think of the book?

Susan Glasser: (27:44)
Well, he's still talking to us. That's good.

Peter Baker: (27:45)
He is talking to us. Look, he wrote two memoirs of his own, so he had a chance to say what he wanted to say about his own life. I think he cooperated with us the way he did because he realized if you're going to be a figure in history, somebody else has to write a biography about you. He had already written two of his own books. He gave us all the time in the world, he gave us complete access to his archives at Princeton and Rice University, we interviewed all eight of his children, his wife, his cousin, his nanny, who's 107 years old and still around, as well as all the poobahs, the presidents and vice-presidents and so forth. I think it was because he wanted somebody to tell his story who was independent and had credibility beyond his own circle. There are things in the book he doesn't like. His joke is I told them it could be warts and all and I wouldn't object to that. I didn't mean all the warts. That's the joke. But I think overall he thinks it's a fair and accurate presentation. He's told people that we've talked to that he learned things from the book that he didn't know because we interviewed so many other people, I think. If it's a revelation to him, maybe it could be a revelation to other readers too.

Anthony Scaramucci: (28:49)
Well, it's a great book. Thank you guys for writing it. I learned a tremendous amount from it, and I appreciate you joining us. We have our audience. We have pretty vigorous audience participation, so I'm going to turn it over to John Darsie.

Peter Baker: (29:02)
That's great.

Susan Glasser: (29:03)
Thank you so much.

Peter Baker: (29:04)
Thank you, Anthony, appreciate it.

Anthony Scaramucci: (29:05)
My pleasure.

John Darsie: (29:06)
Thank you guys again for your time. It's great to have you on, especially in this moment when everything you're writing about and talking about is so relevant. One thing that struck me in reading the book and in thinking about the Trump era is Trump is a wannabe dictator in a lot of ways, and he has some dictatorial instincts, but he's not particularly competent about Washington. He doesn't understand how things work. He wasn't able to navigate the political establishment, despite some world views that were potentially dangerous for the country. What do you think the example that Trump set within the Republican party about how to be successful, if we got a combination of James Baker and Donald Trump in the White House. Is that something that scares you, and how do you think that would play out if we get somebody who's more astute in terms of understanding how Washington works, that has these instincts that are more illiberal than any leader that we've had as a country?

Susan Glasser: (30:02)
Yeah. I think you're right, that that is one of the very scary scenarios that we just avoided here. Now, other people have asked us a version of this question, like could Jim Baker have made Donald Trump's White House work if he was White House Chief of Staff? My answer to that actually is a pretty unequivocal no, in the sense that someone like Jim Baker wouldn't have taken the job because you couldn't succeed at it, and that really nobody could have been an effective chief of staff, in my view, for Trump because you look at the history of him, both in office and also just him before that, as a businessman, it's clear that his personality, it's just impossible for somebody to have the independence and stature and authority to really do things in a professional way around Trump. That's just anathema to who he is in any job description.

Susan Glasser: (30:58)
That being said, look at history. A lot of the descriptions of ... not all, but many authoritarians or wannabe dictators, they have some similarities in terms of personality type to Trump. Many of them were described as buffoonish or not very successful in terms of organizing things. What's remarkable is that over time, people can learn to adapt. I do think that in a second term, had Trump managed to pull it out, he would have accomplished more and more of what his agenda was and the agenda of people around him. So I do think that was a very, very, very close call and that someone else could be successful with that kind of politics.

John Darsie: (31:49)
Our next question is about foreign policy. James Baker is known as a diplomat, both at home and abroad. He believed very firmly in the power of diplomacy. The Obama administration, in a lot of ways, developed a similar tack. They tried to engage in diplomacy even with some of the countries, like North Korea, like Iran, that others believed we should institute maximum pressure campaigns, which the Trump campaign then did in Iran. If James Baker was Secretary of State today, do you think he would follow the more Republican doctrine today of maximum pressure, more stand offish foreign policy, or do you think that it would look more like an Obama emphasize diplomacy type of presidency, Peter?

Peter Baker: (32:28)
That's a great question. I think it would be a mix in some ways. He would be strategic about the way he thought about it. It wouldn't be a one size fits all solution. There are instances in the world where he would have been in favor of maximum pressure. I suspect he thinks that negotiating with North Korea wouldn't be a fruitful prospect because they weren't going to come up with a deal that would be acceptable, and therefore maybe maximum pressure might make sense, economic sense. But he would be pushing to talk with Iran, for instance.

Peter Baker: (32:56)
In the late George W. Bush presidency, one of the things he did with the Iraq study group was really push both push and Condi Rice to re-open diplomatic avenues with Iran, with Syria, and to try working on the Israeli-Palestinian issue in a way that they were not, because he does believe in diplomacy. Now, I don't think the Iran deal that Obama came up with was actually good enough. He's criticized that, but he does like the idea of a deal, and he thinks had it been done better, that that would have been a better situation for the country than the confrontation that we're in right now.

John Darsie: (33:31)
We have a question that pertains to Russia, and I'm going to turn it into a two part question. The question specifically is that Putin claimed that during the break up of the Soviet Union, assurances were given to Putin and leadership there that NATO would not expand into the former Soviet Union, and he cites assurances that were given by diplomats that included James Baker. Is this true, and do you think the Bush team was the best to handle that era of foreign policy? What now do you think happens between the relationship with the United States and Russia, given that Russia, it's a bipartisan consensus at this point, that they helped Donald Trump get elected. How do you think they pivot their relations and their approach to dealing with the United States, Susan?

Susan Glasser: (34:15)
Yeah. Those are both really great questions. Just quickly on that Baker and his negotiations with Gorbachev. He did use, at one point, this phrase not one inch to the east language. I think the context has often been misrepresented. It's become one of Vladimir Putin's talking points. That's why you hear it a lot now. The context at the time was a question of what was going to happen to East Germany. They were talking about unification of Germany, and there were several hundred thousands Soviet troops in East Germany. They were going to be withdrawn, and the question was if the reunified Germany was going to join NATO, what would that mean in terms of this? Remember, at the time both the Soviet Union still existed, and the Warsaw pact still existed, so it was a very, very different conversation than the modern context in which its often sort of misquoted. Even then, Baker was straying from his official talking points, and it was seen as a mistake. He quickly backed away from that. He never repeated that again.

Susan Glasser: (35:22)
When they actually did sign the deal for German reunification, there was no such language evolved. This has been a little bit of a canard, right? Nobody was talking about NATO expansion beyond Germany at that point in time because, again, the Warsaw Pact still existed. What it tells you is the question of what kind of a victory did the U.S. win in the cold war? That's essentially what it's about, and Vladimir Putin has always held the idea that we imposed some kind of a harsh victor's peace on the Russians, and that he's trying to revise that. The truth is that NATO expansion came much later, in two rounds that began with Bush's successor, Bill Clinton. Interestingly, when we had a conversation recently with Secretary Baker about this, he said that he thought you could make the argument that maybe we had expanded NATO too much or had not really thought through what the implications of that were. That was actually a subsequent era's political fight that he and Bush did not shape the outcome of. That's number one.

Susan Glasser: (36:33)
Just quickly on Russia going forward, I would say this. You haven't heard Vladimir Putin congratulating President-Elect Joe Biden yet, even though most other world leaders, even those close to Trump, like Benjamin Netanyahu, have done so. There's a reason for that. Biden, when he was Vice-President and Chairman of the Senate Foreign Relations Committee, was always very skeptical of Putin and Russian power. In fact, he was kind of the designated envoy during the Obama years to people like Ukraine and Georgia, who were pushing back against revisionist Russian power in the region. I do think you're going to see a kind of renewed partnership with our European allies on the question of how to hold the line against the Russians, what can happen to challenge Putin's view. Putin, with Trump, has taken this triumphalist view that somehow the decadent West has actually been defeated and that his form of illiberalism has won.

John Darsie: (37:44)
Peter, I'll turn to you on this one. You wrote an article in the New York Times recently about the split within the Republican party about what do we do right now? How can we convince President Trump to concede, or do we throw our weight behind him with these frivolous lawsuits attempting to ... they don't even really seem like wholehearted attempts to overturn the results, but just to undermine the results and try to maintain some grip on power. Do you think there's any leadership in the Republican party or anyone close to Trump that is going to be able to intervene and cause him to concede the election, or do you think we're going to continue all the way through until January with Trump claiming that he's the rightful victor and we're going to have a sort of muddled transition of power in a way that we've never seen?

Peter Baker: (38:27)
Yeah. I'd go for muddled. Look, you've seen some leading Republican figures come out and congratulate President-Elect Biden, including former President George W. Bush, including Senator Mitt Romney and so forth, and you've seen some Republicans say to the President in effect, look, you don't seem to have anything there. Stop saying stuff like this, including Governor Christie, who has been an advisor of his over the years. Most of the Republican office holders these days are trying to straddle this uncomfortable line between saying more or less, well, if he has anything, he has every right to challenge anything he wants to challenge, take it to court, but they're not embracing the conspiracy theory. They're trying somewhere between acknowledging the result and crossing the President.

Peter Baker: (39:14)
I think that the President is just ... he has said over and over again, he does not like losing. For him, the idea of being tagged as a loser is unacceptable, and if there's anything he can do, even if he leaves office peacefully and on time, to avoid that tag by saying this is a stolen election, it's not a legitimate election, I think he's going to continue to do that. He said the 2016 election that elected him was crooked, and that he actually won the popular vote somehow.

John Darsie: (39:42)
He's had to recycle. He's recycling the narrative that he had ready to go when Hillary potentially was going to be the winner, and he's recycling it now in 2020.

Peter Baker: (39:50)
Exactly, and I think for him the danger, though, is looking more and more feckless as people just begin to tune him out and ignore him, which is maybe why he fires the Defense Secretary or does things like that to refocus attention on himself as everybody else is trying to turn back to Biden at this point.

John Darsie: (40:07)
Yeah. He's trying to look presidential, and the best way to do that is to show that you still have the power to fire people.

Peter Baker: (40:12)
Yeah.

John Darsie: (40:13)
I'm sure he's tossing and turning today as the news of the vaccine, positive early results of the vaccine get released a few days after the election, I'm sure that will be another point of conspiracy for him. We'll leave it right there. Peter and Susan, thank you so much for joining us. Anthony, do you have a final word for Peter and Susan before we let them go?

Anthony Scaramucci: (40:33)
No, listen, I thought it was a terrific book. I'm going to hold it up again. You guys know that I'm not that promotional, as you guys know about me. I'm going to hold it up again and say thank you very, very much. It's a phenomenal tour de force in literally the last 40 years in American politics, and I greatly enjoyed it. I think this is going to be something that people are going to be reading 10 or 15 years from now. This book has legacy the same way the Caro book, in my opinion, did about Robert Moses. God bless you guys. Best of luck with the book, and thank you for joining SALT Talks.

Susan Glasser: (41:07)
Thank you so much.

Peter Baker: (41:07)
Thank you, John. Thank you guys so much. It's a lot of fun. This is great.

Anthony Scaramucci: (41:11)
Okay. Wish you the best.

Susan Glasser: (41:13)
Thank you.

Peter Baker: (41:13)
Have a great day.

Fareed Zakaria: Author "Ten Lessons for a Post-Pandemic World" | SALT Talks #89

“You’ve got to give them a sense of respect when we talk about essential workers, about farmers, about people in construction, about people who are working in mines.”

Fareed Zakaria hosts Fareed Zakaria GPS for CNN Worldwide and is a columnist for The Washington Post, a contributing editor for The Atlantic, and a bestselling author. Fareed Zakaria GPS is a weekly international and domestic affairs program that airs on CNN/U.S. and around the world on CNN International. Since its debut in 2008, it has become a prominent television forum for global newsmakers and thought leaders.

Globalization over the last 100+ years has been responsible for the many of the most important advances in western civilization. Though, in the last 25 years, globalization fueled by an information/technological revolution has created greater inequality with a priority placed on more skilled work. “What's happening is the higher and higher value stuff is being made digitally and operates in a digital world, and the lower and lower value stuff is the physical world… It's more technological than it is globalization and the pandemic has massively exacerbated it.”

We’ve seen the consequences play out in politics and culture where an anti-establishment backlash has emerged. A global economic system designed to move fast was built with few safeguards to protect the working class from the economic seizures we’ve seen nearly once a decade. The key is developing an economic system that balances growth with social and economic security for our more vulnerable populations across the country and globe.

LISTEN AND SUBSCRIBE

SPEAKER

Fareed Zakaria.jpeg

Fareed Zakaria

Host, Fareed Zakaria GPS

CNN Worldwide

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:07)
Hello everyone and welcome back to SALT Talks. My name is John Darsie, I'm the Managing Director of SALT, which is a global thought leadership forum at the intersection of finance, technology and public policy. SALT Talks are a digital interview series that we launched during this work from home period with leading investors, creators and thinkers.

John Darsie: (00:28)
And what we're trying to do during these SALT Talks is to replicate the experience that we provide in our global conferences, the Salt Conference, which we host annually in the United States and we also host an annual international conference most recently in Abu Dhabi in December of 2019, and we're looking forward to getting those conferences resumed here in the near future as soon as it's safe for all of our participants.

John Darsie: (00:49)
At SALT Talks, what we're trying to do is really provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And our guest today wrote recently a great book about these big ideas and these big trends that are shaping our future, some good and some not so good. And our guest today is Fareed Zakaria, and we're very excited to welcome him to SALT Talks.

John Darsie: (01:12)
Fareed is the host of Fareed Zakaria GPS, which is a weekly international and domestic affairs program for CNN Worldwide. He's also a columnist for the Washington Post, a contributing editor for the Atlantic and a best-selling author. Interviews on Fareed Zakaria GPS have included US President Barack Obama, French President, Emmanuel Macron, Chinese Premier, Wen Jiabao, Russian President, Vladimir Putin, Israeli Prime Minister, Bibi Netanyahu and Turkish President, Recep Tayyip Erdogan.

John Darsie: (01:44)
Zakaria is the author of three highly regarded and New York times bestselling books, In Defense of a Liberal Education, The Post-American Worlds and The Future of Freedom. And then at his most recent book is Ten Lessons for the Post-Pandemic World, which is what we're going to focus on today. Prior to his tenure at CNN Worldwide, Zakaria was the editor of Newsweek International, the Managing Editor of Foreign Affairs, a columnist for Time, an analyst for ABC News and the host of Foreign Exchange with Fareed Zakaria, which was on PBS.

John Darsie: (02:18)
In 2017, Zakaria was awarded the Arthur Ross Media Award by the American Academy of Diplomacy. He was named a top 10 global thinker of the last 10 years by Foreign Policy Magazine in 2019, and EsQuire once called him the most influential foreign policy advisor of his generation. Zakaria serves on the boards of the council on foreign relations of which Anthony is also a member and of New America. He earned a bachelor's degree from Yale University, a doctorate in political science from Harvard University and has received numerous honorary degrees.

John Darsie: (02:52)
Just a reminder, if you have any questions for Fareed during today's talk, you can enter them in the Q and A box at the bottom of your video screen on Zoom. And hosting today's talk is Anthony Scaramucci, the founder and managing partner of SkyBridge Capital, a global alternative investment firm. Anthony is also the chairman of SALTs and he was also President Trump's Communications Director, I believe it was for 11 days. And we're now inside of one Scaramucci until the general election, so that's a big milestone.

Anthony Scaramucci: (03:19)
You're going to get fired, okay? I'm just telling you, keep it up, you're going to get fired, okay?

John Darsie: (03:23)
But Anthony, I'll turn it over to you for the interview while we still [inaudible 00:03:26].

Anthony Scaramucci: (03:26)
Everybody knows Darsie, so be careful, Darsie, be careful. Now Fareed, I'm telling you, we've read that exactly the way your mom wrote that, okay? How impressive is that resume and that background? God bless you. And it's a real honor to be able to call you a friend. And I thought that your book was tremendous. And so, as I'm wanting to do, I'm going to hold up the book, amazing book. Obviously, will go on to be a best seller, but I encourage people to read this.

Anthony Scaramucci: (03:52)
And Fareed said this while we were in the green room, he's written these books so that they can be read in one or two sittings. It'll take five or six hours to read. Probably seven or so hours to listen to in Fareed's voice. And I want to get into it with you Fareed. But before we do that, I asked this question of everybody and I've got to ask it of you. There's something about you that we couldn't learn from Wikipedia or from your television show, and I was wondering if you could share something with us about your life that caused your life to go on the arc that it's gone on in this amazing trajectory that you've had.

Fareed Zakaria: (04:29)
First of all, thank you so much. It's a huge pleasure and I so appreciate the fulsome introduction and the holding of the book. You might've heard this once or twice before, Anthony, but you are a good salesman. You are a very good salesman. To answer your question, look, I think the part that people don't talk about enough, people like you and me who have happened to have had some success in our lives, luck plays a huge part in one's life. And I think we should always remember that. And we should remember that when thinking about people less fortunate than us. There are a lot of smart people out there and there I think that, I meant some important areas, I got lucky.

Fareed Zakaria: (05:13)
But probably when I look back, I'll say the thing that I notice that I think when I look back helped me a lot, was this. My parents, my father was a politician. My mother was a journalist. And in some ways my dad was particularly a traditional dad. I don't think he ever went to my school, for example, in that 12 years that I was in school. But they took us seriously as kids and they shared with us at the dinner table, all the conversations that they would have any way.

Fareed Zakaria: (05:47)
Their friends would come and sit with us at the dinner table. And we would talk about my dad's career, my mom's work, what was going on in India, what was going on in the world. And I got very comfortable with adults, adult conversation and navigating adult life. And I noticed that when I got to college, I got a scholarship to Yale and I got there. And in some ways I was under-prepared. I went to a good school in India, but nothing like the Andovers and Exeters of the world.

Fareed Zakaria: (06:18)
But I think I was better prepared in that one respect. I had a very good feel for how to handle adults and the adult world. And nothing about it faced me, nothing about it intimidated me, because I'd been talking to these people and navigating that life for a long, long time. So I probably feel like that was a crucial advantage.

Anthony Scaramucci: (06:43)
Well, we agree. We agree on providence or the universe offering us luck. There's no question about that. And I think that's apropos to what I'm going to ask you about, because we're an interesting situation. I know you're a student of history. You write a little bit about this in the book and I want you to address your philosophical thinkings about this threading history. The gap is widening Fareed. We can look at the empirical data between the haves and the have nots, or the eventuality of a plutocratic world and then a world that's below the plutocrats which may be suffering.

Anthony Scaramucci: (07:19)
And those people, unfortunately, I'll speak for myself, growing up in a blue collar neighborhood with blue collar parents, we were aspirational, but those very same people are now desperational. And so my question to you is, is this an effect of globalism? Is this is a by-product of globalism? If it's not a by-product of globalism, what do we do to help these people? Because whenever you think of Mr. Trump or the rise of nationalism or populism that exists and systemically it's putting pressure to be reflected into our political leadership. And so I'm just wondering your thoughts on this and how do you think this unfolds over the next decade?

Fareed Zakaria: (07:59)
Wow, that's a great question. It is in some ways the big question, which is particularly in the Western world, how do we sustain this western marvel that transformed the work over the last 200 years, given the very pressures you're talking about? So the way I would describe first of all, to describe the problem correctly, I think that this is fundamentally a combination of globalization and the information revolution. It's not just globalization, because globalization has been going on for a while as you know.

Fareed Zakaria: (08:29)
I mean, we basically begun the big burst of globalization in the 1880s, then the 1920s, then the 1950s. But what has happened in the last 20, 25 years is that you've had globalization, and obviously that means some work goes to lower cost countries. But generally speaking that worked out because that was work people didn't want to do in rich countries. People don't want to make t-shirts for a dollar a piece in the United States anymore. They don't want to make sneakers for $25 a piece. That work migrates and then what happens is what's left in the US and in Germany is the higher value work.

Fareed Zakaria: (09:08)
Some of that has been thrown off by the fact that a lot of the world globalized simultaneously, particularly China and India. And so the effect was faster and more accelerated. But the biggest issue has been the information revolution. Work is now digital, and this is the sense in which the pandemic, as you described correctly, has massively exacerbated this problem. Look, you and I are doing fine because we can work digital. It's a bit of an inconvenience we're doing it this way, we would normally have done it in a conference hall, but that's an inconvenience.

Fareed Zakaria: (09:47)
But think about everybody who works in restaurants, retail, shopping malls, theme parks, hotels, that world has just been devastated. And so what's happening is the higher and higher value stuff is being made digitally and operates in a digital world, and the lower and lower value stuff is the physical world. And of course, that correlates with, do you have a college degree? Do you have technical training? So that's the problem. It's more technological than it is globalization and the pandemic has massively exacerbated it.

Fareed Zakaria: (10:22)
The solution I think has to be two fold. We've got to spend a lot more money on these people to put it very simply. I think we are not even beginning to understand the amount of money we need to spend on things like retraining on the earned income tax credit, so that ... What the earned income tax credit does, it says, if you work full-time in the United States, you will not live in poverty. Whatever the market does, the government will top up your wages so that you do not have to be living in poverty. By the way, it's a great social program. Milton Friedman was in favor of it, so it's a free market program because it encourages work and these people spend that money. So it's actually good for the economy.

Fareed Zakaria: (11:05)
The retraining part is harder, but I'll tell you this, because I've got senior government officials, people who you have to know very well in the Trump Administration came and talked to me about retraining because I've written a lot about it. And they said, "What is your sense of how we learn from the true Germans?" I said, "You want to want the best way to learn from them is, they spend 20 times as much per capita on apprenticeship programs as the United States does." So yeah, there's some clever aspects to the programs, but the number one thing is, they commit real resources to it.

Fareed Zakaria: (11:38)
So I think a lot of the answer is that Anthony, but finally, I would say this and you know this better than I do and this is what Trump gets, you got to give this people dignity. You got to give them a sense of respect. When we talk about essential workers, when we talk about ... that's the right kind of language for us to use, not just about essential workers, but about farmers, about people in construction, about people who are working in mines. I mean, I think that even talking about this transition, it's not the right way to think about it. It's you first begin by honoring these people.

Fareed Zakaria: (12:12)
And then you say, what we are trying to do is to make sure that your children can have the same kind of dignity and work and study. And we are therefore going to find great jobs in the future for those people, but you, we honor, we respect and we want to help make sure that your family has the same kind of life that you've been able to have. Something like that. But I think we shouldn't minimize the dignity part because a lot of what the right is better at doing than the left is the dignity, even though they don't spend any money on these people.

Anthony Scaramucci: (12:43)
Well, I would say that it's the right coincidence with President Trump. I think it was prior to President Trump, probably not as much. In fact-

Fareed Zakaria: (12:51)
Correct.

Anthony Scaramucci: (12:52)
... what I once wrote is that there was a vacuum of advocacy for these people on both sides in the establishment for three decades, which gave Mr. Trump the opportunity to exploit that in 2016. You bring up in your book, which I found fascinating, you more or less say that the way the world is now organized, it seems like we're having a seizure or an economic crisis, or now it being a healthcare crisis once every 10 or so years. And if you think about it, the 1998 crisis, which led to the Fed intervention, long-term capital management crisis, the 2008 crisis, the COVID-19 crisis, we could go back. And I'm just wondering why you think that is? Why do you feel like the way we've set up the mechanisms and architecture of globalization is causing these once or so, once a decade or so seizures?

Fareed Zakaria: (13:45)
Yeah, it's a great question because I puzzled about it myself. And I think that fundamentally, if you look at the system we've created and obviously nobody sat down and created it, but that we have allowed to build up. The system is very fast, very open and very unstable. It's very fast. It moves at lightning speed, accelerated by information technology. It's very open. Every country can participate and that is multiplied by the information revolution.

Fareed Zakaria: (14:14)
But we've never wanted to put in safeguards, guardrails, seat belts. We've never wanted to buy insurance because you don't want to slow it down. But the danger of a system like that is that it can careen out of control. So I mean, at some level you can think of 911 as the kind of reckless expansion of Western liberalism and democracy everywhere in the world without much attention to the parts of the world that we're really showing a backlash against it. And with a minority of people in the Middle East, but we saw pretty violent backlash to that idea.

Fareed Zakaria: (14:49)
If you think about the global financial crisis, right? I mean, ever since we have massively deregulated the financial space, is basically since the 1990s or late '80s, you've seen a lot of these crises. I mean, the SNL crisis, the Latin American debt crisis, the Tequila crisis, the Asian crisis, the Russian default, the global financial crisis. And if you look between 1938, roughly when FDR regulates to 1985, not a lot of crises, but a much slower system. So I'm not saying we know what the balance is, but clearly it is out of control right now, because we are seeing, it's not just the pandemic. We're seeing forest fires in California that, I mean, we've burned five million acres of land. That's the entire state of Massachusetts up in flames because between global warming and the way we have actually incentivized people to live at the edges of forests, it's an invitation from one of these accidents to careen out of control.

Fareed Zakaria: (15:52)
Factory farming, the way we do, it's an invitation for another pandemic. So I want us to think more about resilience and security, maybe sacrifice a little bit of dynamism because the thing you don't know, Anthony, is one of these could be the last, or at least could be so severe that it becomes ... just imagine if we had been able to sacrifice some dynamism and not had the global financial crisis. The world probably spent $20 trillion recovering from that. Imagine if we could have bought a little insurance and been a little careful about human development, so we don't have these constant contacts between animals like bats and human beings. We're going to spend, I don't know, 30, $40 trillion on this pandemic by the time we're done with it. It would so much be worth a few billion dollars, a few tens of billions of dollars in prevention rather than the cure.

Anthony Scaramucci: (16:53)
Very well said, and hopefully we'll get there. Your lesson 10. I mean, I loved all of the lessons frankly, but the lesson 10, I found fascinating because you really do understand the Post-World War II architecture. You mentioned a little known fact by most Americans that FDR really started the process in '43 into '44 with the notion of the Post-World War II architecture starting, even though the outcome of that war was uncertain. He knew that and he was a Wilsonian in many ways because he was the undersecretary of the Navy for Rob Woodrow Wilson.

Anthony Scaramucci: (17:31)
And when I was reading that and reflecting upon it, I was actually listening to it on audio tape. And then I went back and looked at it in the book, when I was reflecting upon it, it's 75 years out. It's been by and large successful. We've had peace and prosperity as a result of the Post-World War II alliances and the architecture. But I'm wondering now, because a lifetime has gone by, 75 to 80 years, is it time for a reset? And if it is time for a reset, Fareed, what would that reset in your mind look like? What would it need to look like to continue peace and prosperity and the lifting of the rest of the world into middle-class living standards?

Fareed Zakaria: (18:10)
God, you're asking all the big questions. I mean, I think that's in a way the central international question and you're right. There's no question. I mean, FDR was a total visionary. And you really have to imagine in that situation isolationist America, 43, as you say, one and a half years after Port Harbor and he's already thinking that we are going to create a new world order. We're going to create a new system. We're going to create an architecture that gives the great powers and incentive to be in there.

Fareed Zakaria: (18:38)
He was at Versailles visiting as under assistant secretary of the Navy. And he said, "Wilson's ideals," roughly speaking what he said was, "Wilson's ideals were the right ones, but the guy doesn't understand, it's not going to work if you just say these are the laws and these are the rules. You got to give the major countries an incentive to be there." That's why we ended up with the security council. That's why we ended up with the great powers Veto which invests the strongest countries in the world, in the system.

Fareed Zakaria: (19:09)
So that is in some ways at the core of my answer to your question, we will not be able to sustain this system if the most powerful countries in the world today, not in 1945 are not invested in. If you think about the architecture now, I mean, the five countries that dominate are the five countries that won the war in World War II. Was actually four countries, we pretend that France won the war when it really didn't.

Anthony Scaramucci: (19:38)
Oh, not to interpret but I will. It's sort of like the Dow or the S&P, Fareed. We recirculate, again to show you that the Dow 30 in 1945 are not the same as the Dow 30 today or even 10 years ago for that matter. I think it's a very interesting point.

Fareed Zakaria: (19:54)
No, exactly. Now another analogy though, which is a little less hopeful is the American constitution. I happen to be, as an immigrant, a huge fan of the American constitution. I think it got more things right than any constitution has ever gotten right. But it is an 18th Century document. Parts of it are badly worded. I mean, the second amendment, frankly, is just a grammatical mess. Nobody even knows what it means when you talk about a well-regulated militia. So there are parts of it that clearly need updating, but it's very hard to do.

Fareed Zakaria: (20:28)
So the real challenge here is going to be to do a kind of software update, a soft update. You're not going to be able to say, we're going to bring the system down and we're going to start from ground zero. But we have to find a way to incentivize the most powerful countries in the world that could otherwise be the spoilers to in some way be part of it. It doesn't mean that they're all going to be beautiful, liberal democracies and the world is going to be at peace. No.

Fareed Zakaria: (20:54)
China is going to be a competitor. We're going to have to play hardball with it. We're going to have to find ways to out-compete it. We're going to have to find ways to push back against it on many issues, but we both have a very strong overriding interest that there'd be an open system, a rule-based system in which mostly things are resolved by dialogue and not by force in which everyone can trade with everyone. So if we can come up with a set of rules and try to incentivize people, and what does that mean? It means we blew it in the Obama Administration on something called the Asian Development Bank.

Fareed Zakaria: (21:31)
The Chinese came to us and said, we want more influence in the Asian Development Bank, which is basically a public financing mechanism in Asia, and we'll put in a lot more capital. Obama Administration said, no. The Brits actually advised us to exceed to the Chinese demand. And we're like, no, we like the fact that we dominate the Asian Development Bank. So the Chinese say, okay, we're going to go off and take our marbles, and we'll start our own thing called the Asian Infrastructure Development Bank, which I think got five times as much paid up capital as the ADB. So they went out and freelanced, created their own alternate system. It's working better than the ... and the Asian Development Bank is dying. We've got to think that example through a hundredfold.

Anthony Scaramucci: (22:14)
A hundred percent. They did the same thing with the Export Import Bank for China versus our EXIM Bank in the United States.

Fareed Zakaria: (22:20)
Exactly.

Anthony Scaramucci: (22:20)
Fareed, you wrote an amazing book. I have to turn it over to John Darsie because we have huge audience participation and we've got tons of questions coming in. And so I'm not that promotional, right? Fareed, so look, I'm like using the book as a windshield wiper, see that, but it's an amazing book. I encourage everybody to read it and wish you great success with the book. And I'm looking forward to your future writing on this topic, because I think you're right on point in where the world needs to go. So congratulations Fareed, I'm going to turn it over to John and all that blonde hair, Fareed. Look at all that American blonde hair.

John Darsie: (22:58)
All right, I'll-

Fareed Zakaria: (22:59)
Thank you Anthony.

John Darsie: (23:01)
It's my pleasure to take the baton. So Fareed, I want to elaborate more on what you talked about in terms of humans encroaching on animal habitat. So it was a great book that we've talked about before on previous SALT Talks called Spillover written in 2012, that more or less predicted elements of this pandemic. And you write as one of your lessons in the book about how the pandemic and likely future pandemics is sort of nature's revenge for overpopulation, human environmental encroachments. And you also worry about the implications of a meat-based diet. Could you elaborate on all the different implications of more people around the world moving into consuming meat and the implications that has for our planet?

Fareed Zakaria: (23:42)
Sure. So first thing to remember is the more meat we're eating, the more unhealthy we get. Small amounts of meat are perfectly fine, but larger and larger amounts of meat correlate with all kinds of terrible dietary issues. One of the reasons, by the way, that we don't talk about why America has been hit so badly by COVID is we're all obese. The United States has a massive obesity problem. And as a result, and that is essentially a disease multiplier. But the problem with a meat-based diet is fundamentally, it is terrible for the environment in terms of global warming. The amount of farmland you need to produce the amount of calories we consume from meat is massive. I can't remember the exact numbers, but it's something like 40 or 50% of the farmland for 15% of the calories.

Fareed Zakaria: (24:32)
So secondly, there's a huge amount of methane that is released into the air. And thirdly factory farms, which is by the way, how 99% of meat is produced. So if you think you're having organic meat in Europe solving the problem, you're not. You're 1%, 99% of meat is produced through factory farms. Your hoarding animals together in incredibly unsanitary conditions, and you've chosen animals that are genetically selected to be similar, because that's the whole point of factories, you're producing exactly the same product.

Fareed Zakaria: (25:06)
And that means that these animals have no defenses against viruses. So the virus just keeps hopping from animal to animal, getting more and more powerful. You've injected the animals with antibiotics. So the viruses are now becoming antibiotic resistant and this is a Petri dish for a pandemic. And my great fear is that COVID-19 is the dress rehearsal for what is going to be a more Virial inversion of a respiratory virus born out of this factory farming.

Fareed Zakaria: (25:41)
So you've got global warming issues. You've got environmental issues and you've got pandemic issues. And most importantly, your personal health will be substantially alleviated by reductions of animal protein. Now, to be clear, I'm not a vegan, I'm just careful. I think it's very important to ... my sort of approach in life is our Aristotelian, everything in moderation. But I'm very careful about how much meat I eat, because it's bad for me. It's bad for the country. It's bad for the planet.

John Darsie: (26:16)
So we've seen certain countries and your point about this current pandemic being a wake up call from a potentially more deli future pandemic is well taken. And we've seen certain countries and certain cities be much more resilient and effective in fighting the spread and the morbidity of COVID-19. What cities and countries have stood out, and what can we learn from their success in preventing the spread and in treating the virus?

Fareed Zakaria: (26:41)
Sure. It's a really good question because we really have a wide variation. It's exactly what a social scientist would want, and almost that kind of natural experiment. So probably the gold medal goes to Taiwan. Taiwan is about 24 million people. It's right next to China. It gets huge amounts of traffic from China, tourists, business travel, millions and millions of people. And despite all that, Taiwan has had, I believe, seven COVID deaths. So to give you a sense, New York state, which has 19 million people, 5 million fewer than Taiwan has had 35,000 COVID deaths, roughly 34,000, I think.

Fareed Zakaria: (27:22)
But Taiwan's death rate is 1:2000 that of the United States. So you ask what they've done right? First thing they did was they acted early. They decided having gone through SARS and MERS, they realized, you know what? Better to take no chances and they got smart early on. Secondly, they were aggressive. They put in place some travel bans. They put in place some immediately, if you came off the plane, you were coming from China, they took your temperature. They made you do certain kinds of checks. They kept your information. And then they started banning a certain amount of the travel.

Fareed Zakaria: (27:58)
Most importantly, they immediately ramped up mass testing and tracing and isolation. We don't talk about that because it's the inconvenient part. You have to quarantine the people who are potentially infected. The whole thesis behind the Taiwan strategy is, a lockdown is a bad idea because it shuts down the economy. A lockdown is a sign you've already failed. So what you're trying to do is say, this doesn't just spread randomly through the public, it spreads in clusters. So the minute you find one person who has it, you are trying to capture that cluster of potential infectees. Isolate them, separate them from the population, and they did this in Taiwan.

Fareed Zakaria: (28:43)
In total, they separated 250,000 people for 14 days at a time obviously, not all at the same time. But that's 1% of the population of Taiwan. So they were able to keep 99% of the country, the population fully operational by just selectively and strategically, and immediately pulling out those people who might be infected. So it's only aggressive and intelligent. We were late, passive and stupid.

John Darsie: (29:14)
So Mark Meadows, the White House Chief of Staff told your colleague Jake Tapper this weekend that we basically just need to give up on trying to contain the virus. It's not going to happen in America. People value their freedom of movement and the right to wear a mask or not wear a mask too much. We need to focus on therapeutics and getting a vaccine. Is our inability to fight the virus a lack of political will to put these systems in place to fight it, or is there a lack of testing capability that's more of a product of lack of scientific development and manufacturing development? Can we do this if we decide that we have the political will to contain it, the spread, not just the death rate?

Fareed Zakaria: (29:57)
We absolutely could do it. We could still do it. First of all, to explain why we don't have a mass testing and tracing system in place, it is purely a political decision. The testing piece is trivial. Do you know why we don't have real good testing in America? Because the federal government has not made a distinction between tests that are returned within 24 hours, within 48 hours, within three days. But tests that with the results you get three days later is essentially worthless. You're trying to figure out when people are infectious and separate them. So you're infectious for about three or four days, maximum, during the course of this disease. If you get the tests back three days later, you've already passed the point where you're infectious. So at that point, there's really no point in isolating somebody.

Fareed Zakaria: (30:48)
So the whole point of isolating is once you find out that somebody is positive, you put them in a place where they can't infect anyone else. So if the federal government will not make a distinction in reimbursing, why would a private company, you guy, most of your viewers are business people. Why would a private company be stupid enough to incur heavier costs, to turn around the test in 24 hours as an act of public virtue? They're not going to do that.

Fareed Zakaria: (31:15)
The feds have a very simple solution, which is you reimburse double for a test that you get back in 24 hours, normal rates for 48 hours, and maybe 10% for anything that comes back afterwards. You would see the testing regime change in a minute. I mean, these companies could do it easily, but while they have 95% margins, why are they going to do it now?

Fareed Zakaria: (31:38)
The tracing piece, yeah, there's a little bit of a challenge there. But other Western countries have been able to do it. Germany has a very good tracing system in place. Some of the Northern European countries have a very good system in place. No, we are just being defeatist. And the Trump Administration has decided that their election strategy is to say, look, this was not something one could handle, so any change to the system would imply that they made a mistake and Trump hates to admit he's made a mistake. The real truth is what we should be doing is saying we failed, happens in life, whatever, that's history. We can learn from the failure and we can still set it right.

John Darsie: (32:18)
So I want to shift gears a little bit to a couple other themes that you've written about a lot in the past and you talk about in this book as well, which is the growing digitization of the world and our migration that's been accelerated by COVID to life on the internet, remote work, the rise of robots and robotics, artificial intelligence. Long-term, what do you think the implications of the pandemic are to the speed of the development of those technologies? And what do you think those technologies look like in our society in say 10 to 15 years from now?

Fareed Zakaria: (32:52)
Yeah, it's a great question, and it's a big question. The way I think about it is what the pandemic did was it massively accelerated an ongoing trend, which is, we were clearly transitioning to a greater and greater digital life, but it's massively accelerated it. Look at telehealth. It was very hard to get people to go to their doctors. People like to go and physically meet with the doctor. The doctor like to meet with you because the doctor got paid more when they met with you.

Fareed Zakaria: (33:21)
Suddenly COVID has eliminated all those human obstacles, and you're going to have one billion tele visits or health visits by the end of 2020. Most people had predicted that would take about 10 years to happen. So you're massively accelerating it. Now in doing that, my fear, there are a lot of hopeful things about that because it massively increases productivity. It massively increases the scale at which you can operate.

Fareed Zakaria: (33:48)
Think about education. One of the things that will come out of this is we're doing it badly right now, but online education will be totally transformed because by having this huge, massive stress test to the system, we're going to figure out what pieces work, what pieces don't work so well. I've got a son in college who already, they're all piecing it together. They're realizing, if it's a lecture, Zoom works fine. In fact, you don't even need to Zoom, you can listen to the lecture as a podcast while you're doing something else. You're biking or you're running or you're walking.

Fareed Zakaria: (34:24)
But for a discussion section, Zoom is not that great because you don't ... so you're finding some areas where the technology is actually great. You're finding in some areas where it needs a lot of work, you need to supplement it. I find that with dealing with my teams for the show. Building social capital on Zoom is very hard, spending it is easy. If you already have good relations with people, you already have a good working environment, you can execute. But what about the new person? What about the new process? What about the new ... what about the little stuff that you haven't thought about?

Fareed Zakaria: (34:57)
So all that is the challenge, the dark side, and I end with this is it's happening really fast. So if you think about globalization, one of the reasons we're in the situation we are with the anti-globalization mood is that China and perhaps to a lesser extent India, were just such large shocks to the system. Before that, when we had expanded globalization, what did it mean? Japan came online, 50 million people, South Korea came online, 30 million people. Singapore, Taiwan, 10, 15 million people in total. And then you get China, one billion people. Then you get India at the time, 800 million people. And so the scale was just so much larger than anything we had dealt with before that it did cause an impact both economically and politically. I worry that the speed with which we are now going to make this digital transition is going to just be devastating.

Fareed Zakaria: (35:57)
So let's say it transforms the restaurant industry, which I think it will. And you will have a much greater degree of online web based delivery systems at a smaller number of high-end restaurants, where you go for the real experience of a kind of really cool bars where you're going for the atmosphere. So there will be some kind of sort. Normally, maybe it would have taken 20 years for this to happen. If it happens in the next two years, what happens to all those people who were waiters and busboys and the bellhop at hotels? So change is good, but when change accelerates that fast and almost unnaturally, are we ready for it? And that's one of the reasons that I come back to the importance of government as a stabilizing force to try to help us get through what is in a crazily accelerated transition to digital.

John Darsie: (36:53)
So what are those solutions? That's a great segue to a couple of audience questions. There was one that was focused on India. India is obviously undergoing massive economic development and digital development. You're seeing the growth of the technology industry is very fast right now in a place like India. It's the same type of phenomenon we've seen across the world in China and the United States. What type of government policies do we need?

John Darsie: (37:16)
Obviously, you talked about technology providing a more level playing field in terms of access to telemedicine and health care, better access to at least the bare minimum quality of education in the form of lectures and things like that. What type of government policy specifically would you like to see in the United States or elsewhere to make sure that people on the bottom rungs of the ladder at least have the means to live not an impoverished life?

Fareed Zakaria: (37:42)
It's a great question. Look, it's quite different I would say honestly. A place like India, you're still facing the fundamental challenge that about 600 million people in India still live on less than $2 a day. And one of the reasons is that the Indian economy remains very closed, very regulated, very socialistic. And so in India, the answer is open up, open up, open up, you need growth. You cannot get those people out of poverty without growth.

Fareed Zakaria: (38:13)
China is the perfect example of that. You have to focus first and foremost on growth. And you have to focus on employment friendly industries. The places that employ large numbers of people. And for India, that means you've got to do everything. You've got to do factories. You got to do retail. You got to do large-scale agro. You've got to find ways to open up the labor markets, bring in foreign investment. It's all the traditional mechanisms that have allowed countries to grow by embracing markets, by embracing development, by embracing trade.

Fareed Zakaria: (38:47)
For India, you've got to a long way to go before you start having the problems of too much growth, too much development. So in India, I would say, really think of just opening up, and all the technology is good because it leapfrogs all kinds of ruin-ness and dysfunctional technology. So there's a 4G system in India that's been put in place, amazing for increasing productivity for farmers, for laborers, for anybody.

Fareed Zakaria: (39:16)
The US and the Western world faces a different problem, which is the traditional working class of these countries. The non-educated working class, by which I mean people without college degrees or even much technical training, and it's important to make that distinction. Workers with technical training, for example, electricians, plumbers, are doing fine, and they can adapt very well to the new economy. They can adapt to working on wind turbines or solar panels or whatever it is.

Fareed Zakaria: (39:46)
But it is a more traditional working class, the less skilled, what would have been called semi-skilled jobs that is much harder hit. For these people I think you just, as I was saying to Anthony, you got to spend more money. I mean, we've been very ... Obama gave a great speech once or some remarks where he talked about the signing of, I think it was the South Korean free trade deal. And he said, "We all know that the trade is good and more trade is good. It opens up, it grows the buy, but we always say, we understand that it dislocates some people and we should spend money on them, and then we never spend any money on them and then that resentment grows."

Fareed Zakaria: (40:25)
It was prophetic in a way, because that has been our principle problem. We know that there is going to be a period of dislocation, and there are going to be parts of the country that are dislocated. And in other words, this is not spread evenly throughout the country that you get all the benefits evenly and all the costs to people. The benefits are spread roughly evenly. The costs are highly concentrated in particular towns, in Pennsylvania, in Wisconsin, in Michigan, in Ohio. And you have to have a strategy that addresses that. And frankly, that helps these people.

Fareed Zakaria: (41:00)
Some of it is just cash. Some of it is retraining. Some of it is figuring out new apprenticeship programs. Well, we need something on the scale of the GI bill. The great thing about the GI bill was it was a very American and ingenious solution, which was, the federal government will pay, but it will not administer anything. The private sector, as it were, colleges, both state, religiously oriented, private would provide the service. So the deal was, if you'd been a GI and you presented your proof of it, you could go to any college for any degree of any kind and the federal government would pay.

Fareed Zakaria: (41:40)
I think that the federal government does very well writing checks. They know how to do that very well, but administrating stuff they're less good at. So try and find a similar, where maybe the private sector identifies the needs. Here's what we have. We need welders, we need whatever. The federal government provides the resources and the community colleges maybe, or state colleges do the training, some kind of triangle like that. And what stops you just to be clear is, it's not that we couldn't come up with the genius programs, What stops us is the resources. You'd have to spend a lot of money. I'm talking about tens of billions of dollars on this.

John Darsie: (42:19)
So you talk about, we're going to leave with one last question. You talk a lot about these trends, and in a lot of ways, the book is very depressing or concerning because you see so many things happening that are moving us in the wrong direction as a world. But let's imagine five, 10 years in the future. Let's say we have a change in administration in the United States. Vice president Biden wins the election as the poll seemed to indicate that he will.

John Darsie: (42:44)
Do you think this rise in nationalism and this attack on globalism is a permanent phenomenon that's going to continue, or if not permanent, at least a cyclical phenomenon that's going to continue for 10 to 20 years, and it's really going to erode our ability to fight things like climate change and global poverty? Or do you think that we can do a course correction right now at this moment in time and move back into a direction that is more stable in terms of global peace, global prosperity?

Fareed Zakaria: (43:13)
Look, I hope we can. I'll tell you why.

John Darsie: (43:15)
No problem.

Fareed Zakaria: (43:16)
You talk to any venture capitalists in Silicon Valley and you ask them, what do you want? What's the first kind of person you want? The first kind of person you want is like Elon Musk who succeeded at two or three different things. But let's say you can't get Elon Musk. You want somebody who failed, but who learned from that failure. I think that the key here is do we have the capacity to learn? We're going through some very tough stuff, but you only change when you fail. As a company, as an individual, as a country, it's easy to do nothing when times are good. But it's when times are hard, when you face dislocation already, when you're looking at failure, you now have the chance and the opportunity to change.

Fareed Zakaria: (44:03)
So I think we should view this and not sugarcoat it and say, look, we failed in our response to this pandemic. And by the way, a lot of countries failed, what can we learn? How do we do it better? We have the opportunity to embrace a different future because stuff is already so dislocated. People are open to the idea that we need to figure this out better. I look at the European Union, they started off their response to the pandemic was very much like ours, close, narrow, selfish, turn inward. The Italian started blaming the Germans. The Germans started blaming the Italians. And then there was a kind of come to Jesus moment where they thought to themselves, wait a minute, what are we doing here?

Fareed Zakaria: (44:43)
We're screwing up the entire European experiment. And instead what they did was they reversed course. And the Germans for the first time along with the French, essentially agreed to those, what was always called Euro bonds, basically to guarantee the debt of the poorer countries so that they could all get out of this. And doing that, they're also creating stronger bonds among the Europeans than they had before. So I predict that the European Union will come out of this crisis actually stronger than it was going into the crisis.

Fareed Zakaria: (45:16)
So in a way, why can't the world do the same? Because the truth is we've all been drawn inward, but we are all coming to realize you can only solve this together. It's a global pandemic by definition. We're not safe unless everybody is safe. We're not going to be safe either with climate change if we don't do it together. We're not going to be safe with space wars if we don't do it together. There're so many of these challenges that really require not global government, which that's a kind of bugaboo that people do to scare, but global governance. Agreements made by sovereign governments to cooperate.

Fareed Zakaria: (45:52)
And by the way, that's how human beings have survived. I mean, we've survived because of a strange mix of competition and cooperation, but the evolutionary biologists will tell you, the dominant trait was that we know how to cooperate. We know how to therefore operate at scale, and we know how to get to win wins. And what we need to do now for the world is get to a win-win.

John Darsie: (46:14)
All right. Well, that's a perfect place to leave it, an optimistic message. Thank you Fareed so much for joining us. It's an absolute pleasure. We would encourage everyone to go out and read your book. It's sitting right behind Fareed right now. Thanks again, everybody for joining us and thanks again Fareed for taking the time to sit down with us on SALT Talks.

Fareed Zakaria: (46:31)
A real pleasure. Take care, guys.

General H.R. McMaster: "Battlegrounds: The Fight to Defend the Free World" | SALT Talks #81

“I always wanted to lead soldiers, to be part of a unit that was committed to a mission bigger than themselves.”

H.R. McMaster is the Fouad and Michelle Ajami Senior Fellow at the Hoover Institution and Stanford University. A native of Philadelphia, H.R. graduated from the United States Military Academy in 1984. He served as an Army officer for thirty-four years and retired as a Lieutenant General in 2018. He remained on active duty while serving as the 26th Assistant to the President for National Security Affairs.

After serving many years in Afghanistan and Iraq, General McMaster was on the receiving end of policies and strategies disconnected from the reality on the ground. The tendency to view strategy only through one’s own lens can be described as “strategic narcissism,” where we don’t consider the influence other players have on an outcome. This calls for a shift towards “strategic empathy.” “Empathy is really our ability to consider, in particular, the ideology, the emotions, and the aspirations that drive and constrain the other.”

In attempting to tackle major national security issues, we are running into the warnings offered by President George Washington: rival political parties. It important to keep politics out of the military and that notion has become only more important as we’ve seen military deployed to cities and discussions around peaceful transitions of power.

LISTEN AND SUBSCRIBE

SPEAKER

General H.R. McMaster.jpg

General H.R. McMaster

Fouad & Michelle Ajami Senior Fellow

Hoover Institution at Stanford University

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:07)
Hello everyone. And welcome back to SALT Talks. My name is John Darsie. I'm the Managing Director of SALT, which is a global thought leadership forum at the intersection of finance, technology and public policy. SALT Talks are a digital interview series that we launched during the work from home period with leading investors, creators, and thinkers. And what we're really trying to do during SALT Talks is replicate the experience that we provided our global SALT conference series, which we were looking forward to welcoming today's guests to that conference in May. Unfortunately it had to be canceled, but we have a consolation prize today having him on a great SALT Talks. We're very much looking forward to that.

John Darsie: (00:44)
But really our goal here is to provide a window into the minds of subject matter experts, as well as to provide a platform for what we think are big ideas that are shaping the future. And we're very excited today to welcome General H.R McMaster to SALT Talks. General McMaster is the Fouad and Michelle Ajami Senior Fellow at the Hoover Institution, Stanford University. He's a native of Philadelphia, Pennsylvania. He graduated from the United States Military Academy in 1984. He served as an army officer for 34 years and retired as a Lieutenant General in 2018.

John Darsie: (01:18)
He remained on active duty while serving as the 26th assistant to the president for national security affairs within the Trump administration. He also taught history at West Point and holds a PhD in history from the University of North Carolina at Chapel Hill, which is where I grew up, [inaudible 00:01:34] Hills. He's also the author of his most recent book, Battlegrounds, which is a groundbreaking assessment of America's place in the world, drawing from his long engagement with all the issues that he talks about in the book. Including 34 years of service in the US army with multiple tours of duty and battlegrounds overseas and his 13 months as national security advisor in the Trump, white house.

John Darsie: (01:57)
A reminder, if you have any questions for General McMaster during today's SALT Talk, you can enter them in the Q&A box at the bottom of your video screen. And hosting today's talk is SkyBridge founder and managing partner, Anthony Scaramucci, who also served briefly in the Trump administration along with General McMaster. A funny story about that before we get started. Gentlemen, McMaster is a very nice guy. And so when Anthony came and joined the Trump administration, he said, "Anthony, I want to throw you a welcome party." 11 days later, that welcome party still hadn't taken place. So General McMaster asked Anthony, said, "What are we going to do about the party, Anthony. Maybe we'll just turn it into a farewell party."

John Darsie: (02:32)
And that's what they did. So general McMaster and his wife were very gracious and welcoming and saying, thank you to Anthony for his brief tenure in the white house. But with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (02:45)
[inaudible 00:02:45]. Is that like a fun way to start the interview? Is this guy unbelievable? He's getting his two week notice, okay. Today at 4:00 PM. Is that nice? But in all seriousness, that was one of the more fun moments of my short lived career, eating those hamburgers in your backyard, where I think we were at Fort McNair. Isn't that correct sir?

John Darsie: (03:05)
Yes. Absolutely.

Anthony Scaramucci: (03:08)
That was a lot of fun for me. That's about it. That's a lesson for all the young people out there. You got to turn lemons into lemonade. Where you could get fired from the white house after 11 days, you better have a friend in General McMaster, they're going to serve you beer when you need the beer. Okay. So let's go right to the top of your life, because I think this is a super important part of your story. Then I obviously want to delve into our nation's national security and some of your thoughts and opinions on our country or our amazing country. But you went to the United States Military Academy at West Point. Why did you do that? What gave you that inclination?

General H.R. McMaster: (03:44)
Well, I'll tell you Anthony, ever since my earliest memory, I wanted to serve in the army. And it was a combination of, I think both my mom and my dad. My mom was a teacher and an educator and I became a voracious reader of history, from a really young age or reading the juvenile books on biographies and so forth. And then my father, he fought in the Korean war. He enlisted at age 17 to fight in Korea. And then he stayed in the reserves. And so I would see him in his uniform going into the Germantown neighborhood in Philadelphia, where the army reserve infantry unit was where he was first Sergeant. And then later a company commander if we got a direct mission.

General H.R. McMaster: (04:24)
So I always wanted to lead soldiers on be part of a unit that was committed to a mission bigger than themselves. We can build teams. I grew up playing sports. I think that fostering the teamwork and the cohesion within a military unit. And then to be able to operate together in tough conditions, but overcome challenges for a righteous cause. You can't beat that. And so I really was grateful for the opportunity to go to West Point and obviously to serve in the army for 34 years.

Anthony Scaramucci: (04:59)
Let me hold up the book, you know I'm not one for self promotion or for other people's promotion. You know I'm a very low key and somewhat shy guy, but let me hold up the book. And there is the book. You look like one mean tough son of a bitch on the book. But Katie and I, and your daughters know that you're like a little Teddy bear, but there you are on the book looking great. Why did you write the book? You also had another best-selling book called the Dereliction of Duty. I will tell you, I read this book about three weeks ago, H.R. And it is a brilliant expos on what is going on in the world.

Anthony Scaramucci: (05:34)
I would particularly emphasize in your book, the stuff you're writing about [inaudible 00:05:39] and the government of Russia and really what their plans are. I think it's a necessary reading for all concerned citizens of the United States and frankly, citizens of the world. But why did you write the books so?

General H.R. McMaster: (05:51)
Well thanks, Anthony. In places like Afghanistan and Iraq, where I served for many years, I on the receiving end of these policies and strategies developed in Washington that made no sense on the ground in these places. And so, what I wanted to do is write a book that could contribute to an improvement in our strategic competence, our ability to implement a sustained and sensible foreign policy to build a better future for generations to come. And what I'm arguing in the book, one of the themes in the book, Anthony, is this idea of strategic narcissism.

General H.R. McMaster: (06:24)
That we tend to define the world only relation to us and assume that what we do is going to be decisive to achieving a favorable outcome. Or what we decide not to do. And what we don't do is, we don't consider the agency, the influence, the authorship over the future that the other has. Especially our rivals, our enemies and our adversaries. And so, it's an argument for us to compete more effectively to improve our strategic competence, but in so doing as well, Anthony, restore our confidence. Confidence in who we are as a people. This is one of our big vulnerabilities these days, I think is how divided we are and how vitriolic this partisan discourse is. Especially in this election year, but it's this way for years.

Anthony Scaramucci: (07:09)
Well, I want to get to that in a second, but I want to stay on strategic narcissism. There's another term you're using in the book called strategic empathy, which I think is the opposite of that. So can you define both of those terms for our viewers and listeners?

General H.R. McMaster: (07:24)
Sure. So strategic narcissism as I mentioned, the foster world only in relation to us and therefore what we don't do is we don't really consider that the other has to say in the future course of events. It's a profoundly arrogant approach to the world. Empathy is really our ability to consider in particular, the ideology, the emotions, the aspirations that drive and constraint the other. And if we don't have this quality of strategic empathy, a term I borrowed from my friend and a great historian, exactly sure is, we misunderstand the challenges that we're facing.

General H.R. McMaster: (08:00)
We create opportunities for our adversaries and we develop policies and strategies that are actually counterproductive and based on wrong assumptions. So for example, I'll just go quickly through these. China is based on the assumption that China is going to liberalize. They're going to play by the rules, and they're going to liberalize their form of governance as well. Well, that assumption turned out to be false. That Vladimir Putin across three administrations, Anthony, that he's going to change. He's going to be like the Grinch and Christmas. His heart's going to grow two sizes bigger. He's just going to treat Europe and the United States and the West broadly in a fundamentally different way if we just reach out to him.

General H.R. McMaster: (08:38)
Iran, if we just conciliate the Iranian regime and welcome them in to the international community, they'll stop their four decade long proxy war against the great Satan, us, the little Satan Israel, and the [inaudible 00:08:51] I can go on. If there's a organizations in the book, it's to try to understand how the past produced the present as the best way to project into the future, to examine the assumptions on which our policies and strategies have been based, scrutinize them, test them, and then come up with a more full understanding of the challenges we're facing and make some recommendations.

Anthony Scaramucci: (09:19)
Okay. I think it's a brilliant assessment of what's going on. You're also offering some great recommendations in the book. You state early on in the book and throughout the book that you feel that even though you may have some policy disagreements with the current administration, or you may have disagreements with the president himself, you see yourself in the tradition of George Catlett Marshall, who was the chief of staff of the army, went on to become the Secretary of State for Harry Truman. Arguably one of the most novelist Americans. I think the two of us would agree on that.

Anthony Scaramucci: (09:53)
And he had this theory of staying out of the political fray, which was consistent with what George Washington said long ago. And so I was just wondering if you could talk a little bit about that, because I know when your interviews, you push aside some of the more polemic, old discussion, the political elements of that tell us why.

General H.R. McMaster: (10:11)
Well, you and I have talked about this execution. First I get your advice on this as well. I really think that our military has to stay out of politics. And as a serving officer and serving officer as national security advisor, I did my duty as best as I could for the fifth commander in chief under whom I served, since I entered West Point. And, if you go back to our founders, George Washington grandparents led at the English civil war. And George Washington had in his foremost in his mind keep that bold line between the military and domestic politics. The founders also really worried about factions political parties today. And how advocacy for a faction rather than a focus on our common identity or common interest as Americans could drive us apart from one another.

General H.R. McMaster: (11:01)
And again, in their minds, they're thinking of Oliver Cromwell, English civil war. Let's not do that. And so, as a historian, I'm very sensitive to that. And it's pretty sensitive to any indication that even in retirement, that I would get involved in partisan politics. I think it's important to keep a bold line in place. And also, Anthony, I think that what Americans did need at this stage. It's like a [inaudible 00:11:27] tell all book about the Trump administration. The problems as you know, and the challenges we're facing, they're bigger than any one person. They're bigger than even the president.

General H.R. McMaster: (11:36)
And of course we don't live in a monarchy. It's what I'm hopping, is that people will read the book, think about it. Have respectful discussions about the challenges we're facing. And I hope maybe expect more from our government officials broadly, in connection sound and a much more effective foreign policy.

Anthony Scaramucci: (11:57)
Listen, we agree intellectually on that, but we also have talked about another great general, General Cincinnatus. And so, for those on the call that don't remember General Cincinnatus, he was a great Roman general during the time of the Republic. And he was up on his form and he was asked to come down to Rome to put down the insurrection. And when he met with his fellow centurions, the insurrection abated, and the Roman senators wanted to make him a dictator. And he said, "No, I've been called to serve, and I'm here to serve. I'm not here to rule. I'm going back to my form."

Anthony Scaramucci: (12:31)
And obviously George Washington asserted that many times, our city, our great city, Cincinnati is named after him. And so you have some of your colleagues, Admiral McRaven, General Mattis, General Kelly, the great irony there, H.R as you know, he fired me pretty swiftly. But him and I have become personal friends, just goes to show you never hold his grudge. But all three of them have spoken out in different ways about president Trump. I'm going to ask you this question.

Anthony Scaramucci: (13:02)
It's June 1st, the president's clearing Lafayette Square, is using the military to do that. And then he's there with a photo op, obviously General Millie didn't like that. He had to speak out about it. Secretary Espert didn't like that. And General Mattis wrote about it in the Atlantic Magazine saying that this was a misuse of the military, and he felt that the president was a threat to the constitution. I asked John Kelly on SALT Talk like this if he agreed with General Mattis. Do you agree with General Mattis, General McMaster?

General H.R. McMaster: (13:33)
I have made the choice, Anthony, not to criticize the president, vice president Biden, anybody personally. What I do have no problem doing is criticizing decisions and policies of President Trump, or really anybody. Because I think we have to have these open discussions as Americans. In the book I'm very critical of a lot of the Trump administration's foreign policy. I'm very positive about certain aspects of it like China, for example. Lafayette Square it was a mistake, there's no doubt about it. It's regrettable. It was a bad decision. It was unhelpful in what should be an effort to bring us all together as Americans.

General H.R. McMaster: (14:14)
But you know what's happening, Anthony, is like this, okay, that's bad. And then the reaction to it can be just as bad. The suggestion, for example, that the joint chiefs of staff will have a role in a presidential transition that was made by the vice president Biden and others. That's irresponsible as well. With the great thing about our constitution is the executive branch has no say in the transition and our founders were brilliant, I think, in connection with anticipating what could go wrong.

General H.R. McMaster: (14:44)
One of the things that could go wrong as to the military and getting involved in politics, that would be terrible. And other things that would be terrible would be the military getting involved in transition or the executive, the sending president having a say. Who has the say? The American people have a say. And then also the Congress and the judiciary. The executive branch plays no role.

Anthony Scaramucci: (15:06)
The country's 244 years old, we've had 200 years of presidential transition of power. We'll take it back to 1800. We've always had a peaceful transition of power is a remarkable thing about the American experiment, where the losers in the election are willing to be ruled by or served by the winners in the election. The president has said that it's not 100% sanctified in his mind that he would accept the peaceful transfer of power. He's quite dismissive about it when he's asked about it. How do you feel about that? Do you have an opinion about, sir?

General H.R. McMaster: (15:44)
Well, yeah. It's just wrong, Anthony. What I write about in the book is how we were talking about Russia. But it's other actors, but mainly Russians in the lead on this. What they want to do is diminish our confidence. Our confidence in who we are as a people, our common identity. They want to diminish our confidence in our democratic principles and our institutions and processes. And so, for leaders to say, "Hey, well, the election might not be fair. It might be rigged or something." That's like playing right into their heads. It's being our own worst enemy.

General H.R. McMaster: (16:17)
And really, in 2016, and I think in this year in 2020, I don't think [inaudible 00:16:22] people care [inaudible 00:16:22]. I don't think he cared in 2016. In fact, in 2016, the Russians I think, were surprised as anybody that Donald Trump won. They had a whole campaign ready to go that said, "Hey, Hillary Clinton won because the election was rigged." And then they shifted it quite quickly because they started that campaign. And they realized, well Trump won. So they shifted it to that President Trump would have won the popular vote if it wasn't rigged.

General H.R. McMaster: (16:45)
And so what they're trying to do is sow doubts. Sow doubts about our democracy and no leader should give them space to do that. I think that it's just unwise, described Putin's campaign of disruption, disapprobation and denial. And you actually to combat it, you have to start in the opposite order. You have to get rid of his ability to deny it by pulling the curtain back when that activity, showing it's more fellow Americans, and that's the first step in inoculating ourselves against this really sophisticated campaign of political subversion.

Anthony Scaramucci: (17:20)
I think we're in agreement, we have internal and we have external threats. And so if you had to tick off some of the major national security threats for the United States, what would they be?

General H.R. McMaster: (17:32)
I think you got if we try at the top, Anthony. Ad the reason is, trying to tremendous resources and they are extremely well organized and determined to promote their authoritarian work into this model in a way that will make the world less free, less prosperous and less safe. And the party is driven by emotion and fear. Fear of losing their exclusive grip on power, fear of chaos. But also aspiration aspiration to, in Xi Jinping's words take center stage in the world. The way they're doing that is with a very sophisticated strategy.

General H.R. McMaster: (18:09)
And again, I use alliteration again of co-option, coercion and concealment. And their strategies aim to create short bile relationships, for example, across the world, and especially in the Indo-Pacific region in a way that will exclude the United States and others. I think what's really important for Americans to understand now is that, this isn't just a US, China problem. I think there's this tendency to personalize everything else around President Trump. Xi Jinping is not acting this way because Donald Trump is so mean.

General H.R. McMaster: (18:44)
Actually I think the Trump administration put into place at a very important and overdue shifted in our foreign policy towards China, the one of competition and recognizing China as a rival. And I think it's very important that wherever sworn in on January 20th, carry on that competitive approach.

Anthony Scaramucci: (19:04)
Well, at the same time, we can quibble about the style. But I do give the credit. I'm not going to demonize the president, whatever my disagreements are with him. I do give them credit for having good instincts as it relates to certain things related to China. But the president is also preaching something related to isolationism. And, we've been combating this for several hundred years. Obviously FDR had to combat it and 38, 39 and 40, he was vexed in terms of what to do. But he knew that America needed to get involved in the next global conflict. It's almost a prevention mechanism.

Anthony Scaramucci: (19:41)
General Mattis has said this to president Trump. I know you have said this to president Trump, that our position around the world is almost like a life insurance premium to prevent a catastrophe or a casualty insurance premium. This way we're there it'll prevent something from further getting heated. Do you think the president is right about his isolationist stance at this point in world history? Or where would you like to see our foreign policy?

General H.R. McMaster: (20:08)
Well, I think that this idea that our disengagement from complex challenges, oversees challenges that have big implications for security. It's a big mistake. And the areas in the book that I'm most critical of the Trump administration's policy and president Trump are areas in which he has replicated. And in some ways exceeded the flaws of the Obama administration, of course, to some of these problems sets. Afghanistan's bar breaking to me, Anthony. I think that it's not only regrettable and that will pay a price for it, but it's really reprehensible.

General H.R. McMaster: (20:39)
That we would partner really with the Taliban against the Afghan government. You'll partner with like this 5% of the people who've supported the Taliban against like the 95% of Afghans who want nothing to do with this brutal burgers organization. Because they lived off of the health of the Taliban from 1996 to 2001, they know what it's going to be like. So Americans might simply, again, we've been there almost 20 years. Like what are we doing? But as I lay out, it has not been a 20 year war. It's been one year war, 20 times over. It's been a war in which I think if we had deliberately set out to screw it up, we couldn't have done worse.

General H.R. McMaster: (21:19)
And I think that there is a way to partner with Afghans as part of a multinational effort and sustain very, very important counter-terrorist efforts there for a relatively low cost. But it is this drive to disengage that is a danger. I see the same kind of dynamic in the Middle East as well. And I'm not arguing, I don't think we should have like hundreds of thousands of troops there. This shouldn't be expensive, engagements, but it's really that sustained effort that enables our diplomatic efforts.

General H.R. McMaster: (21:52)
And it keeps us secure. If we learn anything from COVID, it ought to be problems that develop overseas. Once they reach our shores can only be dealt with at an exorbitant cost. Better to contain and deal with it abroad, than to let it recharge our shores.

Anthony Scaramucci: (22:12)
Listen, we agree. You say something in the book. I was just wondering if you could encapsulate it for our listeners and viewers about isolationism and about the potential crisis that could unfold as a result of a disengaged America around the world. I was wondering if you could encapsulate that force. I think it's a brilliant assessment of Afghanistan, and we'll also point out to people that please read the book because you go around the world literally.

Anthony Scaramucci: (22:39)
And it is a playbook and manual for exactly what's going on in the world and what America needs to do to respond to it. But let's stick on the isolationism for a second because lots of Americans are confused by this General McMaster. And I'd like them to hear it from you, why there's so much danger in isolation?

General H.R. McMaster: (22:58)
Well, first of all, it has been our Alliance system. It has been our Alliance together, military power that has prevented great power conflict for over 75 years now. And it's really hard as need to prove a negative. But I think it's a really good thing that we haven't had great power conflict for 75 years. And so, our Alliance system and Forward positioned US forces, not even a lot, but a significant number that integrate with our allies and partners. That's what gives you deterrence by denial. What that means is, you're convincing a potential enemy. In this case, you could say China and Russia powers on division lambast that they can't accomplish their objectives in the use of force.

General H.R. McMaster: (23:42)
And that's a good thing to prevent conflict obviously that would be devastated. In connection with jihadist terrorism, for example, that probably isn't going away, Anthony. It's going to be with us for multiple generations. What I read about is it was held this ISIS and Al-Qaeda alumni they're orders of magnitude larger than the Mujahideen alumni of the resistance to Soviet occupation to Afghanistan. And it was that Mujahideen alumni who committed mass murder in your home city, Anthony in New York on September 11th, 2001. And in Washington and over a field in Pennsylvania.

General H.R. McMaster: (24:19)
This is not a theoretical case. And we know that many other attacks in Europe were as a result of ISIS gaining strength when it controlled a landmass, the size of Britain. And so, the rise of ISIS didn't just happen. It happened because vice-president Biden called President Obama in 2011 from Iraq and said, "Thank you for allowing me to end this war." And of course, wars don't end when one side disengages. And we disengaged in a large measure diplomatically as well. What that resulted in is a return of war scale security and violence in Iraq, and set the conditions for ISIS to come back.

General H.R. McMaster: (24:59)
And so, just when you think the situation in Middle East can't get worse, it actually can. And it's our sustained engagement there that can create opportunities. Opportunities, I think such as those that you see now with giving the [inaudible 00:25:12]. Opportunities to isolate Iran, who is pouring fuel on this destructive sectarian civil war and exacerbating the humanitarian crisis associated with it.

Anthony Scaramucci: (25:26)
Listen, I was in Iraq in Baghdad in January of 2011. Our spring, as you remember, was bubbling up. General Austin, you remember General Lloyd Austin, he is one tall SOP. I felt like I needed still to talk to the guy, but.

General H.R. McMaster: (25:43)
Most of those big guys, it was Austin and Odierno [crosstalk 00:25:46].

Anthony Scaramucci: (25:47)
Ray is the tallest Italian I've ever met in my life, actually. I'm convinced that he's probably not Italian, but that's a whole other topic, but.

General H.R. McMaster: (26:00)
Also the both sport is a very handsome hairstyle out, I've noticed that.

Anthony Scaramucci: (26:04)
I remember that too. Of course, you have a very handsome hairstyle yourself H.R. We'll talk about that later. We'll talk about what we could do to help you there. But, I'm in Baghdad, it's January, 2011, General Austin, we ask him a question. Part of a Benz movement, the businesses, the extra national security. I say, "What should the troop level be?" He says 20,000. The Obama administration takes it down to zero. He says, "God forbid you can't do that because it'll lead to the rise of Daesh," also known as ISIS. So it plays right into what you're saying in the book. And it confirms that we need to de-politicize some of this stuff.

Anthony Scaramucci: (26:41)
But again, the American people, they need to be educated about this. And once they are, I think there'll be reaching a consensus decision closer to where you are. Let's talk about the president again for a second, because I was only there for 11 days, but we did have some fun together, you and I. Our interactions and with president Trump. How would you describe to the average person, your interactions with the president in discussing national security? Did he have a worldview? Was he being educated by your worldview? Was there a level of dogmatism or was there a level of flexibility? How would you describe those interactions?

General H.R. McMaster: (27:19)
Well Anthony, as you know, he's just reflexively contrarians, this is part of the style, and of course as a national security advisor, it's a unique position. It's a position of privilege and confidence because-

Anthony Scaramucci: (27:32)
Okay. But I'm going to stop you there. Because that was like some serious military language there with the reflectivity contrarian. So let me stop you because basically what you're saying is you'd tell him something and he'd want to do the exact opposite, which is "reflexively contrarian". And so, I just try to figure out what is that all about with the president, but go ahead. Reflexively contrarian.

General H.R. McMaster: (27:53)
He questions conventional wisdom. If you come in with the shiny course of action, and you say, "Hey, everybody agrees. This is the perfect thing for you to do. This is what you should do." That's not going to work. What I realized is, I could come up with the perfect process, the perfect course of action. We could do it. It would not be personally, but I could facilitate that from across the departments and agencies. But what we've needed to do, I felt, and I think this is true for any president, actually, Anthony, because I owed him multiple options.

General H.R. McMaster: (28:23)
I needed to give him a say in determining his foreign policy agenda and putting into place these policies and strategies. Anthony, I was only there for 13 months obviously, I can only speak to those months I was there. I think it worked in those 13 months, that approach of giving multiple options. Because what that allows you to do is to use, what are our goals? What are our objectives? As a way to evaluate those courses of action, you can assess them based on the degree to which they advance your interests, the degree of costs, the degree of risk and so forth.

General H.R. McMaster: (28:57)
And I think that produce good results in connection with the national security strategy. But also, as I mentioned, big shifts in foreign policy on Iran, in China and go on, in Venezuela, in Cuba. But that process works. I don't know what happened if our left. I'm not in a position to judge it. But I think one of my lessons from writing about the Vietnam period was that it was a disservice to Lyndon Johnson to tell Lyndon Johnson what Lyndon Johnson wanted to hear.

General H.R. McMaster: (29:29)
And I was determined, that I would not do that because it would be a disturbed to the president and the country. And, I think that's one of the aspects of how I approach my job that may have limited my shelf life, which I was at peace with. When I took the job, Anthony, I decided I was going to retire out of that job. It was in many ways a bonus round for me in 2017. I was thinking about retiring from active duty in 2017. So I would've had to start with you to continue serving, to continue serving the new president as national security advisor. I decided that moment when I'm done, I'm done and it's time for me to retire from our army as well.

Anthony Scaramucci: (30:09)
Well, it was also a bonus round for me, General. It was a little shorter bonus round. I'd have to calculate the number of MOOC's 13 months actually is. I have two last questions. I'm going to turn it over to John Darsie for questions from our audience. But, you write about in the book, these stationary islands that are being manufactured in the South China sea and parts of the far Eastern Pacific by the Chinese government. It's an encroachment on international waters. It could even be an encroachment on Japanese territory and other sovereigns in Asia. How serious should we be taking that threat? And what do you think that means for the US in terms of its national security?

General H.R. McMaster: (30:53)
Yes. Anthony, we should take it very seriously because I believe Xi Jinping thinks he's winning right now. He looks at us, he looks at the divisions in our society, sparked in large measure by the murder of George Floyd. He looks at our vitriolic partisan environment that we're in. The crises of a pandemic and the recession associated with it. And he always, he's a dictator. He's probably in an echo chamber saying, "Hey, you're on top. You're doing well." And he already believes that he had only a fleeting window of opportunity to realize the China dream, to take center stage.

General H.R. McMaster: (31:24)
And what you're seeing is aggression in the South China sea, as you mentioned, where he's destroyed complete ecosystems, by the way, to build these islands and militarize them. And if he succeeds, it will be the largest land grab, so to speak in history. But what he's also doing, he's also passing a national security law, there's regression progression of human freedom in Hong Kong. He is engaged in a campaign of cultural genocide in Shinchan. We are birth rates are down 60%. It's important. What's happening as over a million people are now cramped into concentration camps and he last week, Xi Jinping says, "Hey, I'm building some additions on to those concentration camps. I'm going to put more people in there for reeducation." But then you look at COVID-19, both war diplomacy, bludgeoning Indian soldiers to death on the Himalayan frontier.

General H.R. McMaster: (32:12)
The threats toward Taiwan, the threats towards Japan. It is a flashpoint. I think Taiwan is a flashpoint in the South China sea. And what I think all this shows you not to mention massive cyber attacks against us and against medical research facilities in the middle of the pandemic. This shows you, Hey, this isn't a US-China problem. This is a real-world China problem. And it's time for us to really focus on this threat and do our best to deter further aggression and convince the Chinese communist party leadership, Hey, you need to change your behavior or we're going to have to impose unacceptable costs on you economically in particular.

Anthony Scaramucci: (32:48)
I think it's a dour, but realistic assessment of what's going on. You write a lot about it in the book. I courage everybody to read the book. My last question, and I'm going to turn it over. You've got a great reading list. There are philosophers, scholars, military men, academics, there may even be a few hedge fund managers on your reading list. Tell me, who's influenced you the most in your career and your thought process?

General H.R. McMaster: (33:15)
Yes. A lot of people across my career. When I was with my mom, first of all, in terms of she instilled in me a sense of history. I think, the intellectual curiosity that I carried with me across my life. I rated that this book is to continuation of my self education in many ways. It's my Italian mom, Anthony by the way. And then, football coach/[crosstalk 00:33:42].

Anthony Scaramucci: (33:42)
That's one of the parts I like about you, H.R. I just want to point that out.

General H.R. McMaster: (33:48)
My football coach and it was also my history teacher in high school. My sponsors at West Point, both of whom were in the history department. One was also one of my rugby coaches at West Point and also a historian of US diplomatic history. They all inspired me. Casey Broward, who was the head of the history department at West Point. He helped me pick my topic on Vietnam. I had great professors, great professors at UNC Chapel Hill. Dick Cone as well, who's a wonderful man, was my advisor. The late Don Higginbotham, what a great guy. And you would love this guy. Great sense of humor and was a great historian. After I finished my exams, he said, "Congratulations, you now know more history than you will ever know."

General H.R. McMaster: (34:34)
And then of course many officers, influenced me in a profound way. My first battalion commander, Billy Jamie Gallon, who was, I think maybe bigger than Odierno. [inaudible 00:34:45] these guys was this huge, an amazing guy. African-American officer, which to be an armor battalion commander in the early '80s. Imagine with the changes we saw in our army, through the Vietnam period, post Vietnam period, a real charismatic leader. And I met so many leaders who exhibited strong qualities that I try to take from them.

General H.R. McMaster: (35:08)
And then of course you see some negative examples too. I would say that, across my career, John Atrazine is our ambassador and [inaudible 00:35:17] Raby now, that guy was great to me. Dave Patraeus, I think has always been tremendous. Martin Demson. We mentioned, Odierno Austin. The armies are family and I just think, young people, if you're listening to this, you joining our military is tremendously rewarding. I think because we have a smaller professional force, not as many Americans are familiar with the less tangible rewards of service. Being part of a team in which the man or woman next to you is willing to give everything, including their own lives for you.

General H.R. McMaster: (35:50)
And to be part of something that's bigger than yourself. And so, I admire these leaders who I mentioned, but I admired my soldiers. The younger generation gets hammered all the time. They're self-absorbed, they don't have attention spans, they don't understand the history. They're not patriotic. I'll tell you, if you want to see the best of our country, just meet some of our service men and women. They're extraordinary people. And they like what they're doing. They're bound together by an ethos. An ethos of self sacrifice and honor, and a sense of duty to one another and to our country.

General H.R. McMaster: (36:34)
And so, we we began talking earlier about the dangers of associating the military with political parties. We should never do that. And we should never associate the military with any sub identity in our country. When you're in combat and you've got bullets coming your way, you're not checking skin color, you're not checking religion or sexual orientation of the men or woman next to you. You're fighting together. And I think it's just a lesson we can learn these days, as divided as it seems we've become.

Anthony Scaramucci: (37:07)
Listen, I think it's a real lesson about the American military. I also think it's a lesson why the military is still considered one of the more trusted and more sacred institutions in our country. So I admire and appreciate all that General. I'm going to turn it over to John. We've got five or six minutes left to go in our SALT Talk, and he wants to pepper you with some questions.

General H.R. McMaster: (37:27)
All right.

John Darsie: (37:28)
In light of a general McMaster's comments about, how in the military there's a sense of cohesion that maybe doesn't exist in society and politics today. There's an organization called With Honor general that I don't know if you've ever been involved with. But, Rye Barcott who founded it as a friend of ours. Basically hos goals [crosstalk 00:37:45].

General H.R. McMaster: (37:45)
I know Rye, it's a great organization. Absolutely.

John Darsie: (37:47)
Yeah. Bringing more military men and women into the political realm, because when you get people who served beside each other in the battlefield, serving next to each other in the legislative branch of the government, you find a more collective purpose than you would otherwise, were today they're at each other's throat. So we always like to plug with honor, go donate. They support house races with veterans running in local districts. So we encourage everybody to see [crosstalk 00:38:12].

General H.R. McMaster: (38:12)
You have to propose by parts and legislation as part of the covenant you sign. Rye has done a great job of it. Thanks for bringing it up, John.

John Darsie: (38:21)
Yeah. Absolutely. So we talked earlier about how there's external threats and then there's internal threats. And what Russia has really done is tried to sow internal threats in our society, and they've frankly been pretty successful at it. The FBI recently foiled a plot from white supremacist militia groups to kidnap the governor of Michigan. They reportedly also were planning to kidnap the governor of Virginia, potentially there were talking about plans to do so. How do we fix that problem? Let's say Trump's gone, whether it's in four years, or it's in four months or whatever it may be until inauguration. How do we fix that problem and how do we fight back against Russian or another country's disinformation aim to sow internal division?

General H.R. McMaster: (39:07)
Well, I think the first thing we have to recognize is, we have to take this very seriously, this polarization in our society on all extremes. And what I think it's important to recognize is the Russians don't create these divisions. We create the divisions and they exploited those divisions. Russia's efforts to divide us on issues of race. The Soviet union's go back to the 1920s, but Hey, now they have new tools available. They have social media that already by the algorithms that dominate social media drive us further and further apart from each other because the companies keep more and more advertising revenue, which is more and more clicks. Which is, Hey, let me show you even more extreme content to get you to click even more. And then we have the issues of polarization of our political leads and our media.

General H.R. McMaster: (39:57)
How did it become this way? Where if you need a one direction politically, you watch one cable news ditch. You lean the other direction, you watch another one. We just had a presidential town halls yesterday, two separate. That was some people aren't hearing both sides. They're not hearing a civil meaningful debate. And I think that even our mainstream media, they're destroying themselves over either support for it or hatred for Donald Trump or so. It's crazy what's happened. And so, we all have to come together as Americans and be part of the solution for this. And I think we have to be intolerant of extremist, like those that were plotting against the governor.

General H.R. McMaster: (40:41)
And we have to recognize though that, our work's not going to be done easily here. That kind of extreme view is based on ignorance I believe fundamentally. Ignorance of our history and who we are, ignorance of our democratic process and ignorance of your fellow Americans. These are people who hate because they don't even know the people who are the object of their hatred. I just think we have to we have to do everything we can in our communities and universities, in schools, and in athletic organizations. Let's get people together. Let's emphasize a common identity.

General H.R. McMaster: (41:23)
I think history plays a big role in this, John. I do think that in many ways, our young people have been subjected to what I would say, and this might sound extreme to some people, but essentially a curriculum of self-loathing. That really portrays America as the problem in the world. And this is associated with the new left interpretation of history. I think we should be able to come together around, you'll not a contrived happy view of history, but a recognition of the nobility of this radical idea of our revolution, that sovereignty buys neither with kangaroo parliament, but with the people.

General H.R. McMaster: (42:00)
We could also be disappointed though, that our bill of rights and the elbow rights in our inner declaration of independence did not apply to all Americans. And it was only until our most destructive war, the 4 million people were emancipated from slavery. We can celebrate that, but also be disappointed at the failure of reconstruction. The rise of Jim Crow and the KU Klux Klan, but then also celebrate the civil rights movement and the dismantlement of the Jorah segregation and inequality of opportunity. But still recognize, Hey it's a work in progress as our founders knew it would be.

General H.R. McMaster: (42:34)
That our democracy had to be constantly nurtured. So I just think in Battlegrounds, I quote Richard Wharton, a philosopher, he said that, "National pride is to nations. What self-respect is to individuals and necessary ingredient for self improvement." And I think in many ways we have to make a concerted effort to come together as Americans and restore pride in who we are.

John Darsie: (43:04)
Well, general, we're going to leave it there. Thank you so much for taking the time to talk to us again, this is another interview we feel like could have gone on for another three hours. And we apologize to everybody who asked questions that we weren't necessarily able to get to. But you offered such a sweeping a great analysis of everything going on domestically and in terms of our foreign policy. We're very grateful for your time. Anthony, do you have a final word for General McMaster. And thank you so much for being nice to Anthony and giving him that nice farewell party when he didn't last longer than a carton of milk in the White House.

Anthony Scaramucci: (43:32)
The guy's getting fired General. I just want to make sure you just say hello to him. Maybe you'll see him out of the Hoover Institute. I just want to know if you're going to use the same picture when the children's version of the book comes out? Just a little intimidating there General. Okay. You may want to tone it down for the kids. Okay.

General H.R. McMaster: (43:50)
I'll work on my softer side [crosstalk 00:43:52].

Anthony Scaramucci: (43:54)
All right. But in all seriousness, our thank you so much. We got to get you to one of our live events, hopefully soon once the pandemic ends. My regards to the family, General. And we'll see you after the election, I hope.

General H.R. McMaster: (44:06)
Thanks so much. And thanks for this great forum too. Thanks. Take care.

Anthony Scaramucci: (44:10)
Great to have you on, sir.

Kurt Andersen: Author "Evil Geniuses: The Unmaking of America" | SALT Talks #76

“Technology changed the nature of economies and all the rich world. But in the US, we did this different thing of saying, no, all boats are not going to rise anymore.”

Kurt Andersen is the bestselling author of the novels Heyday, Turn of the Century, and True Believers. He contributes to Vanity Fair and The New York Times and was the host and co-creator of Studio 360, the Peabody Award–winning public radio show and podcast. He also writes for television, film, and the stage. Andersen co-founded Spy magazine, served as editor in chief of New York, and was a cultural columnist and critic for Time and The New Yorker. He graduated magna cum laude from Harvard College.

In the 1970s, a subtle yet radical shift took place in American politics that culminated in Reagan’s election. A pro-business vision of the economy displaced the working class policies of FDR’s New Deal. This set the stage for the next 30-40 years of policy consensus that ultimately drove the economic inequality we see today. “I was a little oblivious to and indifferent to the systemic change in the economy that had happened around it, starting in the seventies… I didn't realize until I went back and did the research how that had been not the beginning, but the end of a decade of strategic work of CEOs and rich billionaires and libertarians.”

While the middle class initially shared in prosperity, major advancements in technology and globalization exposed the systemic inequity. This has given rise to many of the cultural and political divisions we see today.

LISTEN AND SUBSCRIBE

SPEAKER

Kurt Andersen.jpeg

Kurt Andersen

Author

Evil Geniuses

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:07)
Hello, everyone. Welcome back to SALT Talks. My name is John Darcy. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology and public policy. And we're very sorry for the late start today, a little bit of miscommunication on the timing, but our guest today is worth the wait. It should be a fascinating conversation about his recent book and observations about things that are going on in the country. But SALT Talks are a digital interview series that we launched during this work from home period. They are interviews with leading investors, creators, and thinkers. What we're really trying to do is replicate the experience that we provide at our global conference series, the SALT conference. And that's to provide a window into the mind of subject matter experts for our audience, as well as to provide a platform for what we think are big ideas that are shaping the future.

John Darsie: (00:54)
And we're very excited today to welcome Kurt Andersen to SALT Talks. Kurt is the best-selling author of a number of books, including several novels, as well as non-fiction books. Among his novels are Heyday, Turn of the Century and True Believers and his most recent nonfiction book, which we're going to talk about a lot today is called Evil Geniuses, The Unmaking of America. He contributes to the Vanity Fair and New York Times and was the host and co-creator of Studio 360, the Peabody award winning public radio show and podcast. He also writes for television, film and stage. He also co-founded Spy magazine and served as editor-in-chief of New York and was a cultural columnist and critic for Time and The New Yorker. A reminder, if you have any questions for Kurt during today's SALT Talk, you can enter them in the Q&A box at the bottom of your video screen. And now we'll turn it over to Anthony Scaramucci, who's the founder and managing partner of SkyBridge Capital, a global alternative investment firm, as well as the chairman of SALT to conduct today's interview. Take it away, Anthony.

Anthony Scaramucci: (01:56)
Well, first of all, Kurt, thank you so much for joining us. I loved your book. Before we go into the book though, I want to talk a little bit about your professional background, your personal background. It's a little cliche, but I ask everybody this. And I always learn something. As an example, yesterday or two days ago, John Brennan, the CIA director, he told us that he wanted to be the first American Pope and that his name that he had designated for himself when he was 14 was Owen the first, which was his family's, his mom's maiden name. So, I thought there's no way we're going to find that out Kurt on Wikipedia. So tell us something about your life that sort of triggered you to go in the direction that you went in with your career or something fun about you that we couldn't find on the web.

Kurt Andersen: (02:44)
Well, I really started doing what I was doing as a junior high school student in Omaha, Nebraska. I got a job on the student newspaper, Arbor Heights Junior High School. And started I guess being a journalist of sort, but really writing satire. That was my first quasi-professional writing experience and I loved it and they let me keep doing it, they let me get away with it through high school as well. And then I went to Harvard and was on The Harvard Lampoon there, that you could find on Wikipedia. But really even though I had done legit journalism and I write novels and history books, really having that founding self-tutorial in making mischief, I guess was the beginning of my writing life.

Anthony Scaramucci: (03:44)
And you were also one of the founding editors of Spy magazine with Graydon Carter. And so I want to go back to that moment in time. It was the roaring eighties. I was a prolific reader of Spy magazine as was everybody that lived here in New York. And you had Donald Trump on the cover once in a while but really what as [crosstalk 00:04:09]?

Kurt Andersen: (04:04)
We did have him on our cover once a while. In fact our first issue of Spy Magazine in October of 1986, the cover story, it was called Jerks, the 10 most annoying New Yorkers, of whom Donald Trump was one of them. And in his little write-up we did on him among the 10, he was just one of 10 at that point. He was saying that he could solve the nuclear missile issue with the Soviet Union. Just send him over there, he could learn everything he needed to know in an hour about nuclear missiles was his quote in the first issue of Spy Magazine. So yeah, we kept at him, investigated his bankruptcies and his bullying and all that he was then and remains.

Anthony Scaramucci: (04:46)
Who was the number one jerk? Did you have a ranking or did you or did you have to [inaudible 00:04:49]?

Kurt Andersen: (04:49)
No, I mean, ranking is the kind of thing we did. We didn't do it in that case. So he was just one of 10 along with Leona Helmsley and a lot of others.

Anthony Scaramucci: (04:57)
Okay. Yeah. Well, there you go. Well, you're really going back. All right. Well, let's turn our attention to your book, Evil Geniuses, The Unmaking of America. And basically for our viewers that haven't listened to read the book or listen to it on audible, it's a fascinating discussion about the US economic system and how it unfortunately was re-engineered, let's call it about 40 years ago to benefit elites. And so we had something going on and I don't know if you've read American Amnesia that was written about in 2016, if you haven't, I'll send you a copy of it.

Anthony Scaramucci: (05:33)
It basically said that we had this pretty good intersection between our government helping middle and lower middle income people through government activism and programs. And we had a pretty robust capitalist story going on in conjunction with that. We seem to have jettisoned one part of that about 40 years ago. We'll call it the Reagan revolution and now as a result of which income divide is widening even deeper. I'd like you to address that for our listeners. Explain why you wrote the book, explain what you have seen in our Zeitgeists economically over the last 40 years.

Kurt Andersen: (06:10)
Yeah, I'd taken a pause from writing novels to write this previous book called Fantansyland. That was about what I noticed really in this century, right? In the last 15 or 20 years. Which is to say how the belief in the untrue of all sorts. Believe whatever you want had gotten out of control in this country. And so that book was an attempt to figure out how that had happened. And I figured out that it was a really deep in our bloodstream, but it was under control. It was an okay balance for a few hundred years, right? Because the grownups when pushed came to shove were in charge. But then I realized as that book came out and I went out and talked about it, that that was really only half the story. That this inequality and economic insecurity and the sense of hopelessness and less upward mobility, all that economic stuff was the other half of how we got into the ditch or the ditches we're in.

Kurt Andersen: (07:12)
And how did that happen? And I realized because I was doing pretty well in the '80s and '90s as a journalist, as a magazine editor, as an entrepreneur, as all kinds of things. And which while I was voting democratic and I consider myself a liberal, I was a little oblivious to and indifferent to the systemic change in the economy that had happened around it, starting in the seventies, really. And in this evil geniuses, I traced back to how yeah, Reagan got elected and wow, that's new and taxes on the well-to-do were cut in half or more as they were on big business.

Kurt Andersen: (07:52)
That's a big deal. But I didn't realize until I went back and did the research how that had been not the beginning, but the end of a decade of strategic work of CEOs and rich billionaires and libertarians, and all these different people working in all these different ways to do what they did as, as you say it. To re-engineer the system, to hijack the system really, and to change it from this great kind of post new deal America that had worked for everybody, the rich got rich, the middle class got more prosperous.

Kurt Andersen: (08:28)
The working class were doing okay. This system was working, all the boats were rising economically pretty well together. And then it changed. And what I realized too, during the research for this book is that inequality increased elsewhere, right? Globalization happened everywhere. Technology changed the nature of economies and all the rich world. But in the US, we did this different thing of, of saying, no, all boats are not going to rise anymore. Your boats, you, 80% of less wealthy people are just not going to rise any more. Your incomes and your household wealth is not going to increase. And that didn't just happen by accident. It happened by a whole series of regulatory changes, changes in thinking, changes in norms, changes in law, changes in taxes that have left 80% of us, not better off than we were 40 years ago.

Anthony Scaramucci: (09:24)
And it's a brilliant exposition. In addition, where you're saying right now, what you write in the book, you really lay out what happened in the convergence of a lot of special interests that sort of allowed for this outcome to happen. I was dying to ask you this when I was reading your book. So now I've got the opportunity to ask it to you here. Isn't it the fault of the politicians though? Isn't it the fault of our public servants in a sense that they almost abided to special interests through the political lobbying, the payments, the junket, the packs that were formed to help them stay in power. And they sort of lost that, no bleach obliged, if you will, or that understanding that they were there to serve the American people, which included all of the American people, not just necessarily the people that were donating to them?

Kurt Andersen: (10:12)
Certainly, they have their large share of the blame along with, and the Democratic politicians do as well as the Republican politicians who were more unapologetically and shamelessly devoted to this change. But there's plenty of blame to go around. But what and it's easy to blame politicians. We're used to blaming politicians and they're are political figures who are among my Evil Geniuses, but I think it's important to look at the whole realm of people, including CEOs, including intellectuals, including people in the media who did all that they had to do in various ways or failed to do what they had to do in the case of Democrats, I would say, to stand up and say, "No, this is a raw deal. This is no longer the new deal."

Kurt Andersen: (11:09)
So, but yeah. But I think as I try to lay out in the book in so many ways, the Zeitgeist, the set of norms about what was fair, really just what was fair, were being changed on so many fronts. And so partly out of earnestness, Neo-liberal Democrats said, "Yeah, maybe we should go halfway. Maybe we're off the free market it's pretty good." And then basically lost their distinct vision of this sense of fairness and went along with the crushing of labor unions and went along with the end essentially of overtime pay, went along with reducing the minimum wage, all those things. And pretty soon, since there were no actual liberal Republicans anymore, there were the Democrats on economics took the place of liberal Republicans. Everybody was a Republican. The Democrats were just a little softer.

Anthony Scaramucci: (12:09)
It's very compelling stuff. You wrote about technology in the book about how it's exacerbated inequality created more insecurity. I'd like you to address that, but then also, how can technology fix some of this inequality as well? It's sort of an interesting thing. It's hurt us in one way, but it may be able to help us. You explain it. I'd like you to articulate it here.

Kurt Andersen: (12:31)
Right. Well, I mean, my first couple of chapters are a quick history of modern capitalism, of America, and of technology and how technology has been key to prosperity again and again and again. But technology can be good. It can be bad. It can make nuclear weapons, it can make nuclear power. It can make life easier, or it can make slavery worse through the cotton shin. It's the choices, it's the political public social choices that are made about how to use it. So technology, we moved from farms to factories, from factories to offices, technological change, good, use it well. We have this whole set of balancing mechanisms through government, through citizens organizations, through unions, all the rest. There needs to be this balanced system. In the 1970s and '80s we lost that balance. So it became simply fine for companies to lay off as many people as they could constantly as a way to do business, right? So sooner or later that catches up with you as it has caught up with us, there aren't enough decent paying jobs for human beings.

Kurt Andersen: (13:50)
And that is going to become a bigger and bigger problem as AI kicks into gear and makes fewer and fewer jobs necessary. How do you deal with that? So we can have a future that is more like a utopia frankly, where machines do all the work, but we got to figure out how to then share that bounty. And it's not just... It can't all go to Mark Zuckerberg and the investor class. I mean, we all did it together. By the way, as you know I talked about in the book how the United States government was key, is key to building doing all, making all kinds of businesses happen, including the internet and all of its businesses.

Anthony Scaramucci: (14:34)
Absolutely.

Kurt Andersen: (14:34)
Do we as citizens, taxpayers get anything out of that? We do not. So there is a social wealth that has been created that with all, with nanotechnology, with AI, all that. It can get even more fantastically prosperous, but it's not going to work if just the rich are getting richer. And just the people who own the machines and the AI are benefiting.

Anthony Scaramucci: (15:01)
Well, we're in agreement. There is another famous author, Malcolm Gladwell once wrote, I think it was in one of his piece. I didn't remember seeing it in his book, but he said that he felt that this proliferation of greed at the corporate level started with baseball free agency in 1974. He attributed it to Curt Flood. And he basically said, what happened was Curt Flood got his free agency. The court said he could be a free agent. Then you had the rise of Reggie Jackson. And Reggie is a friend of mine. He always will mention that he got a five-year deal, which was $600,000 a year. At the time it was a stupendous contract. And obviously you have Pat Mahomes now getting a half a billion dollar deal from the Kansas city chiefs.

Anthony Scaramucci: (15:47)
And Malcolm's point was once the sports athletes could make $25, $50 million a year, American CEO said, "Well, wait a minute, I'm doing a way harder job than them. What am I chopped liver?" They went to their boards and said, "Pay me more money." And you saw this whole proliferation. And so I guess the question I have is what is the counter dote to that? What could happen in the society to make people recognize, well, wait a minute, you got to look out for the little guy. Or wait a minute your compensation on a multiple of your poorest employee is just too high. And I know we want to compete for art at Sotheby's and have a big aircraft, but you may want to take care of these people, because if your neighbor's doing better, there'll be less social unrest. There's a public good to that for your family as well.

Kurt Andersen: (16:38)
100%. Well. So a lot of things have to happen. And one of the bits of the pieces of hopefulness that I take from this book and doing the work is that it changed, right? We had this new deal all in the same boat sense of common good even as the rich got rich. And we've always had an unequal society economically, and no doubt always will. But it's question of extremes and how ostentatious one feels no shame about being, in having and showing off wealth while most people have had no income increases, can't afford college and all the rest. So there's the, are we good people? Are we fair people or is greed good and profits all that matter? That's the question. That was changed 40 and 50 years ago. It can be changed again in through various ways.

Kurt Andersen: (17:33)
And to your point about the CEOs and earning multiples of their average workers, that wasn't a law. It just was the norm that for decades and decades the average CEO got 50 or 60 times the pay of his average worker. And that was a lot of money. Then it okay, fine. The '80S it goes up to a hundred times. But then in the '90S to 300, 400, 500, a thousand times as much money. Tell me that's fair. And, and, and, and it wasn't just the market working its way as we know. And as I discovered, really when I did the work and talk to people in finance and journalists and authors in finance that the pay that CEOs get is not some kind of free market. It is this clubby cabal that decides, as you say, because Curt Flood or Reggie Jackson are getting what they're paying like, "Hey, why aren't I getting paid this money?"

Kurt Andersen: (18:34)
So, how do you fix that? By preaching the injustice and fairness. But I also think just as Franklin Roosevelt, 75 years ago, understood, wait, rich guys like me and us, this system, this golden goose, isn't going to keep laying golden eggs for us. If the people in the Keynesian way aren't buying stuff to make it all work, right? The system needs a prosperous middle class to work. And I'm afraid that not only has the way we've changed the system 40 years not doing that, it's just going to get worse as more and more jobs become automated.

Anthony Scaramucci: (19:17)
Yeah. And I've made this case. I think you and I share our level of moderation. I have made the case of my friends. Well, you want to live in a barbed wired security compound in your McMansion while your fellow neighbor's suffering or do you want to figure out a way to help people stem the inequality this way they don't come after you with a pitch fork or a Tiki torch at some point, which will happen because it has happened throughout civilization. So we'll turn it over to audience producer. We're getting a lot of audience questions.

Anthony Scaramucci: (19:49)
But I have just two more questions for you. And they're tied to your other books, because you seem to have a knack for seeing things before other people see them and a knack for understanding what's going on. And so you wrote a best seller in the year, 2000, it's called The Turn of the Century. And for some reason before the iPhone and Facebook Kurt, you predicted what America was going to look like in 2020, you captured a lot of elements of our media, a lot of elements of what it would take to be successful in politics in terms of bombast and over-exaggeration. Tell us how you did that. Tell us what you saw back then and why did it come true? And what do you see over the next 20 years?

Kurt Andersen: (20:34)
Well, that was my first novel actually came out in 1999. And I've looked back at it fairly recently, and I Pat myself on my back because it didn't see the future in some ways pretty clearly. I don't know, in that case, because it wasn't a nonfiction book and I hadn't written a big nonfiction book, although I'd been a magazine writer and a magazine editor. I think because it was fiction and this near future fiction, it allowed me to sort of tune into my instincts and intuitions in a way that if I were writing a serious piece of journalism, I wouldn't have allowed myself to do. So, it was this funny, it was this interesting time where again, I saw things happening. I saw how in a way that hadn't been true in my younger life how money was everything and how this blurring of distinctions between fiction and reality was just becoming a real problem and on and on.

Kurt Andersen: (21:39)
So I was able to piece it together, I think in fiction by depicting again, the present and near future in a way that writing speculative fiction allowed me to do. Then I think with this last big nonfiction book Fantasyland, and then with The Evil Geniuses as well, I really took what I learned to some degree as a novelist, through telling stories and seeing the big picture rather, and focusing on small facts and details and figures as well, but seeing the big picture in a novelistic way that I hope I bring to these nonfiction histories as well.

Anthony Scaramucci: (22:22)
Well, in Fantasyland, you wrote that in another best seller, you wrote that into 2017. You said something fascinating about America. You said that the society has a peculiar susceptibility to falsehoods and allusions. Tell us why you feel that way? It's obviously true. I just want to understand why [crosstalk 00:22:42]?

Kurt Andersen: (22:41)
Yeah, yeah. Yeah. Well, see, I didn't know. Again, both of these books begin with a question of like Evil Geniuses, how did things get so screwed up and insecure and unfair economically? And that one was, how did that happen and how old the thing was that? And so I just began some years of research and it really is, it's not unique to America, but it is so definingly present in America. It is so deeply part of our character I realized when it wasn't just a thing that had happened since the internet.

Kurt Andersen: (23:12)
At first, I thought, "Oh, maybe it's the internet helped that. And it certainly God knows then." And I thought, "Oh, it's the late '60s and '70s where everybody could do their own thing and find their own truth. And yap, that's part of it too. But then I just kept tracing the threads back in time and saw that literally from the first European settlers where they were coming here, because it was going to be the new Jerusalem and or they were going to find gold in the dirt in Virginia. Again, it was neither of those turned out to be true, but the Americans self-selected to believe that. American self-selected to believe in advertising. Right? Okay.

Kurt Andersen: (23:53)
The first big mobile advertising campaign was to get settlers to come to these money-making colonies and downplay the harsh realities of that. And because we are, and always were such a uniquely religious place, that in its extreme forms also led us to believe things that aren't necessarily true. Our knack for entertainment. And then as entertainment become more and more extraordinary and Hollywood and movies and television, again that helped blur this, this our sense of I think the real and the fictional in a way that isn't unique to Americans, but my God is part of our defining quality.

Kurt Andersen: (24:41)
So on and on and on grownups, it was a thing in balance and the serious people and experts and people knew what they were doing were still in charge. And then that establishment control started in all kinds of ways, started going out of control in the 1970s. And Fantasyland, I finished before Donald Trump was nominated for president. It came out right after he was elected president, and he wouldn't have been in that book, probably. Probably wouldn't have been mentioned if he hadn't run for president. But then just as I'm writing this eccentric history of America, here he comes embodying everything in that book, Fantansyland. And so, one of the small silver linings personally, it was that he illustrated this theory of how America had gone to hell that I wrote without him being even present in the thinking or execution of that book.

Anthony Scaramucci: (25:44)
It's amazing. I'm going to turn it over to John and we've got a ton of audience questions. The book Evil Geniuses, The Unmaking of America. Probably one of the best books I read this summer. I did a lot of reading in the pandemic-

Kurt Andersen: (25:59)
I appreciate that, thank you.

Anthony Scaramucci: (26:01)
Congratulations on the book, but before I turn it over to John, just quickly, what's on your nightstand? What are you reading?

Kurt Andersen: (26:07)
Oh, I am reading, what did I just read a book called Mill Town, about this town in Maine, that, and by working class woman who grew up there and how that town has been effectively torn asunder by the very things I'm talking about. It's sort of a micro version of about Evil Geniuses in that way. That's the book I'm in the middle of. I just started Anne Applebaum's, the Twilight of democracy. So I'm reading happy, uplifting books.

Anthony Scaramucci: (26:41)
If you know Anne, I just finished her book. If you know her, reach out to her for me. I'd love to get her on one of these days. I think she's fascinating. She wrote quite a book. That's a very, I won't ruin the ending there, but it's a great book.

Kurt Andersen: (26:52)
Yeah.

Anthony Scaramucci: (26:52)
Okay. John fire out those questions, we've got a ton of audience participation. John is working from the new SALT studio. So he's sparing you his ancestors. He's a big time wasp so he's got, I don't know, white wigged people in his background. So he's sparing you that today. Go ahead.

John Darsie: (27:12)
Ignore his antics Kurt, but you argue in the book that we've gone back to sort of a pre-new deal world order. And that's a theme that we've had a few speakers that have touched upon during SALT Talks. One of which was Daniel Okrent, who wrote The Guarded Gate, which you might've read. So, if we're in a pre-new deal world order, we obviously need a new deal to get us out of it. What in your view does that new deal need to look like if we can get a more progressive president into office? What do we need to do to jumpstart our climb out of the current morose?

Kurt Andersen: (27:47)
And I just want to make the point that it's not, in my view, a world order. We are exceptional in the world in these ways. But so, I've always loved the line history doesn't repeat but it rhymes. And so we can't say, "Oh, we need this thing exactly like we did it in the new deal. And we did this thing exactly like we did in the new deal." But the idea of the new deal, that there's an essential place for the government and society in general to make the free market economy more fair, more legitimate, more trusted, all those things in all kinds of ways, whether it's antitrust enforcement or so forth are important. But 2020 is obviously a very different time than 1932 or 1936.

Kurt Andersen: (28:46)
And not at least in the way that as John Maynard Keynes saw it back in the 1930s. Technology and machines are changing the nature of work in this profound way that I don't think is going to be, it's going to be sort of, it'll just sort itself out like things sorted themselves out during the 20th and 19th centuries during the previous industrial revolutions. So you've got to have things on the table, like a universal basic income. Andrew Yang was never going to be nominated let alone elected president probably, but the fact that he's so intelligently had this particular critique of what was problematic about our economy, which is to say not enough decently paying jobs for enough human beings because of the miracles of technology and how are we going to deal with that. That in all of its... However we do end up dealing with it, needs to be on the table as all kinds of people, Mark Zuckerberg, for instance, and others in Silicon Valley have signed off on.

Kurt Andersen: (29:55)
So that's one way, but first we need to re convince ourselves, relearn the necessity and virtues of having a social understanding that everybody needs to come along if we're going to get to the promised land. And not just because it's good and it's fair and it used to work great and from 1945 to 1980, it worked fantastically. But the system is just not going to work. FDR was called a socialist in 1932 and 1936, and he saved American capitalism from its greed and from its excesses and from its misguidedness. And again, as his cousin Teddy Roosevelt had begun doing the progressive era a generation earlier. So there's lots of ways to do it.

Kurt Andersen: (30:54)
And again, do we need more higher taxes on people like me and probably you and those of us, a lot of people watching? Yes, of course we do. Because we have plenty. And I think if you're a fair-minded person and you're not utterly committed to just me, me, me, me, me about all things economically, people will come to understand that, yeah, this isn't working. And by the way, it works a lot better in all these ways in other countries.

Kurt Andersen: (31:28)
The fact that having universal health care has been made so contentious is also crazy because show me just for starters, show me how it works better here than it does in all these other rich countries. That by the way and one of the things I hated about the democratic primary process and their arguments about healthcare and how it should be dealt with was there isn't just one way that Denmark, Germany, Canada, Australia, France, Japan, all these other countries do it. They do it in a whole bunch of different ways with different versions of private and public but it's universal and nobody goes broke paying for healthcare.

Kurt Andersen: (32:10)
So there's a reason that became the central, how do we fix this mess question in the democratic primaries and in this election? But that is an obvious beginning. But it's all these ways in which just the basic security that people did feel Americans had and felt when I was a kid and my parents felt coming out of the war. We need to figure out ways to restore that in this very new situation with AI and all the, AI and globalization that make all the problems very different than they were 70 years ago.

John Darsie: (32:52)
So do you think, and this is an audience question, do you think the extreme views that we're seeing reflected in our politics today are the results of our leaders driving us in that direction or a reflection of the way our culture has become divided?

Kurt Andersen: (33:08)
It's both, there's a lot of chicken and egg problems in this that I talk about in Evil Geniuses. I think and there are conspiracy theories on both sides. There are extreme views on both sides. Everything is true on both sides, but it's asymmetrical. It's insanely more true on the right. Now, why did that happen? That happened because the rational, smart, evil geniuses in politics and finance and C-suites and the rest understood that to get what they needed to do done in the 1970s and '80s and 90s, they needed to have enough people to get elected. And who are those people going to be? There aren't enough rich people and CEOs to form a party. So you need a bunch of people who are not rational or not educated or not whatever.

Kurt Andersen: (34:10)
And how do you get them? Well, you get them by riling them up and making them afraid of everything and everybody. And that leaves, inevitably has led in this country, which by the way of course has a certain history of toxic racism and bigotry to extreme toxic political feelings. And I think at what may be the end of this long 50-year cycle that came after this other long 50-year new deal cycle, that in the desperation to hold on to power, the right in the form of the Republican party has unleashed the extremism on their side to this horrible and ultimately I believe self destructive. Self-destructive both of the republican party. And if it's allowed to go unchecked America, that this there's self destructive way.

John Darsie: (35:11)
So we have another audience question, I think is interesting. Because you talk about some of these themes in the book. They talk about a book that's titled Fairness and Freedom, and it basically compares the evolution of the United States and New Zealand, which were two open societies that were founded by British colonists. And it basically talks about how New Zealand adopted an approach from an early stage of that country's life around the collective good. Whereas the United States was more about libertarian individualism.

John Darsie: (35:39)
And we've seen those two different approaches achieve success in each country, the United States and our philosophy around individualism has certainly been part of the economic miracle here. But at certain times it's also been a detriment to us. One of which you could talk about is COVID. You see New Zealand has zero cases while the West wing has 37 and counting. So, what do you think has created that environment? Do we need a reset of that brand of individualism that's become a sort of our trademark in the United States? You talk a little bit about how China maintained some of its political system while resetting their economic system as well. So how do we find more of that balance?

Kurt Andersen: (36:21)
Yeah. Well, I do talk about China and what they did in the late '70s. And I think where we are now requires perhaps as significant and radical of a change as they did and it worked out well for them, didn't it? The individualism thing is interesting. That's a real thing, right? That's a real thing in the founding of the United States. And then became this mythologized real thing as well. But we also had this intense sense of community, even back in the 19th century, the height of Cowboys and resettlers and all that kind of mythic individualism. Small towns became this sustaining place where people helped everyone. Then when we got big corporations and bigger population and bigger government, everything else, we used governments, local and federal and used unions and used all these non-individualistic means to balance out the individualism and to make sure that there was a sense of the common good and the common.

Kurt Andersen: (37:37)
So, yes, we have this in our system and it will always affect, and people want to be who they want to be. And that's been great and grand and beautiful in American history. But my argument, my theory of the case is that starting around 1970, that just got out of control. It just got out of control and was privileged over everything else. And for these Milton Friedman Knights who are major part of my Evil Geniuses, they used that to help themselves and kept helping themselves. So, it was always there but it was always there in balance with this sense of we are Americans together. We help each other and all that. And then, I say it's like a chronic condition that sort of was fine. And to be in the bloodstream intellect was allowed to just metastasize out of control, which I think is what's happened.

John Darsie: (38:43)
Well, Kurt, thanks so much for joining us. I think we could talk for three hours. No problem about these themes, because they're the big themes that we're facing as a country today. And hopefully we can have you back on in a few months when maybe the landscape is a little bit different and we can talk about some of these energetic government policies that hopefully can help lift us out of the current predicament. Anthony, you have any final words?

Anthony Scaramucci: (39:04)
I need to know when your next book is Kurt so I can start investing in that direction [crosstalk 00:39:10].

Kurt Andersen: (39:07)
As soon as I know I'll let you know.

Anthony Scaramucci: (39:11)
All right. Well, exactly right. Well, thank you so much, Kurt. We appreciate it. Hopefully we can get you to one of our live events at some point. I think you would enjoy that and-

Kurt Andersen: (39:20)
I'd love that.

Anthony Scaramucci: (39:20)
... enjoy the chemistry there.

Kurt Andersen: (39:22)
Thanks.

Anthony Scaramucci: (39:23)
All the best to you, Kurt.

Kurt Andersen: (39:24)
See you.

Stuart Stevens: “It Was All a Lie: How the Republican Party Became Donald Trump" | SALT Talks #64

“You can really trace in the post-World war II [Republican] party into two factions, it was sort of an Eisenhower governing boring, but sane faction, and then Joe McCarthy.”

Stuart Stevens is the author of seven previous books, and his work has appeared in The New York Times, The Washington Post, Esquire, and Outside, among other publications. He has written extensively for television shows, including Northern Exposure, Commander in Chief, and K Street. For twenty-five years, he was the lead strategist and media consultant for some of the nation's toughest political campaigns. He attended Colorado College; Pembroke College, Oxford; Middlebury College; and UCLA film school. He is a former fellow of the American Film Institute.

Donald Trump’s political rise seemed like an impossibility. After his improbable primary and general election wins, surely Trump was not a true Republican. That illusion quickly vanished as the party fell in line and offered their unwavering loyalty. “The Republican Party is the party that endorsed Roy Moore and attacks John Bolton. So I started asking myself like, ‘How did this happen?’"

After decades of winning on the major issues that defined the Republican party platform, George W. Bush was tasked with defining what it meant to be a Republican in the modern era. Bush introduced the idea of compassionate conservatism. Speeches like the one given at the 2000 Republican National Covention are unrecognizable compared to today’s Republican messaging. “One of the conclusions I came to, which seems sort of obvious is that leaders really matter.”

LISTEN AND SUBSCRIBE

SPEAKER

Stuart Stevens.jpeg

Stuart Stevens

Author

It Was All a Lie

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:07)
Hello everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology and public policy. SALT Talks are a digital interview series that we started during the work from home period to replicate the experience that we provide at our global conference series, the SALT Conference. And really what we're trying to do is to provide a window into the minds of subject matter experts for our audience, as well as provide a platform for leading investors, creators, and thinkers, to talk about some ideas that we think are really shaping the future.

John Darsie: (00:41)
And our guest today is someone who has had a big part in shaping the future of the Republican Party for the last 30 years, and the picture that he now paints or the party is a fairly dire picture. And That guest today is Stuart Stevens. Stuart is the author of Seven Books, and his work has appeared in the New York Times, The Washington Post, Esquire and Outside among many other publications. He has written extensively for several television shows, including Northern exposure, commander and chief in K Street. For 25 years, he was the lead strategist and media consultant for some of the nation's toughest political campaigns. He attended Colorado College, Pembroke College in Oxford, Middlebury College and UCLA Film School. And he's a former fellow of the American Film Institute. He's also a member of the Lincoln Project, a group of Republicans who have been involved in the party for many years, who have decided to work to elect Joe Biden in this election as a result of what they view as some flaws within our current president, president Trump. Just a reminder, if you have any questions for Stuart during today's SALT Talk, you can enter them in the Q&A box at the bottom of your video screen.

John Darsie: (01:52)
And in addition, Stuart is out with a recent book called It Was All a Lie that recapped some of what I just spoke about, some of his concerns about the future of the Republican Party. So we're very excited to talk about that book as well. And I think Anthony has it in front of him. And conducting today's interview is Anthony Scaramucci, who's the founder and managing partner of SkyBridge Capital, a global alternative investment firm. He's also had a few stints in politics as well. He's also the chairman of SALT. And with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (02:22)
Stuart looking at, I'm holding up the book, see that Stuart? I've got the pages dog-eared, it is great to have you on.

Stuart Stevens: (02:30)
You'll get a note from my mom, thanks.

Anthony Scaramucci: (02:32)
And you're beaming in from where I actually met you. I don't know if you would remember this, but you're in Park City, and I met you in 2012 at that big Romney Conclave. And then ultimately we continued on with governor Romney doing that every year. And that was an interesting time, obviously, because that was June of 2012, as we were heading into the Republican convention. And eight years has made a big difference in Republican Party politics stewards. Before we go to the book, I want you to tell us a little bit about what it was like to grow up in Jackson, Mississippi, and how you got your career arc headed towards politics?

Stuart Stevens: (03:11)
Yeah. You know Anthony, I grew up in the bad old days in Mississippi, kind of the Mississippi Burning Days. The big question that people would ask is, "Are you good on race or bad on race?" And my parents were kind of classic political moderates, but they were good on race. And they were involved in trying to support civil rights efforts. There was a guy named William Winter, who ran for governor in 1967 and he had gone to Holmes with my parents, actually dated my mom for a while, which is still a source of some amusement. And he was running against the last avowed segregationist then John Bell Williams. And my parents were involved in that campaign. And I got involved in the way you do when you're like out of a 13 years old, I walked precincts, I did those things.

Stuart Stevens: (04:04)
And it was a very dramatic campaign, Winter was getting a lot of death threats because he was against segregation. And I just found it incredibly compelling. And I thought, "If this is politics, what else could be more interesting?" At the time, pretty much everybody in Mississippi were Democrats. And the dominant political figures were Jim Eastland, Big Jim Eastland as he was called the Senator and John Stennis, both for segregationist. John Stennis was more genteel version of segregationist, but he was a segregationist. I got involved, I was a young sort of classic Rotarian type do good Republican lawyer who ran for Congress in his early thirties named Ted Cochran. And he ran as an alternative to that segregationist establishment. And I worked in his campaign. So I was actually a page in his office when I was in high school. And that's really how I ended up being a Republican. At the time we didn't really know what Republicans were, but we didn't want to be like Stennis and Eastland, unless you wanted to be a judge in like Yalobusha County or something. So that's the path I started on and I just continued it until recently.

Anthony Scaramucci: (05:25)
So this book is extraordinary. I'm a lifelong Republican. I became a Republican in 1982. My dad was in the union, actually David Axelrod got this right. He said to me, "Well your dad was a laborer Nassau County." I said, "Yes." So Joe Margiotta controlled that union. I don't know if you remember Joe Margiotta.

Stuart Stevens: (05:45)
I remember Joe Margiotta very well.

Anthony Scaramucci: (05:48)
And so when I went to the post office, I turned to my pops, I said, "Am I Democrat or Republican?" He says, "Oh no, you're a Republican." So there I was a Republican, I filled out the voter card. And then I learned about Ronald Reagan and obviously fell in love with him and I've been a lifelong Republican. But you write a book about the Republican Party, and it's not really about Donald Trump, which I found interesting about the book. It is more about the system that percolated to create Donald Trump. And I was wondering if you could take us through that, that synthesize that for us, if you don't mind.

Stuart Stevens: (06:22)
Yeah. Anthony, in 2016, a lot of people were wrong about Donald Trump, but it's hard to find anybody who was more wrong than me. I didn't think he'd win the primary. I famously said he wouldn't win a primary. I kind of said that to be provocative but I did think he wouldn't win the nomination. And I didn't think he'd win the general election. Ad after he won, I went through a period, like a lot of my friends, and kind of the side of the party I was on, saying Donald Trump's not really a Republican. And I don't really know how to sustain that. I mean, he's head of the Republican Party. The Republican Party is the party that endorsed Roy Moore and attacks John Bolton. So I started asking myself like, "How did this happen?" And really this book began is just a personal exploration of that, and that old high school English teacher way that if you can't write something, you don't understand it.

Stuart Stevens: (07:11)
So that's why I started on this path that led to the book. It really didn't begin as a book project. It began more sort of a personal reflection. And it was fascinating because when you look at the history of the Republican Party, and one of the great things about writing this book was getting a chance to sort of have a good excuse to read a lot of books about the Republican Party. And it's not an obscure subject and this tremendous work that's been done. But you can really trace in the post-World war II party to two factions, it was sort of an Eisenhower governing boring, but same faction, and then Joe McCarthy. And those trends really continued. And I was very involved in Governor Bush's campaign for president, I moved down to Austin in April of '99.

Stuart Stevens: (07:57)
And at the time, you could say that conservatism and Republicans are sort of a victim of our own success. The Cold War was over and I guess we won it. Welfare had been a big issue with Republicans, but then bill Clinton ran on ending welfare as we know it. Crime was a big issue, but crime was going down as it's continued to. Taxes are no longer 70%. So I think governor Bush asked himself sort of what is it to be a conservative in this modern era. And out of that grew compassionate conservatism. And I was very drawn to that. And I think that most of us involved in that felt that we were own as it were the right side of history, that there was an inevitability if only because of the changing country that we were the ones of a more inclusive party, we used to talk about a Big tent party a lot.

Stuart Stevens: (08:47)
So I saw our side as the dominant gene and the other side, I'd call it the dark side, the regressive gene. But I have to say, I think I was wrong. I think we were the regressive gene. I tell you, if you go back and you read George Bush's acceptance speech at the 2000 Republican Convention in your hometown, New York. I mean, it reads like something like a lost document from a civilization, like the Mayans or something. I mean it's all about compassion and service and humility. That message couldn't win 20% in the Republican primary now. So it's extaordinary-

Anthony Scaramucci: (09:27)
So Why is that? What is it? And obviously you write in your book, I just want to point out that the Democrats started out as the segregationist, as you were referencing in the book. And then all of a sudden we're gravitating towards Republican racial division and seeing a phobia. And so now we're here where we are now. So why is that? Because it doesn't make sense for the expansion of the big tent of that party to me, but I'm not in the vein of the party where the leadership is, so why is that?

Stuart Stevens: (10:03)
It's a profound question. And honestly, even been after writing this book, I can't say that I've nailed an answer. One of the conclusions I came to, which seems sort of obvious is that leaders really matter. I think that the country and people can be led in different directions. If you go back to the thirties, there was a huge fascist movement in America. But we didn't become fascist like a lot of countries in Europe, Why? Probably because Roosevelt was president and not say Lindbergh, who was part of the American First Movement. Had Lindbergh been president, we would have been the same country, but we would have gone in a different direction. I mean, why was the civil rights movement largely non-violent? Probably because Martin Luther King, and it's Stokely Carmichael had been head of that, it would have been a much more confrontational, probably violent movement.

Stuart Stevens: (10:56)
So I think that Donald Trump, you know him far better than I Anthony, I think he analyzed Republican Party and said that, "If I give them power, they will not fight me on these values that they've always said that they stood for." Very transactional. And I think that a lot of it ... I look at the people I helped elect, a lot of them. In this book, I didn't want it to be one where I settled scores or name names. I just really wanted to kind of accept personal responsibility and blame myself, but I just don't get it. Because I know these people, and they're good people. I mean if you live next door to them, they'd be great neighbors. If they saw you on the road stranded, they'd stop in a heartbeat. And yet they support Donald Trump. It's really something that baffles me.

Anthony Scaramucci: (11:54)
Let me play devil's advocate for a second. Let me play devil's advocate. Let me say that the country's in a great culture war, my culture, my conservativism, my right to bear arms, my individualism, whatever I've been taught in the Bible, I want to preserve. I only have two people standing for election at any one time. And even though the president has some personality [inaudible 00:12:23] and personality issues, I believe that he is the savior of our civilization relative to the other person. And by the way, that came from a wickedly smart guy into my text and into my phone last night, that exact verbiage, this is a guy that I went to Harvard Law School with, who's a staunch 'Trump supporter', and your response to that is?

Stuart Stevens: (12:49)
My response is that we used to say, "If you only stand for reelection, you don't stand for anything." I think that when we said back in the Clinton era, that culture is the soul of the country, that it is greater than any single issue. I think we were right. I mean, when you read the beautiful stuff that William Bennett wrote. And I think that what's happened now is the conservatism is being destroyed. What was conservatism? And to my view, 90% of us would have agreed on a set of principles, personal responsibility, character counts, free trade, strong on Russia, the deficit matters, very pro legal immigration. I mean, Ronald Reagan announced it in front of the statue of Liberty, signed a bill that made everyone for 1983 legal. And it's not just that we're drifted away from those were actively against those parties.

Stuart Stevens: (13:43)
So to me there is a role to play. You have to stand for your principles. And if it means you lose a race, you lose a race, but you don't lose your soul, and you don't lose the definition of what you believe in. And I think the long-term damage to conservatism by this sort of Faustian bargain that was struck with Trump, it's devastating. And you can see it in numbers, how many young people are being attracted to what we would call conservatism. They're really not. And it's sort of an ankle here in political philosophy now, which I think is going to probably push us toward a center left period of government for a while. Say what you will about Elizabeth Warren, she can articulate a theory of government. You can like it, you can hate it, but she can argue with you. I really don't know what the Republican Party stands for now except beating Democrats.

Anthony Scaramucci: (14:35)
Well I mean listen, there's no Republican Party platform post convention, so that's more evidence of it. You discuss in the book the hypocrisy of family values. You basically are saying that it was the bedrock of the Republican GOP culture war, but they're quite hypocritical. How are they hypocritical?

Stuart Stevens: (14:56)
Look, I think that ... First, you always get into dangerous ground when you start generalizing about large groups of people. And I think there are a lot of people who are genuine. But in a larger sense, this idea that the party would stand for these certain values, I think has just been proven to be false. I don't know how you can reconcile supporting someone like Donald Trump with pretending that role models matter, pretending that character counts. I mean, everything that we're taught from our parents, our coaches, our teachers, our scout leaders, our people we work with, our bosses, that all of these things matter. I don't think you can reconcile that.

Stuart Stevens: (15:46)
And there's always been this strange history, particularly in the Evangelical White Movement of these sort of larger than life, fraudulent figures like Jimmy Schweikert. And I see Donald Trump is one of those, but even weirdly sort of look alike, they all have these kind of larger than life presences. And they're all kind of like manufactured and they look phony. And I think if the heart of family values to me is being a good neighbor, sort of fundamental what we would call Christian values, though they're not only held in the Christian religion, of [inaudible 00:16:22], of compassion, of helping others. And I think what Trump does is, we all have a sod within us that feels aggrieved, that feels like, "Well, I didn't get a good shot here." An angry side. And Trump validates that. I mean, he tells us that's our best side, that that little spurt of adrenaline you feel like when someone cuts you off in traffic, that little moment of road rage, that's your best self. And if you let that person cut you off, you're a sucker, you're a loser, not just to say, "Okay, it doesn't matter?" And I think that's very toxic to a culture. And the long-term effects of that are very dangerous. And I think you see it with racial [inaudible 00:17:05], it's not that Trump made people racist, I just think he made it more socially acceptable to acknowledge this and to embrace it.

Anthony Scaramucci: (17:15)
So all of this stuff you write in this brilliant book, I just want to hold the book up again for everybody to see it, It Was All a Lie, you're saying something in the book that I think is fascinating and I'll give an editorial tip here, I believe it's true. You and I are in agreement on this. One of the central points of your book is that Trump is an outcome of a multiple decades of behavior that led to Trump. And so resulted with, if Trump is removed on November 3rd, there's still a systemic problem with the Republican Party. And so can you elaborate little bit on that? What is that problem and how could you fix that problem? Let's say you were the tsar of the Republican Party, or the tsar of that 35% that continues to vote for Mr. Trump, how would you fix it?

Stuart Stevens: (18:02)
Well I really think this all goes back to race. I mean in 1956, Dwight Eisenhower got almost 40% of the African-American vote, which is extraordinary to think about now. And '64 with Goldwater, when he opposed the Civil Rights Act, it dropped to 7%. Now you could have made a case, I probably would have made a case in '64, that after the Civil Rights Act passed, that a large number of African-Americans would be drawn back to the Republican Party because of shared interest, faith in the public square, basic family values, patriotism, entrepreneurship, but it didn't happen. I mean Goldwater got 7%, Donald Trump got somewhere between seven and 8%. At that rate, we'll be doing better with African-Americans about 30, 50. And I think that like any business, when you realized that 90 plus percent of your market is one share, you get very good at talking to that share and not very good at talking to the other.

Stuart Stevens: (18:58)
And we used to acknowledge the failure of the Republican Party to attract African-Americans and other non-white vote. We talked about a Big tent party, and we tried to address that. Now, we weren't very successful, though with Hispanics in the Bush Campaign, we were more successful. But I think it matters that we acknowledged that it was a failure because I think the first step to change anything is to acknowledge it's a failure. I mean, Ken Mehlman in 2005 went before the chairman of the Republican Party, went before the NAACP and apologized for the Nixon Southern Strategy, which tried to divide African-Americans from the Democratic Party. I just think that that's an important step. And the country is changing so rapidly. I'll tell you a stat that I saw that just blew my mind Anthony, of Americans 15 years and under, the majority are non-white. I mean, odds are really good, they're going to be 18 and still a non-white.

Stuart Stevens: (19:55)
And what does that mean for the Republican Party that is increasingly a white party? I think it's just a death sentence unless the party changes. And right now the party shows no desire to change. On this Trump, there is this kind of other Republican party, governors. Look at Phil Scott and Vermont, Hogan and Maryland, Charlie Baker in Massachusetts, I work for all these guys. I love them. And they're wildly successful in very tough markets for Republicans. And yet even as successful and popular as they are, they can't choose their own state party chairman. They're Trump people. For those of us who work in policy, that's like a [inaudible 00:20:37] they won't. I mean it just shows how deep Trumpism has become embedded in the party. And I don't think it's going to change until it's seen as a political necessity to change. I've really given up to being something that blind that Trump would cross the Republicans would rise up and oppose him on principle.

Anthony Scaramucci: (21:04)
Do you think there is a potential rise up of a center right movement, center right party to challenge republicanism or Trumpism, as you're describing?

Stuart Stevens: (21:17)
When I look at this, I really see that there are three parties in America. There's the Republican party. And then there's really two parties inside the Democratic Party. I mean, there's the Joe Biden wing as call it. And then there's the AOC, Bernie Sanders wing. And I think you're seeing a lot of people who 20 years ago, would have run as moderate Republicans running as moderate Democrats now. Look at Conor Lamb in Pennsylvania, he was a classic guy. I mean, I worked for Tom Ridge who just came out for Biden. He's the last Republican governor reelected in Pennsylvania. Those are people that would have been comfortable in the party then, but now they're not. And to me, when you look at the future of the country in a public policy sense, it's really going to be largely determined by that battle within the democratic party, which side is going to emerge dominant?

Stuart Stevens: (22:07)
If you take national health insurance, in 20 years, even 10 years, are we really going to be the only Western Country that doesn't have national health insurance? Hard to imagine. And what that's going to be I think will be determined by that fight inside the Democratic Party. And Republicans, I'm afraid what's going to happen nationally, is what happened to the Republican Party in California. I mean, it wasn't long ago. California was the beating heart of the Republican Party, the electoral citadel, and now it's in third place. Third. It's hard to find a big public policy issue that Republicans in California have much say in. And I just find that tragic. I think it's bad for California. I think it's bad for conservatism. I think we need two strong parties. But we're not going to get there with a culture war.

Stuart Stevens: (23:01)
My home state of Mississippi, we finally took down the Mississippi state flag, which basically the Confederate battle flag, a few months ago. It's very moving to a lot of us. And that same week, Donald Trump got in a fight with NASCAR because NASCAR was banning the Confederate flag from events. I mean, really? We're on the wrong side of a cultural issue with NASCAR. How is that even imaginable? We're in a war with Walmart, a cultural war over mask, because Walmart insist you to use masks. So somehow in 2020, Republicans have ended up on the wrong side of a cultural war with Walmart and NASCAR. And man, I just don't think that bodes well for the future.

Anthony Scaramucci: (23:42)
I'm going to ask you one more question and we're going to turn it over John, for some questions that I'm going to wrap up at the end. I want to take you back to 2012, the Republican Party commission to study, you're well familiar with it, you contributed to that study. You also referenced a lot of these elements in the book about opening the tent and making the party more demographically acceptable, income strata and making the party frankly more competitive. Now obviously, president Trump went in the other direction, he's selling the party to people that are buying my pillows and catheters on Fox News during commercial breaks. That's what he's decided to do with the party. But you wanted to go in a different direction with the party, tell us a little bit about that direction. And then also is that even possible today, or have we reached the point of impossibility? And then I'll turn it over to John.

Stuart Stevens: (24:35)
I think what's really striking about that So-called autopsy, and Reince Priebus I think deserves a lot of credit for commissioning that because it's always hard for any organization to be self-critical. The conclusions were pretty obvious. We needed to appeal to more non-whites, we needed to appeal to younger voters, we needed to appeal to more women, particularly single women. And they were presented not just as a political necessity, but as a moral mandate, that if we were going to earn the right to govern this big, confusing, changing, loud country, that we needed to represent it more, be more like it. And then Trump came along and it was like, "Okay great, we can just win white people. Terrific. We don't have to pretend that we care about all this stuff." And I think it's just tragic.

Stuart Stevens: (25:20)
And to me, the turning point is when Trump came out in December of 2015 for a Muslim ban, it's unconstitutional, it's really just test. And if Republicans stand for anything, it's constitutionality, and a belief in the constitution. And I just think the party then missed an opportunity to come forward and say, "Look, we don't support Donald Trump. Now we can't tell them not to run. We can tell you not to vote for him. But this isn't who the Republican Party is. And if Donald Trump's a nominee and supports the Muslim ban, we can't support him because it's against the constitution." Now what would have happened? I have no idea. But I think the Republican Party would be in a lot better place now. For years, we criticized Democrats for being-

Anthony Scaramucci: (26:07)
But Stuart not to interrupt, is that the leadership of one man, or is that the whole system that you're describing here in the book?

Stuart Stevens: (26:14)
I think it's both. In 2012, when a Republican Missouri nominee for the Senate, Todd Akin said horrible things about women and rape, Reince Priebus came out and said, "Look, we're not going to support this. No one Republican party that I'm involved in is going to give this guy money or work for him." It probably cost us a Senate seat, but we want something more valuable. I think Chairman Priebus should've done that then. Now at the time, nobody thought Donald Trump was going to win. Trump was also out there trying to leverage the fact that he might run as a third party, and they didn't want to alienate Trump. So I understand the reasons, I just think it's a classic example of how when you negotiate with your basic values, you always end up losing, it's that fast. And when people forget about fast, it's not only Mephistopheles take your soul, but he doesn't deliver. And I think that's what's happened with Trump. We have the worst deficit in history. It's gone up faster under Trump. We're kind of to the left of Bernie Sanders on trade, as far as I can tell. I mean, Sanders went to Russia, but he didn't marry Putin. I just don't get it. And I think that all of that is going to come back to haunt us for a long time to come.

Anthony Scaramucci: (27:40)
All right, let me turn it over to John. John is from North Carolina, so he had the snicker going over the whole NASCAR thing. I don't know if you caught that facial expression from John Darsie, but go ahead John.

John Darsie: (27:53)
Nah, I've said the same thing, growing up in the heart of NASCAR country, the idea that you're going to get into a battle with NASCAR and you're going to label NASCAR as too liberal. It just defies all sense of imagination.

Stuart Stevens: (28:08)
Yeah. I don't think Donald Trump is where the country is, that's a perfect example. Another is we he talks about trying to frighten suburban housewives. Now first of all, I don't know about you, but I know a lot of women that live in the suburbs. I don't know any of them refer to themselves as suburban housewife. I mean, most of them are working three or four jobs and have very complicated, busy lives. And I don't know anybody that wouldn't want their children to look at them as someone who would welcome a neighbor, if they were of a different ethnicity or different religion, they don't want to be that person. And there's nothing in our culture that encourages that except the septic pools on the internet. There's nothing in our music culture, our popular culture that supports racism.

Stuart Stevens: (28:53)
I mean, look at the whole kneeling thing, Donald Trump out there when he was campaigning for Roy Moore saying, "Those that kneel," which were primarily African-Americans, "Get those sons of bitches off the field." How'd that work out? Right now we have entire baseball teams not playing. Before the Holmes Florida game, all the players kneeled. I mean not since Stalingrad has anybody lost a battle like that? And I think it just shows how out of touch Trump is with where the country's going. One of my favorite clients and dear friends is Haley Barbour from Mississippi. And Haley had this saying goes, "You know man, be for the future, it's going to happen anyway." And I just think that's a lesson Republicans seem to have forgotten.

John Darsie: (29:51)
I liked that a lot.

Anthony Scaramucci: (29:52)
It's a great one.

John Darsie: (29:55)
You've worked with so many high profile Republican candidates, both people like Bob Dole, George Bush, Mitt Romney, but you've also worked with some people who are in power right now. You talked about some of the governors you've worked with who have spoken out somewhat against Trump, but you've also worked for people who are part of this coalition within the GOP that has enabled him if you will, and has not stood up to the values that they, in private, talk about how they don't like some of the rhetoric, they don't like some of the policy. And I've sat at dinners with Anthony and I'm not going to name names here, because I don't think it's appropriate, but at dinners with very high profile Republicans who say something very different than what they say in public, because they think it's politically expedient to say that other thing in public. Why do you think there is such a large cohort of Republicans who are allowing this to happen? It's not just policy issues, it's an erosion of some democratic institutions. We're talking about de-legitimizing our electoral process without any evidence of it. Why do you think they're not standing up to Trumpism and some of the things that he stands for?

Stuart Stevens: (31:02)
Brother, I ask myself this question about 50 times a day, and I still don't have the answer. What really, really offends me about it is these politicians are heir to the greatest generation. I mean people like my dad spent three years in the South Pacific, 28 island landings, came back, never really talked about it. My uncle, his brother, who was machine gun deep in Europe and never really recovered. That's the legacy they have. Courage isn't standing up to Donald Trump, courage is getting out of the boat when the guy in front of you got shot, and that's the legacy they have. So I just don't understand it, on multiple levels. I mean, I get it if you're working on the hill, you've got a family and jobs are hard to come by and the person supports Trump, okay. Aid the Queen's bread, fight the Queen's war.

Stuart Stevens: (31:48)
But these senators, particularly, they're all going to be fine financially. They're not under any pressure. And what really baffles me is I mean, most politicians have pretty big egos, which doesn't bother me in the least. So do great musicians, athletes, god those writers too. But why don't they see like how they're going to be remembered? I use the example of George Wallace. George Wallace actually did some good stuff as governor. He passed free textbooks, at least for white students, but nobody's remembered as the free textbook George Wallace guy, you are the George Wallace guy. And I think that's how it's going to be for Trump. No one's going to be remembered as I want to lower marginal tax rates for corporations Trump guy, you're going to be the Trump guy. And I don't see it. I don't understand it. I don't understand why even by sheer ego, they would not understand how much more they would be respected and admired with their kids and grandkids would think of them, if they stood up to Trump. It's absolutely baffling to me.

John Darsie: (32:54)
What about the devil's advocate? What about the devil's advocate who says, "Well, we elected Trump on the supreme court issue. We thought there was a possibility of openings coming into the supreme court, that came to pass. And now we flip the balance of the court into a more conservative position, and that was worth all the other noise, all of this erosion of democratic institutions that will pass. All the bad stuff will go away when we have another candidate leading the party. But now we have a conservative court for 40 years." Is it worth it?

Stuart Stevens: (33:29)
I don't buy that. I don't buy the idea that we have to attack democratic norms to preserve democratic norms. I mean to me, it's burning the village to save it, which only ends in ashes. I don't see that. And look, a perfect example is 1964, how'd that work out? We opposed the Civil Rights Bill, and what's happened? We lost a huge part of the country and lost something of our soul. So I don't think that you can undo these things. I think that this is a moment of testing. I mean, most of us certainly, I don't go through life looking for moral crisis. I go through lifetime to avoid moral crisis, just live my life. But this was a moral test, and the Republican Party for the most part failed. And I don't think that that goes away.

Stuart Stevens: (34:20)
And I think the idea that you have to fundamentally go against these institutions of democracy. I mean, there's not one pillar of our democratic institutions Trump hasn't attacked, justice department, the FBI, he supports supreme court justices that are more conservative, but he attacks jurors, he calls a judge from Indiana, a Mexican. I think that's a deeper degradation of the whole system because all of this is held together by trust and faith. I mean, why do we stop at midnight on a lonely road at a red light? Because we're a civic society, not because you're going to get punished. And once we start running through those red lights, where does it stop? And to me, that's what leaders are for. The leaders are-

John Darsie: (35:18)
Anthony gets asked this question all the time, and I'm sure you get asked that as well. And you talked about how you started this book as an exercise in self-reflection about how did we get here and what role did I play in allowing the party to get here? How do you answer that question? How do you rationalize your own role as a Republican strategist and maybe missing resurgence-

Anthony Scaramucci: (35:38)
I am way more culpable than Stuart Because him and I were on a panel in Greenwich, he was yelling at me and I was flying to meet governor Christie to work on the transition. So I'm way more culpable.

John Darsie: (35:49)
I want both of you guys to answer that question, relatively briefly. But if you look at Anthony's Twitter mentions, it's full of people saying, "You have no authority to tell me why Donald Trump is bad because you served on his campaign and briefly in his administration." So to both of you, how do you rationalize your own role in creating the modern GOP or missing this sort of far right element of the party that was maybe louder than you expected?

Stuart Stevens: (36:13)
I mean look, my book opens [inaudible 00:36:16] because there's a certain genre of books in Washington that say, "If only they had listened to me." Well, I can't say that because they did listen to me. And I think that we were naive. I was naive. I can only speak for myself, but we saw this dark side. And we never confronted it enough, and we never sort of asked ourselves, "What does it mean enough?" I was always glad that people [inaudible 00:36:40] work for one. And I was on the side of the party that was mostly fighting those people, but at the same time, I was part of this larger thing. And I think we should have spoken up more. I should have spoken up more and raised more red flags. Would it have mattered? Probably not. But I think all you can do is what you can do. And I think if more of us had done that, it would've mattered. I look at it and I just was naive. I chose to believe, but it was convenient for me to believe that. I mean, I was at the top of a profession, I was doing well in every sense, to go to war with that would have been personally costly. And I probably just chose to look the other way, because it was easier.

John Darsie: (37:31)
How about you Anthony?

Anthony Scaramucci: (37:34)
I'm probably more flawed than Stuart even. I was critical of Mr. Trump, when I was working for a Jet Bush who we're going to have on SALT Talk on Wednesday by the way Stuart, governor Bush. And then I did what a lot of people do, which I wrote about, you critical of him, and you're trying to learn to accept him. And then you're cognitively dissonant about what he's doing. And then you end up where John Bolton is, or myself, or General Kelly, or Jim Mattis, or you can name the litany of people where you're like, "Okay I made a huge mistake." So for me, it was naivety and the flaw and the temptation of wanting to be associated with power. And so I have to always be honest about that and be accountable with that.

John Darsie: (38:23)
So we have a question from the audience about the electoral system in general. And President Obama has expressed his opinion on the Senate, for example being an undemocratic institution because it provides-

Anthony Scaramucci: (38:33)
Before we let Stuart go though, we got to get his opinion on the tax story.

John Darsie: (38:37)
That's an audience question as well.

Anthony Scaramucci: (38:39)
Let's do that right now. And then when you can ask that question, because I know we're running out of time, we need your opinion on the tax story that's come out. A lot of people are asking.

Stuart Stevens: (38:47)
I think the tax story is going to really matter because everybody pays taxes. And in my experience, negative information about a candidate, it reinforces a preexisting notion about that candidate is much more effective. So I think this is pushing on an open door, people think that Trump games the system. And I think it really goes to the core for support, which is, I'm on your side, I'm one of you, which has always been a fraud. But I think it's going to hurt him.

Anthony Scaramucci: (39:21)
Well let me push back for a second because you and I were involved with governor Romney's Campaign and everybody set their hair on fire over a 14%, millions of dollars of taxes that governor Romney was paying. But he seems to have anesthetized his base or his group of people where he's right. Maybe he can shoot somebody on Fifth Avenue and it doesn't matter. So if he pays $750 in taxes or no taxes, they don't care. And your response to that is?

Stuart Stevens: (39:50)
My response in electoral senses, right now if the election were held, Donald Trump would lose. So how does he win? He has to have some of these people who are against him now drift back toward him. And there's reason to believe could happen. So I look at something like taxes is like a speed bump, it makes it that much harder for someone who that isn't for Trump today, to go back in the end, like what happened when Trump did very well those last four days of the campaign in 2016 in part because of the Comey letter. But it's just stay where they are now, and that's all Biden needs. He doesn't need new customers. He just needs to keep the customers he has now.

Anthony Scaramucci: (40:27)
Can Mr. Trump, President Trump threaten this system, meaning can he go to the state legislatures and flip the electors, even if he loses the general election and The Electoral College vote?

Stuart Stevens: (40:42)
Well, I was part of the glorious landslide in 2000 of George Bush. And there was a lot of talk about electorates and all that. We're in a different environment now. I think that that ultimately ... The answer is probably not. But you run the 2016 race a hundred times, Trump loses 90. So things unexpected can happen. To me, the real test is the Republican Party. Parties in our system have to form a circuit breaker function. And really the party has to come forward and stop this. It is a destruction of democracy to do that. You just can't allow it to happen. And I think in a larger sense, the best way to avoid it is to crush Trump. I mean, if it's 1964, nobody's going to be sitting up there at midnight saying, "Let's go to the lawyers.

Anthony Scaramucci: (41:33)
We agree.

Stuart Stevens: (41:35)
So that's what we're doing in the Lincoln Project. Our goal is to do what we can to make sure-

Anthony Scaramucci: (41:41)
I got my mug. I got my hat. I just want you to know I donated money. I've raised money.

Stuart Stevens: (41:46)
You are a great supporter.

Anthony Scaramucci: (41:48)
And I'll be on a Lincoln project 8:00 PM live stream, I think later in the week. John Darsie, I'll turn it back to you. I know we're tight on time.

John Darsie: (41:59)
We are going into overtime here, but we'll squeeze in a couple more questions. The Electoral College system, and even the Senate has been labeled as undemocratic because of excessive representation that provides to rural voters who are sort of the bedrock of Trump's base. Are those systems, should they be abolished? Are they fair? What is your opinion on that?

Stuart Stevens: (42:18)
I would abolish The Electoral College tomorrow. And I think it would be the best thing that ever happened to the Republican Party, because it would force the Republican Party to change. I think minority rule is toxic. And I say that as someone who benefited from it in 2000, when I worked for Bush. I mean in Bush Campaign, we sort of joked like anybody can get elected president when you get more votes, it takes professionals when you lose by half a million. It seemed kind of funny then, it doesn't seem very funny. So I just think it's toxic, it's toxic not to have majority rule. And we don't do it in any other aspects of our lives. And you can take a big state like California and you could make the same case for Electoral College in California as you do nationally. It's dominated by these larger urban areas. The rural areas are disproportionately not represented.

Stuart Stevens: (43:10)
But nobody's saying that. They're saying like, "The more people, you get more votes, you ought to win." I mean when you're on for Cub Scout leader, you get more votes, you win. I think that's just something where ... And the whole system of electoral, if you go back to the history of it, it basically was, "We're going to elect a bunch of smart people and they're going to pick the president." And that's just not where we are now. That's not where the country's evolved. So I would abolish The Electoral College. I would leave the Senate alone. That's just such a profound sort of tinkering, it's way over my head.

John Darsie: (43:41)
So you talked about how you don't know if the party is going to change until it becomes an electoral necessity for the party to change. And I know you're more of a strategist than a forecaster, but if we looked out in five or 10 years, what do you think is sort of the fallout from Trumpism will be for the Republican Party? What do you think the Republican Party will look like, both from a policy and a demographic perspective?

Stuart Stevens: (44:05)
I think it's sort of like the subprime mortgage crisis. It's easier to predict how it ends and how long it takes. Eventually, the Republican Party is going to have to change, just by survival. It's going to have to. How long that'll take? I don't know. I don't think that just nominating someone who's different will make much of a difference. I mean, if you look at African-American republican candidates, they don't tend to do much better with African-Americans and white Republican candidates, same with Hispanic Republican candidates. So there's not an easy fix here. If I had to predict, I think that we're going to have a period of center left government, it's going to go too far. And there will be a rational alternative to it that will emerge. But that's going to be one that's not fighting cultural wars.

Stuart Stevens: (44:56)
I mean, look at gay marriage, 2008, every candidate, Democrat Republicans were against it. Now we don't even talk about it anymore. It's just like over. And I think that that's going to happen with these other cultural issues. Where people love immigrants, is where they live with immigrants. It's where they don't live with immigrants that they're seen as some sort of mysterious negative force. And I think that's a very positive indicator for the country because we're going to change like that. So eventually there'll be a strong center right party, because there's a demand for it in America. I just don't know how long that's going to take.

John Darsie: (45:32)
Well Stuart, thanks so much for joining us. It's been a fascinating conversation. You're somebody who's been in the middle of a lot of these battles within the party for many years. You have unique insights into how we got here and how we move forward. So thanks so much for joining us. Anthony, you have any final words?

Anthony Scaramucci: (45:46)
Just holding up the book, It Was All a Lie. Stuart, great, great book. And a New York Times bestseller. I encourage everybody to read it. And I hope to see you on the other side of this Stuart. And I hope we're part of the future together like the great governor Haley Barbour said. Wish you the best.

John Darsie: (46:04)
Love that brother. All of us.

Anthony Scaramucci: (46:05)
God bless.

John Darsie: (46:06)
Thanks for inviting me.

Anthony Scaramucci: (46:06)
Bye.

John Darsie: (46:07)
Bye.

William Cohan: Author "Why Wall Street Matters" | SALT Talks #59

“President Trump has introduced a tremendous amount of risk into our capital markets and economy.“

William D. Cohan, a former senior Wall Street M&A investment banker at Lazard Frères & Co., Merrill Lynch and JPMorganChase, is the New York Times bestselling author of three non-fiction narratives about Wall Street. He is a special correspondent at Vanity Fair and is hard at work on his new book about the rise and fall of GE. Bill led an unforgettable interview at SALT Las Vegas with Magic Johnson in 2014.

“People love to bask Wall Street,” frequently without fully recognizing what it is Wall Street does and how it keeps the economy going as we know it. Without Wall Street providing capital to businesses around the world, opportunities to create new companies and industries wouldn’t be possible. On the flip side, more needs to be done to support companies like mom-and-pop shops that cannot gain access to this capital, especially during economically distressing times.

Turning to the 2020 election, the relationship has soured between Wall Street and President Trump, who is now viewed as “extremely detrimental at this point.” Follow the money: Vice President Biden has significantly outpaced President Trump in fundraising from Wall Street.

LISTEN AND SUBSCRIBE

SPEAKER

William D. Cohan.jpeg

William Cohan

Special Correspondent

Vanity Fair

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology and public policy. And today's guest, marries the intersection of those three pillars more effectively than any author maybe out there in journalism today. SALT Talks is a digital interview series that we started during this work from home period. And that we're going to continue even after we hopefully all return to our offices here before long. And it's an interview series with the world's foremost investors, creators and thinkers. And what we're really trying to do with SALT Talks is replicate the experience that we provide at our global conference series, the SALT Conference. And that's to empower what we think are big, important ideas that are shaping the future, as well as provide our audience a window into the mind of subject matter experts.

John Darsie: (00:58)
And we're very excited today to welcome Bill Cohan to SALT Talks. Bill is a former senior Wall Street M&A investment banker of 17 years, where he was at Lazard, Merrill Lynch and JP Morgan Chase. But today he's has long since transitioned into the world of journalism. He's a New York Times bestselling author of three nonfiction books about Wall Street. His newest book Four Friends, talks about what happened to four friends from his high school. And it was published in July of 2019. Bill is a special correspondent at Vanity Fair, but he also writes for ProPublica, the Financial Times, the New York Times, Bloomberg Businessweek, the Atlantic, the Nation, Fortune and Politico. He previously wrote a biweekly opinion column for the New York Times and an opinion column for Bloomberg View, as well as for the DealBook section of the New York times. He also regularly appears in financial television media, including CNN, MSNBC and BBC TV.

John Darsie: (01:56)
He's also appeared three times as a guest on the Daily Show with Jon Stewart, the NewsHour, the Charlie Rose show, the Travis Smiley show and CBS This Morning, as well as numerous times on NPR, BBC and Bloomberg radio programs. He's a graduate of Phillips Academy, Duke university, Columbia University School of Journalism and the Columbia University School of Business. A reminder if you have any questions for Bill during today's SALT Talk, please enter them in the Q&A box at the bottom of your video screen in your Zoom window. And with that I'll turn it over to Anthony Scaramucci, who is the founder and managing partner of SkyBridge Capital, a global alternative investment firm. As well as the chairman of SALT, to conduct today's interview.

Anthony Scaramucci: (02:37)
Bill, great to have you on. John, thank you. I would also point people to Bill's article over the weekend in Barron's. Which I thought was a brilliant article on Bill Ackman. And Bill, I don't know if you remember this, way to segue in the question. Do you remember that Magic Johnson interview that you did at the SALT Conference?

Bill Cohan: (02:58)
Anthony, I'll never forget that. I... Go ahead.

Anthony Scaramucci: (03:01)
Before I go into your background, tell us why you'll never forget. I'll never forget that either, but you were on stage, Magic Johnson, 2,300 people live in the ballroom at the Bellagio. Why would you never forget that Bill?

Bill Cohan: (03:15)
First of all, Magic Johnson, as Anthony knew and as all of us surmised, is like one of the most charismatic people I've ever met. Between Magic Johnson and Barack Obama, I'm not really sure which one was more charismatic. But about halfway into the interview, it's me and Magic up on the stage. And as Anthony said, there's 2,300 people in the audience having lunch. And all of a sudden, Magic Johnson says, "Bill, this is great. You're asking me these questions, but do you mind if I just sort of change this up a little bit. I want to go down into the audience and just start talking and start being with the people and being with everybody." And so he just got up off the stage, went down into the audience. I asked him a few more questions, but then he was literally off to the races talking about what Magic Johnson had done here and there in basketball and business. It was incredible moment. I've never seen 2,300 banker hedge fund types, totally captivated by another human being for more than an hour.

Anthony Scaramucci: (04:19)
There was a woman Bill, who asked him a question. It was a very difficult question. He gave the answer. You could tell she was a little disappointed. You remember what Magic Johnson did in that moment?

Bill Cohan: (04:32)
I hope he hugged her. I don't know.

Anthony Scaramucci: (04:33)
Yeah. That's what he did. He crossed the entire ballroom to go over to her and said, "I know you're feeling bad about what I said, let me give you a hug." I don't know if we're allowed to do that anymore, but he gave her a hug.

Bill Cohan: (04:43)
Probably not. No.

Anthony Scaramucci: (04:43)
Yeah. He gave her a hug to a standing ovation. But anyway, that's one of my fondest memories of the many different people that you've interviewed at SALT for us, including Michael Lewis and others. But let's go back a little bit. Tell us something about your career as an M&A banker before becoming a journalist. What attracted you to M&A Bill? And then why did you leave to become a journalist?

Bill Cohan: (05:08)
Oh well. First of all Anthony, you have to know that before I, because in the bio that John described which is of course accurate. I had been a journalist and I went to Columbia journalism school and left there and was a journalist on a daily paper in Raleigh, North Carolina, covering public schools for two years. Which was of course ironic, because I'd never been to a public school in my life. But I did do that for two years and then I went back to business school. And I kept wanting to go to business, I kept thinking if I went to business school, I could get a job with The Wall Street Journal. And I kept trying and trying to get a job at The Wall Street Journal and they never would hire me. And even to this day, they've never published anything I've written in my long bio that John was reading, there's no mention of The Wall Street Journal. I've never been able to appear in their pages.

Anthony Scaramucci: (06:03)
I don't want to interrupt you, but they've written four negative stories about SkyBridge since COVID-19 started. So maybe we could do a swap. Right? They don't like you Bill, but trust me, they don't like us either. But God, I keep going.

Bill Cohan: (06:14)
And I think they've written six negative reviews of all of my books. So I'm right up there with you, Anthony. So I said, "Either I'm going to go to The Wall Street Journal or I'm going to go to Wall Street." I went instead to Wall Street I think when I graduated from Columbia in May of 1987. All you had to do was breathe to get a job on Wall Street. And so I put the mirror up to my face I was still breathing, and off I went. And at the time, there were no, there were very few hedge funds, there was very few private equity firms. If you wanted to sort of have the most sort of intellectual content on Wall Street, the place to be, I always thought was an M&A banker. And so whereas I, first of all, I couldn't get a job doing that initially. I started my career at GE capital actually, financing leverage buyouts of all things. I had no idea what I was doing, of course.

Bill Cohan: (07:13)
And then two years after that I got to Lazard, which was a place for some reason I always wanted to work. Because it was so mysterious and quirky and kind of clastic and private and French, all those things that I liked. And that's when I started learning how to be an M&A banker, working for the Felix Rohatyns of the world. And it was an incredible experience. Obviously, I wrote my first book about Lazard. And just kept doing that as long as I could, Anthony. And that gig lasted 17 years between Lazard, Merrill Lynch and JP Morgan Chase. And then like any good 44-year-old Wall Street guy, I got zoxed. And after getting zoxed at JP Morgan Chase by some of my favorite people, I decided that one thing that I could still do and be productive was to go back to journalism.

Anthony Scaramucci: (08:14)
So how did the banker career, did it helped you with the journalism, hurt you or? How did that-

Bill Cohan: (08:22)
Well-

Anthony Scaramucci: (08:22)
Feather into the new-

Bill Cohan: (08:23)
It was incredibly-

Anthony Scaramucci: (08:24)
[crosstalk 00:08:24]?

Bill Cohan: (08:24)
Incredibly helpful to me. Obviously, because I was a subject matter expert. Say what you will, 17 years, I did understand what M&A was all about. I understood investment banking, I understood how banks worked. And I didn't just leave Wall Street and suddenly become a journalist again. Actually I thought, well, I will try to write a book about Lazard. And I wrote a proposal, I got an agent, I sold the book. I wrote the book. I had total beginners luck. It was not only a New York Times Best Seller, but it was named the best business book of the year by the FT and Goldman Sachs. And I'll never forget going to London to receive that award. And by the way, I went to London with my wife and the ceremony was at this beautiful library in London. And none of us, none of the five finalists knew who had won. And I was up against Nassim Taleb, who wrote Black Swan. And Alan Greenspan, for his book on being Fed chairman.

Bill Cohan: (09:40)
And I'd heard the story that somehow the word got out that Alan Greenspan had found out as he was crossing the Atlantic in a private jet, that he didn't get it. And they turned the jet around and back he went, he did not come to the ceremony. But I had no idea. I was like in the Oscar ceremony, you're way in the back Anthony, because no one expects you to win. I was way in the back, it took me 10 minutes to get up to the front. And who's standing there, but Lloyd Blankfein, CEO of Goldman Sachs giving me my check for winning. And it was an incredible moment. And as a result of that, it was total beginners luck. Then I started, then Graydon Carter called me and said, "Would you write for Vanity Fair? Would you write for the New York Times? Would you write for the FT?" And sort of, I was off to the races.

Bill Cohan: (10:28)
So to answer your question, had I not been a banker, I could never have written that book about Lazard. Even though I never thought I would be writing a book about Lazard when I was working there, I didn't take a single note or anything about that experience. I had to recreate it all from talking to everybody. But having been a banker, it sort of paved the way for my first three books about Wall Street.

Anthony Scaramucci: (10:51)
And yeah. I want to talk about the Bear Stearns book a little later. But I want to ask you about the recent book, Why Wall Street Matters? Because it's an interesting time for Wall Street. Once again, the economy's in the [inaudible 00:11:07] room, the stock market is rallying. Although it's off today, it's really been rallying since the COVID crisis bottom, March 23rd. Why does Wall Street matter? Why is there such a pull, a gravitational force towards Wall Street, the stock market, et cetera, Bill?

Bill Cohan: (11:25)
Well, when I wrote that book and it came out in February of 2017, when the last thing anybody wanted to focus on was why Wall Street mattered. People were so overwhelmed with the fact that our friend Donald Trump had become president. I had really decided I wanted to write that book because in the years leading up to that, there'd been so much Wall Street bashing. And people were using it as a political football without really understanding all the good things that Wall Street does and can do and does every day. So as you know Anthony, people love to bash Wall Street. It's an easy target. And so they love to bash it and use it as a political football. The Elizabeth Warren's of the world, it's like sport for them. Without really and fully recognizing or being forthright about their knowledge about what Wall Street does that keeps our economy going, which of course is provide capital 24 hours a day, seven days a week to companies all around the world that need it and can afford to pay for it.

Bill Cohan: (12:45)
And so whether it's M&A advice, whether it's capital raising, whether it's incredibly important trading and liquidity and in stocks and bonds, what Wall Street does is obviously invaluable. We can't even imagine what our world would it be like, if there were no Wall Street. The things that we completely take for granted. So I was careful to point out the things that Wall Street does wrong and needed to be fixed. None of which of course, have happened. But I also wanted to make sure that people understood what Wall Street did right and does right. And that's why I wrote that book. Of course, nobody cared. But occasionally, people read it. It's a thin book. It's a primer. It's not like my usual doorstop books. So it's a little easier to read and I think makes an important point about Wall Street.

Anthony Scaramucci: (13:34)
Well, you say it in the book which I think is important for people on this Zoom call. You talk about it being the central artery system for capitalism. And you talk about the nexus between Wall Street and Main Street. And ultimately just to remind people, if we discover a technology like for hacking, it's controversial from an environmental perspective. But lo and behold, without Wall Street and liquid capital markets sending money to that innovation, you don't create that industry, you don't create those jobs. And so that would be the same thing for Zoom for that matter or Facebook or Google. And so it's a very compelling case for Wall Street. I recommend the book to people and I recommend all your books. Price of Silence by the way, was an unbelievable book about the lacrosse scandal at Duke.

Anthony Scaramucci: (14:24)
A little bit off genre for you, but that was a terrific book that people liked reading about factual situation and how it got misinterpreted and politicized. Which is apropos frankly, what's going on today in a lot of ways. It was a precursor Bill. Your book was a precursor for what's going on now in the political world in 2020. But back to Wall Street, US is the financial capital of the world. I think we could both stipulate that. It still seems to be.

Bill Cohan: (14:55)
Absolutely.

Anthony Scaramucci: (14:55)
How has that benefited the US economy in your words?

Bill Cohan: (15:00)
Well, I think it's benefited those companies that can access the capital markets, Anthony. And unfortunately, that's not most companies. That's not most of the working American population who works for those companies. The biggest, most profitable, international and large domestic companies that can access the capital markets, it's a huge competitive advantage. They get capital and especially nowadays, extremely low cost. They get access to equity debt. They can finance their business, they can build new businesses. They can take risks with that capital. They can hire more people, they can build new plant and equipment. It's why in many ways our economy is the most dynamic, the most innovative economy in the world. Why any number of the largest corporations in the world are in America.

Bill Cohan: (16:06)
Why the world's entrepreneurs beat a path to our doors. Because through thick and through thin when people count out, Wall Street, it's really at the end of the day the Wall Street banks, which are the biggest and most powerful in the world. It's really frankly, a lot of politicians would disagree, but it's really a national treasure. It's an unbelievable machine that has been built here, that is clearly the envy of the world. And it benefits people who can make tremendous in many cases too much wealth, but nevertheless it's a free market system. Most of the time, not always. And you can benefit tremendously by creating a great idea and bring it to this country. Or starting it in this country and getting it financed. Companies that can access the capital markets, which is mom and pops and lots and hundreds of thousands of companies where hundreds of millions of people work. That's tough. That's a lot tougher. And that's why you see so many of these businesses really having a tough time right now.

Anthony Scaramucci: (17:22)
It's an interesting restatement of where things are. And sometimes politicians don't understand your life experience, my life experience on Wall Street. We understand that nexus between Main Street, but some politicians probably make it too much of a scapegoat. Let's talk about judgment which I've had my series of flawed judgments in my life. So let's talk about the 2016 challenge for some of our Wall Street friends. Many of them despite president Trump's personal flaws, held their nose proverbially and voted for him because they thought he was a guardian of the free market system. What do you think happens this time in 2020? Do you think they still see it that way? Or do you think that the president's actions over the last three and a half years have changed that?

Bill Cohan: (18:12)
No. I think the bloom is completely off the rose now. I don't... I'm sure they're out there Anthony, just like there are a lot of people who will probably vote for Trump, don't want to tell anybody they're voting for Trump. So there are probably people like that on Wall Street. But I would say, with the exception of somebody like our favorite Ken Langone, most people on Wall Street have completely lost the thread of Trump and view him as extremely detrimental at this point to... If he were a CEO of a company with a board of directors like most Wall Street guys can relate to, he would have been fired long ago. And so I think Wall Street would absolutely wants to fire this guy.

Anthony Scaramucci: (19:09)
And by the way, I will point out that the fundraising on Wall Street for Donald Trump way down, and he's been outpaced by Vice President Biden. So what you're saying, if you follow Wall Street and the money action Bill, speaks louder than words. And so there's evidence of that. So do you think Joe Biden is better for the economy? Is that what the Wall Streeters are thinking? Or what do you think's going on there?

Bill Cohan: (19:41)
Yes, I think. But again, everything's relative. If Trump were a different kind of leader and manager and hadn't exploded the national debt and hadn't exploded the annual budget deficits, or hadn't artificially kept interest rates, bullied the Fed into artificially keeping interest rates near zero and making our economy incredibly risky. Yes. They've made a lot of money during this period because of everybody who can refinance and finance and go public. All of that, yes. It's been true. But they've, Trump has introduced just a tremendous amount of risk into our capital markets and our economy, just like he did in his own businesses when he ran casinos and real estate. So I think that they think somebody like Biden, who's basically a centrist who cares about things like budget deficits, and trying to reduce the national debt and actually putting in an infrastructure proposal that will make sense and trying to resolve the COVID epidemic and unemployment, doing all the things that a normal human being who cared about people does.

Bill Cohan: (21:09)
I think that's why they think... And even if they have to pay more in taxes or even if the corporate tax rate goes up, I think the time has come to... Even on Wall Street, they recognize that Trump is completely out of control and anything is going to be better than Trump right now.

Anthony Scaramucci: (21:30)
Well, we're going to open it up to, we've got tons of audience participation, but we're going to open it up in a second. But I want to ask you about your 2008 crisis book House of Cards, which the subtitle was A Tale of Hubris and Wretched Excess on Wall street. And this was about Bear Stearns. So this was, correct me about the chronology of the books. Lazard was first.

Bill Cohan: (21:50)
Right.

Anthony Scaramucci: (21:50)
Bear Stearns was second. In your trilogy on investment banks, Goldman was third.

Bill Cohan: (21:55)
Correct.

Anthony Scaramucci: (21:56)
Okay. So the, and you probably don't remember how we met. But-

Bill Cohan: (22:00)
Oh, I do.

Anthony Scaramucci: (22:01)
Okay. How did we meet? Do you remember?

Bill Cohan: (22:03)
Well, I do remember because you wrote your book about working at Goldman Sachs.

Anthony Scaramucci: (22:09)
Right.

Bill Cohan: (22:10)
And it came out. And I was coming to the end of writing my book about Goldman Sachs. And you told this incredible story in your book that I tell all the time Anthony.

Anthony Scaramucci: (22:23)
All right.

Bill Cohan: (22:23)
About how at Goldman, it was the Friday before Memorial Day weekend.

Anthony Scaramucci: (22:28)
Yup.

Bill Cohan: (22:28)
And all you new associates were gathered together in a conference room at Goldman Sachs, and just told to wait until you got your next orders. And-

Anthony Scaramucci: (22:37)
Nothing.

Bill Cohan: (22:37)
The hours went by, nothing happened. And four of the associates said-

Anthony Scaramucci: (22:44)
Three.

Bill Cohan: (22:44)
The hell with-

Anthony Scaramucci: (22:44)
Three.

Bill Cohan: (22:45)
Three of them said, "The hell with this. I'm out of here. It's the Friday before Memorial Day weekend, I'm not going to the Hamptons." And the rest of you stuck around until 10:00 PM at night. The partner comes in and says, "All right everybody's signed. Here's a yellow piece of paper, sign your name on it and then you can go." And he took it and he saw that the three of them weren't there. And he said that they were fired immediately. And the message was, "This is a client service business. If the client wants you to be around until 10 o'clock on Friday night before Memorial Day weekend, you do it. And if you can't do that, you don't belong here."

Anthony Scaramucci: (23:20)
Yeah.

Bill Cohan: (23:20)
So I read that, I loved that. I wanted to use that, and I called you up and said-

Anthony Scaramucci: (23:25)
Yeah.

Bill Cohan: (23:25)
"Can I do that?"

Anthony Scaramucci: (23:26)
And he, the gentleman that did that, we won't give out his name. Because he sometimes doesn't like that story now. He loved that story 25 years ago, but he's got a little older and a little bit more gentler, but he was the former mayor of Eagles Mere, Pennsylvania, God bless them. And a terrific guy, still going strong. But he taught me a lot of lessons back then. And that was a hard core moment for a lot of people. And that was a hardcore thing to do or a little bit more sensitive in these workplaces today than back then. But that's how we met. That's a good memory. But I was reading your House of Cards book at the time, which I thought was a sensational book.

Bill Cohan: (24:04)
Thank you.

Anthony Scaramucci: (24:05)
And I would rank your books I'm not going to do it on a SALT Talk, but I'll tell you about it personally, but that was up there. All your books are great, but I'll just say it. That book and Price of Silence, I thought were sensationally gripping because you really got into the personalities of people and what human nature is like. The other books were very good, but they were a little bit less of that for me. I thought that this book was unbelievable. The story that you told about Jimmy Kane and his urinary tract infection. I'm just going to go right there, was one of the more legendary stories. So what was going on at Bear Stearns in 2008 that led to their demise Bill? Because it's a cautionary tale for young people that are listening in.

Bill Cohan: (24:58)
Well, I think what has happened throughout the history of Wall Street and of course, Bear Stearns got caught up in it as did Merrill Lynch, Lehman Brothers. And by the way, banks throughout the history of our country. And that is this pension for borrowing short-term money and lending it long-term. Borrowing short and lending long as it's said in the vernacular. And basically what Bear Stearns did, what Merrill did, what Lehman did, what banks through time immemorial do. What banking is all about is that they borrow in the short-term markets, and how does like JP Morgan borrow? They borrow in a lot of ways but basically they've got one and a half trillion dollars worth of customer deposits, which can be taken away any second of any day, right? You just go to your ATM machine, you pull that money out and it's gone. So they pay nothing for that. They get that raw material for free and then they lend it out for five years, seven years, 10 years, 12 years, whatever it is. For loans, they use it to make markets.

Bill Cohan: (26:14)
So Bear Stearns didn't have deposits but it borrowed over time through the course of 2017 after its two hedge funds went barely up. Basically, their capital markets options became greatly diminished and they were forced into the overnight repo market. They were forced into the short-term overnight secured lending market. And they were using as collateral for those overnight loans, the mortgage backed securities that they couldn't sell that were sticking around on their balance sheet. And we're talking billions and billions and billions of dollars that they were using as collateral. And in March of 2008, what happened was those overnight lenders, which were the fidelities of the world, the federated investors in the world, that provide that financing in that market said, "We don't like this collateral anymore. We won't take this anymore for overnight loans." And so basically Bear Stearns literally, could not finance its business. It had something like $18 billion of cash on its balance sheet, but it needed $75 billion a day to run its business.

Bill Cohan: (27:19)
Covering margin loans, whatever it was making loans, making sure everything was running and it just couldn't do that anymore. And so the classic example of borrowing short and lending long and banks do that forever. And as long as there's no run on the bank, it works. Because that's what fractional banking is all about. If there weren't fractional banking, IE meaning that you can only have a small fraction of the deposits. Actually there, you can lend out the rest. If it weren't like that banks couldn't make money, because they make money on the spread among other things. And it's fine as long as there's no run on the bank. In the 20s, 29, 30 31, there was a run on the bank from individual depositors. In 2008, Bear didn't have any individual depositors. They had some hedge fund money that they were custodians for, but basically it was an institutional run on the bank. Anybody who had more than $250,000 at Bear Stearns took their money out or thought about taking their money out because that was not insured.

Bill Cohan: (28:32)
And so they just said, "Forget it. I'm going to take my money out and ask questions later." And in some cases, these hedge fund guys took their money out and then shorted Bear Stearns. So it's a self-fulfilling prophecy, which we've never really gotten to the bottom of. But again this is in time in memoriam, this is why Anthony, banks get into trouble. They borrow short and lend long and Bear Stearns was no different, Lehman was no different, Merrill was no different, even Morgan Stanley and Goldman had this problem, although not to the same extent. And of course. they were bailed out.

Anthony Scaramucci: (29:10)
Oh, it's just, it also speaks to the self-confidence that sometimes people have at the top. It's a combination of greed and self-confidence. And then-

Bill Cohan: (29:18)
Hubris.

Anthony Scaramucci: (29:19)
Sort of a certainty that they're not, nothing's going to go wrong for them. And of course-

Bill Cohan: (29:22)
Well Bear Stearns, hadn't had a losing quarter in 85 years until the fourth quarter of 2007-

Anthony Scaramucci: (29:31)
Seven.

Bill Cohan: (29:32)
And then boom. March 2008-

Anthony Scaramucci: (29:35)
[crosstalk 00:29:35].

Bill Cohan: (29:35)
They were gone.

Anthony Scaramucci: (29:35)
It's a cautionary tale about when there's no doubt there's usually a trap door in the next room Bill. So let's turn it over to the very lovable John Darsie, who's switched up his room a little bit. He's got some audience questions.

John Darsie: (29:51)
Yeah. This is a follow-up to the question about 2008 you were a student of that time period. What about 2020? Do you think, what did we learn from 2008 that we applied before or during this crisis that allowed us to avert maybe a more long-term and painful type of depression and financial meltdown?

Bill Cohan: (30:12)
You mean what right now of we're trying to avert yeah.

John Darsie: (30:15)
Right now. Yeah.

Bill Cohan: (30:16)
It's not clear that we've averted it yet but-

John Darsie: (30:17)
The world economy is obviously under strain. The banking system is under strain, but it seems like we were a little bit more prepared from a bank balance sheet and a household balance sheet perspective coming into this crisis. And perhaps the Fed was a little bit more confident in its actions in helping us recover from the crisis. I just didn't know your observations if you've studied this time period relative to 2008.

Bill Cohan: (30:39)
Yeah. The banks are obviously much better capitalized now coming into this crisis than they were in 2007. They have a lot more tier one capital. They have more capital. Generally, there also have been severe restrictions on the kinds of assets that they can actually keep on their balance sheet whereas in 2007 it was the Wild West. Now banks talk about being in the storage business and in the moving business, banks are basically in the moving business now. Everything that they can get off their balance sheets, they do as quickly as they can to try to, they're in the fee business. And so the banks are much better capitalized, many fewer riskier assets on their balance sheets now. There are still problems. There are huge loan delinquencies. There've been huge billions and billions of loan loss reserves taken in the first half and probably three quarters of this year.

Bill Cohan: (31:46)
There's probably problems in the credit card portfolios for those banks that have them. And I'm sure there's probably problems in the mortgage portfolio, whether it's commercial mortgages or residential mortgages, they're probably a lot of problems hiding out in all of that. But generally speaking, the banks are much better shape. As far as the Fed, the Fed just went bonkers on March 23rd of this year. And then again on April 7th, just transcending anything that they had done in the years after 2008. When they are already breaking every rule that we knew about. And the Fed just has flooded the capital markets with capital they've backed up, they're buying, they've expanded their balance sheet. It was down to like three and a half trillion now it's up to seven trillion. They've just been buying every piece of paper or implying that they're going to buy every piece of paper that's ever been out there that nobody wants.

Bill Cohan: (32:50)
Which of course is once again, inflated bond prices, lowered bond yields, which I think is going to is injected a huge amount of risk into the capital markets just like it did after 2008, which was why the markets imploded in March of this year. There's linkages to all this, but I think the Fed probably says, "Look, we'll deal with that later. Right now, we've got to reopen the capital markets." And they did that in a huge way, and completely unprecedented way. And so as we talked about before with Anthony, those companies that can tap into the capital markets have been able to do that in a big way. It's benefited Wall Street tremendously in terms of fees, but those companies that can't access the capital markets are struggling immensely right now.

John Darsie: (33:44)
So we have a question about deficits and I think it's in response to a recent piece you wrote in Vanity Fair about some members of the Republican party who are more fiscal purists, have sounded the alarm about the current budget deficit for this year and our rising national debt. Why do you think the reaction hasn't been as loud to that rising deficit within the Republican Party and elsewhere, are we all becoming accidental modern monetary theorists? Or why do you think Wall Street isn't more concerned about this unprecedented deficit in 2020 and rising debt in general?

Bill Cohan: (34:20)
Well, I think there's a Maslow's needs hierarchy thing going on here. And so the national debt, which is whatever $26 trillion and rising and the budget deficits which seem like they're hitting around $4 trillion. Those are big issues, but they're sort of big amorphous issues that are probably of tertiary importance now to curbing the pandemic, making sure people are healthy, getting business back to normal, getting unemployment down, getting the recessionary pressures relieved, getting rid of Donald Trump. There are needs that just outpace that. And part of the reason for that is because there's really no consequences at the moment to $26 trillion of debt and $4 trillion deficits. Interest rates are very low, so the cost of servicing that debt is relatively low and investors all over the world, in an environment where there's a lot of negative interest rates around the world, we have positive interest rates on US government securities which are supposedly the most liquid and secure in the world. Although that probably could be changing with this fiscal irresponsibility that we're involved with.

Bill Cohan: (35:46)
But basically speaking, there's been no consequences. And I think there's a view that, as I think Anthony has said, that we're in... This is a war posture. It's really kind of no different than the deficit spending that had to occur during World War II to win a war. We're trying to win a war against this pandemic, against high unemployment, against struggling economy. We're not doing a very good job of it, but we're trying to do it. And so I think people say, "All right. Well, under these unusual circumstances, we will live with these huge budget deficits and a growing national debt." Which I remind people that when Trump was a candidate, he said he would eliminate. And of course, he's added more to it than almost any other president.

John Darsie: (36:32)
So shifting gears back to 2008 for a moment, we have an audience question about why you think there was a dearth of prosecutions, criminal prosecutions following the 2008 collapse? And what type of moral hazard that creates going forward on Wall Street?

Bill Cohan: (36:50)
Yeah. I've written a lot about this. This is extremely a disturbing topic. Part of it is Eric Holder, who was the attorney general. And before he became attorney general, sort of published a paper and a doctrine if you will, that basically urged prosecutors not to prosecute firms for their wrongdoing because of what happened with Arthur Andersen. The accounting firm, which went out of business and lots of people lost their jobs. So I think that the general sentiment with Holder as the attorney general was to try to find other solutions excide from criminal prosecution. And so what there was instead were these huge civil penalties that were agreed to from the Justice Department and these banks for all of their mistakes they made in the mortgage-backed security business, that they were all huge participants in. And I think it was just decided that slapping these firms with, or their shareholders frankly, with these large huge $10, $15 billion fines would preserve, would make the point without costing these firms to potentially... Because a criminal indictment could, like it did with other firms like Drexel and Enron and others, put them out of business.

Bill Cohan: (38:24)
They decided not to go that route. And I think that was number one and number two. When everybody is a part of a system that is creating these mortgage-backed securities and packaging up mortgages and making them into mortgage-backed securities and selling them all around the world in AAA investments. The whole system people are caught up in, it's very hard to blame it on one or two or three individuals. Even though, if they had done any investigation, if Preet Bharara and the Southern District of New York, instead of investigating insider trading at all these hedge funds, which he was rightly very proud of, he didn't spend any of his political capital investigating wrongdoing at the big Wall Street banks related to the mortgage-backed securities.

Bill Cohan: (39:17)
And there's plenty of memoranda. There's plenty of incidents where this could have been proven if people could have been prosecuted. But I think there between what Holder was saying and Preet Bharara not doing it and losing the Bear Stearns hedge fund case in the Eastern District of New York, I just don't think... And the revolving door between Wall Street and Washington, I just think there was no appetite. And it's frankly, that is the crime right there, that none of these people were prosecuted.

John Darsie: (39:48)
So we'll leave you with one last question from the audience before we let you go Bill, and it's about SPACs. So you've written recently about the SPAC craze that's taking over Wall Street. For those on the call who are unfamiliar, it's a special-purpose acquisition vehicle or a company that basically provides a company a backdoor into a public listing. We had Chamath Palihapitiya on a previous SALT Talk and he's become one of the poster boys for SPACs. He did Virgin Galactic. He recently did Opendoor. And then when he did Opendoor, he simultaneously filed for I think, four more SPACs. You see other copycats across Wall Street that are doing it. Why have SPACs become so popular? And what do you think it says about the current environment we're in from a financial markets perspective?

Bill Cohan: (40:31)
One of the points that I made in one of in the articles, it's sort of like where old investment bankers go to die now. They go to the SPAC wonderland. They take their skills as M&A guys or capital markets guys. They can't stay at their Wall Street firms anymore because they're whatever, too old or they're retired or whatever. So they convince people to give them hundreds of millions of dollars, for two years to try to find a company to buy. I don't really know what it says about the capital markets. They really, I guess, because certainly until they buy a company these things don't really do anything. So I guess it's, there's some downside protection. If they don't find a company to buy they get their money back, if they do find a company to buy and it's a decent deal like Virgin Galactic and some of these others, the stock runs up and everybody makes money. So I guess it means, it's just sort of another one of those ways that at the beginning anyway, it's now it's like $35 billion has been raised this year in SPACs.

Bill Cohan: (41:50)
At the beginning it looks like a gravy train and everybody's going to make money because nobody's really lost big on these things. It's only in retrospect when these things don't work out, when people merge with a company that does not do well and the stock goes to zero and people lose their money, that we begin to reassess these things. It's just another one of the great ways Wall Street figures out to alleviate investors from their money.

John Darsie: (42:20)
Well Bill, it was great having you on and your articles are always immediately bookmarked when they come out from my perspective. Anthony, do you have any final words for Bill before we let him go?

Anthony Scaramucci: (42:29)
Bill, I don't know if you're allowed to talk about it, but what are you working on now in terms of a book? Anything coming out that we should let everybody know about?

Bill Cohan: (42:37)
Well I've been, Anthony, working my butt off all the time, writing my new book about GE. The Rise and Fall of GE. And how the company that was once the most valuable company in the world, once worth $600 billion in August of 2000 Anthony, is now worth 10% of that today. Apple's net worth, Apple's market cap goes up and down $60 billion in a day. At one point, GE was by far the most valuable company in the world. How did it become that valuable under Jack Welch and how did it all come apart under Jeff Immelt? And so that's what I'm working on. Fortunately, I spent many hours interviewing Jack and others before he died. And so it'll be I think, back to my roots Anthony, of writing about big financial companies. And it's really the story of America in the 20th and early 21st century.

Anthony Scaramucci: (43:44)
Somehow is hubris going to get into the subtitle there, Bill? Somehow, right?

Bill Cohan: (43:50)
From your lips to God's ears, Anthony. We'll make it happen.

Anthony Scaramucci: (43:53)
All right. Well, listen, as always fantastic discussion available on Vanity Fair. You're writing for Bloomberg Businessweek. We saw you in Barron's over the weekend. And thank you so much for keeping it real, Bill.

Bill Cohan: (44:08)
Thank you, Anthony.

Anthony Scaramucci: (44:09)
Thanks again, Bill.

Brian Stelter: “Hoax: Donald Trump, Fox News & the Dangerous Distortion of Truth” | SALT Talks #53

“What is written, what is perceived, what is covered on the air is not always reflective of what’s going on in society.“

Brian Stelter is the anchor of “Reliable Sources,” which examines the week’s top media stories every Sunday at 11:00am ET on CNN. He’s also the network’s Chief Media Correspondent. His new book, Hoax: Donald Trump, Fox News, and the Dangerous Distortion of Truth, tells the twisted story of the relationship between Donald Trump and Fox News.

“Fox News is now the beating heart of the pro-Trump media world.” Leadership at Fox initially didn’t align with Trump: Rupert Murdoch was deeply critical of the President, and Roger Ailes was backing Jeb Bush. The network’s transition was largely fueled by a vacuum of leadership post-Ailes and the commercial incentives of being the President’s network of choice.

The internet changed how we interacted with the news. “It made us all our own publishers.” There’s an obvious benefit to a diverse ecosystem of thought, and bad-faith actors playing to extremes take advantage of it. Trump and his media outlets are then able to go out and tell a powerful, compelling story about the “deep state” and white victimhood, but in the end, “it doesn’t add up.”

LISTEN AND SUBSCRIBE

SPEAKER

Brian Stelter.jpeg

Brian Stelter

Anchor, Reliable Sources

CNN

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

Joe Eletto: (00:07)
Hello everyone, welcome back to SALT Talks. My name is Joe Eletto and I am the production manager of SALT, which is a global thought leadership forum and networking platform encompassing finance, technology, and geopolitics. SALT Talks is a series of digital interviews with the world's foremost investors, creators, and thinkers. Just as we do at our global SALT events, we aim to empower big, important ideas as well as provide our audience a window into the minds of subject matter experts.

Joe Eletto: (00:35)
We are really excited today to welcome Brian Stelter, to SALT Talks. Brian is the anchor of Reliable Sources, which examines the week's top media stories every Sunday at 11:00AM Eastern on CNN, as well as the chief media correspondent for CNN Worldwide. Prior to joining CNN in November of 2013, Stelter was a media reporter at the New York Times where he covered television and digital media for the business day and art section of the newspaper. He was also a lead contributor to the Media Decoder blog. Stelter published the New York Times best selling book, Top of the Morning, inside the cutthroat world of morning TV, about the competitive world of morning news shows. He is a consultant on Apple's drama, The Morning Show, which is inspired by this book. He was featured in the 2011 documentary, Page One: Inside the New York Times, directed by Andrew Rossi. He was also named the Forbes magazine's 30 Under 30: Media, for three consecutive years.

Joe Eletto: (01:31)
If you have any questions for Brian during today's talk, please enter them in the Q&A box at the bottom of your video screen. And now I'll turn it over to Anthony Scaramucci, who's the founder and managing partner of SkyBridge, as well as the chairman of SALT, to conduct today's interview.

Anthony Scaramucci: (01:46)
So Brian, that's one of the things I didn't know about your resume, the 30 Under 30. I had been submitting an application for 30 Under 30 for the last 30 years to no avail. So we can talk about that at another time, but I have to tell you, because I've lived a portion of this book and obviously I was in and out of the Trump administration, spent nine months on the campaign. Full disclosure, was a paid presenter on the Fox News channel where I was the host of [crosstalk 00:02:14] week.

Brian Stelter: (02:13)
It's in the book. That's right.

Anthony Scaramucci: (02:16)
And I've got to tell you, I loved reading the book. It was very clarifying to me. We're going to get into the book in a second. But for those of us that are getting to know Brian Stelter away from the television, away from Reliable Sources, and your reporting on CNN, tell us something about yourself that we couldn't find on a Wikipedia page. How did you grow up? Why did you get into this? Why did you take this arc in terms of a career?

Brian Stelter: (02:46)
Well I've always been a news junkie, and that's probably on Wikipedia. So I'm thinking of something that's not on Wikipedia. I'm also a big weather junkie, a big weather nerd. I was just talking about this with my wife Jamie the other day, because when Hurricane Sally was coming ashore, there was a part of me that wants to go out and be that correspondent that's getting blown around in the wind and the rain. And I did do it once before. I was on the weather channel once doing this and I was re-watching the video recently and showing it to my daughter and saying, "Daddy wants to go do that someday." which just speaks to my obsession with news and my love for news. I want to be wherever that story is.

Brian Stelter: (03:24)
And when it comes to Fox News, they've got great hurricane correspondents. They've got great people who go out and stand in the storm and tell you what's going on, just like CNN does. But one of the problems, one of the differences with Fox, is that they don't value and respect the news division the way that CNN does. So that's one of the many reasons I think that I was interested in writing about Fox is how the place has changed. But look, whether it's Fox or CNN or another channel, I think it'd be fun to go out and do that some day. I guess that's something people don't know about me. I'm a big weather junkie, big weather nerd, and in general, just obsessed with how the news works and doesn't work. I mean you probably know better than I that what is written, what is perceived, what is covered on air, it's not always reflective of what's really going on and that's a challenge for us in the media to try and get it right, be more careful, more right, and get to the truth every day.

Anthony Scaramucci: (04:20)
So I mean I'm going to hold the book up for everybody. The book is called Hoax, it's a international bestseller, and it is a riveting account of what is going on at Fox, but also an account of what's going on in the age of mass information. So I want to ask you something intellectually first, then we're going to talk a little about the book. I would have thought with the proliferation of blogging, social media, the proliferation of media itself, we would have had more accuracy in the facts. Man, did I get that wrong. We have way more distortion of the facts, way more real fake videos, way more, I don't like calling it fake news but you get the point, that there's a distortion happening. There's almost a prism that depending on where you're coming from and what segment of the population you're coming from, you're seeing the news through that distorted prism. Can you explain sociologically or from a commercial perspective why you think that evolved in this era?

Brian Stelter: (05:25)
Well certainly the internet changed everything. The internet enabled all of us to be our own publishers, it allowed me to create a blog, and then get hired by the New York Times, and then get hired by CNN. So there's these incredible benefits from having this healthier, more diverse media ecosystem. However, the algorithms and the other tools that we use to navigate and get through this internet universe, are primed to encourage sensational, crazy, outrageous content. And we see more and more bad faith actors playing to those extremes, especially on the right, especially in this narrative that Trump is always right and everything else is fake, all the news is fake, or it could be a hoax. So I say it's partly gained by algorithms, but it's partly about human desires to hear a simple, consistent narrative or story.

Brian Stelter: (06:20)
I think what Trump and his media allies do is they tell a pretty powerful story over and over again, although it has a lot of holes in it and doesn't really add up. It's a story about the deep state, it's a story about White victim-hood, about grievance politics, about the world all against Trump. And this is a story that Fox tells every day, and it's a really compelling story although it doesn't really add up. And by telling that story they are excusing so many of the President's errors and mistakes and misrepresentations, and they are defending the indefensible when the President re-tweets someone saying that Joe Biden is a pedophile. That should be called out by all good people, and it's not because we're in these alternative universes and so tribal. And I do think the internet has a lot to do with that increased polarization.

Anthony Scaramucci: (07:08)
So the subtitle of your book is The Dangerous Distortion of the Truth. And you write in the book, and I don't want to give the book away, the book is such a powerful read and I don't need to demonstrate to you that I've read the book, we can have that conversation after SALT Talk.

Brian Stelter: (07:24)
You already did, actually.

Anthony Scaramucci: (07:25)
But I just have to tell you that it's a phenomenal book, and I don't want to give it away because I want people to read it. But we both know that the Fox News organization, President Trump himself was a fan of it, he was showing up frequently on the morning show Fox & Friends. But it's not necessary that the suits, the executives of Fox were fans of Donald Trump in the beginning. So tell us a little bit about that part of the story.

Brian Stelter: (07:53)
Yeah, I do think you have to go back five years. And in order to understand what Fox is today and what the pro Trump media universe is today, you have to understand five years ago. Fox is now the beating heart of the pro-Trump media world. Fox is it pumps out blood that goes all throughout the body and influences the Breitbarts and the Daily Callers, and it influences the president. It's the beating heart. But it was not always that way. In 2015, Rupert Murdoch was deeply critical of Donald Trump. He said, "When is he going to stop embarrassing his friends and the entire world?" Roger Ailes was skeptical of Trump. He saw Trump as a great television performer but Ales kind of wanted Jeb Bush. He was a Bush guy in the beginning.

Brian Stelter: (08:33)
So there was this dissent or this skepticism about Trump, but there was also this sense early on that the Fox audience was pulling for Trump, that the Fox base was Trump's base, that there was this alliance of sorts or this overlap of sorts. And there was this fear of taking off the Trump Fox base and having those viewers start to go elsewhere. So there has been this kind of Trump takeover of Fox that didn't happen overnight, didn't happen right away, didn't happen all in one fell swoop, but it happened. And it happened because it's what the audience wanted, it's because there was a lack of clear leadership after Ailes was force out, it's because that's what the commercial incentives were, the commercial imperatives were. It's incredibly profitable to be the nation's pro-Trump network. It is also incredibly misleading sometimes. And it was dangerous when the pandemic started when the channel was downplaying the virus. So I think those commercial incentives are really critical to the story about why the network gradually came under Trump's spell.

Anthony Scaramucci: (09:36)
Well [crosstalk 00:09:37]

Brian Stelter: (09:36)
But you were there at the time. Am I getting that right? I mean you were there in 2016.

Anthony Scaramucci: (09:43)
No, well I think you're getting it right, but I'm going to make an admission now which doesn't reflect well on me. I think what happens is you're in that echo chamber and you're in the ecosystem and you're not fully picking up the reality distortion until you leave the echo chamber and the ecosystem. And that's why I said to you and I'm going to give it away now, of all the sentences in this book, page 121, the sentence which is quintessential and it really resonated with me Brian, it says here on the bottom of the page, it says, "Call Cameron. Just couldn't take it anymore." And I think that that is a resonance of what's going on as it relates to President Trump and what's going on, as it relates to Fox News and what's going on in the society right now. It's not clear to me that the society wants to be this divided. And since you talk about it, I'll address is here.

Anthony Scaramucci: (10:38)
Roger Ailes had this unstinting message. He grew up in Warren, Ohio. He has this hey-geography of America. This is the Happy Days America of Arthur Fonzarelli and Richie Cunningham. And it's a mid-Western America. And he wanted to sort of reclaim that for America. And there's a tribal perspective in that because the great irony is you're shooting the light through that prism and you're shooting it on the wall, and you're presenting an America frankly that never existed that Richie Cunningham, Arthur Fonzarelli America. You were just getting African Americans on the sports field in the 1950s. Jackie Robinson was 1947. And you still had people separated in school systems and being discriminated in lunch counters. So America is always a nation in progress with tremendous flaws, but there's Roger Ailes in an effort white-washing if you will, I think that's a appropriate term, pun intended, white-washing the society. And so let's go back to the Iraq war. Fox News had a big role in the Iraq war, did it not Brian?

Brian Stelter: (11:47)
Yes. I think it did. I think post 9/11 Fox became the number one cable news channel. Ailes was secretly sending advice to the Bush White House, and provided cover from the right flank, especially the post invasion as the occupation came into obviously serious trouble. The cheerleaders like Sean Hannity were critical to maintaining some support for the Bush presidency and for explaining away the lies and misinformation about the Iraq war. But compared to today, that version of Fox is so much more moderate. I think every turn Fox takes is a right winged turn over the years, over the 24 years it has been on the air. And I try to document that in the book.

Brian Stelter: (12:36)
Take it for example during the Obama years, Roger Ailes was a birther. He believed Obama was born in Africa. But he didn't let his talent go off and go full birther. He did let Trump call in and say those things. But he didn't want Bill O'Reilly out there pushing the birther smear. He wanted his talent to be seen as fair and balanced, to at least be seen as someone moderate and not be compared to QAnon or Alex Jones. And so I think that's what's missing now. The channel is more extreme now in terms of the content than it was in the Ailes years for a variety of reasons. But that's one of the reasons, because Ailes was trying to keep some level or some measure of control. And I think that's important in the context of Trump because Trump was able to kind of take power, not literally of Fox, but metaphorically of Fox.

Anthony Scaramucci: (13:34)
But here we are today, President Trump is now starting to turn a little bit on Fox. He refuses to bend to its polling data. Every time they throw up a polling data that he doesn't like the narrative of, he goes bazonkazoid on Twitter. And so my question to you is, is he turning on Fox? Is it just a few pundits now? Has Fox turned on President Trump? Some of the punditry there?

Brian Stelter: (14:02)
I think it's a tug of war between news and propaganda. And the propaganda side usually wins. There's more of an audience for the talk shows. There's more electricity around the shows. But occasionally Trump will see the newscasts, he'll see the news anchors, and he'll get ticked off. And he lashes out about the news coverage because he doesn't want news on Fox. He only wants propaganda. So I think when we see him tweeting anti-Fox things, he's working the refs, same way he did in 2016, trying to have less news, more propaganda, and trying to downplay the Fox polling unit which is really well respected, and promote the talk shows instead. I think it's that tactic that is kind of tired, but it still kind of registers with some of his fans. Then the news anchors get hate mail.

Anthony Scaramucci: (14:50)
Has it co-opted the editorial content of Fox, his tirades? Has Trump's Twitter tirades...

Brian Stelter: (14:57)
I think people are very aware of it at Fox. I mean the real reason I wrote Hoax is because I was hearing from so many sources at Fox who were frustrated by the network and what has happened and how Trump feels like he's in charge, or how he has hijacked the network in some ways. And what a lot of those staff first said was the incentive structures are all wrong. So if you're a news anchor or a correspondent at Fox and you just want to report the news and oftentimes the news is about Trump's chaos and scandals and controversies, you feel you can't do that. You feel pressure. You feel powerless is really the word. You feel powerless to do that. The news feels suffocated at Fox and the propaganda feels promoted.

Brian Stelter: (15:35)
And there's some really specific examples of that. Carl Cameron who's on the record in the book talking about how the news cast didn't really want packages, they didn't really want reports. They'd rather just have conversations with panels. And by the way, I mean Fox is not the only network where that's true sometimes, but it's very true at Fox according to Cameron. I have other correspondents in the book who said they all had their, "I can take it anymore." moments where they don't want to be on there defending child separations, they don't want to be on there defending Trump's comments about Charlottesville. So these different people at Fox had these breaking points, and the ones who stayed, either they agree with everything that's happening or they fear they can't find a job elsewhere, or they want to make the place better from the inside. So there's all these incentives for staying as well.

Anthony Scaramucci: (16:23)
So have you ever thought about working at Fox in your illustrious career? Has that ever come up?

Brian Stelter: (16:29)
I don't think they would be interested in me. But let me put it this way. I think anybody at Fox who if you could have an hour that's devoted to fact checking and debunking a lot of the nonsense that's in prime time... I turn on Fox & Friends and most mornings, the narrative is like this. "The cities, there's violence in the cities." And of course that's true. Crime is up in some areas including in New York City. But the way it's presented it makes it sound like New York City is a hell hole. It makes it sound like all of Portland is on fire. It makes it sound like all of Seattle is a disaster area. And that narrative, that's damaging. That hurts New York City, it hurts Portland, it hurts the people in these cities. And if I had an hour where I could push back on all that, it would be hard to turn that down. But I don't think they're calling offering that. I don't think there's interest in that. Shep Smith was trying to do it and Shep left.

Anthony Scaramucci: (17:27)
Yeah. No, no. And I got that. Shep is over at CNBC, and I think it's a good home for him. But I guess the reason I'm asking you that is because... Again, this is just my opinion. I think there's a civil war going on inside of Fox. You definitely talk about it in the... there's a civil war between the facts, the fact checkers, responsible journalism, and full on political punditry that literally they're mental gymnastics at night trying to explain what President Trump is doing. I've told people, "I'm watching them 8:00 to 11:00 at night. They're telling me that Trump is playing four dimensional chess, he's sitting at the table eating the chess pieces. So I don't understand how they can get away with that.

Anthony Scaramucci: (18:12)
And since you mentioned Sean Hannity, I want to bring him up, and full disclosure, I'm friends with Sean, I've known Sean a long time, although we haven't talked recently because I'm one side of the ideas objectively in my opinion about Donald Trump, and he's on another side of the ideas in his mind objectively about Donald Trump. So we chose to agree to keep our friendship and not get into political jousting. But you have a fascinating relationship with Sean Hannity. Nd you talk about it in the book which I find fascinating. So describe your relationship for our SALT Talk listeners.

Brian Stelter: (18:48)
Yeah, yeah. I felt like I needed to disclose it a little bit.

Anthony Scaramucci: (18:49)
Yeah. So describe it to people.

Brian Stelter: (18:49)
I felt like I needed to explain in the book that I had been covering Fox for 16 years, and I know these players. Hannity was really friendly to me as I was growing up in this business, when I was at the New York Times. He gave me great advice when I joined CNN. I would say that was a friendly relationship until the Trump presidency, until 2017. As I'm sure everybody on this Zoom session has an example of a friendship or a relationship that has been strained or ruined by the Trump presidency. And that's true for me with folks at Fox. Tucker Carlson is another example. He was a big supporter of my blog, he put me on TV when he had a show on MSNBC, we had a relationship over the years. Now he's on TV calling me a eunuch. And it's, "What happened Tucker? I don't think I've changed. I think you changed. I think you changed based on your audiences demands. You're trying to feed this increasingly radicalized audience."

Brian Stelter: (19:48)
And that's the uncomfortable part about a lot of this. I'm not saying every Fox viewer is radical. They clearly are not. Fox has a big audience and has lots of different kinds of people that watch. But there's a base that doesn't want to hear the reality of what's happening in the Trump Whit House. And these hosts feel pressure to serve that base, and I think maybe it's not possible to still have a friendly relationship with these guys when they feel those pressures.

Anthony Scaramucci: (20:12)
Well I mean one of the problems is, and I'm going to editorialize, get myself into trouble with probably half of our SALT Talk participants. But if you're into full blown demagoguery you've got to go 13 for 10 for the demagogue. If you go seven for eight for the demagogue you're called an unstable nut job on Twitter. I mean you've been called some tough names. I got called an unstable nut job by the President of the United States. I mean I wear it like a badge of honor, but I'm just saying my point being is that they're literally being watching by him. They're playing to an audience of one. Bill Barr is playing to an audience of one, he's comparing slavery to the closures and lockdowns during a pandemic. I don't know. I don't think that's appropriate but I'm sure the president liked it.

Anthony Scaramucci: (20:55)
And so that's the cycle, that's the dilemma that we're in. You do a great job of describing that as well.

Brian Stelter: (21:02)
Thanks.

Anthony Scaramucci: (21:02)
You say something interesting about the president. I want you to react to this. You say that he's not going to be confused as a great orator but his simplified style of communication is resonating. So what do you think makes him effective as a communicator and a politician? Describe for our listeners the essence of how he became this successful.

Brian Stelter: (21:25)
Well I think we have to appreciate what does work and learn from it. And I'm surprised that more candidates haven't learned from some of Trump's techniques. His ability to tell stories. Usually it's a version of the same story at every rally but it's a storytelling mechanism. It's an attempt to bring people to his side by involving them in his stories. It's obviously the repetition of certain simple slogans over and over again. We all know that with, "Build a Wall." That's obvious.

Brian Stelter: (22:01)
Where I sometime think I've fallen down on the job is not try to meet people where they are and say, "I see what's appealing. I see some of the reasons why either Trump is appealing or a democratic candidate is appealing. I see it. Let me meet you half way and then talk about it." Same with Fox. I see what's appealing about Fox and the way it's produced and the topic selection, the choice of narrative. As a viewer I get it, I watch a lot of it. I understand why it's appealing. Let me met you half way and then let's talk about why it's discouraging that they misinform Trump and then he misinforms the country, and why that's a bad thing. But then I can see the appeal of the show.

Brian Stelter: (22:39)
It's almost Trump leads a hate movement against the media. And I'm not saying we need a love movement but we might. We might need something like that that gets us a little more connected to our common humanity. That's way to fantastical, isn't it Anthony?

Anthony Scaramucci: (22:55)
Unless something crazy happens to the institutions of our democracy, the Trump era is going to end in 100 days, or it's going to end in four years plus 100 days. And so what happens to the Trump acolytes and what happens to the future of Fox News in a post-Trump world?

Brian Stelter: (23:16)
It's a big question and it's being debated inside Fox. Will he launch his own network? Will he try to rival Fox? I think the answer is no. I think that's a lot harder to do than people appreciate. But I wonder if he'll be on the radio. I wonder if he'll want a radio show if he loses the election. I wonder if he'll want a show on Fox. I wonder how much audience there would be for someone who is branded a loser after having a winning brand for decades. I think Fox will be just fine in any of those scenarios because the channel is more anti-democrat than it is pro-Trump. It's more anti-Biden than it is pro-Trump. But I saw Leon in the Q&A said, "Is Fox afraid if he loses he'll start aa competing network?" I don't know if people are afraid but there's definitely some concern about it, people talk about it as a possibility, they wonder if it would happen, and certainly folks close to the Murdochs have talked about this and gamed our those scenarios too.

Anthony Scaramucci: (24:17)
So why don't we do that? Let's go to some of the Q&A Joe. I mean we've got a lot of questions populating. Some of these are quite interesting.

Joe Eletto: (24:25)
Absolutely do. This is a very active Q&A which is what we had expected. So this is great.

Brian Stelter: (24:31)
I was just peeking over there. That's why I brought it up. [crosstalk 00:24:33]

Anthony Scaramucci: (24:33)
Yeah. No, I love it. That keeps bringing them back Brian, okay? The fact that we answer all their questions when they come on.

Joe Eletto: (24:42)
Something to start with, I want to go back to social media is fake news, alternative facts, and what that social media is now checking some of Trump's tweets, his branding things as distorted media. What role in propagating fake news and stories such like Joe Biden playing Despacito but them putting on a different song, and people not really checking. What role does that have in creating and forwarding this narrative that let's say, a regular viewer of Fox News or maybe OAN has about the president and what he's doing?

Brian Stelter: (25:18)
Yeah. OAN makes Fox look like ABC. OAN is much further to the right, but also much, much, much lower rated. Fox has an incredible monopoly on the right wing audience. Newsmax, OAN, they try but they just can't come close. I think Twitter and Facebook are taking these baby steps, and maybe it looks like they're taking big, gigantic steps, but they're really just baby steps in terms of how much misinformation and bull is out there. But by taking these baby steps they can be held accountable because we can point to their actions and say, "You did this for X, why haven't you don't that for Y?" So it's useful I think when we see these companies taking action because it gives us a baseline to compare it with and to judge in the future.

Brian Stelter: (26:00)
I personally think these labels they're putting on Trump's tweets are kind of a joke. Trump will tweet, "Mail in ballot is a fraud. Don't believe it. Blah, blah, blah." And then the label will say something like, "Get the facts about mail in ballots." And you can't fight fire with that kind of ice. I don't think that works. But again, they are taking steps. That's a lot more than they were doing in 2016. I remember saying fake news on TV for the first time in October, 2016 because there were these actually fake stories. That's the term before Trump used, it was a term for actually fake stories that were all over Facebook making up smears about Clinton. And, God, I kind of wish I hadn't said the term because by December of that year, Trump hijacked it.

Joe Eletto: (26:41)
Absolutely. So going off of that, I mean do you think once Trump leaves office, whether it's in 100 days or four years and 100 days as Anthony said, how do you restore the standard of truth in American society, or at least the news media? Or is the horse out of the barn, and we're just in a place where people are going to accept multiple different routes of getting to the same fact?

Brian Stelter: (27:03)
Yeah. Look, I think a diverse media ecosystem is a good thing. So having lots of sites and lots of sources and lots of options is good. It's when some of those sites are total rubbish, they are garbage, they are disinformation trying to hurt the American people, that's where we have a problem. And QAnon gets thrown around as an example of this. But there are lower level examples of this as well where there's just a lot of low quality information out there, and on your Facebook feed it looks like it's the same quality as CNN or the New York Times. And that's a fundamental problem. I wish Fox would strengthen its news operation so there was more high quality information coming from a trusted right wing source, but that doesn't seem to be in the cards right now.

Brian Stelter: (27:46)
I think to answer the question more directly, most Americans see through the fog. Most Americans see through the distortions. There is though this minority of the country that's so distrusting of institutions, and distrusting of news outlets and all that. They seem to only put their trust in Trump and Trump's allied media outlets, and that doesn't go away when Trump leaves office in January or in January of 2025. That doesn't go away. And I don't have great answers for what that audience looks to next, or what that audience does or what they gravitate toward.

Brian Stelter: (28:17)
But I think all of us individually have a little bit of a role to play. The people in our lives who think Joe Biden is a pedophile or feel good saying that on their social media pages, the people in our lives who align with crazy concepts like that, and not really crazy, hateful. It's really about hate. Saying that about Joe Biden is really about hate. It's about fear and hate of the other side. I think we have to figure out how to talk to those individuals in our lives who feel that way and figure out how to pull them toward higher quality sources. It's not about pulling them toward left wing sources. It's about pulling them toward higher quality sources of news that come from the right or the left or anywhere else.

Joe Eletto: (29:03)
Absolutely. So another question about sort of in the anchor's role or the reporter's role, how are you able, a book you're able to be subjective, you're able to put in your own thoughts about the current occupant of the White House. But when you get onto CNN you need to be impartial. You need to be presenting facts. And there can be somewhat of an editorial nature. But it's mostly, "Here are the facts. You do with them what you will." How do you balance that? I mean I guess we were talking about other anchors that we don't need to refer to again, but how do you balance that desire to show people what you see as the truth, and presenting facts and wondering what people are going to do with those facts after they turn off the television?

Brian Stelter: (29:43)
Yeah. I think what I do on CNN, there's different labels for it. What I would say is trying to tell the truth sometimes with a point of view, and that point of view is, "What's reliable? What's believable? What's factual? And how can we cut through all the noise and get to the news?" And that sometimes comes in the form of these monologues that lots of CNN anchors are doing where you try to say, "Hey, here's what the president said, here's the reality, here's the contradiction, here's the clip." and string it along in the form of an essay or a monologue.

Brian Stelter: (30:17)
We're doing a lot of those on TV and sometimes I hear from viewers who say, "It's opinion." And I say, "It's not opinion. It's not based on feelings. And we're not pushing to endorse a policy. This isn't about the earned income tax credit or about abortion rights. We're not lobbying for policy positions. We're just talking about decency and truth. And democracy." And that I think is privily fair for news outlets to speak about and push for. Push for truth and honesty in politics. That's not partisan. So I think that's what we should be doing and we will keep doing is pushing for that.

Joe Eletto: (30:55)
Absolutely. So we actually had a question come in from someone who was a previous SALT Talk guest. Piggybacking off of this, so if you launched your own Brian Stelter news organization, whatever we're going to call it, how would you combat the current dangers of information, lies, propaganda? Would you have a segment like that where you start off with a monologue? Or what would that look like for you?

Brian Stelter: (31:16)
Right. It depends on the medium I suppose if it's online or on TV or elsewhere. I think we should root this in what the audience wants. The question you'd ask is, "What does the audience want and need?" I don't know about you all, but most of the people in my life don't know what the heck to believe. They see all sorts of smears and crazy things on the internet, and they want to be guided toward reliable sources, aha, of information. So I think in that scenario, calling it like it is, is essential. When the president has a great victory we should call that what it is. But when he lies about Joe Biden, we should call that what it is. Maybe Call It What It Is, is a good brand name for a news outlet. I don't know.

Brian Stelter: (31:59)
But I think that kind of personal connection where you can call it out what it is, I think that's appealing, I think that's what the audience wants. And then the only thing I would say is provide primary source material. Provide the evidence so people can see it for themselves so that they're not believing me or believing anybody else, they're believing their own eyes. One of the worst things Trump has done is he has tried to get people not to believe their own eyes. He has told people that everything could be a hoax. And that has done damage it's going to take time to repair, but we can repair it by bringing people to the own original data, and see the proof for themselves.

Joe Eletto: (32:34)
Yeah. I remember. That was very 1984 when that quote came out.

Brian Stelter: (32:38)
Right.

Joe Eletto: (32:39)
So concerning to COVID quickly, I know we're bumping up against time. But, so Fox followed largely the president's script in downplaying the seriousness of COVID-19 I guess until the Woodward tapes came out. But pre-Woodward, were pretty much in lockstep with the president and what he was saying about the pandemic. What are other examples of situations where the inability of the American people to trust the president and the most watched news outlet in the country could lead to major problems? So there are past examples of this or things that you see potentially in the future?

Brian Stelter: (33:14)
Yeah. The pandemic is the strongest and in some cases the worst example because it's the most painful example. It's a life and death example. There's a lot of blame to go around for what went wrong in February and March, and I say that very clearly in the beginning of Hoax. A lot of blame to go around with [inaudible 00:33:27] Now there are media outlets even. But Fox had the biggest cable platform and Trump had the biggest presidential platform. And so by downplaying the pandemic, by making it seem political, not medical, that did real damage. I think there are other examples in the book from earlier in the Trump presidency of times when he gets misled by Fox, and then he misleads the country and that hurts everybody.

Brian Stelter: (33:48)
One example is when we end up having a government shutdown driven largely by right wing media demanding Trump take a firmer stance on the border wall. There's even, if you look back in 2017, the seeds of the Ukraine scandal which led Trump to be impeached, are sown on Fox. They are kind of laid out on Fox, and then farmed years later. So there has been a bunch of these example of times when Fox is trying to help Trump, but they're actually hurting Trump. Or by following his script, and downplaying the pandemic, hurting their own viewers. And by the way, that's not coming from me. That's coming from staff inside Fox who said things like, "What we did was hazardous to our viewers. What we did was dangerous. These were kind of whistle blowers inside who were saying, "This went really wrong." And that's why the book is called Hoax. We were going to call this Wingmen because Trump has lots of wingmen at Fox, and but when Trump and Hannity use the word Hoax by decrying the democrats' politicization of the virus, we named the book Hoax for that reason.

Anthony Scaramucci: (34:46)
You were dying to call it Wingnuts but your editor told you you couldn't call it a wing nut [crosstalk 00:34:50]

Brian Stelter: (34:50)
Actually John Avlon wrote a book called Wingnuts, and I couldn't do wingnuts. Wingmen is what I think he has-

Anthony Scaramucci: (34:57)
I remember John's book.

Brian Stelter: (34:59)
And by the way, if those wingmen were giving him the highest quality information, challenging him with new perspectives, challenging his priors, there wouldn't be a book to write. But because what happens is Fox & Friends puts up a banner that's full of crap, and the president reads it and then tweets it, and then spreads it across the country, that's really the heart of the problem I think.

Anthony Scaramucci: (35:23)
So some of the questions that have come in, I'm trying to distill them because we are running out of time, but there's a few questions about CNN and obviously the right is critical of CNN and the president of CNN. What do you say to the critics of CNN?

Brian Stelter: (35:42)
I say that CNN has its flaws, and I like being called out for them, and I like when people email me. I'm at bstelter@gmail.com because I think it's good to hear from viewers and hear their feedback, and hear what we can do better. But I just think there's something fundamentally different between what Fox does and what all other networks do. And the differences include childish name calling, deflections and distortions from the biggest story of the day, those sorts of tactics that I think, what about-ism on a grand scale. Those sorts of tactics that they weren't always in play at Fox. They've become more obvious these days and they distract from what's really important.

Brian Stelter: (36:22)
I'll give you an example. I think CNN has done a great job of putting up on screen the COVID data, making sure COVID is front and center in the news. Fox covers the story a lot less. And you have to wonder if that's for political reasons or not. But we certainly have our flaws, and I like when we're held accountable for it. Somebody said, "Isn't there a sense of the same is true in reverse for the left on CNN?" That CNN and Fox are equal. They're mirrors of each other. That's what I just think doesn't hold up to scrutiny because when you look at what Chris Cuomo is doing in prime time, it is clearly not the same that Hannity is doing in terms of how reality based it is. That's the way I see it.

Anthony Scaramucci: (37:04)
Yeah. And listen, I'm going to defend Chris a little bit because I do his show. He has a ton of Trump acolytes on the show defending the president and offering up the case for the president including people from the Trump campaign. So if you haven't noticed Brian, not that you would notice this, I can very rarely get an invite on Fox News now. Those guys don't want to have me one there. I got on with Steve Hilton.

Brian Stelter: (37:29)
They don't want to engage.

Anthony Scaramucci: (37:30)
Yeah, I got on there with Steve Hilton a few weeks back, we had a sparring match, the president didn't like it, he's tweeting about me, and that's the Michael Cohen axiom. What's that axiom? If you're saying something crystal clear, clarity in truth and you're breaking down the president's reality distortion field, he's going to viciously ad hominem attack you on Twitter. That's one of the postulates of the Trump era if you will.

Anthony Scaramucci: (37:58)
But let's talk about, before we let you go, let's talk about you being the new czar. Okay? So now we've appointed you to a new position. It's a supra governmental position, it's a supra media position. You are the new czar, and you're trying to make the news more, let's use a Fox News term, fair and balanced. Really fair and balanced. What would you do? And I'm going to take you back to Ronald Reagan. You remember when he signed that legislation to offer some equality on the radio air wave which led to the advent of conservative talk radio. What would you do if you were the new czar and you wanted to figure out a way to strain out some of the inaccuracies, the misinformation, and stuff that's hurting the country right now.

Brian Stelter: (38:48)
First we would invest enormously in the local news, and we would rebuild local newspapers and rebuild local sources of news because they are more trusted, they are more important in the lives of everyday Americans than anything else. Rebuild local news because that rebuilds people's trust with media. And when you know your local reporter like I did growing up in Damascus, I knew Susan, she was the towns reporter. It makes you more trustworthy in media in general because you see how the person works and you see how they care about the community. And when they make mistakes they clean up their act.

Brian Stelter: (39:23)
I would say number two, you want the healthiest, most diverse media ecosystem possible, but tethered to reality. Info Wars for example not tethered to reality. Alex Jones is on there in the past saying I drink children and I run the banks. That kind of insanity just confuses people and hurts people. And the tech companies did take action against info Wars. That was the beginning of what we've seen now, these tech platforms trying to take action in really extreme cases of disinformation. But I think a new czar would try to figure out a more cohesive way to have the media world be as diverse as humanly possible, make is as diverse as possible, but healthy, meaning tethered to reality in some way so that if I were on CNN and I said something that was wholly inaccurate, you almost want a red light to fire off or you want a bell to chime. You want to figure out ways to signal to the audience-

Anthony Scaramucci: (40:24)
Or a laugh track maybe.

Brian Stelter: (40:27)
Or a laugh track. Yeah, there has got to be some way to have that kind of checking. I don't know how you would do it, but if I'm the new czar, maybe I had magical powers. So maybe I can make it happen. And that would be a form of accountability. What I got frustrated by reporting in my book about Fox is [inaudible 00:40:45] a lot of the accountability of Fox where mistakes are made. I know that there is at CNN. Maybe [inaudible 00:40:50] is not enough but I had a screw up over the summer in my newsletter, and I had a call from my boss, and we had one of those awkward but really important conversations where I talked about how I had this screw up, and I talked about why and how I'm going to avoid it in the future. And that makes me a better journalist. And if I was the new czar, I would try to make sure there were lots of those conversations happening all the time so that people are held accountable.

Anthony Scaramucci: (41:16)
Well listen you were very generous with your time. You wrote an amazing book. I also want to recommend Top of the Morning and The Morning Show because I thought those were intriguing about that high paced competition in morning television. Before we let you go let you go, what is your next project Brian? Are you able to talk about it? Or you don't have a project yet?

Brian Stelter: (41:38)
I'm brainstorming what to do because I don't know how to top this book about Trump and Fox. If Biden wins, and he makes America boring again, there's not going to be any books to write. Think about there's all this interest in Trump, the pro-Trump [crosstalk 00:41:52] anti-Trump [crosstalk 00:41:53] everything in the middle.

Anthony Scaramucci: (41:53)
And now you sound like President Trump. He says, "When I go, you guys are going to miss me." Right? I'm not going to miss him. I'm going to be honest with you. But...

Brian Stelter: (41:59)
I think the book publishing business is going to miss him. I'll say that.

Anthony Scaramucci: (42:03)
But I wish you great success. You-

Brian Stelter: (42:05)
In terms of my next project, I just want to make my Sunday show better. That's always my top priority, is, "How do I make my show [crosstalk 00:42:10]

Anthony Scaramucci: (42:10)
All right. So make the Sunday show better, I'm certain that that's going to happen. I watch it every Sunday. It's on my DVR. That's Reliable Sources at 11:00AM on CNN, and CNN International. Ladies and gentlemen, Brian Stelter. But Brian, thank you so much for joining us, and we'll have this up on our website and so forth, and I really enjoyed your book. Fantastic work.

Brian Stelter: (42:36)
Awesome.

Robert Draper: "To Start a War: How the Bush Administration Took America Into Iraq" | SALT Talks #47

“Damage done to our intelligence agencies isn’t systemic and permanent, but it isn’t a matter of replacing one President with another.“

Robert Draper is a Writer-at-Large at The New York Times Magazine, as well as a contributing writer to National Geographic. He is the author of several books, including the recently published To Start a War: How The Bush Administration Took America Into Iraq. Robert first became acquainted with the then-Governor of Texas, George W. Bush, when he was writing for the Texas Monthly. He then moved to Washington, D.C. to write a biography on President Bush after seeing existing ones fall short of capturing his full story.

“Before 9/11, President Bush intended to be a domestic President.” There was a focus on tax cuts and jobs creation, and a passive approach to potential international conflict. President Bush didn’t lean into the intelligence about 9/11 and, as a result, retaliated stronger than he needed to compensate for this shortcoming.

“One uncomfortable truth that this President has been unwilling or unable to abide is that Russia interfered with the 2016 election.” In 2016, the Russians assumed that Clinton was going to win and sought to delegitimize her Presidency and demoralize her electorate. However, once they saw that then-candidate Trump had the potential to win, they stepped up their disinformation campaign.

LISTEN AND SUBSCRIBE

SPEAKER

Robert Draper.jpeg

Robert Draper

Writer-at-Large

The New York Times Magazine

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology and public policy. SALT Talks are a digital interview series that we launched during this work from home period in which we try to really replicate the experience that we provide at our SALT conference series.

John Darsie: (00:29)
And what we're really trying to do is provide a window into the mind of subject matter experts, as well as provide a platform for what we think are important ideas that are shaping the future. And we're very excited today to welcome Robert Draper to SALT Talks. Robert is a writer at large for the New York Times Magazine and a contributing writer to National Geographic. He is the author of several acclaimed books. And one of which we'll talk about today, his most recent book, which is, To Start a War: How the Bush Administration Took America Into Iraq.

John Darsie: (00:57)
And Robert is really one of the preeminent writers talking about the Bush administration period. He wrote a previous book about the Bush administration as well, closer to the time that they were an office. Robert lives in Washington, D.C today. And a reminder, if you have any questions for Robert during today's SALT Talk, you can enter them in the Q&A box at the bottom of your video screen.

John Darsie: (01:16)
And conducting today's interview again will be Anthony Scaramucci, the founder, and managing partner of SkyBridge Capital, a global alternative investment firm. Anthony is also the chairman of SALT. And with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (01:29)
John, thank you. Robert, great to have you on. I've read several of your books and obviously I always try to read your articles in New York Times Magazine. Before we get into that though, tell us a little bit about your professional and personal background. How did you find this career arc and what was driving you as a kid to get you to where you are today?

Robert Draper: (01:50)
Sure. Anthony, thanks for having me on. And I'm kind of the black sheep of my family. I come from a family of lawyers, but I found at a very early age that I was basically incapable of doing anything other than writing. And so thank God. I mean, it's to figure out how to do it for a living. I'm from Houston, Texas originally. I became a staff writer in Texas Monthly. And while I was a staff writer there in the 1990s and became acquainted with the new governor of Texas George W. Bush, and got to know him. And so at around the time that he moved to Washington and became president, I sort of sat back and waited to see how his presidency would unwind. I had no aspirations of making in cottage industry out of Bush, like the way a lot of Texas journalists had.

Robert Draper: (02:38)
But then by the end of his first term I had frankly decided that none of the other biographies about Bush really captured the character of Bush as I knew it. And so I sought to make myself his biographer as it were. And I moved to Washington, D.C. I've been here ever since.

Anthony Scaramucci: (02:56)
And so one of the Bush books was Dead Certain, you sort of wrote that during the mid, not the middle, but the second term of the administration. And this is sort of the second book, is that correct? Would be the second one?

Robert Draper: (03:11)
Exactly, yeah.

Anthony Scaramucci: (03:12)
Right. And so I may just hold the book up. I love promoting fellow authors. Robert, in case you didn't know, I've written four New York Times internationally recognized bestsellers. And if you don't believe me, come into my basement, I'll show you every copy that I had to buy to make that happen.

Robert Draper: (03:27)
Outstanding.

Anthony Scaramucci: (03:28)
But you on the other hand, actually sell books, which is very impressive. And this is a fantastic read and we're going to get into it in a second. But I want to talk to you first about a New York Times Magazine article that you wrote recently called Unwanted Truths: Inside President Trump's battle with the U.S. intelligence agencies. Tell our viewers and listeners, what are the unwanted truths that were in that article and how is the president trying to subvert them?

Robert Draper: (03:55)
Sure. Anthony, the story is basically about the collision course between a president who his counselor Kellyanne Conway, memorably described as embracing alternative facts. The collision between that kind of person and a community of government officials, whose job it is to actually lay out the facts to present the uncomfortable truth. And the one uncomfortable truth in particular that this president has been unwilling or unable to abide has been the manner that Russia interfered with the 2016 election to swing the election towards Trump. And it tends to do so yet again for the same purpose in 2020.

Robert Draper: (04:38)
To this president, and I think it's understandable why he would feel this way to suggest that Russia tried to make him president is to call into question the legitimacy of his presidency. But rather than recognize that reality for what it is and to own it and to say, "Therefore, we're going to make sure that this doesn't happen again." He has time and again, refused to acknowledge that, that's true. In fact, said the opposite that it's not true. And more to the point, and this is what my story really deals with Anthony, has punished those people in the intelligence community who have said what the intelligence community has plainly assessed, namely that Russia tried to swing the election in his favor.

Anthony Scaramucci: (05:20)
Okay. So there are many of our fellow Americans that did not believe that Russia tried to sway the election in his favor. So for the benefit of some of the people on this call, tell us what you learned from the intelligence agencies in terms of what Russia was doing in 2016, and then secondarily, what do you think they will be doing in 2020? What are they already doing in 2020?

Robert Draper: (05:44)
Sure. In 2016, the Russians assumed as did everyone, including I think candidate Donald Trump, that Hillary Clinton was going to win. And so their chief aim was to delegitimize her, to demoralize her electorate, to make her presidency a hobbled one at the outset. Sometime in the fall of 2016 it became apparent to the Russians that the Republican nominee could actually win. And so they began to step up their disinformation. They began to try unsuccessfully to hack into infrastructure, to use various trolls and bots on Facebook and elsewhere to amplifying negative messages relating to Hillary and to promote candidate Trump. And it's impossible to know Anthony, to what degree, if at all, that was determinative. It may well be that Trump would have won anyway, we'll never know. But what is clear is that, and the intelligence community assessed this, was that, that was what Russia did. And that's why Russia did it.

Robert Draper: (06:49)
They have sought again to do so in 2020. And what I write about in this story is a national intelligence estimate, which is this assessment that is made by the entire intelligence community on any particular subject. This one had to do with Russia attempting yet again to interfere this upcoming November. And once again, it assessed that Russia favored the current president. That Russia probably believed that under a new president there would be increased sanctions and it would just basically be much more of a slog for the Russians.

Robert Draper: (07:20)
And again, using I think I'll be at in a more sophisticated manner on trolls and bots through the Russian internet agency, through other means. They are also still trying to hack into our infrastructure. And the Department of Homeland Security has spearheaded what we hope will be a successful counter to them. But what is already clear, Anthony, is that if DHS and the rest of the government succeeds, it will not be because President Trump has encouraged them to succeed, really it will be the opposite since the president has now pushed out this message that no, no, it's not really Russia that's trying to interfere, it's China. And China's trying to interfere in Biden's behalf, not mine. So it's China, we should be concerned about.

Anthony Scaramucci: (08:05)
Yeah, no say, listen, and I appreciate that this information is out there. One last question on this, the damage done to our intelligence agencies, Robert, is it repairable? Is it something we can recover from? Or has he done systemic and permanent damage?

Robert Draper: (08:22)
I don't think it's systemic and permanent, Anthony, but it's also not simply a matter of replacing one president with another. I think that we have lost some credibility within the intelligence community among potential human assets who now aren't sure just whether we're on the level. There has been concern that information given that finds its way to this president could then be leaked to the Russians. And frankly, even if President Trump is defeated, Anthony, as you well know that does not mean that Trumpism will be. And it does not mean that there will suddenly be a wholehearted embrace of the intelligence community's findings of faith in government institutions far from it. And I suspect that we're in for a long haul here. And the intelligence community is going to be caught in the crossfire, just like a lot of other government institutions.

Anthony Scaramucci: (09:15)
Not a lot to say, I think it's well said. Do you think there's any Russian involvement in these protests that are being organized around the country? Particularly the one in Kenosha, Wisconsin.

Robert Draper: (09:26)
I don't know about Kenosha, Anthony, but the New York Times did report on, about a week ago that the intelligence community believed that there was evidence of Russian activity in the protest in Portland, and that they were doing what they could, Russians were actual live bodies on the ground to sort of fan the flames of that sense disorder. Basically, helps stoke the argument that what we need is law and order, and thus what we need is the president. For Kenosha, I'm not aware of any intelligence that indicates that. But it is not a very far leap of the imagination from Portland to Kenosha, to figure that at minimum, they are feeding disinformation that relates to the riots and that maximum were actually participants on it.

Anthony Scaramucci: (10:12)
Well, I mean, it's just curious, Kenosha, Wisconsin itself, if you look at the electoral map, it's going be very difficult for the president to win without Wisconsin.

Robert Draper: (10:21)
Right.

Anthony Scaramucci: (10:21)
If you just look at the way the map is shaping itself up. So it's something that is worrisome that you see the activity in Kenosha, certainly the tragedy that took place there and the exacerbation of that tragedy. So we'll have to see what happens. But this is Seminole book, how to start a war. It's a Seminole book. You say something in the introduction, which I loved, the elusive goal of trying to have peace by starting a war. And then you talk a lot about linkages or non-linkages to Saddam Hussein as it related to the trade center. But yet there seemed to be a determined discipline inside the administration that they were going to use 9/11 as a leveraging point to go to war with Iraq. And so tell us about your observations of that administration, what they were doing right, what they were doing wrong and what your conclusions were.

Robert Draper: (11:18)
Sure. I mean, start with this, Anthony, that before 9/11, I really do believe that George W. Bush intended to be a domestic-focused president. He didn't know much about foreign policy. He'd been a governor of a state that bordered Mexico. So he knew a bit about Mexico. And he knew from personal animists, from a family history, a bit about Saddam Hussein. But the evidence to me was pretty clear that Bush didn't want to spend his presidency hugging war widows.

Robert Draper: (11:44)
He wanted to pass tax cuts, education reform, immigration reform. And I mean, that's how he was as governor. He believed in executive should do three or four things, do them right and then let the government take away on its own. 9/11 happened. He wasn't prepared for it. He should have been, there were ample warnings that Al Qaeda was intending to attack the Homeland. And he just simply did not lean into that the way he should have.

Robert Draper: (12:09)
I think you can argue that he overcompensated as a result of that. That he began to look for the next way that he was certain would take place and began to imagine the next wave as being even worse than 9/11, because perhaps an Al Qaeda kind of group would use weapons of mass destruction. But where would they get those WMD from? He began then to imagine that they would perhaps come from this rogue foe of the United States, Saddam Hussein, the butcher of Baghdad, as it were.

Robert Draper: (12:38)
You've noticed that he used the word imagine two or three times. And I think that's the real problem and the thing that I uncovered in this saga. That where 9/11 arguably was a failure of the imagination. You could say the Iraq war was a failure of too much imagination, of imagination we're on a mock of. There were intelligence failures to be sure. But the real failure was that the president departed from intelligence altogether and began to think of what could happen.

Robert Draper: (13:04)
And part of what could happen and this goes to what you mentioned about the very beginning of my book, Anthony, is that there was a belief that all sorts of dire things could happen if we didn't go to war. And then alongside that I very sunny belief in all the wonderful things that would happen once we did go to war. That Iraq would erupt in this joyous display of democracy where something like that had never existed before. And this too was a feat of the imagination. And I think a tragic one.

Anthony Scaramucci: (13:35)
Well, I mean, you mentioned a Harvard professor's name that I haven't heard in a while, names are Laurie Mylroie.

Robert Draper: (13:42)
Laurie Mylroie.

Anthony Scaramucci: (13:43)
I think I pronounced right.

Robert Draper: (13:44)
Yeah.

Anthony Scaramucci: (13:44)
And she was a big believer that Saddam was part of the 1993 World Trade Center bombing. And therefore it had to be linked to the 2001 tragedy. But you didn't find any real intelligence or any real evidence of that, is that correct?

Robert Draper: (14:02)
That's correct. I mean, not only did I not even find any indication whatsoever that Saddam had any linkage to 9/11. But it's also a fallacious as to pursue as Laurie Mylroie did, this notion that he was involved in the 1993 World Trade Center attempted bombing. The FBI for a time was pursuing any and all leads of, if the perpetrator were Iraqi or Afghan or from Mars, they didn't care. They just wanted to get who did it.

Robert Draper: (14:30)
But all the leads died, that headed towards Iraq. They thought that, that was a foolish notion. And further, I should mention that Laurie Mylroie also thought that Saddam was behind the 1995 Oklahoma City bombing as well. So basically everything that was bad that had happened to the world, she believes Saddam was responsible for it. And we're talking about her, of course, because she's not just some character on the margins. She's someone that people at the Bush administration actually lent credence to most, especially the Deputy Secretary-

Anthony Scaramucci: (14:57)
Paul Wolfowitz.

Robert Draper: (14:57)
... of Defense, Paul Wolfowitz, who in so many ways was the straw that stirs the drink on the whole Iraq saga.

Anthony Scaramucci: (15:04)
See that Reggie Jackson, that you brought up the Reggie Jackson metaphor.

Robert Draper: (15:08)
Yeah, exactly.

Anthony Scaramucci: (15:08)
Good for you. Yeah. I'm a met fan, Robert. Just take it easy therefore, was the worst loss in met history yesterday, okay? I'm still crying about.

Robert Draper: (15:17)
Oh, come on.

John Darsie: (15:17)
Help is coming Anthony. Help is coming.

Anthony Scaramucci: (15:19)
And then I told my brother, I'm not watching the doubleheader. By the third ending, I turned on the TV. When you're a met fan, you live in pain your whole life. But okay, you hurt my feelings about bringing up Reggie Jackson, but let me get back to the show here. The thing I guess I want to ask you about, there was a couple of failures, right? Obviously the weapons of mass destruction. You go into it in the book. Why was that such an epic fail? And then secondarily, there was an opportunity there to have the Republican Guard with Paul Bremer and Rumsfeld and Wolfowitz, to help contain the insurrection that was taking place or what ultimately became the Iraqi resistance and ISIS, talk about those two failures of ours. What did we miss in that process?

Robert Draper: (16:04)
Sure. One of them was an intelligence failure. The other was an ideological failure. The intelligence failure had to do with a supposition, the intelligence community. And by that, I mean, not just the CIA, but I mean, pretty much every intelligence agency in the world had that Saddam, Iraq, which once had weapons of mass destruction. And, which had used them in fact on the Iranians and on Saddam's own people, that they surely had them again owing largely to the fact that, well, I mean, he certainly behaving like a guy who has them, he hasn't denied, he's had them. And he's pushing around the weapons. The specters are on the ground there.

Robert Draper: (16:46)
And then the intelligence community from there began themselves to take imaginative leaps. They would see literally see trucks coming in and out of known chemical plants and assume that those were decontamination trucks spraying the floors of a chemical weapons facility. They were just water trucks, hosing things down. But this was, again, the manner that if you start with a dark conclusion then you find facts here and there that will conform to that, that's confirmation bias. And unfortunately, the CIA was very much in concert with government officials who also believed the same thing.

Robert Draper: (17:22)
Now, the second part that you mentioned had to do with the failure of the U.S. government to keep the peace in Iraq once we did invade by keeping the Iraq army intact. That actually had been the policy of the Bush administration. It was reversed on the ground by Paul Bremer, the head of our Coalition Provisional Authority. And he did so in concert with the under secretary of Defense for Policy, Doug Feith and an outside advisor named Walt Slocombe. They had this ideological notion that the Iraqi army was filled with bad dudes, with Baathist and that they needed to be basically torched. And rebuilt a new with true believers.

Robert Draper: (18:06)
And this was a kind of idiotic notion, frankly. I mean, to be anybody in the Iraqi regime, you had to be a member of the Ba'ath Party. If you want it to be an electrical engineer, if you wanted it to be a school teacher. And so, yes, you had to pledge fealty to the Ba'ath Party if you wanted to join the army. So the very notion that you could find an altogether different army, an altogether different group of government employees and disband the army as well as the Ba'ath Party in the meantime only meant that you were going to piss off a bunch of Iraqi men who are now unemployed and had guns. And that was really the makings of the insurgency.

Anthony Scaramucci: (18:52)
Well, no question. So when I visited Baghdad on a troop support mission in January, 2011, we've met with Lloyd Austin in one of Saddam's old palaces, I guess that was our NATO Headquarters. And he was lamenting that decision. And lamenting how the insurgency developed. But he also, that time we were in the Obama administration, he did not want troop force deployment to drop below 20,000. He said there would be a rise of ISIS. No, I'd never heard of that word or the IS before. And of course that happened. And so some of these decisions are made for political purposes.

Anthony Scaramucci: (19:30)
You do write in the book that Rove was sort of thinking we've got to get the war started before Labor Day, or at least get the rumblings going so that we could get the election cycle turned on. And wartime presidents don't get usually sent home, they usually get reelected. How much of these mistakes that we made in To Start a War, your book, were born from politics as opposed to policy?

Robert Draper: (19:57)
Yeah, well, I mean, that's a well phrased question, Anthony, because I do think that you have to kind of parse this and, or dis-aggregate it. And Bush's case again, for all of his many flaws I do not think that he went to war for political reasons. I don't think he went to war to get oil. I don't think he went to war to appease Israel. I think he truly went to war because he felt the need to protect America after he had failed to do so on September the 11th. And I do not think the political considerations factored into that.

Robert Draper: (20:27)
I do think though that for those people who gave a glide path to war that I should say people on Capitol Hill, it was rife with political considerations. Therefore, all these Democrats, including Hillary Clinton, including Joe Biden and certainly Hillary Clinton, who gave the president authorization to use military force. They were very aware of the fact, Anthony, that in 1991, when a vote for military force for a war last came up in the first Gulf War, all these Democrats voted against it because their memory of war was this intractable forever war of Vietnam. And they didn't want to be attached to that in any way.

Robert Draper: (21:05)
They voted against the first Gulf War. The first Gulf war ended up lasting all of 100 hours. It was a roaring success. And the presidential ambitions of Sam Nunn, one of the Democrats who voted against it were immediately squashed. And so there were a lot of Democrats who thought on that going that way again. And we hope war will be as tidy this time as it was last time. And so I do think that, you see among Democrats and certainly among Republicans who felt the need to stay with their wartime president, a number of considerations that don't look entirely fact-based, they do have the ring of politics to them.

Anthony Scaramucci: (21:45)
If you had a member of the policy establishment, Republican or Democrat read this book. And some of it reminded me actually, of Guns of August by Barbara Tuchman in terms of like the different scenarios that were coming up, what would you want a policy person to take away as a teachable moment from your book?

Robert Draper: (22:04)
Yeah, I think it's that, I mean, because war is so messy, because war invariably entails second and third order consequences that you don't foresee that tend not to be good, then you need to follow the truth. You need to have an earnest pursuit of precisely whether war is merited and precisely what will happen when you do go to war.

Robert Draper: (22:32)
And I think that the infuriating thing, and that's the word that I've heard most often ascribe to my narrative in this book is that there's so much of that any half serious inquisition of the truth would lead you to that Iraqis had no experience in self-governing. They had no experience in democracy, that there were these sectarian tensions. That there was in fact, no hard cold evidence of weapons of mass destruction, that there was no evidence whatsoever that Saddam, even if he did have weapons intended to use them against America.

Robert Draper: (23:11)
And if we had gotten out from under our biases and simply pursued where the truth had led, we would have been left with a conclusion that war was not only unnecessary, but undesirable. And it seems like so basic that just follow the facts would be the advice that this book offers policymakers, but it is a reminder of just what kinds of disasters can ensue if you don't follow the facts.

Anthony Scaramucci: (23:40)
And it's interesting. So then I would say in summary, To Start a War is basically the lesson here is how to not start a war, that's ultimately what it is. Because by not starting a war, you don't get all of these unintended consequences that take place. So I'm going to turn it over to John Darsie, who's in his new venue there in North Carolina. He's trying to pretend that he's a Southern now, instead of the rank wash that I know him to be. And he's got some questions from the audience. So go ahead, John.

Robert Draper: (24:11)
Okay.

Anthony Scaramucci: (24:12)
John is really-

John Darsie: (24:12)
Yeah, definitely, I've been trying to tell everybody-

Anthony Scaramucci: (24:14)
... this is just an image improvement for him. Draper-

John Darsie: (24:15)
... I'm just an [inaudible 00:24:16].

Anthony Scaramucci: (24:16)
... just so you know, this is an image improvement. Go ahead, John.

Robert Draper: (24:17)
Okay.

Anthony Scaramucci: (24:17)
But for myself I'm you John.

John Darsie: (24:18)
I'm just [inaudible 00:24:18] trying to convince everybody that I'm a Northeastern WASP by having those paintings and everything in the background, but I'm back to my roots now. So I can talk in my Southern accent and feel comfortable. I don't know, Robert's a Houston guy. So he sympathizes with me a little bit.

Robert Draper: (24:33)
I can understand what you're saying, yeah.

John Darsie: (24:34)
There you go. You wrote another great book in 2012 called Do Not Ask What Good We Do. It was later republished under the title When the Tea Party Came to Town. And this is switching gears a little bit. The book was about the actions of both Democrats and Republicans in Congress during President Obama's first term. And in basically the gist of a lot of what you talk about is how Republicans got together after Obama was elected and vowed to do everything they could to fight his agenda at all costs. Was that different and more hyper-partisan than other periods in history? And what do you think now if Biden is to win the election and he sets out his agenda in his first term, what do you think politicians in the Democratic Party have learned from that period of time? And how do you think it's affected governance and the periods since President Obama's first term?

Robert Draper: (25:25)
Yeah, sure, John. I mean, I do think that the period that my book begins with, so right after Obama's election or right after his inauguration is not dissimilar to what happened when Newt Gingrich's revolution led the Republicans to take over the house in January of 1995. At least the intention was to grind Democratic Party policies to a screeching hall and to overrun a conservative revolution. But in practice, what you'll recall is that Gingrich actually worked with then President Clinton quite successfully on a number of measures. And this really teed off a lot of Republican house members who thought that he was being a little too acquiescent of Clinton, maybe falling prey to the president's a silver tongue. But the fact is that it was not a time of nonstop gridlock.

Robert Draper: (26:28)
What you described as the prologue to my book, Do Not Ask What Good We Do, is that hours after Obama's inauguration all these Republicans are gathered in a steakhouse kind of licking their wounds. And by the end of the evening, they've come up with a battle plan to thwart anything, and everything that this new president does. So rather than it being, let's figure out a way to work together, but to move things towards our side, it's basically, we're going to find this president on everything.

Robert Draper: (26:56)
That's a kind of fight club mentality that I think we have come to see all the way till now. I mean, it's kind of reached its apotheosis right now where the president of the United States, has basically said, I'm going to have as little to do with Capitol Hill as possible. I'm going to bend that institution as well as practically any other institution to my will. And it does kind of beg a question, will we ever get back to a moment where there are not only checks and balances between the legislative and executive branch, but also a kind of inter-party commonality between the two parties on Capitol Hill such that there won't be this constant kneecapping or thwarting of any objectives, but instead a working together? I honestly don't see any evidence that we will easily come back to that.

Robert Draper: (27:53)
I mean, John, I think that the axiom had always been that while in times of crisis Americans come together. Coronavirus constitutes a crisis where anything but a come together nation at this point.

John Darsie: (28:08)
So you think Donald Trump is more of a symptom of greater division than necessarily the disease and something that we can overcome with someone like Joe Biden, who actually been criticized in democratic circles for talking about his history of working across the aisle.

Robert Draper: (28:23)
Yeah. Well, I think you're right.

John Darsie: (28:24)
So, I-

Robert Draper: (28:26)
Yeah, go ahead. Yeah, no, I'm just going to say that. Yeah, I do think that, that's the case, yeah.

John Darsie: (28:30)
Yeah. You can elaborate on it, and then I'm going to switch gears to another audience question.

Robert Draper: (28:33)
No problem. Yeah. So I do think that Trump is symptomatic, but he's also an accelerant of it. I mean, he exacerbated something that already existed.

John Darsie: (28:47)
So as I was researching this SALT Talk, I found interesting the juxtaposition between your article about Trump's battles with the U.S. intelligence community and your book about how members of the Bush administration, which is, you could call an established administration sort of gain the intelligence system to reach an outcome that they wanted. Is Trump right in some ways to question intelligence at face value and take a more skeptical view of the intelligence community? Or is this something that's very dangerous and leads us into sort of a post truth world that you think is going to be hard to get the horses back in the barn?

Robert Draper: (29:19)
Well, he would be right to question the intelligence at face value, or rather not to accept it at face value, to be a skeptic. I think one should always be. So one should always ask the next question. Well, who's your sourcing on this? Are you sure about this? Could it be XYZ? That's unfortunately not what the president's doing. Instead, the president is first of all using the WMD fiasco, something that I think that the intelligence community has learned a great deal from as an excuse to say, "We don't ever need to trust these guys because look how badly they bungled it before."

Robert Draper: (29:54)
And then situationally to take the intelligence that he likes while any intelligence that happens to be politically inconvenient to him, for example, the notion that Russia interfered in the election to sway the election to his favor as something that is baloney. I mean, he didn't decide and locate Soleimani himself. I mean, he did that with the help of the intel community. Now he's taking credit for it. Fine. That's what presidents do.

Robert Draper: (30:23)
But Al-Baghdadi's assassination, Soleimani's assassination came because the intelligence community means to pinpoint their locations. He approved it, signed off on it, and those are clear intelligence triumphs. So you cannot say even if you're Donald Trump, that we should never listen to these guys. The question is, do you only listen to them when they succeeded at something and then you blame them when something doesn't succeed? And I'm afraid, that's what we've been seeing most recently.

John Darsie: (30:54)
Right. I had to play devil's advocate a little bit just to get the answer out of you, but I think we all know the answer to that question. So I want to switch gears again a little bit back to the Middle East. So we recently had our SALT Conference in Abu Dhabi in the UAE. We've also had a lot of Israeli entrepreneurs at our SALT Conferences, including actually at SALT Abu Dhabi. So I'm not going to say we take credit for the Abraham Accord between the UAE and Israel. But it's definitely a step in the right direction in terms of fostering economic cooperation, which leads to geopolitical cooperation in the region. Do you think that's a template and sort of a precursor to a greater stability and understanding within the region? Do you think it's an outlier? Or what do you think the future of the region is? And do we have hope to empower some of these countries economically and hopefully lead to a dialing down of some of the extremism and hate that exists between different countries in the region?

Robert Draper: (31:48)
Sure. I mean, I don't want to short sell that achievement. Anything that leads to more cooperation between Israel and the Arab countries is something to be applauded. And I'll also caveat that I'm by no means an expert on this. It does seem to me, however, to be an accord that kind of amounts to low hanging fruit. It's not exactly one that benefits say the Palestinians or brings them to the table. It's one that has a lot of economic and actual arms implications to it. Again, I think it's an important first step as long as you recognize that, that's what it is. That it is an area that both sides are likely as to agree on. And then from there you get to the harder part. But I would not assume as the Trump administration has been kind of advertising this as anything that is greater and more encompassing a victory than it is. It's a start, is what it is.

John Darsie: (32:55)
So again switching gears back to U.S. politics a little bit. So, there's this idea that, Trump has the anti-establishment candidate, right? After years that we had one Bush, we had a Clinton, we had another Bush, and then we had president Obama as the only non-Bush or Clinton president, or then candidate against Donald Trump in 2016. How much do you think people like George W. Bush and the so-called establishment is to blame for the rise of someone like Donald Trump, who again, he's an avatar for people's hate of sort of the upper classes of America in some ways as Anthony has written and spoken about in the past. How much do you assign, blame or do you owe the rise of a figure like him to failures of the Bush administration and others like him in the American establishment?

Robert Draper: (33:46)
Yeah, I think I'll pass on the word blame and go with your amended version of the question, which is-

John Darsie: (33:52)
There you go.

Robert Draper: (33:55)
... how much is can be traced back to, because I do think that the whole generation of Americans has grown up now with a view that the U.S. government is not on the level. And that goes back to Iraq. That goes back to Bush, a man in a White House, in the Oval Office telling us we need to go to war against this guy, because he's going to kill us. And it turns out not to be the case at all. And it's for the case that anti-establishment had been building up for quite a while. I think on both sides we had seen establishment presidencies not deliver, but of course it's always much more complicated than that.

Robert Draper: (34:35)
It's not as if that Barack Obama was himself the ultimate insider when he came to Washington and he did however, have a kind of insight or a view that we should work with both parties. And if there's one major failure, at least according to Obama, as he's saying it these days, that one can lay at the doorstep of this presidency is that he was willing to trust the establishment, trust the institutions too much. So you can argue, I guess that Donald Trump came in basically saying it's time to blow everything up.

Robert Draper: (35:07)
But I lend less credence to that given the fact that so many members of his cabinet have essentially used Washington as their personal piggy bank that the swamp far from being drained, it's hardly a populous swamp. It's more like a swamp that he has bent to his will. But one in which there is every bit as much lavish profiteering as there was before. So what he has framed as kind of anti-establishment presidency is really only anti-establishment and so far as the establishment has shrunk to the size of a bathtub. And the person in the bathtub is Donald Trump.

John Darsie: (35:49)
Right. We have a question from our audience, sort of a followup, I think from a UK based participant about given the United Kingdom and its experiences in the past in the Middle East, negative experiences, and even in Iraq, how do you think George W. Bush despite having sort of flimsy intelligence that drove the decision to invade Iraq, how was he able to get Tony Blair and another massive country like the United Kingdom to join the Iraq War?

Robert Draper: (36:16)
Well, partly because Blair was in a sense already there. Had been giving major speeches about Saddam being a threat to the Middle East and someone who ought to be deposed. So part of it's that. And all of that precedes Bush's presidency. Part of it also was that Blair really did believe in the importance of the UK as the indispensable ally to the U.S. and he did not want to forfeit that. He believed in particular after September 11th, that global coalitions were going to form and UK needed to be by the U.S. side.

Robert Draper: (36:58)
He also believed, Blair, that he could curb Bush's potentially reckless appetite and make sure that he was staying within the guardrails and being mindful and respectful of international institutions, such as the United Nations. And so that he would not go it alone. But what is clear is that, Blair was going to stick with him no matter what. And indeed there is a memo that has since been declassified of Tony Blair in the summer of 2002, or maybe even spring of 2002, writing to Bush saying, "George, I will be with you, whatever." So, it didn't take much. Blair saw the stakes and figured he'd better be by Bush aside.

John Darsie: (37:39)
Right. This is a last question that I'll leave our audience with. You've been analyzing U.S. politics for over many eras, you wrote about the Tea Party movement, and you've even seen some Tea Party insurgents in Congress now become the establishment. So this whole thing runs in cycles. You wrote about the Bush administration. You've written at length about the Trump administration. And most recently in that great article in New York Times Magazine about his battles with the intelligence community. If you look out in 10 years from now in your expert opinion, where do you see the state of U.S. politics? Is it going to continue to remain in such turmoil in a way that anytime we have a shift in power that the other side just employs dirty tricks that trying to prevent that side's agenda from being prosecuted? Or do you think there is some path to bipartisanship and a little bit more patriotism in terms of trying to address issues that are facing the country?

Robert Draper: (38:34)
Well, I guess, what I'd say is that the next really couple of years will tell the tale on that and how we manage. I mean, we're now at 180,000 casualties as a result of the coronavirus. And if within a year's time, this continues unabated then I really do think we will see a kind of civil war. I don't mean that necessarily literally, but certainly, a country that has essentially been cloven into and a country that, because it has been cloven to diminishes in stature both economically and geopolitically. And it will experience a real and perhaps permanent decline. That's if we don't get our arms around this. Getting our arms around the coronavirus will entail I think working together. And the working together may not take place immediately. And whether this is under a suddenly enlightened Trump administration or under a Biden and Harris administration it will require strong leadership one way or another.

Robert Draper: (39:40)
And one hopes that, that kind of success will be in elixir, the begets more success than it actually awakens an appetite for bipartisanship. But even as I say this, it's hard not to kind of descend into gloominess and wonder just how that will happen if it hasn't happened already. And in particular, how it will happen. The second term of a president who now realizes that there are absolutely no checks on his behavior. I guess, theoretically, that could make him more unlined, this could make him think now I have nothing to prove anymore, and I'm willing to actually make Infrastructure Week happen. But I wouldn't place all my money on that.

John Darsie: (40:28)
Right. Well, thanks so much for joining us, Robert. You've written on a very diverse set of very interesting topics. We look forward to your next feature article in New York Times Magazine, as well as your next book. I'll let Anthony have a final word.

Robert Draper: (40:40)
Alright, thanks, John.

Anthony Scaramucci: (40:42)
Well, listen, we don't say this lightly. This was an amazing book, Robert. I really enjoyed it. I think it'll be a Seminole study. People will look at this 25 years from now in terms of understanding the era and the direction that we went in. And hopefully it'll teach people to avoid some of the mistakes that were made. But in any event I want to personally thank you for coming on. I hope we get a chance to get you back after the election so that we can talk a little bit about where the future is. Not only for the intelligence community, but for the United States. So thank you, Robert. Appreciate you being here.

Robert Draper: (41:13)
Thanks so much for having me, Anthony, and I'd be delighted to come back.

David Dayen: Author "Monopolized: Life in the Age of Corporate Power" | SALT Talks #43

“I’m hopeful that we can see this as beyond left and right and as a problem that affects all of us.“

David Dayen is the Executive Editor of The American Prospect magazine and the Author of Monopolized: Life in the Age of Corporate Power. He writes about the effects of power consolidation across technology, manufacturing and more.

“We have a problem when smaller collections of bigger companies control our economy.” The breaking up of monopolies has traditionally been a conservative idea, but more recently we’ve seen liberal ideology lay claim to its principles. This considered, it still remains a largely bipartisan initiative, albeit for separate reasons.

One company has no incentive to provide an exceptional product. Having one company responsible for large amounts of people and products creates severe supply chain risks and results in city abandonment. With regard to companies like Amazon, “You cannot control a platform and compete on the same platform.”

LISTEN AND SUBSCRIBE

SPEAKER

David Dayen.jpeg

David Dayen

Executive Editor

The American Prospect

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology and public policy. Assault talks or a digital interview series that we started during this work from home period are going to continue indefinitely even after hopefully we get back to normal here sometime soon. And what they are? Their interviews and conversations with leading investors, creators, and thinkers. And what we're really trying to do with the SALT Talk series is to provide our audience a window into the minds of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And today we're very excited to welcome David Dayen to SALT Talks. David is the executive editor of The American Prospect, which is a daily online and quarterly print, American political and public policy magazine dedicated primarily to American liberalism and progressivism.

John Darsie: (01:02)
He's also an acclaimed author, and his most recent book being a Monopolized: Life in the Age of Corporate Power, which was released in July. Monopolized is a riveting account of what it means to live in this new age of monopoly and how we might resist this corporate hegemony. David's work has appeared in The Intercept, The New Republic, HuffPost, The Washington Post, The LA Times, and many more outlets. His first book called Chain of Title: How Three Ordinary Americans Uncovered Wall Street's Great Foreclosure Fraud was the winner of The Studs and Ida Terkel Prize, and it was released by the new press in 2016. If you have any questions for David during today's talk, a reminder please post them in the Q&A box at the bottom of your video screen. And conducting today's interview will be Anthony Scaramucci, who I know read David's book and was fascinated by it. Anthony is the founder and managing partner of SkyBridge Capital, a global alternative investment firm, and he's also the chairman of SALT. And with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (02:02)
Hey John, thank you. And David, thank you so much for agreeing to our invitation. I thought the book was fascinating. We'll get into the book in a second. I'm old enough to remember Studs Terkel and his living history stuff, so that's an amazing award for you, God bless. Before we get into the book though, tell us how you got to where you are. Why did you become a writer? When did the light bulb go off in your brain that you were going to have this sort of career?

David Dayen: (02:32)
Yeah, I kind of came in through the side door. I was working in television, doing a lot of shows up on the top of the digital tier of those networks. And I learned about a thing called political blogging. This was back in 2002, 2003. If you gotten involved in that you were part of a pretty small group and you could advance pretty quickly. And so I started a blog in 2004 I believe, and sort of advanced on the liberal side of the spectrum. And that gave me more opportunities, more opportunities. And I was still working in television, but sort of doing this on the side. And then I was sort of doing this and working in television on the side. And eventually it became clear to me that this is what I wanted to pursue. And I was really fortunate in my career to be able to write these books and become the executive editor of the Prospect. And it served me well.

Anthony Scaramucci: (03:40)
Essentially you say the liberal side. And so what I find fascinating about the busting of monopolies is that it used to be a conservative idea. I think we both know that. It generated out of the idea that there was too much power at the top and you needed to create more of a free enterprise system by shaking the power of the top and unleashing all of that innovation. So take us through why it's no longer a conservative idea. What do you think happened David?

David Dayen: (04:10)
I don't know that it's not at the ground level. I talked to people in this book who are libertarians, I talked to people who were Trump Republicans, who see this problem of concentrated corporate power very directly. I talked to one woman who is a big Trump supporter, and she was in a home that was purchased by Blackstone and I said, "Well you know, that Stephen Schwarzman is also a big Trump supporter. You're saying that Blackstone is the source of your problems. She said, "Yeah, I know. I'm trying to write to him, and I'm trying to figure that out." But I explained to her that Teddy Roosevelt was really the initial trust Buster and she said, "Well, I guess I'm a Roosevelt Republican then."

David Dayen: (04:50)
So I think there is a consensus left, right, center, whatever. If you talk to people about their daily lives, that's something is wrong, that the economy is rigged in some way, that these large interests are having a major effect on their lives in ways that maybe they can't talk about it as monopolies or antitrust. But they know that there's this level of corporate power that is influencing what they do, what they say and what they are able to do in major ways.

David Dayen: (05:24)
At the top, that's an interesting question. Why monopoly has moved sort of and shifted from the left to the right in the political sphere, in the halls of power. There still is a little bit of residual bipartisanship there. We had a hearing in the house antitrust subcommittee with CEOs of Amazon and Google and Apple and Facebook, and there were piercing questions from both sides of the aisle on the level of power that these large tech companies have. So I'm hopeful and it's one of the reasons I wrote the book and that we can see this beyond left and right. And we can see this as a problem that affects all of us.

Anthony Scaramucci: (06:08)
So explain to the lay people, and some of the younger people that listened to these SALT Talks, why it would be important the concept from an economic perspective of breaking up a large corporation, what are the benefits to that? And why would we do that? And there are some people out there that would say, "Well, the person was able to get the corporation to where it is. Isn't it unfair that we're breaking it up?" How do you respond to those?

David Dayen: (06:34)
Well, I mean, we've had laws on the books for over a hundred years that say that competition is something we want out of the U.S. economy. And if we don't have it, we get a lot of residual problems. So my view and what I write about in the book is that it goes beyond just sort of, "Oh, I only have one cable company. And so they charge me more." It goes well beyond that. Concentration is equality problem because if you have nowhere else but one service provider, they have no incentive to give you a quality product.

David Dayen: (07:13)
Concentration creates hidden risk in the economy where disruptions in supply chain for example magnify when there's only one supplier, we've seen this during the pandemic with respect to supplies for medical use like PPE. Concentration creates not only personal inequality, but regional inequality, where you see these regions that have been left behind, and these winner-take-all cities that have popped up and really created this abandonment of parts of middle America. And the wealth that was in these communities has been sucked out and is moving to these large corporations rather than staying within with small businesses and small enterprises. So on a variety of levels, I feel like we have a problem when we have smaller and smaller collections of smaller and smaller or bigger and bigger companies controlling too much of our economy. And innovations is another one, we see this in the tech sector where they have what is called a kill zone. Where if you get too prominent, that your product is either copied by the big guys, or you're bought out by the big guys, and then they take your innovation and they throw it away.

David Dayen: (08:35)
So that has a direct effect on the economy more generally. We've seen startup business formation cut in half since the 1970s. So I think it goes beyond just sort of the consumer welfare concept that largely is talked about in terms of price, which is way that we sort of judge mergers today. It really goes into more and more larger issues around the economy that we're seeing right now. And then in the book, I bring up a whole bunch of other issues that this touches on.

Anthony Scaramucci: (09:11)
So one of the great ironies which you point out which I love is the breakup of AT&T, unfortunately I'm old enough David, you don't look old enough, but I'm old enough to remember that breakup. I was 20 years old and we busted AT&T which is hard to believe now controlled all of the wire, telecommunications and was at the early onset of cellular communications. And it controlled everything. We broke it up into seven companies. It unleashed this massive amount of innovation in the society and allowed for international cable to be run and satellites to be launched. And lo and behold, the companies that we're about to talk about are really the product of the breakup of that very big monopoly, AT&T. Where now you have Google and Apple and Microsoft, and all of these people have benefited from that innovation. So these large corporations are now dominating daily life. What would be your prescription? If you were the monopolists in the United States, what would be your prescription to make things better? And what do you think would happen from an innovation perspective if we followed your prescription?

David Dayen: (10:21)
Well, I think it's absolutely true as you mentioned, and it wasn't just the breakup of AT&T, but the [inaudible 00:10:27] consent decree with AT&T which said everything from Bell Labs needed to be compulsory licensed out to electronics firms that paid a fair rate. And that created the electronics industry in the United States, which has created so much wealth for this country. And you see this recur over and over-

Anthony Scaramucci: (10:47)
Let me just stop you for one second, because you pointed ... What was happening is Bell Labs was creating and patenting all this great technology and they were sitting on it.

David Dayen: (10:55)
And doing nothing with it.

Anthony Scaramucci: (10:56)
Yes. Because they were collecting very high economic rent from their let's call it the copper wire business. So the forcing of that treasure trove of technology to be brought to the universe led to great advancement. Would that be fair to say? I mean, that's more or less correct.

David Dayen: (11:12)
Correct. Correct. Yeah. Bell Labs was one of the top R&D facilities in the United States at that point. And allowing those innovations to actually be used was great for the country and great for the economy. We see this recur over and over again. IBM forced interoperability and splitting their software from their hardware led to a software industry. The Microsoft trial, even though the remedy ended up being not completely fully set out, the trial itself forced Microsoft back from using the same tactics they used to kill the [inaudible 00:11:50] browser to kill things like Google. And that led to Google being more and more prominent. So we see the sort of eternal recurrence in tech where the government steps in to ensure that there isn't one company or a handful of companies that are too dominant, too controlling and having too many deleterious effects on the rest of the country and the economy.

David Dayen: (12:16)
And we can do that again. Now it doesn't have to be something as interventionists as a breakup. There's a distinction to be made between antitrust and anti-monopoly policy. So antitrust policy is really about mergers and breakups. Maybe you'd say there's a moratorium on mergers from Apple, which buys a company almost every week or Facebook or Amazon or something like that. Or maybe you break up those companies into component parts, maybe Amazon Web Services gets cleaved off from amazon.com or maybe Google's ad tech service gets cleaved off from Google search engine. But that's antitrust policy. You don't have to go there to necessarily come up with things that would be beneficial. So anti-monopoly policy could include things like structural separation where you say, "Okay, if you're a business, we're not going to tell you how to do this, but you cannot control a platform and also be competing with everybody else on that platform."

David Dayen: (13:19)
So Amazon controls the amazon.com marketplace, but also has its own brands that competes with companies on that marketplace and then takes all those company's data and uses it to formulate its own business model. So you can say we need to separate that structure. We can have a common carrier service and interoperability where we say, "Okay, Facebook you have to allow people in a competing service to contact their friends that might only be on Facebook. And make that interoperable, as we did with instant messaging where you can in any phone, you could do an instant message to somebody, it wasn't just AOL instant messenger you had to use. And there are more privacy laws and other regulations that you could do, there are a whole host of them, and I think this antitrust subcommittee report that's going to be coming out in the Fall is going to list a lot of these options that you could do to really create a situation where competition was allowed to flourish.

Anthony Scaramucci: (14:21)
You mentioned ... Let me not put it in your words, let me let you say it. But you talk about the middle class despair and the sawed-off ladders of processors. And so how do growing monopolies create that anxiety in our country?

David Dayen: (14:41)
Yeah, absolutely. I mean, there are several chapters I think that speak to that. And one of the biggest one is the agriculture chapter. So you have family farmers that are really struggling to survive, they're put into open competition with concentrated animal feeding operations or CAFOs which are these giant feedlots that have much more scale, tremendous scale than small family farmers. Family farmers can not find high prices for their products at processors who also own the feedlots that are competing against them. They are forced into circumstances by these middlemen, these processing companies, big packers, to grow and raise livestock to exacting specifications that might end up not panning out.

David Dayen: (15:36)
They only have one or two options for equipment. All the inputs have been costing more, all of their outputs have been paying less. And you have this tremendous amount of bankruptcies and closing up shop of family farms all over the country. And that has an effect on the communities that built up around those farms. So the hardware store and the grocery store in town that used to be a vibrant main street is no more because the farms are now all these sort of absentee operations where in places like Iowa, which I went to and talked to a lot of farmers. These towns are basically dead. And what do you do if that's where you come from? That's where your family is. That's where your community is. And suddenly it's dried up. And what does that create in a society? Well another set of monopolies, the pharmaceutical monopolies said, "Here's the sad for that. Why don't you take some Oxycontin and relieve your pain." And that created a whole other set of problems and challenges for those societies.

David Dayen: (16:48)
So the concept of regional inequality, this idea that as corporate America abandoned these communities, as the value and money that is used and circulated in these communities goes to monopolous rather than local businesses, that creates this trouble and despair all of its own. And its political problem too, because you end up having different parts of the country responding to different parts of politics, it creates a lot of divisions that we see.

Anthony Scaramucci: (17:28)
And you also mentioned that the farmers have twice the suicide rate of the veterans, and we know that we're losing almost 20 veterans a day. It's a very painful thing.

David Dayen: (17:37)
Dairy farmers, dairy companies are now putting in with their checks to dairy farmers information about suicide hotlines and things like that. That stark in-

Anthony Scaramucci: (17:47)
It's super devastating. Before I turn it over to John Darsie, who's dying to ask you some questions and we've got great audience participation. The chapter that struck me the hardest, it's literally like a boulder hitting me in the head was chapter seven, where you talk about our weapons systems, the defense industry, the fact that we can't do anything in our defense industry without the help of China because of the rare-earth minerals. But you also bring up General Eisenhower and then President Eisenhower, who was super concerned about the way we set up the military industrial complex. And I was wondering if you could offer some commentary on this and where do you think we're going from here? And what could the United States do if anything to improve this process of defense procurement?

David Dayen: (18:35)
Yeah, absolutely. There are two sort of separate issues going on there. Eisenhower warned against having this concentrated sector that was tied directly to the military. And in the next 20, 30 years, we proved him right by creating even more consolidation. This was largely done under the Clinton administration where they had this very famous event called The Last Supper where the heads of a lot of the major defense manufacturers were brought into a room and told that they had to team up because there's just not going to be enough money after the cold war has ended for these various manufacturers to get the money that they needed. So you saw the winnowing down to about five major defense companies that are the prime companies that service the United States.

David Dayen: (19:33)
And then of course, 9/11 happens and now these five companies control this massive amount of a budget. The peace dividend did not pan out. So there's that problem. The other problem is the fact that these companies motivated by Wall Street investors, in many ways, have sought a virtue in outsourcing their supply chains abroad. And so the manufacturing and particularly the manufacturing key elements of ... There's a lot of defense manufacturing in the United States, but the key elements like rare-earth minerals and other chemicals, a lot of them are only obtainable in China at the moment. That's not destiny. We have the ability, there's a rare-earth mine in California that has been shuttered, that's been there for years. But it's the way that this has gone.

David Dayen: (20:29)
And so now we're in a position and the defense department knows about this. They've written reports. They know that certain weapon systems and products could only be done with the assistance of China. And of course this is an economic power and we hope it doesn't become a military adversary to us as well. But if it does, this is a situation that's analogous to the Confederates and the Union. The Union was making all of the materials and at a certain point in the war when these materials were not flowing down to the Confederacy, they had the upper hand. And that's what you would see in a potential cold, or God forbid, hot war between the U.S. and China. And it's very dangerous. And the military is aware of this, but the way in which the very concentrated defense industry operates makes it hard to change that.

Anthony Scaramucci: (21:26)
I think one of the things that was fascinating about that chapter as well was I think it was John Deutch who brought the defense contractors to the Pentagon and said, "Hey, just to give you a heads up, I don't know who's winning or losing in here, but you guys are merging. We just don't have enough money to go around to feed all of you." And then it caused that flurry of mergers. So we've got a lot of interesting things going on at the same time. I'm going to turn it over to John Darsie. But before I go David, I thought the book was fascinating. This is an all-party book. This is a bipartisan book. This is really about what you need to do to reframe growth and opportunity in a society.

Anthony Scaramucci: (22:06)
And you do point out, you lead the book with I think from the ancient world, let me go back to the front of the book. I guess it was Emperor Zeno, 483 AD that was breaking up monopoly. So let me hold the book up for everybody before we turn it over to John. But I have to tell you, I was fascinated by the book, you're on the right path here. And I do hope that more of our policymakers pick up the book and learn from it. And we have some work to do here in terms of re-energizing and reengineering our society. But John Darsie, go ahead. I know you're dying to ask questions John.

John Darsie: (22:39)
Always, always.

Anthony Scaramucci: (22:41)
And by the way, he has a better portrait of his ancestry. See, he has Col'tre behind him, you've got George Washington. I just want you to know, I like David's ancestors a lot better than your ancestors Darsie. I just thought I would point that out.

John Darsie: (22:53)
All right. As normal, I'm going to no comment Anthony's critics of my background. David, how has the pandemic affected these monopolies and the monopolistic nature of our economy and the small businesses that are trying to compete with those monopolies?

David Dayen: (23:09)
Well, it's accelerated it and I want to thank Anthony for his kind words about the book. And I really was attempting to bring something together that wasn't left or right. That was really talking about people and how this issue affects their daily lives. So thank you for that. But it's absolutely accelerated it. So on a combination of factors, number one obviously, we have a lot of bankruptcies that are coming up because of the pandemic. And it's simply axiomatic that bigger companies have more reserves to hold out for a longer period of time than smaller companies do. And we're seeing that play out over the last couple of months. The second thing is the way in which Congress rescued the economy. They gave a large amount of money to bolster the Federal Reserves, sort of whatever it takes policy, including the purchase of corporate bonds which are really only in the market if you're a large company.

David Dayen: (24:09)
Whereas the PPP, which was a small business lending fund was time limited. It was eight weeks of payroll and that has run out by now, long run out by now. And it was not enough to save a lot of those businesses. So just the nature of congressional rescue favors big companies over smaller companies. And then the changing sort of personal tastes and dynamics that are sort of caused by the pandemic, online shopping, working from home, things like we're doing right now, all moved towards in particular a certain tech incumbents that were already big at the time, things like Amazon, Google Tools, Microsoft Tools, things like that that helps them increase their market share. I believe now the tech sector, sort of the five biggest firms, there's something like 20% of the S&P 500 in terms of value, which is an incredible amount. We've never seen anything like that before. So yes, there is an absolute acceleration of monopoly. And this is of course part of a 40 year trend, but it's now increasing much, much more as a result of the pandemic.

John Darsie: (25:26)
So you talked about the CARES Act. This doesn't necessarily have as much to do with monopolies as it does with general government oversight, but you've been critical. I've seen you on social media and in the media writing about the lack of oversight in the CARES Act and some of the corporate loans that have been given out. What is most concerning to you about that process and the precedent that it sets?

David Dayen: (25:48)
Well, the fact that we are 151 days since we signed the CARES Act, and we still don't have a chair of the main oversight committee that Congress put together to monitor the Federal Reserve portions of the legislation. I mean this is astonishing. In a similar situation after the financial crisis, there was also a congressional oversight panel that Elizabeth Warren ended up sharing. And days after that legislation passed, Elizabeth Warren was installed as the chair of that panel. We are months, five months away from the passage of that legislation. And we still don't have a chair of the panel that has a perception effect where the things ... Even though the panel with it's remaining four members has issued reports and they did one hearing, but the fact that they don't have a chair, keeps it sort of onto the sidelines, it keeps it sort of off the pages, the front pages.

David Dayen: (26:57)
And it's incredible to me, that we would not ... We're talking about trillions and trillions of dollars potentially on the table in these large corporate bailouts. And there are a variety of them, corporate debt, the airlines are getting specific grants, there's a municipal liquidity facility that could ... Right now, it hasn't been used very much, but it could be used to support state local government. And all of this is sort of being moved, billions of dollars right now could be tens of billions, could be hundreds of billions could be trillions in the future, and we're not really paying attention to how it's going. And there are ways in which we know from the first few reports that the fed is preferencing certain industries over others, certain size industries over others. And we need to get a handle on that. So yeah, it's a terrible precedent to do this. And remember, this was the Democrats, this was their big get they said in the CARES Act. They said, "We are going to do extreme oversight. We're going to figure out where this money is going. Don't you worry about it." And five months later, we still don't have a chair of the main committee.

John Darsie: (28:17)
Right. There's an opportunity certainly within the legislation for lawmakers to pick winners and losers, you talked about the municipal lending facility. I think one of the reasons it hasn't been used is because they're still sorting through how do you make those loans in a way that's not preferential to certain States or certain local groups. You want to elaborate on that?

David Dayen: (28:39)
Well, I mean just by the very nature of the initial Federal Reserve rules on the MLF, it left out I think 97% of the states and cities that were able to be eligible for the loans. In large part it hasn't been used because it's actually more expensive than it would be to use the regular market. And that makes it a nonfunctional kind of system. Obviously it would be better to use fiscal policy to support state local governments who would have this tremendous revenue shortfall. However, if fiscal policies is left wanting, and we still don't have any certainty about whether they will step-in to backstop states and cities, the Fed has options to come up with ways, creative ways to support these businesses, so we don't get in situation like we did after 2008, when the austerity at the state and local level offset the spending at the federal level and put us right back to square one. That's the scenario, we know it happened, it happened last time and we're headed right down that road again.

John Darsie: (29:51)
So this is sort of a macro question. We have all these forces like globalization, like technology that are depressing wage growth in the United States, and this is a 30, 40 year problem, as you talked about. And at the same time, you have these monopolies that are destroying jobs and destroying small businesses. How much of this would be solved by breaking up monopolies and creating sort of free market competition? And how much do we need sort of energetic government enterprise to fill the gaps in places like the healthcare industry to make things more affordable for Americans at the same time that wages are falling or wage growth is falling at least, you have healthcare costs increasing, access to education more uneven, so how much do we need an energetic government to step in and fill some of the gaps here?

David Dayen: (30:33)
I think this is a big enough problem that it's an all hands on deck moment. I don't think you can say that there's a silver bullet here or there. It's not one thing that's going to help us through. Obviously, I think stronger merger policy is incumbent upon us to get to a situation where companies just don't get bigger and bigger, and bigger, and bigger. So that's a piece of the puzzle. A stronger fiscal intervention is certainly going to be needed in the short-term. I think the nature of our healthcare system robs our competitiveness. It makes businesses responsible, what's the story that a Ford Motor company spends more on healthcare than steel. This is a global competitive in this problem, as much as it is anything else. And some would say it's a moral problem to have your wellbeing and your health tied to your job, or whether you have a stored personal wealth.

David Dayen: (31:36)
So I think you need to work on a number of different fronts, but Congress needs to get involved again in these issues. I mean, we had a long period of sort of letting the markets sort of dictate what the outcomes would be. And it's led us to the place that we're in now. And I think the pandemic was an eyeopening moment for that. I mean, we saw that the free market wasn't available to take care of a situation when we had massive needs and the supply chains were all the way over in China, and we couldn't make a piece of cloth with two strings tied around it right away. This has been a moment that has exposed some of the fault lines in the way that the economy runs right now, both through monopoly and through other factors. And I think that now that we have seen the effects of this, it's incumbent upon us to do something about it.

John Darsie: (32:36)
So we have a business contact, his name is Winston Ma. He used to work for the China Investment Corporation, which is the large sovereign wealth fund in China. And he wrote a great book a few years ago about the mobile economy in China, how they've invested heavily in building out this mobile-first economy. And in a communist regime, they're able to then harvest all that data that's driven from a mobile-first society to make advancements and things like AI and other industries. And part of the reason they've been able to do that is because they've subsidized heavily some of the tech giants in their country, like Tencent who developed WeeChat, which is probably the most powerful app in the world. It's sort of come on the radar of American, normal Americans because of Trump's recent actions to try to ban it in the United States. But how do we compete in the United States against someone like China who is actively engaging, I guess you could call it fiscal policy or heavy handedness in terms of driving innovation in areas that are important, and what advantages does the American system present versus the Chinese system? And how do we compete over the next 10, 20 years with China in that regard?

David Dayen: (33:42)
Well it's mercantilism. I mean, that's what China's engaged in. And in the tech sphere, it's actually very dangerous. It's a surveillance society. Not that we don't have one here, it's just being done by private interests rather than by the government itself. I think to take your question in maybe a different direction, one thing you're talking about is the preparation of an industrial policy and an infrastructure policy. So I have a chapter in the book about broadband, Chattanooga Tennessee has the fastest broadband in the United States and maybe the fastest in the world. And it's done through a public utility that brings fiber optic directly to the home, to Tennessee Valley Authority, public utility in Chattanooga.

David Dayen: (34:31)
And it's created this tremendous amount of opportunity. Not only is it super fast internet, 10 gig per second, but it's created an industry around 3D printing in Chattanooga. It's created incubators for more tech policy and tech businesses. It's created new options for telehealth, even before the pandemic. It's created education options and things like that. And if you go three minutes outside of Chattanooga Tennessee, you have [inaudible 00:35:04] and you have kids who are sent to Starbucks parking lots to catch wifi to do their homework every night. And the reason that that dichotomy is there is because the monopolist, telecommunications companies, AT&T and Comcast got their buddies in the legislature in Tennessee to pass a law that says public utilities can only do this kind of municipal broadband through the edge of their service area. So even if cities outside Chattanooga want the service, they are not allowed to get it by law. That is absolutely backwards. We have the opportunity and we obviously have the technology and the ability to create something like Chattanooga in practically every city in America, but we don't do it because investor-owned utility and large telecommunication firms don't want it to happen.

David Dayen: (36:03)
A forward thinking country would see the example of Chattanooga and say, "This is something that we can do." And it wouldn't really cost that much because it's brought back more for the Chattanooga public utility than it has been in paying out. We can do this across the country. We can build sort of a national network that is completely wired. And that's the kind of thinking that we do not do in the United States and maybe future administrations will figure it out. But I think that's a perfect example of the kind of thing you're talking about, which is really a forward thinking way of looking at this issue.

John Darsie: (36:43)
Yeah. You might've taken it in a little bit of a different direction, but it's a big theme in Winston's book that I mentioned is China's investment in that broadband infrastructure that continues with 5G and all of the ancillary benefits of that within the society, their ability to build out their AI systems, gather data and incubate technology companies. So you talked earlier about the fact that you tried to write this book, not as a left or a right book, but it's something that you hope to unite people in terms of building more equitable legislation around monopolies and understanding the impact on small businesses or some of these forces that have been in place for 30 years. How optimistic are you that that process is going to take place? How much of it is driven, the lack of action is driven by special interests and money and politics? And what do you think the path is to really meaningful action in terms of regulating some of these monopolies and creating more competition in our economy?

David Dayen: (37:38)
Well, a lot of it is driven by money and politics. Economic power converts into political power. And we see this across the board, whether it's through campaign donations or lobbying or the revolving door of people coming from industry into the government. So am I optimistic? I think what makes me hopeful in doing this book is I was able to travel around back when we could do that and go to talk to people all over the country, Iowa, Tennessee, California, New York, Ohio, North Carolina, where have you. And I did see a lot of commonality of experience, as I said, they couldn't say what percentage market share a certain airline had or things like that. But they all had a sense that there was this problem with the economy, this problem with companies taking up more and more space in their lives and affecting their lives in larger and larger ways.

David Dayen: (38:43)
And they all sort of got it in that sense. And when you have sort of an understanding, a commonality of understanding, which is rare in our sort of tribalized, polarized political and social environments, when you have that, you have the basis for something that can lead to action. And so the thing that we don't have is political will, and I think political will can be brought along by movements. So one of the things in the last chapter of the book that I talk about is the situation in Israel. Israel was even more concentrated than the United States, they have these tycoons and interlocking directorates that controlled large segments of the Israeli society. There was a social movement, it actually started through a journalistic enterprise. It led to mass action on the streets, well beyond anything we've seen in the United States.

David Dayen: (39:44)
And it led to the dismantling of these large concentrated industries, such that for example cell phones were extremely concentrated in Israel. And after the anti-concentration law that was passed by the Knesset, you now have prices for cell phones that are 90% below what they were originally. So I think it takes a movement. There was a famous paper written by Richard Hofstadter called What Ever Happened to the Antitrust Movement. This was written in the 1950s, 1960s, where it talked about how first there was the movement and no policy, and now there was policy and no movement, everyone got comfortable. They thought that the antitrust enforcers were doing a good job and they can sort of be left to their own devices. Within 20 years, those laws were changed sort of without changing a word of the law, they were just reinterpreted, and we had no movement and no policy. And so I think the way to get that back is through grassroots mobilization and getting people interested in this topic and forcing the political system to act.

John Darsie: (40:59)
Well the grassroots movement triggered by a journalistic outlet educating people on the problem. That sounds-

David Dayen: (41:06)
Imagine that.

John Darsie: (41:06)
It's something you might be at the middle of hopefully over the next several years. I'm going to leave it to Anthony for one final word. It's fascinating, the book, I would recommend it to everybody, Monopolized. Anthony, you have a final word for David?

Anthony Scaramucci: (41:20)
David, thank you for coming on. And we hope we can catch up with you after the election to talk about potentiality or policy that could come out of a great book like this. But I do agree with what John said, it is a post-partisan book. It's actually regaling back to an earlier time in the American society where our public politicians were trying to make things fairer and evening up the playing field. And so to me, as somewhat of a libertarian, I think it's a bipartisan book. It should be read by everybody. Thank you so much for joining.

Jim McKelvey: Co-Founder of Square & Author of "The Innovation Stack" | SALT Talks #42

“Entrepreneurs are in the business of solving problems that have never been solved before.”

Jim McKelvey is the Co-Founder of Square and Author of The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time. Jim had the idea to start Square when he couldn’t take a customer’s credit card at his glassblowing studio. Square would go on to survive a major challenge from Amazon due to its Innovation Stack.

“If you put yourself in a situation where the only solution is to create something new, then you need to understand that the process of innovation is different.” An Innovation Stack is a series of interlocking inventions. While individual elements cannot be viewed individually, the entire Stack fails if one block is missing. We are surrounded by hundreds of examples, but we don’t consider them innovative because they serve as the basis for entire industries.

Jim co-founded the non-profit LaunchCode to provide people with nontraditional backgrounds free education and job placement opportunities in tech.

LISTEN AND SUBSCRIBE

SPEAKER

Jim McKelvey.jpeg

Jim McKelvey

Co-Founder

Square

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:09)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology, and public policy, and interestingly our guest today is going to be able to cover pretty much all of those three pillars of SALT. The SALT Talks are a series of digital interviews that we started during this work from home period and are going to continue even after hopefully we kick this virus that provides our audience a window into the minds of subject matter experts who are leading investors, creators, and thinkers. What we're also trying to do during these SALT Talks is provide a platform for what we think are big ideas that are changing the future.

John Darsie: (00:49)
Today we're very excited to welcome Jim McKelvey to SALT Talks. Jim is a serial entrepreneur, an inventor, a philanthropist, an artist, an author, and a glassblower as well, which I'm sure we'll get to during the talk, and he's the author of a book called The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time, which I would highly recommend for those that are entrepreneurs or looking to build a business. Jim is the co-founder of Square, and he also served as the chairman of the board until 2010, and he still serves on the board of directors. Square has been one of the big success stories in the tech industry over the last decade. In 2011, Jim's iconic card reader design was included in the Museum of Modern Art. Jim founded Invisibly, which is an ambitious product to rewire the economics of online content in 2016, and he's also the deputy chair of the St. Louis Federal Reserve.

John Darsie: (01:44)
If you have any questions for Jim during today's SALT Talk, a reminder, you can enter them in the Q&A box at the bottom of your video screen. Conducting today's interview will be Anthony Scaramucci who's the founder and managing partner of SkyBridge Capital, which is a global alternative investment firm. Anthony's also the chairman of SALT. And with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (02:03)
Well, Jim, it's great to have you. I've got to hold up your book. I love the cover. The Innovation Stack, just holding that up for everybody, Building an Unbeatable Business One Crazy Idea at a Time. You probably think John Darsie's sane and I'm crazy, but I just assure you, when this is over, you'll realize it's the exact opposite. Okay? He's the one that's nuts, not me.

Anthony Scaramucci: (02:26)
But I want to go to you. The book is great. We're recommending it to everybody. I'm holding it up. Right after college, you graduated from Washington University, amazing school in St. Louis. You had a degree in economics and computer science, and you had authored two computer programming textbooks. How do we get there to glassblowing artist? Tell me what happened here. Tell me the evolution of Jim McKelvey.

Jim McKelvey: (02:52)
It can be explained by basically bad planning, or in my case no planning. I graduated with these two degrees, took a job with a startup run by a crook. I was too clueless to realize that the guy was a crook. Right? Sometimes you work for a guy-

Anthony Scaramucci: (03:07)
Sometimes that happens. You can work for a crook, and you can be clueless about it. That does happen to people. I have empathy.

Jim McKelvey: (03:15)
Sometimes it happens.

Anthony Scaramucci: (03:17)
And, Darsie, don't be looking at me. Okay? I'm talking about other people, Darsie. Okay? Go ahead, James.

John Darsie: (03:22)
Of course. You would never make a bad decision like that.

Anthony Scaramucci: (03:26)
I've made my series of bad decisions. Sometimes I'm a little bit too gullible, Jim. But go ahead. I'm sorry.

Jim McKelvey: (03:32)
So, I ended up in this situation, and I realized what was happening one day, and so I went and I quit. I was like, "Oh, this guy's screwing everybody he deals with." My number's going to come up next. So, I went in, and I just quit. I didn't have another gig lined up. I didn't have another job. So, I woke up the next morning. I was like, "Oh crap, how am I going to pay the rent?" and the answer was I thought, well, maybe I could sell my glass work, because I was doing glass ... I had just taken one year at college, but I was TA for the college, and I had access to the studio. So, I went in, and I thought I could make some work and sell it, and it just turns out that I couldn't, because my work sucked.

Jim McKelvey: (04:14)
But it's amazing how good you can get at something if you say, "This is what I've got to do." Right? So, within six months I was making a really good income, and I've just stuck with it ever since. As a matter of fact, I'm heading to the studio this afternoon. I've been a glass blower for 30 years. Well, it was a great business, and now it's a great hobby.

Anthony Scaramucci: (04:40)
All right. Well, before that you co-founded Square with Jack Dorsey who's also the founder of Twitter. So, tell us a little bit about that. You lost $2,000 on the sale at your studio apparently, and I want to hear that origin story. How did it all come together? How did Jack find you, you find him, and how did you get this amazing business started?

Jim McKelvey: (05:07)
Right after I became a glass blower, this was 1989, I started another company, which I still have today. As a matter of fact, that's when I met Jack. I hired Jack when he was a 15-year-old kid. His mother was our I wouldn't say drug dealer, but she would sell us-

Anthony Scaramucci: (05:27)
You could say drug dealer. It's okay. [crosstalk 00:05:29]

Jim McKelvey: (05:28)
So, we bought from Marsha Dorsey chocolate-covered espresso beans which, before ritalin was readily available ... They're basically putting it into the water supply now. But back in the early '90s, if you wanted to stay awake, you munched on coffee beans, covered in chocolate. We bought piles of this stuff from Marsha. We found out her son liked computers. We worked with computers. So, this 15-year-old kid shows up, and that was Jack. He's an amazing guy. He did a great amount of work for us. We became friends.

Jim McKelvey: (06:02)
And sort of 20 years later, I guess it was 15 years later, he had started Twitter, gotten kicked out of Twitter, and was back in St. Louis for Christmas. We started talking, and Jack said, "Hey, why don't you come out and start a new company with me?" I was like, "Great. What do you want to do?" And he said, "Well, I don't know. What do you want to do?" So, we went back and forth. Neither one of us had an idea. But then I was in my studio-

Anthony Scaramucci: (06:27)
Next time you guys are going to start a company, can you invite John and I to the lunch table? We would be interested. I'm just letting you know. That would be great.

Jim McKelvey: (06:33)
It wasn't a very posh thing. We were having this conversation in my studio. I mean, Jack was a nobody. I was basically an artist. So, it wasn't this big thing. But I was there, trying to sell a piece of glass, and the truth of the matter was it was this piece of glass that I hated. It was ugly as ... Just terrible. And this lady was going to pay me like two grand for this thing, and I lost the sale because I couldn't take an Amex card, and I was pissed.

Jim McKelvey: (07:03)
It was a phone sale, and I was talking to her on one of these things, and I looked at this thing. My attitude towards this device is it turns into anything I want. Right? It becomes a phone, a TV. It becomes a map. It becomes anything. This thing should turn into whatever I want, but it wouldn't turn into a credit card machine, which was what I wanted to turn it into. So, I called Jack up in California, and I was like, "Hey. We should turn iPhones into credit card machines." That was the idea behind Square. Didn't know if it was going to work, but turns out it was a pretty good idea.

Anthony Scaramucci: (07:41)
Well, not a good idea; it was an amazing idea, because you had a seam in the marketplace where credit card companies ... I don't want to use the word gouging, but let's use the word gouging. Okay? They were really taking a vig off of these small businesses. So, you interceded and you closed the gap for them. That was a huge benefit to small businesses. Is that fair to say?

Jim McKelvey: (08:04)
Oh, a ton. A ton. What I discovered in starting Square was that the lower part of the market paid most of the fees. The little guys got screwed way bigger. I actually ran the math, and it was ... If you calculate the profit that you make on a transaction at Walmart versus the profit that you make on a transaction at a small company, it's 45 times higher. So, the little firms are paying almost 50 times as much as the big ones are, which is unconscionable.

Anthony Scaramucci: (08:37)
Just for all of our viewers and listeners, that is a huge competitive disadvantage. We're going to have the author of Monopolize on. I believe that's next week. Is that not right, John Darsie?

John Darsie: (08:47)
Yeah. It's on Monday, David Dayen, the author of Monopolize, talking about big tech monopolies.

Anthony Scaramucci: (08:52)
Yeah. So, what happens is if you're Walmart, you can squeeze down the credit card company, but if you're mom and pop in St. Louis on a local main street, you cannot. See, you guys came in and helped them split the seam, which is a great, great thing for the country.

Jim McKelvey: (09:08)
Yeah, yeah. It turned out to be a really great thing, and then interestingly enough, and this is actually the reason that I wrote the book, was three years later we got attacked by Amazon, one of the big monopoly companies. I try not to knock Amazon too much when I'm trying to sell a book, but, look, the fact is, when Amazon attacks a startup, the startup dies. And Amazon copied our product, undercut our price by 30%, and everyone expected Square to just get wiped out. Amazingly-

Anthony Scaramucci: (09:42)
So, how did you survive? How did you survive that?

Jim McKelvey: (09:46)
Well, that's the funny thing. We didn't do anything differently. We looked at all the stuff that we were doing, and we were doing everything for a good reason. So, we didn't change anything. We didn't even lower our price. Then we sort of fought Amazon for about a year, and then Amazon gave up. When they gave up, they mailed one of these little Square readers to all their former customers. So, I've got to say, out of respect for Amazon, when they quit, they quit in a sort of admirable way. They were sort of gracious in defeat. But I couldn't explain what happened. The amazing thing to me was why did we beat Amazon, because if you look at the history of companies, this doesn't happen. Startups don't survive this. And somehow we did.

Jim McKelvey: (10:37)
So, I was happy we won, but I couldn't figure out an explanation. I basically started researching, because I get obsessed with problems. I started looking for other companies that this had happened to, and it turns out, if you look back in time, there are literally hundreds of examples of the same thing having happened throughout time. So, when I saw this pattern, I was like, "Oh my god. This is really interesting." But the problem with doing historical research is you can really delude yourself into thinking you're right, because you can cherry-pick your examples, and then you're like, "Oh, I've proven that the sky is always red." Well, no, it's not, but you're just taking your photos at the sunset after dust's in the air or something.

Jim McKelvey: (11:25)
So, I took all my research ... It was funny, because I'd done all this historical research, so basically I was studying dead people, and I needed to find somebody who was alive. So, I called Herb Kelleher who's the founder of Southwest Airlines. I called up Herb, and I-

Anthony Scaramucci: (11:40)
Legendary entrepreneur.

Jim McKelvey: (11:42)
He's phenomenal. Dearly miss the guy. But I flew down to Dallas, I took all my research to Herb, and I said, "Herb, I think what happened at Square is another example of what happened at Southwest. What do you think?" Then I just shut up and let the man talk. And he got really excited, and he told me a bunch of stuff that was exactly the same things that happened to us. And I said, "Okay, here are 15 other companies where I've seen the same pattern," and he's like, "This is exactly right." He says, "I've never heard it explained this way." He's like, "You need to go write this. You need to go write a book." So, Herb Kelleher was the one that basically convinced me to write a book, but I didn't want to write a normal book, because I hate business books. I mean, I see your bookshelf back there. Man, I almost feel sorry for you, because a lot of these things are just disastrous, boring tomes.

Anthony Scaramucci: (12:39)
You mean the books behind me you feel sorry about? Is that what you're saying?

Jim McKelvey: (12:42)
If you've read all of them. I'm looking at a few of them, and I won't sort of out some of the authors-

Anthony Scaramucci: (12:46)
Pick out one that you dislike, go ahead, that you feel sorry about me. Okay? There's the beautiful wife though. Right? You like that. Those aren't bad, right? But which book on the shelf you don't like? Go ahead.

Jim McKelvey: (12:59)
Edison.

Anthony Scaramucci: (13:00)
Edison. I couldn't get through that book, by the way. Okay? [crosstalk 00:13:04]

Jim McKelvey: (13:05)
I got that as a gift.

Anthony Scaramucci: (13:06)
Yeah, couldn't get through it. And by the way, since Edmund Morris wrote the Reagan book, Dutch, he's gone downhill in my mind. But somebody sent me that book. Somebody sent me this book though. This book is pretty terrific.

Jim McKelvey: (13:21)
So, what they should have sent you was this. My original book was a graphic novel.

Anthony Scaramucci: (13:27)
Oh, okay.

Jim McKelvey: (13:27)
The whole thing was cartoons.

Anthony Scaramucci: (13:30)
Yeah. I need that. I need that. [crosstalk 00:13:32]

Jim McKelvey: (13:31)
I'm surprised they didn't send it. I'm sorry, man. I'll send you one.

Anthony Scaramucci: (13:34)
All right. I need one of those. But let's talk about this though, because this is an ingenious revelation. And if somebody can actually read this and understand this, their business is going to get a lot better. So, tell the people that are queued in here right now what this is about. What's the central thesis of The Innovation Stack?

Jim McKelvey: (13:58)
The central thesis is that there is a difference between doing something that's never been done and copying. And that sounds pretty obvious, but it wasn't obvious to me over 20 years, because I was always going to business conferences and reading books and talking to experts whose problems never seemed to be like the problems I was having. And the problems I was having were typically the problems you have when you're doing something that's never been done before, and that's different from doing a business where there's a trade show and they're experts and they're consultants, and they're things that are known to work.

Jim McKelvey: (14:32)
The reason I think I was ignorant for all these years was because the word entrepreneur today means business person. So, if you start a company, if you start a coffee shop, we call you an entrepreneur. If you start a dentist office, well, if you open it, you're the entrepreneur. You start an accounting firm. Anything that you do to start a business, we say entrepreneur. But that's not why the word was originally used.

Jim McKelvey: (15:00)
The original use of the word, and I had to go back into linguistic history to figure this out ... The original use of the word meant somebody who was crazy doing something that has never been done and might not work. So, the Wright brothers trying to fly for the first time. They were entrepreneurs, because if you look at the history of aviation, at least from the early days, there was a lot of death and burning and mangled flesh. So, if you were one of those guys who was trying to fly when humans had not figured it out, you were an entrepreneur.

Jim McKelvey: (15:33)
It's a totally different set of rules if you're not copying, and copying, I'm not knocking copying. I try to copy everything. I try to never do anything original unless I have to. It's sort of the last resort. But if you're trying to solve a problem that's never been solved before, then you've got to think differently, and the process of thinking differently is one that we don't even discuss, because literally, Anthony, the English language doesn't have a word for it. And when I realized this, I was like, "Oh my god. It explains all these problems I was having." So, that was the genesis of the book.

Jim McKelvey: (16:12)
Then I wrote it as a graphic novel. It was supposed to be a cartoon. I showed it to Herb. Herb hated the idea of being portrayed as a cartoon character, so he said ... I was really surprised at this, because Herb had a great sense of humor, but he basically said, "Look, if you're going to make this as a cartoon, leave me out." So, I rewrote the book basically as text out of respect for this man.

Jim McKelvey: (16:35)
But the fundamental idea in The Innovation Stack is that, if you put yourself in a situation where the only solution is to create something new, then you better understand that the process of invention is different, that it's not usually one or two single things. It's probably 12 or 14 or 20 different things that you're going to have to do differently. Those things themselves are going to influence each other, which causes this giant mess. And this becomes what I call an innovation stack.

Jim McKelvey: (17:09)
If you look at the history of companies who've dominated their industries, at the beginning of every industry, there's one of these innovation stacks. Now, it doesn't happen that often, because most businesses are copies of other businesses, but when it does happen, things get really interesting and really different, and that's what I wrote about.

Anthony Scaramucci: (17:29)
Well, but I also think that there's a lot in here about how you have to adapt to your environment. Right? So, your plans for Square, they didn't go perfectly.

Jim McKelvey: (17:42)
No.

Anthony Scaramucci: (17:42)
You had to make changes. You had [inaudible 00:17:44] So, give us a few examples of your plans making contact with the enemy and competition and what you had to do to innovate and switch up that stack.

Jim McKelvey: (17:57)
Great example. So, we decided to connect our little Square reader through the headphone jack. So, it was going to plug in through ... I've got one of the last phones with a headphone jack. I've got a little Samsung here. But this is how we decided it'd connect, which Apple didn't want you to do. Apple wanted you to connect through their dock connector, which at the time was like this inch-long thing. We were sort of violating the iPhone by plugging in through the headphone jack, which nobody had done before, and we were sure it was going to piss off Apple. So, our great strategy was to get Steve Jobs to cover us. Right? So, Jack got in touch with Steve. That was not easy, because Steve was very ill. But Steve agreed to meet with us. Now, this was 2009, 2010. Steve, he was pretty sick, but-

Anthony Scaramucci: (18:57)
Well, he died in 2011, so, yeah, he was having a hard time. He had just probably gotten his liver transplant, right?

Jim McKelvey: (19:01)
He had just gotten his liver transplant. He wasn't seeing too many people, but we got an audience with Steve. I was terrified, because I was the guy that built all the hardware. So, Jack was writing the software; I was the guy that physically had to build this thing. Okay? If you know anything about Steve Jobs, you know that he was a design zealot. I mean, he didn't have any furniture in his house, because he couldn't find anything that was good enough.

Anthony Scaramucci: (19:26)
Right. He drove Laurene crazy. I mean, Walter Isaacson writes about it in the book. He couldn't buy a couch, the poor guy.

Jim McKelvey: (19:34)
No, no. If it wasn't perfect, Steven wouldn't touch it. Right? You would hand Steve a pen [inaudible 00:19:39] Yeah. So, I'm the hardware guy, and I've got to put a piece of hardware in front of Steve Jobs. I'm freaking out. I'm just freaking out. So, I'm a good copier. I'm like, "Okay. I need to steal Steve's own idea." I go to the Apple store, and I look at the Macintoshes. The Macs were all these sort of brushed aluminum, just sort of pill shaped.

Anthony Scaramucci: (20:06)
I'm looking at one right now. I'm touching it.

Jim McKelvey: (20:08)
Yeah. There you go. Oh yeah, the Mac. Right? So, I was like, "Okay, Steve likes aluminum." So, I go, I get a block of aluminum, and I'm milling the first Square reader out a block of solid aluminum, shove all the electronics in there, test the thing out. I'd been awake for two days. It works. I get it to work. Fly out to see Jack, hand it to my ... Because Jack's the one who's actually going to do the meeting. I hand it to Jack. It doesn't work.

Anthony Scaramucci: (20:45)
Oh god.

Jim McKelvey: (20:45)
He hands it back to me. I'm like, "No, no, no, man. Look, it works, it works, it works." Then [inaudible 00:20:51] And I've got to show you with a credit card what's going on here. I've got a credit card here. I'll try not to show my credit card number to the whole world. But what was happening was, as Jack was swiping it, he was holding it like this to keep it from rotating, because the thing spins. Right? So, Jack would swipe like that, and it would never work. When I swipe, I go like this. So, I don't touch the thing. Well, aluminum is an electrical conductor, and on an iPhone this is not the grounding plug, this is the grounding plug. So, I was basically making an open circuit. It was effectively a heart monitor-

Anthony Scaramucci: (21:37)
Got it.

Jim McKelvey: (21:37)
... because when Jack touched it, the thing shorted out, picked up his heartbeat, and totally ruined the signal. Okay. This before a demo with Steve Jobs. I've totally made something that looks cool and doesn't function.

Anthony Scaramucci: (21:51)
Got it.

Jim McKelvey: (21:52)
The good news is ... Well, there were sort of good and bad news. I think we were lucky. The meeting got canceled, because Steve got sick again. So, we didn't actually have to do the meeting. And I've built them out of plastic ever since. But, look, that's just ... I mean, I could tell you-

Anthony Scaramucci: (22:11)
But when you eventually got to the meeting, he probably loved the design, right? Because it looks like the old iPod, the small iPod, the mini iPod.

Jim McKelvey: (22:19)
Steve never saw it.

Anthony Scaramucci: (22:20)
Oh, he never saw it? Okay.

Jim McKelvey: (22:21)
Steve never saw it. He got ill. He canceled the meeting. We actually showed that first prototype to Mike Bloomberg, because we had another meeting with him, but ... Actually, I think we may have been saved by the fact that we didn't meet with Steve, because the funny thing was we were expecting Apple's lawyers to just tear us apart. What was funny was that Steve was such a powerful force at Apple that I believe the fact that we even had a meeting with him was enough protection that the lawyers weren't going to attack us. So, just getting on his calendar was probably what saved us, but, again, I don't know.

Anthony Scaramucci: (23:04)
So, mission accomplished. I have to turn it over to John Darsie, because we have tremendous audience engagement. But before I do, I want to ask you one more question related to where you are going, because I think you are a polymath and you are a genius, and I want to hear about another contribution that you are going to make to our civilization. What is it going to be? And it could be glassblowing. That's totally fine. But I see something else in your future, and I want you to tell us what it is.

Jim McKelvey: (23:41)
So, I've got three things I'm working on right now. One is actually in the studio. I'm going in today. I'm making another set of ... I'm trying to make a cool rocks glass. I've been spending a lot of time drinking lately. You know, pandemic. And I just realized that I didn't like the glasses I was drinking out of. So, I'm going to go and try to make an object. I haven't made a consumer object in 15 years, so I'm going to go in and see if that'll work. Don't get your hopes up for that one.

Anthony Scaramucci: (24:13)
All right. Well, that's number one. You said there's three. So, what are the other two?

Jim McKelvey: (24:17)
The second is a project called Invisibly. Basically the economics of content are broken, and I think that's fixable if we can get micropayments working. That's a bunch of gobbledygook that nobody should understand. Here's the basic problem that every human has. You are not allowed right now to pay more for good stuff and less for bad stuff online, because most online content is either subscription or advertising supported. There's no way to pay more for good and less for bad. The problem with that is it's not all free. Right? Content isn't free. You pay for content essentially with your attention. But because your attention doesn't have this signal built in whether or not you like the stuff, crap gets the same price as quality. And unfortunately, that's-

Anthony Scaramucci: (25:09)
Makes sense.

Jim McKelvey: (25:10)
Yeah. That doesn't work. So, what I'd like to do when I go out is signal to the world that, if I spend 20 bucks on a hamburger this afternoon, I'm basically telling the world to kill more cows and build more slaughterhouses. If I go out and spend five bucks on a Beyond Burger, that's going to be a different vote, and that's how the economy works. But it doesn't work online, and it doesn't work for a bunch of reasons.

Jim McKelvey: (25:40)
So, anyway, I sat down with a bunch of economists at the Fed. We figured out how to fix this. The problem is it requires micropayments to work, and, if you know anything about the history of micropayments, they've never worked. Everyone's had the idea. Nobody's ever gotten it working. So, I'm working on that. That one, that's a long shot, but if Invisibly works, it's going to meaningfully improve people's control over their eyeballs, which I think is a good thing for the world.

Jim McKelvey: (26:07)
The other thing that I'm doing right now is a project called LaunchCode, and LaunchCode is something we started about seven years ago. It's a free class in programming. So, the deal with LaunchCode is you show up, we don't charge you anything, we give you free education, and then you get a job, and we get you a market rate job. And we've been training thousands of people. That's sort of a ... It's a nonprofit, but it's solving the talent gap in programming. So, those are sort of my three big focuses.

Anthony Scaramucci: (26:38)
Awesome. Well, go ahead, Mr. Darsie. We've got a ton of questions for you.

Jim McKelvey: (26:42)
Cool.

Anthony Scaramucci: (26:43)
I'm holding up the book one more time, The Innovation Stack. Everybody should be reading this book. By the way, I'm getting texts from Jack Oliver. He says hi, by the way, so I'll just throw that out there.

Jim McKelvey: (26:55)
Oh. I talked to Jack last week. All right. Jack, Jack, Jack.

Anthony Scaramucci: (26:59)
He says you're a genius, but we sort of already know that. But go ahead, Darsie.

John Darsie: (27:02)
Yeah. I have a followup question about Invisibly. How much of this idea was born in the last several years? There's been a lot written about how a lot of these journalistic outlets have gone behind paywalls, and we want to make sure that journalists get paid for their work. That seems to be the most sustainable business model for a newspaper outlet that's publishing online, for example. But then you have a lot of disinformation that's out there, and it's free. So, what's happening is a lot of people who don't have the means to have subscriptions to The Washington Post, The New York Times, The Wall Street Journal, The Financial Times, they're instead consuming ... I'm not going to name these disinformation outlets and give them that platform, but a lot of people are consuming stuff on Facebook and social networks that's out there for free. How much of that idea is born out of the desire to make sure that people are consuming the right information rather than disinformation?

Jim McKelvey: (27:52)
There's sort of two questions there. I'm going to take them both. The first is you named three of the five subscription models that work in the English language: Financial Times, Washington Post, Wall Street Journal, New York Times, and The Economist. If it's not one of those five paywalls, it's ad supported or losing a ton of money. Okay? Although those a five great information sources, I as a consumer want to be able to read stuff from all sorts of different sources. Right now, none of those sources are making money. So, subscription is not going to save everybody, because you just as a consumer are not going to have 40 subscriptions, but over the course of a year I'm probably going to want information from 40 different places. So, we really need to figure out a way to ... It would be like me saying, "Okay, pick five chain restaurants you're going to eat at for the rest of your life." You kind of go, "Well-"

John Darsie: (28:45)
Right. Does this apply to streaming outlets as well? Not to interrupt your missive, but I feel like the same thing is developing with these streaming outlets is that now everyone's unplugging from cable, but there's 15 streaming companies out there and you have to subscribe to all of them to get the content you want. Could a micropayment system work for digital video content as well?

Jim McKelvey: (29:05)
It works in theory, John, but it's really hard to set up, and we haven't figured out how to turn that corner yet. I've burned $30 million so far, and I have got nothing significant to show for it. The only thing I've got to show for it, which actually is significant, is I've got a survey to ... Part of our tech ... We just started playing with politics. I can call elections now. I can literally survey and get within a point of the final vote total. It's amazing. Actually, that's one of the reasons I was talking to Jack Oliver last week. But the politicians are all over us, because we've got this tech now. But that's not what the company's about. It's just this weird quirk. But if you need to call an election, let me know. And I'm sorry. I forgot the other part of your question.

John Darsie: (29:58)
It was about how much of this idea was born out of this disinformation, the amount of free disinformation that exists out there on the internet today.

Jim McKelvey: (30:06)
Oh, yeah. Yeah, yeah, yeah. Disinformation. So, it was not born out of that, but I will give you a really interesting piece of insider information that only the ad tech people know, and that is, if you take one of those readers from one of those five expensive publications you've mentioned ... Okay. So, this is somebody who's got enough money to spend 100 bucks a year subscribing to some content source. Okay. Now, let's take the value of that person's eyeballs as an advertisee versus somebody who reads something that is laughably fake news. Okay? Whose eyeballs are worth more per second? You want to take a guess?

John Darsie: (30:52)
I would think the person who's willing to pay for the subscriptions.

Jim McKelvey: (30:55)
Yeah. Most people make that conclusion. You're not only wrong; you're wrong by a factor of 10.

Anthony Scaramucci: (31:00)
Oh, I love the way he's sticking it to you, Darsie. Keep going, Jim. I'm going to turn my camera off. Hold on. You guys can just talk together. All right. I'm down. My camera's down, Darsie. Go ahead, McKelvey.

Jim McKelvey: (31:14)
There you go. No, no, no. I mean, it's the same conclusion I'd make, which is why I think this is so ... So, it turns out that, if you are so gullible that you believe the fake news sites, your value as a sucker for whatever product they're advertising is 10X. I can prove this. I've seen the numbers. You get more money if your audience is the sort of person who believes unquestionably or unquestioningly the content. The critical thinkers, the people who ask the questions, we're not worth that much as a set of eyeballs. But if you're gullible enough to think you should shove your IRA into gold or ... I don't know what they're advertising now. I don't see a lot of that stuff. But I've seen the data. It's chilling.

John Darsie: (32:09)
There's a case study in that today. There was an indictment in New York City about a crowdfunding campaign to build the wall on the southern border where they preyed on zealots to crowdfund the building of the wall, because the government was stalling on building the wall. And you have four individuals, one of which is very familiar to Anthony, who have been now indicted, because they were preying on the exact people that you were talking about.

Jim McKelvey: (32:38)
It's so sad. I have to say, preying on the trust of others is abhorrent. And I wish I had a solution for that. I will tell you that Invisibly does not. The only thing we're able to do, if our system works, and it doesn't work yet, is to give consumers the ability to pay more for good stuff and less for bad stuff and to control how their eyeballs are being bought and sold, because right now your eyeballs are being bought and sold a thousand times a day without your knowledge or consent. So, we're going to give you that control.

Jim McKelvey: (33:15)
What we can't do is make you exercise that in a thoughtful way. So, let me use an analogy with food, because people understand food. What I want to do is change the model, which is currently ... Here's the model that your intellectual food is being created under. We're never going to make much money for it, so we're going to pay the absolute least amount for our ingredients and sell it to you at a fixed price. So, that's the equivalent of saying every lunch in New York City costs 10 bucks. And you say, "Oh, great. 10 bucks. I'll eat a fancy restaurant." No, you won't, because the fancy restaurant just closed, because they can't put the food on the table for 10 bucks a plate. So, all you're going to be is fed the cheapest crap that they can get their 10 bucks from, and that's the model that we're living in with content.

Jim McKelvey: (34:12)
So, in our system, it's like the economy today. You'll have cheap options, you'll have expensive options. If you choose the expensive options, that's great. But if you choose the cheap options, that's also great. The interesting thing though is that we want to have the consumers exercising this choice in a way that's responsible, but we're not going to tell them what to eat. So, the analogy here is, look, you can go out and have a healthy meal. You can go out and have a meal that cumulatively will kill you. That's your choice. So, I'm not going to tell you what content's good, what content's bad, what's fake news, what's real news. We're not going to get into any of that. We're just going to reflect the value that the consumers see back in the price, but it's [crosstalk 00:35:01]

John Darsie: (35:01)
We could talk about Invisibly all day, I think. I want to pivot a little bit back to innovation stacks for a minute.

Jim McKelvey: (35:06)
Cool.

John Darsie: (35:06)
You talk about how Square ultimately prevailing against Amazon in this space is an example of an innovation stack. Are there any other prominent examples in today's business world of innovation stacks? I can think of one potentially with Tesla, now the market cap of Tesla having encompassed the entire automotive industry. But are there any others that provide an example for people of what innovation stacks are?

Jim McKelvey: (35:30)
Well, there are dozens, but let's take your example. Tesla's a great example, because Tesla didn't copy all the other car companies. Right? All the other companies were doing basically internal combustion engines, and when they did try to build electric, they build these sort of glorified golf carts. I don't know if you've ever seen an EV1, but the GM ... I mean, GM built Tesla to market with an electric vehicle by a decade, and yet it was such a ... I mean, they just got it wrong. I think it was because, in the world of General Motors, working on the electric car is like punishment. Like, if you're a bad engineer, they make you ... Like, "Oh, we're going to send you to the Russian Front or make you work on the EV1s. You can make a golf cart that slows down when you go up a hill."

Jim McKelvey: (36:24)
But Tesla, what they did was not just one, two, three things. They've probably got an innovation stack that's 40 or 50 things long. Now, I don't work at Tesla. I've met Elon Musk a sum total of five minutes in my life. So, it wasn't like he and I got deep on anything. But even from the outside, you could look at the way they're packing the batteries, the way they're putting capacitors in front of the batteries, the software, the way the car drives, the way it unlocks, the way they deliver the car, the way they sell the car, the Tesla dealership network. Oh, wait a second. You're not buying this from Scaramucci Auto.

John Darsie: (37:07)
No, it makes sense. I think it's happening a lot in the financial industry as well.

Anthony Scaramucci: (37:09)
That would be a hot car, McKelvey. That could be our next business, you and me. Okay?

Jim McKelvey: (37:12)
I'd do it.

John Darsie: (37:12)
You would have a lot of-

Anthony Scaramucci: (37:14)
It would have an '80s feel, and there would be a lot of ostentation to that car. Okay? I just want to make sure you guys know that.

Jim McKelvey: (37:22)
I think David Lee Roth is available.

John Darsie: (37:26)
Well, it's happening a lot in the financial industry as well, where you're seeing people from the tech world come and attack problems that are traditionally financial industry problems, and they're thinking about them in a different way. It's allowing them to re-engineer these systems without preconceived notions of the conventions that have existed in the past.

Jim McKelvey: (37:45)
Look, here's the whole point of the book. I'll save you from having to buy it now. And that is innovation is this thing we all talk about, but it's really hard and really unpleasant and probably should be the last resort. I'm not preaching innovation. I'm not sitting here going, "Look, this is what you should do." I'm a big believer in copying solutions, except that it doesn't always work. When people find themselves in a situation where there's an unsolved problem that they can't copy solution that, almost everybody stops. And I still feel that urge to quit as well.

Jim McKelvey: (38:22)
But when I was writing the book, I had this person in mind, and I always think about her, because she's super competent. She's intelligent, hardworking. She's got all those qualities for somebody you would say, "Oh boy. This person could be doing great things." And she does do great things, but she only does great things when she has permission to do it, i.e. a degree or a credential or somebody saying, "Oh, you're qualified to now work on this project." And when she encounters a problem that has not been solved before, she says, "Oh, I can't do this," and I'm like, "Wait a second. No, no, no. You can." And we had this conversation. She's like, "Well, I'm not qualified to do that." I was like, "Look, nobody's ever done this. You can be qualified."

Jim McKelvey: (39:02)
So, today, all right, I'm going to fly a plane today. I'm going to get in a plane. I've literally got a freaking book here that I've got to sit here and read on the Garmin G1000, because they just put a new ... Everyone's going to hate me now. But I've got to read this stupid book, okay? And then I've got to go take all these tests, because today if you want to get in a plane and fly a plane, you'd better be qualified. Great. That's the way it should be. Orville Wright who gets in the Wright Flyer-

Anthony Scaramucci: (39:36)
I've got to interrupt you there, because you're talking to capitalists, fellow capitalists. I love the fact that you have your own plane, okay? I want everybody to have their own plane. I want them to read The Innovation Stack so they can figure out how to buy their own plane. Okay? All right. But keep going, okay? This is great.

Jim McKelvey: (39:52)
So, the point is if you want to get in and pilot a plane today, you get qualified, you get trained, you get certificated, you pee in a cup. You're good to go. The Wright brothers could not be qualified to fly the first plane. Nobody is qualified the first time. You build the first anything in the world, I don't care what it is, you're not qualified.

Anthony Scaramucci: (40:15)
Well said.

Jim McKelvey: (40:16)
Nobody's qualified. You don't get credentials and permission and diplomas and little badges until it's become something that humanity has already solved. So, if you want to spend your whole life limited to the world of already solved problems, then you're going to have a great life. Nobody's going to give you any shit. Nobody's going to sit there and tease you or tell you you're stupid or call you crazy. But unfortunately, the world's never going to move forward unless some of us sort of step off the edge and usually fall, but sometimes we end up pushing the frontier of what humans can do a little bit further, and that's innovation. It's unpleasant, and it's something we don't talk about because we don't even have the words, but it's something that I think is desperately necessary.

Jim McKelvey: (41:08)
I mean, the reason I wrote a book, which by the way is hell ... Writing a book for three years is ... Well, it's rewriting the book. You write the book, and then you rewrite it and rewrite it and rewrite it, rewrite it until it becomes readable. But the reason I put myself through this is it's the only way I could possibly think of to get more people off the bench. So, the reason I want people to read the thing ... I don't necessarily want them to buy it. You can steal it. I'm sure there's a Tor copy of my book out there. But if you get the idea that at some point in your life you may encounter something where all of your training, all of your credentials stop being relevant, and you don't necessarily have to stop moving at that point. If we can get a few more people moving [crosstalk 00:41:54]

Anthony Scaramucci: (41:53)
I think it's brilliant. I just want to ... As a public service announcement for Penguin Publishing, buy the book. It's worth every bit of the $22 that you've got to spend on it.

John Darsie: (42:06)
I want to leave you with one last question, Jim, and it's a followup to what you're saying about how we need to get people off the bench. So, we had a great conversation at our SALT Conference in 2019 between Mark Cuban and Steve Case on the idea that entrepreneurial success can be found outside of Silicon Valley. There's this bubbling up of entrepreneurial zest that exists in the American heartland. You live in St. Louis. Other areas of the country, other areas of the world, frankly. Mark Cuban has invested a lot outside of Silicon Valley. Steve has a fund called the Rise of the Rest fund, dedicated to funding entrepreneurs outside of Silicon Valley. You launched LaunchCode, which is a nonprofit to try to get people from nontraditional backgrounds free education and job placement opportunities in tech. So, how do we tap into that entrepreneurial spirit that exists in parts of the country but they might not have access to capital or expertise or the confidence they need to go out and truly innovate?

Jim McKelvey: (43:03)
I might get in a lot of trouble for saying this. I've never seen a problem with access to capital. Okay? So, I've got a VC fund. I get pitched all the time, which is by the way a horrible business, because you just ... People lie to you professionally. Your job is basically to have these people lie to you all day long. It's gruesome. But I hear people talk about "Oh, I don't have any capital." It's like, well, maybe your idea is a little messed up, or maybe you didn't do enough work. The investments that we make, we're fighting off other investors. These elbows are sharp for a reason. So, I don't see that.

Jim McKelvey: (43:44)
But what I do see is a sort of clubbiness to tech entrepreneurship, which has historically persisted in the Bay Area and to a lesser extent New York and a few other cities around the world. And the cool thing about a pandemic is that it is all now coming apart, this club that the rich belong to, which is the club of New York or the club of San Francisco. And, by the way, if you don't think you have to be rich to live in San Francisco and have a normal life, go check rents there. I've got engineers earning well into six figures that have five roommates. That's how expensive San Francisco has become.

Jim McKelvey: (44:29)
If you're a normal person and you have the skills but you don't have the financial ability to move to a coast ... Maybe you've got a parent you've got to take care of or maybe you've got some other that prevent you from just upping and moving. Well, we're breaking these clubs up. I mean, right now we're ... I mean, I guess we should all be sitting in a room together, but we're not. We're Zooming. And there's some lag over the video and a few other problems like that, but we've basically pulled it off. Right? And I don't know where you are, and I don't know where Anthony is. Actually, I'm assuming it's a bunker somewhere.

Anthony Scaramucci: (45:09)
I'm in a heavily fortified bunker with shitty books behind me, but it's so far so good-

Jim McKelvey: (45:14)
That Edison book is going to save his life.

Anthony Scaramucci: (45:15)
... because my wife is still allowing to stay here. I mean, once in a while she throws food in through the door, but I'm fine. I'm fine.

Jim McKelvey: (45:23)
The sheer density of the writing is going to be the thing that protects your head from the blast. In this twist of irony, you will be saved. I'll have to eat all my words. God, I hope that wasn't published by Penguin.

Jim McKelvey: (45:36)
But, anyway, the point is it doesn't matter as much. So, cities like St. Louis where it's pretty pleasant to live and we've got great health care and great schools, and houses are really nice and cheap. I mean, hell, we'll give you a house in certain parts of town. It's opening up talent to more opportunity, and I think that's what we need. So, I love what Steve is doing. The Rise of the Rest is fantastic. His bus came through here. I was on it and spoke at the events. I love what Steve is doing.

Jim McKelvey: (46:13)
I think we're just going to see that, not because it's a good thing to do or we're being nice to Ohio or anything like that. It's just because, look, greed is a good thing to harness, and greed is smiling on lower cost, higher quality of life cities. As long the town is here and it can move remotely, maybe live in St. Louis. It's a great city. Or whatever you think is a great city. Pick what you like and move there.

Anthony Scaramucci: (46:50)
You should know, because people are texting. We're getting questions and answers. Jim, you're a phenomenal guy, and you've left an amazing impression on our delegates. So, I would love to get you back.

Jim McKelvey: (47:04)
Anytime. This has been super fun. I love it.

Anthony Scaramucci: (47:05)
You've got to do me a favor though. You've got to be careful flying the plan, man, because you're holding up the operational manual there. And I'm not saying I wouldn't get in the plan with you. I would definitely put Darsie in the plane with you first though. I'd just like to try it out with Darsie before I take a ride with you. But I want you back on our show so we can talk about where the future is going. You're going to be a big part of it. I have no doubt about that. So, we've very grateful to have you on.

Jim McKelvey: (47:30)
Anytime. This has been super fun. You guys ask great questions. This is fun. Yeah. Thank you.

Anthony Scaramucci: (47:37)
All right. Well, God bless. We're going to turn it back to John Darsie. He usually does the happy recap. Go ahead, Mr. Darsie.

John Darsie: (47:44)
Well, I'm very excited to see your progress with Invisibly.

Anthony Scaramucci: (47:46)
We didn't make one comment about George Washington. McKelvey, look at what this guy thinks of himself with the George Washington portraits. I mean, I know I have shitty books, but look at this this guy. Look at this [crosstalk 00:47:53]

John Darsie: (47:53)
I try to create a background that lives up to Anthony's bookshelf.

Anthony Scaramucci: (47:56)
Darsie, at night, he walks around with that wig on. Okay? I've heard that from his wife, by the way. Go ahead, John.

Jim McKelvey: (48:01)
I need a wig. That's a good idea.

John Darsie: (48:04)
Well, Jim, thanks so much for joining us. Thanks everybody for tuning in. I highly recommend Jim's book. It will hopefully either help you take that leap into entrepreneurship or decide that that journey's a little bit too painful for you, and I think Jim provides both of those perspectives in a great way in The Innovation Stack.

Daniel Okrent: Author "The Guarded Gate" | SALT Talks #40

“There’s this sudden fear that the next guy coming up the ladder is going to ruin it for everyone else who has made it.“

Daniel Okrent is the prize-winning author of six books, most recently The Guarded Gate: Bigotry, Eugenics, and the Law That Kept Two Generations of Jews, Italians, and Other European Immigrants Out of America. He was also the corporate Editor-at-Large at Time Inc., and was the first public editor of The New York Times.

His career began at seven years old, when he wrote a letter to the editor that was surprisingly published. Daniel was a baseball writer at first, later publishing a book on the history of Rockefeller Center.

Daniel’s latest book covers the false science of eugenics, a set of practices aimed to “improve” the genetic quality of the human population. “It seems to me that we as a species need somebody to look down on. I don’t know why that’s the case.” Daniel also discusses the blanket term “whiteness” and how its expansion seems to be based on familiarity with a race or culture.

LISTEN AND SUBSCRIBE

SPEAKER

Daniel Okrent.jpeg

Daniel Okrent

Author

The Guarded Gate

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello, everyone. Welcome back to Salt Talks. My name is John Darsie. I'm the managing director of Salt, which is a global thought leadership forum at the intersection of finance, technology, and public policy. Salt Talks, as you know, if you've tuned into them previously, are a series of digital interviews we've been doing during this work-from-home period with some of the world's foremost investors, creators, and thinkers.

John Darsie: (00:30)
And what we're really trying to do during these Salt Talks is replicate the experience that we provide at our global conference series, The Salt Conference, in which we aim to provide our audience a window into the mind of subject matter experts as well as provide a platform for what we think are ideas that are shaping the future, as well as interesting stories.

John Darsie: (00:47)
And we're very excited today to welcome Daniel Okrent today to Salt Talks. Daniel is the prize-winning author of six fantastic books on a very diverse set of topics. In fact, Publishers Weekly called him one of our most interesting and eclectic writers of nonfiction over the last 25 years. His most recent book, which was published in May of 2019 is called The Guarded Gate, and it's a story about bigotry, eugenics, and the law that kept two generations of Jews, Italians, and, and other European immigrants out of America. It started about eugenics and morphed into a book more broadly about immigration. I know Anthony and Daniel will talk at length about that book as well as some of his previous books.

John Darsie: (01:30)
And prior to The Guarded Gate, Daniel published the Last Call: The Rise and Fall of Prohibition in 2011, which was cited by the American Historical Association as the year's best book on American History. Prior to that, he wrote the Great Fortune, which is the epic of Rockefeller Center, talking about all the inner workings of how Rockefeller Center got built. That book was a finalist for the 2004 Pulitzer Prize in History.

John Darsie: (01:57)
Among his many jobs in publishing, Daniel was the corporate editor at large of Time Inc. He was also the first public editor of the New York Times. Daniel served on the board of Smithsonian's National Portrait Gallery for 12 years, including a four-year term from 2003 to 2007 as the chairman, and he remains a board member of The Skyscraper Museum and the Authors Guild.

John Darsie: (02:18)
Daniel is a native of Detroit and a graduate of the University of Michigan. Go Blue! He now lives half the year in New York on the Upper West Side and the other half on Cape Cod with his wife, where he's currently residing right now. They have two children that are grown, and his wife is also a well-known poet.

John Darsie: (02:36)
A reminder to our audience that if you have any questions for Daniel during today's Salt Talk, you can post them in the Q&A box at the bottom of your video screen. And with that, I'll turn it over to Anthony Scaramucci, who's the founder and managing partner of Skybridge Capital, a global alternative investment firm, to conduct today's interview.

Anthony Scaramucci: (02:54)
Daniel, it's great to have you on. The first thing I have to do is I have to give a shout out to Sol Gittleman, the course professor from Tufts who watches these Salt Talks, so Sol, we're waving to you. I got your book from Sol. I went up to see him. He's living up in, I guess it's the Winchester area in an assisted living place with his wife, Robin. And he mentioned your book to me about a year ago. Maybe eight, nine months ago, I read the book, and obviously, then reached out to you.

Anthony Scaramucci: (03:23)
I thought it was one of the more fascinating books that I've read about that genre of time in American history, 1915 to 1935. I learned a lot about that book. My Italian grandparents were immigrating. My two grandmothers and one of my grandfathers, 1921 and 1923, respectfully. And then my dad's father was actually born here in the United States in 1895, so they had a little bit different experience in the immigration.

Anthony Scaramucci: (03:55)
But before we go into that book and your other books, I would love you to tell our listeners and viewers how you became a writer. What was it about your personal background that guided you in that direction from your time in college?

Daniel Okrent: (04:12)
Well, to tell the truth, I can take it back before my time in college. But first, thank you, Anthony, for inviting me to do this. It's a pleasure to be here. And hi, Sol. How are you? When I was seven years old, my father's oldest friend, who was involved in politics and to some degree journalism, he was a godfather to me. And he urged me to write a letter to the editor to the Detroit News, our local newspaper. And he said, "If you want to get it published, be sure to begin with, I am seven years old, but I have this opinion."

Daniel Okrent: (04:46)
SO I wrote this, signed it, and it appeared in the paper three days later. And I saw my name there, and it said underneath it, Danny because I was called Danny Okrent. And I said, "My God, my name's in the paper. I'm going to be a writer." It really goes back as far as that. But I got serious about it when I was in college doing journalism. Then I worked in the book publishing business.

Daniel Okrent: (05:08)
When you're an editor in the book publishing business, what you really want to do sometimes is be on the other side of the desk. And after nine years in book publishing, I switched, and I decided I'll try to be a writer, which meant four or five years of barely making mortgage payments, but then it worked out.

Anthony Scaramucci: (05:25)
Well, and then you went on to become an author. I mean, you're a phenomenal nonfiction author. And so you converted from journalism, which is a tough enough job, into actually writing books, which I know is a super tough job. When did you make that transition?

Daniel Okrent: (05:42)
When I began writing, I took the advice of a friend who said, "If you want to make it as a freelance writer, you'd better have a subject that you're really good at so people will come to you to write about that subject." And the thing that I knew better than anything else was baseball, so I became a baseball writer, and I did pretty well. I was published a lot, Esquire Magazine and Sports Illustrated. And I did a couple of books about baseball.

Daniel Okrent: (06:04)
But again, following that friend's advice, once you've established yourself on your subject, you can then switch to any subject you wish because you've shown that you can make it as a writer. So around 1990, '95, when I was in my 40s, I was working as a magazine editor, but thinking about leaving, making that change, and to turning full-time to writing, which I finally did in 1998.

Anthony Scaramucci: (06:27)
Daniel, what is your team? Which is it, Detroit Tigers or-

Daniel Okrent: (06:30)
No, the Chicago Cubs.

Anthony Scaramucci: (06:32)
Chicago Cubs, alright. There you go. Well, congratulations. You finally got one. It's awesome.

Daniel Okrent: (06:35)
Finally, yeah.

Anthony Scaramucci: (06:37)
You were also the George Washington of the modern rotisserie scoring system for fantasy baseball. See, a lot of people don't know that about you as well, which is equally fascinating. I interrupted. I didn't mean to, but I just wanted to hear. I'm a huge baseball fanatic.

Daniel Okrent: (06:50)
No, no, no, not at all. I just found that when our kids were graduating from high school, the opportunity to have the freedom to live where we want and to make my own schedule really played into my long-term wish to write for a living. So I left the magazine business in 2001, but I had begun working on the Rockefeller Center book, Great Fortune, about in 1997, I think. So I date my career-

Anthony Scaramucci: (07:16)
Why that, though, Daniel? Why did you pick that subject?

Daniel Okrent: (07:20)
Well, again, I don't have a good reason. I have a silly reason. It was somebody else's idea. I was called by a publisher I knew slightly. We had lunch. It was a very nice lunch. It was back in the days when I'd actually have a drink at lunch, and a beautiful afternoon in an outdoor garden behind a restaurant in the village. And I said to her, "I'm really not looking for a book to write. I've got this job and others."

Daniel Okrent: (07:45)
She said, "Well, I want you to write a history of the Rockefeller Center." And I said, "It's a deal." My agent, who was sitting at the table, said, "You never should do such a thing."

Daniel Okrent: (07:53)
When I was the editor of Life Magazine, and when I was corporate editor at large, my office looked at Rockefeller Center. I was in the Time and Life building at 6th Avenue and 50th Street on the West Side, and I saw that place and walked through it every day, and I lived it for a variety of reasons. So the opportunity to learn more about it and have somebody pay me to do that was something I couldn't pass up.

Anthony Scaramucci: (08:16)
And, boy, I thought that was a phenomenal book. I read your books in reverse order. Well, I read The Guarded Gate, then The Last Call, and then I found ... Somebody had mentioned to me that you had written the book on Rockefeller Center. I thought that book was amazing. Let's touch on Rockefeller Center for a second because it almost didn't happen, as we both know, based on your book. And yet, this was a phenomenal experiment by John D. Rockefeller Jr. Tell us a little bit about the idea behind Rockefeller Center and what it means to the city of New York.

Daniel Okrent: (08:49)
Well, it was an accident. John D. Rockefeller Jr., who had never done anything resembling property development, but was an extremely generous philanthropist even beyond his father, really his entire career was philanthropy. He acquired a ground lease to the land that is now Rockefeller Center from Columbia University so that the Metropolitan Opera Company could build an opera house there. And then the opera company, as they're preparing to build an opera house, suddenly the market crashes in 1929. And they go to Rockefeller and say, "Well, we can't really afford it," even though these were some of the richest people in New York, "So would you build the opera house as well?"

Daniel Okrent: (09:28)
And he said, "It was at that moment I decided I could either work for them or I could work for myself. And I decided to do it alone." And he had this 99-year lease on three blocks of Midtown Manhattan that absolutely had become worth almost nothing, but he was committed to it. And he had deep enough pockets that he could stick with it.

Anthony Scaramucci: (09:48)
It's an amazing story. So he built this beautiful complex, and he put a lot of people to work in that complex. And obviously, as we both know, it's the real heartbeat of Midtown Manhattan.

Daniel Okrent: (10:00)
Right.

Anthony Scaramucci: (10:02)
And tell us-

Daniel Okrent: (10:03)
Go ahead.

Anthony Scaramucci: (10:03)
No, no, I was just tying it back to the book for one second and get your insight here. But it didn't look like it was going to be successful in the beginning. Right? I mean, it looked like he had-

Daniel Okrent: (10:14)
It was a calamity. It was the Depression, it was the Depression. And the only way they could get people to move into it, they were the primary means of acquiring tenants, first, everything that the Rockefellers were involved in. Standard Oil of New Jersey moved into it. Rockefeller Foundation moved into it. Everything that had the name Rockefeller connected moved in. So that occupied about 1% of the space.

Daniel Okrent: (10:38)
And then they made deals with anybody who wanted to get the contract to build the place had to commit to a lease as well. "So I'm trying to decide between Westinghouse and Otis for the elevators. Which one is going to take up the most space in my building?" Westinghouse said, "We'll do it." Then he signs up Westinghouse.

Daniel Okrent: (10:55)
I should say it's not John D, Rockefeller Jr. Himself, as you know, but a man named John R. Todd, Christie Todd Whitman's grandfather, who really was the genius who did the work. He was the real developer.

Anthony Scaramucci: (11:07)
It's an amazing story. And also David Sarnoff, the legendary David Sarnoff takes 30 Rock for the Radio Corporation of America, which goes on to become NBC. And if you walk those storied halls, which I have because I've done television there, you can hear the voices of Howdy Doody, and Captain Kangaroo, and Johnny Carson, and Jack Paar. Well, that's an amazing book. I want to recommend it to the people that are listening. But I want to transition back to your latest book, which I think is very timely given the election coming up. And it's called The Guarded Gate, and it is about immigration.

Anthony Scaramucci: (11:43)
And, boy, I thought we were having a tough time with immigration in 2015 to 2020 until I read your book, Daniel, and recognized that it was probably worse 1915 to 1935, considerably worse. So let's talk about eugenics and that false science of eugenics. And let's talk about where the zeitgeist of America was at the time of They Guarded Gate.

Daniel Okrent: (12:09)
Well, the movement to keep out immigrants from eastern and southern Europe begins in 1896. And a piece of legislation is passed that would require a literacy test for people coming into the country. And it was clear to the people who wrote that, in fact, they listed the countries, that people from these countries were less likely to be literate, and we could keep them out that way.

Daniel Okrent: (12:31)
But that was vetoed, that bill, in 1897 by Grover Cleveland. It was passed again under William Howard Taft, vetoed again. Passed again early in Wilson's tenure, vetoed again. And then finally in 1917, there were enough votes to override another Wilson veto because the anti-immigrants had changed the story. After being accused of racial and religious ethnic prejudice, they came upon this nonsense science called eugenics.

Daniel Okrent: (13:00)
Eugenics begins in the United Kingdom in the aftermath of Darwin. It's a distortion of Darwin, but even then, the idea of matching up the best women and the best men to marry each other, they might produce better babies as the term was used throughout this period for contests at state fairs. But what the anti-immigrationists did was they decided to apply it to ethnic groups.

Daniel Okrent: (13:29)
The lead publicist for this movement was a New Yorker named Madison Grant, who wrote a book published in 1915 called The Passing of the Great Race. And he posited that there were three European races, and they were a hierarchy. And at the very top were the Nordics who were bold, and strong, and confident, and smart, and they should run the world. And they're the people from Scandinavia and from the British Isles.

Daniel Okrent: (13:55)
Then there are the Alpines from France and Austria. They're artisans, and we need them in our culture. And at the very bottom are the Mediterraneans, the Italians, and the Greeks, and the Turks. And he actually writes at one point in the book, and he said, "As we now know from the science of eugenics," which wasn't science, "any intermarriage between any of these two groups, the offspring will revert to the lower form. Therefore, if a Nordic marries an Alpine, their children will be Alpines. If an Alpine marries a Mediterranean, their children will be Mediterraneans. And if any of the three European groups marries a Jew, their children will be Jews." This is a horrifying thought published by our leading publishing companies and embraced by two generations of American politicians.

Anthony Scaramucci: (14:45)
Let's go to the culture. What were they fearing?

Daniel Okrent: (14:48)
Well, to take a term from today, displacement. They were fearing displacement. I think the first fear is just the fear of the unknown. But this goes back, Anthony, as far as before the Republic is born. In the 1750s, there was a newspaper editor in Philadelphia who was writing screeds about keeping the Germans out of Pennsylvania because they're going to destroy our culture and our language. That was Benjamin Franklin who wrote that.

Daniel Okrent: (15:17)
So it really, really goes back. It comes up every couple of generations in America that there's this sudden fear that the next guy coming up the ladder is going to ruin things for those of us who have already made it.

Anthony Scaramucci: (15:30)
So in your opinion, the anti-immigrant sentiment today, is it worse? How is it different? Is it under there's a displacement issue? Clearly, that's why I brought that up. How would you describe today versus 85, 90 years ago, or 100 years ago?

Daniel Okrent: (15:48)
Well, I think there's a very strong similarity, which is to say that we are not deciding whom to allow into the country based on that person's quality as an individual. We're doing it on the basis of where they come from, what ethnic group they belong to. So it just says Italians, Greeks, Romanians, Poles, Jews. They were the ones who were ... They used the expression of a well-known politician in America from the shithole countries of the day.

Daniel Okrent: (16:16)
Now, the same thing is being applied to people Arab nations and from Central America and Mexico. If you're deciding to keep somebody out because they're from Honduras, that's like keeping somebody out because they're from Italy rather than do I want this person in the country. And that sounds very, very similar.

Anthony Scaramucci: (16:38)
No, I thought that was a fascinating part of the book, and I'm interested in your reaction because Teddy Roosevelt wrote legislation saying that Italians, for immigration purposes, were to be treated as non-Caucasian. I remember my grandfather being sore about that. Jews and Italians were considered, back then, nonwhite. I think we've gotten whiter over the last hundred years if that makes any sense to you. And so I guess, can you talk a little bit about that evolution of the expanding definition of whiteness in the United States?

Daniel Okrent: (17:16)
Well, it's a matter of familiarity, and it's a shame that we have to use a color to define it. But, in fact, you're right, that's how it was determined at the time. The notion that somebody is beneath you on the ladder begins to fall apart when that person climbs up the ladder and is succeeding.

Daniel Okrent: (17:37)
So as we saw, Italians, and Greeks, and the Eastern European Jews make it in American society. The question is, are they pulling up the ladder so that nobody else can come behind them, or are they extending the ladder because they're glad that they've made it? And they made it in the eyes of the people who would rather keep them out because they've gotten educated, and they've worked hard, and they've become good American citizens. It's really not any more complicated than that.

Anthony Scaramucci: (18:04)
There's an American History book called These Truths by Lepore.

Daniel Okrent: (18:09)
Jill Lepore, mm-hmm (affirmative).

Anthony Scaramucci: (18:10)
Jill Lepore. And she was also a Tufts grad. It's another book that Sol recommended me. Did you read that book or not?

Daniel Okrent: (18:16)
Yes, I did. I know Jill quite well. Yeah.

Anthony Scaramucci: (18:17)
Okay. So I want to emphasize these books and ask you an opinion now because I'm going to intersect the two books because her book is really about the truth of what happened in America. We get a story in social studies about America's greatness, and obviously, we both love America. I can tell from your writing that you love America as much as I do. But we also know that there's an underbelly of America. There's a seething in America. There's this discontent in America.

Anthony Scaramucci: (18:45)
And so my question to you, has that always been the case in America? Is it worse now? Is it better now? Or how can we make it better?

Daniel Okrent: (18:56)
I don't know that it's any worse now than it has been in the past because the same principles are operative, in which one is to come up with excuses not just to demean the lower group, but in the process, to exalt the group you belong to. It seems that we, as a species, Anthony, need to have somebody to look down on. I don't know why that is the case.

Daniel Okrent: (19:24)
I think it's probably more toxic today because of the communications culture that we have so that we can see in an instant the nature of the hatred that exists. Some people say, "Has this president, has he made this country that has more haters in it, more anti-Catholics, more anti-Semites, anti-black?" I said, "No, I don't think he has. He's just given the opportunity to come out of the closet. And in a world of Facebook and Twitter, it's very easy for vile and poison to pour into the culture at large.

Anthony Scaramucci: (19:59)
Well, we took the village idiot, and we turned him into a global idiot through the use of the social media. They can sit in their basement, and they have this huge microphone now to speak to the rest of us. I mean, not to go into politics, I try to stay away from politics on these talks. But one of the reasons why I disavowed my relationship with the president, and no longer gave him my support, had to do with this story because he told four congresswomen, also known as the squad, to go back to the countries that they originally came from, three of which were born here in the United States. One was a naturalized citizen, all four democratically elected to our Congress.

Anthony Scaramucci: (20:41)
And so they told my grandparents that. They said, "Go back to the country you came from." You write about it. You write about the NINA movement for the Irish and the Italians. No Italians or Irish need apply in these storefronts. My grandmother was subjected to that. And so I want to ask you this question. We're still subjecting people to this. Is there a panacea? Is there something that we ... Your book is clearly something for intellectuals to read and become more aware of this and become more psychologically minded of it. I'm just talking about from the social construction, Daniel, based on your life experience, is there anything that we can do to make this better? Or is this a permanent syndrome for us?

Daniel Okrent: (21:24)
There comes a time, I think, in every bad moment in American history where there's a swing in the other direction. The 1924 Immigration Law, which is the one that effectively kept Southern and Eastern European immigrants out of America for 40 years, it falls apart in 1965 at the same time that the Civil Rights Movement was happening.

Daniel Okrent: (21:46)
Coming out of World War II and beginning to understand the country better, and the black quest for rights becoming visible, that informed a larger expression of that same moment. In 1965, the passage of the Hart-Celler Act, which revoked the 1924 law, opened the gates to an incredible immigration that we have benefited from enormously.

Daniel Okrent: (22:13)
Now, I'm not suggesting that anybody who wants to come should be allowed in. I think that what we had for many years was not a quota, but a quotient, a limit to the number of people. And it was a lottery. Anybody could come. Anybody could try, and I think that we're going to get back to that. We're going to get back to that when this president is no longer president, let's not talk about politics.

Anthony Scaramucci: (22:39)
I didn't mean to bring up the politics. I just wanted to explain how you-

Daniel Okrent: (22:42)
No, I'm trying to go with you on it.

Anthony Scaramucci: (22:44)
Yeah, yeah. Yeah. I was trying to explain how your book moved me. We're going to let John Darsie, who you can see. He was an early immigrant of the United States because he wears that gray-haired wig of his great-grandfather. See the picture behind him? He's one of those ... Anyway, we can talk about that later. We'll talk about that offline.

Anthony Scaramucci: (23:03)
But I want to get to prohibition for one second, and then I'm going to open up to John Darsie and questions from our audience. The prohibition book was also phenomenal. And when I finished the book, the only thing I could think of was hypocrisy. That's the only thing I could think of. I closed the book. I said, "Wow! We are sanctimonious and righteous, but yet, on a Saturday night, we're all living it up." It was very hypocritical.

Anthony Scaramucci: (23:32)
So number one, what's your favorite drink? You mentioned you were having a drink at the restaurant there before you wrote the Rockefeller Center book. But what's your favorite drink?

Daniel Okrent: (23:41)
I'm a brown goods, I'm a bourbon drinker in the winter, and I'm a gin drinker in the summer. And I can drink my gin in any number of different combinations.

Anthony Scaramucci: (23:49)
Okay, there you go. Okay, so I like a good Negroni. I like a gin and tonic. I'm a gin drinker myself, but I've also discovered Tito's Vodka as I've gotten older, which is a good one with lemonade. But here we are, a country that was so Christian ideologically based that we literally got a Constitutional Amendment passed to ban drinking, yet we were all drinking, so go ahead. I mean, on that before I turn it over to Darsie.

Daniel Okrent: (24:18)
Yeah. Think of it this way ... Just to that, Anthony, there are only two things in the Constitution that limit the rights of individuals. The Constitution limits the powers of government, the two things that limit it. And the 13th Amendment says you can't own slaves, and the 18th Amendment says you ant have a glass of beer. The notion of equating these two things alone shows you how insane it was.

Anthony Scaramucci: (24:42)
Well, how did it get reversed? Roosevelt, right, Franklin Roosevelt, basically, right?

Daniel Okrent: (24:47)
Well, it got reversed because there was a sudden need for tax revenue. In 1929, the crash comes in. Income tax collections drop by 30%. There are no capital gains collections at all between 1929 and 1932. Somebody says, "Where can we get the money to run the government?" Well, Geez. You remember that alcohol tax? And like so many things in American life, money turned it around.

Anthony Scaramucci: (25:11)
I just want to comment, in the age of global warming, it would have been very hard to drive those trucks over the Great Lakes from Canada to bring all that booze into the United States.

Daniel Okrent: (25:19)
Exactly.

Anthony Scaramucci: (25:21)
It would have been on motorboats this time. I got to turn it over to John. We have great audience participation here, lots of questions, Daniel. I could talk to you for hours, but I got to turn it over to George Washington. So go ahead, George.

John Darsie: (25:34)
Alright. Don't hold it against me.

Daniel Okrent: (25:36)
Well, before we hear, don't hold it against you, John, I mean, if you do go back that far, it's worth pointing out that the term that people whose families have been here since the 18th century used to describe themselves during this period was Native Americans.

John Darsie: (25:50)
Well, there you go. I actually don't go back that far.

Anthony Scaramucci: (25:53)
I'm using that on our next Salt Talk, Okrent. Thank you for bringing that up. Thank you.

John Darsie: (25:56)
It's all just part of Anthony's shtick. My family emigrated from Scotland in the 1800s, actually to New York, but I was raised in North Carolina, so I'm really just a redneck that Anthony likes to call a wasp.

John Darsie: (26:10)
Anyways, getting back on topic, you talk in the book a little bit, and I've seen some interviews that you did about The Guarded Gate where you talk about science and about how science was used as a pretense for creating these immigration quotas. Science was a pretense for the Holocaust and things of that nature. But today, we use science as an argument for addressing things like climate change or related to the pandemic and public health issues.

John Darsie: (26:38)
Fundamentally, how do we make sure that science doesn't get politicized and protect the sanctity of science in our society?

Daniel Okrent: (26:47)
I don't know how to do that. If we knew how to do that, we wouldn't be in this terrible dilemma right now with 170,000 Americans needlessly dead. The ability to denigrate science, it shocks me. I mean, certainly, for the last 50 years, this country has respected science, and I think it goes back further than that.

Daniel Okrent: (27:10)
Now, in connection to what I'm writing about in my book, sometimes science turns out not to be science. And this was a very difficult thing for me to conjure with. Science only knows what it knows today. It doesn't know what's going to happen tomorrow. It can imagine and project, but it doesn't know for sure. And until things can be disproven, then sometimes people aren't going to accept them as real. Nothing I can do about it.

John Darsie: (27:36)
Right. So it's a fundamental challenge that we have to be rigorous about addressing the truth behind science and not allow it to be distorted.

Daniel Okrent: (27:44)
Yeah, exactly.

John Darsie: (27:44)
We have a question from one of our viewers talking about The Guarded Gate refers to immigration from the outside, but there's also internal barriers that act as guarded gates within our society to immigrants, restrictive zoning policies, nimbyism, in general, by both liberal and conservative politicians. How do we address those types of internal guarded gates with our society, or do you have a prescription for it? Or how do you observe those phenomenons that have existed ranging back from the beginning of the 20th century through today?

Daniel Okrent: (28:17)
What I can do is recommend two books that address this directly. The first by Richard Rothstein, and it's called The Color of Law. It was published several years ago, and it describes how, by law, by acts of Congress, and by presidential action, black Americans were kept ghettoized by policy. And they are continuing to be victimized by what happened to their parents and their grandparents. It's required reading, I think.

Daniel Okrent: (28:47)
Equally, a brand new book about to come out called One Billion Americans by the exceptionally astute political commentator, Matthew Yglesias, points out how we can get past this. And one of his ways of getting past it is to expand the society. We need more Americans. We need more Americans mixing with other Americans. And then he goes into a very persuasive argument about why that would be very powerful in improving the lives of all Americans, both those here today, and those we're going to create soon.

John Darsie: (29:19)
What's the next wave of people that we look down on? So we talked about the evolution of whiteness. It didn't use to include Jews and Italians. And now we look down on the Central American immigrants that are becoming so ingrained in our society. They'll eventually be such an important part of the electorate that they can't be ignored. What's the next evolution of that whiteness and how we discriminate against people?

Daniel Okrent: (29:46)
My fear is that it'll be directed toward Africa, both Saharan and sub-Saharan Africa. There was quite a substantial immigration from Africa after the law was changed in 1965. And we see the scientists, and the football players, and the politicians who came out of that and have really added to American life, but it wasn't attended to much by the haters during that period.

Daniel Okrent: (30:13)
And I think if we can get past this period, we hope we can get past that one too, but that would be the obvious ... Those would be the people who would obviously be the next targets, I think.

John Darsie: (30:23)
Right. I want to pivot a little bit to your time in journalism. So you served as the first public editor of the New York Times, a role in which you were asked to, without guidance from the paper itself, or without a few or a favor, critique the paper's work. It's a role that we're familiar with now, but you were a pioneer in that space. How did you critique the New York Times' performance during that period as a public editor, and how would you critique the modern media in the way it's covered the Trump presidency?

Daniel Okrent: (30:52)
Well, you got a few hours? Then I could go into great detail on it. I learned an important thing, John, when I was the public editor during the 2004 election. I got a call one day from a reader. I guess it was an email from a reader who said, "It's clear to me," the reader said, "that the Times is in the pocket for George Bush because there's a picture of George Bush in color page one, three columns, above the fold, looking happy, and strong, and confident. And that's clearly you're favoring that candidate."

Daniel Okrent: (31:23)
And I asked the reader, "Who was on the front page of yesterday's paper?" And he said, "I don't know." And I said, "Well, it was John Kerry in an equally happy and positive context."

Daniel Okrent: (31:37)
This has only gotten worse. Too many of us are seeking out the news that conforms to our view of the world. If it conforms to the view of our world, it's true. If it does not, it's either fake news, or it's biased in some other fashion. And this has only gotten worse. It's gotten worse in every aspect of the media as we get fractionated.

Daniel Okrent: (32:01)
Liberals watch MSNBC. Conservatives watch Fox. Who reads the Times? Who reads the Journal? We don't have a common set of information. We aren't hearing the same things. And how you can build a society when we don't have that in common is hard to imagine.

Anthony Scaramucci: (32:21)
But we're arguing about the facts now, right? So we can't even have a proper debate because we're getting different facts from different channels.

Daniel Okrent: (32:29)
Yeah, and so-called facts. There was a time when-

John Darsie: (32:32)
It's like eugenics. It's like the point you made about eugenics.

Daniel Okrent: (32:36)
There was a time that if Walter Kronkite said something, America thought, "Oh, yeah. That's probably true." There were three national sources of news, the three network news shows. Now, let me find the news that pleases me the most, and that's not news. That's propaganda.

John Darsie: (32:54)
How does the New York Times, for example ... And they've been criticized in certain corners of the media for covering some of Trump's shenanigans ad nauseum and giving the attention to him that he seeks by some of the behavior that he engages in. He pardoned Susan B. Anthony to distract from things that are going on at the Democratic National Convention or to distract from the release of the Senate Intelligence Committee Report. How do you balance the reporting on the president, he's the president of the United States, things that he does and says probably deserves some level of attention, but how do you make sure that the right stories get covered?

Daniel Okrent: (33:33)
There's no way of making certain that the right stories are getting covered. But as you said, John, you have to cover what the president does, or even what the leading candidate of one of our two major political parties does.

Daniel Okrent: (33:43)
Back in the 2016 campaign, Trump was saying outrageous things, and he was saying it to these huge crowds, and people were complaining. Why are you giving him so much television time? Well, he's a candidate for president. We can't help that. He's making the agenda.

Daniel Okrent: (33:58)
Now, it's incumbent on the new media to call him on falsehoods and to show that there's another side to the story. But I do think that we could all get carried away in one direction or the other.

John Darsie: (34:12)
I want to switch gears once again. Like I talked about in the intro, you're a man of eclectic taste. You started out as a baseball writer before writing these fascinating books about a variety of different topics. But you, as Anthony mentioned, were the father of the rotisserie scoring system for fantasy baseball. How did you develop that love of the game, and how did you come up with that rotisserie style of scoring for fantasy baseball?

John Darsie: (34:37)
I asked you about your fantasy team before we went live, and you said you quit that about 10 years ago, about 10 years after you quit smoking. So what's the genesis of your fantasy baseball fascination? How'd you come up with all of that?

Daniel Okrent: (34:50)
Well, at times, I thought fantasy baseball was more dangerous to my health than smoking was, certainly it was to my pocketbook. I was terrible at it. The idea came to me in 1980, and it was really the first real fantasy sport at all. This shows how stupid we were, rotisserie was our trademarked name. People would always call it rotisserie, or if they didn't, they'd have to pay us a royalty for whatever they produced under that name. And then, of course, somebody came up with the generic name, fantasy, and we disappeared, but that's fine.

Daniel Okrent: (35:19)
It just came to me because it was the winter of 1979, 1980, and I was missing baseball. I was simply bereft of baseball, and I started thinking about getting engaged in the game, missing the back scores. And boom, then my colleagues and I, we were in the Times, and we were on the Today Show. We were on CBS Morning News. Word got out, and this is why I'm a fabulously wealthy man today because everybody who plays the game pays me for the privilege.

Anthony Scaramucci: (35:51)
Do you remember Strat-O-Matic Baseball?

Daniel Okrent: (35:53)
I played it endlessly as a kid.

Anthony Scaramucci: (35:56)
Yeah, so the legendary Hal Richman is a native of the town I grew up in. And so at the age of seven, I learned Strat-O-Matic Baseball. And in 2008, I bought a piece of the company. It was obviously the precursor to-

Daniel Okrent: (36:13)
Absolutely.

Anthony Scaramucci: (36:14)
I'm a big baseball aficionado, so I own a piece of the Mets. I own a piece of Strat-O-Matic Baseball. You remember-

Daniel Okrent: (36:19)
Well, the piece of Strat-O-Matic Baseball is more valuable than a piece of the Mets.

Anthony Scaramucci: (36:24)
Actually, no. I mean, think about it. There's a couple of hedge fund managers that are bidding for the Mets, not Strat-O-Matic Baseball.

Daniel Okrent: (36:30)
I know, I know. You know what I'm saying.

Anthony Scaramucci: (36:32)
I do. I do. In terms of the literary significance of Strat-O-Matic Baseball, I tell children, "Learn Strat-O-Matic Baseball, you can manage money because there's a lot of statistical insight in that game."

Anthony Scaramucci: (36:46)
I don't mean to interrupt you, John, but I have to ask this question. Baseball has a future, Daniel?

Daniel Okrent: (36:54)
I sure hope so. It's so hard watching now. I can't watch because seeing the empty seats, it's not right. It's just off. I can listen on the radio and even accept the fake fan noise because it is a familiar thing that's coming to me over the airwaves. The sound with the ball and the bat, and the crown noise, the announcer, if you connect to baseball, you want this in your life forever. And I'm just hopeful that future generations will feel the way that you and I do.

Anthony Scaramucci: (37:28)
Are we going to seven innings?

Daniel Okrent: (37:30)
Oh, I hope not. I mean, there are some things in this, clearly. One of the things that is sneaking into baseball under the guise of COVID protection is the end of pitchers batting in the National League. This is how they're getting rid of the DH. They're also getting rid of extra inning baseball as we know it with this new man on second when the inning starts.

Daniel Okrent: (37:56)
There are going to be a lot of changes. Whenever you have a crisis, and this is true, I'm sure, in your world, in finance, in politics. Whenever there's a crisis, other things change because attention is elsewhere. And that's going to happen with baseball.

Anthony Scaramucci: (38:08)
Yeah. Well, we had the crisis that led to us being able to drink alcohol again.

Daniel Okrent: (38:13)
There you go. Exactly.

Anthony Scaramucci: (38:14)
John, I didn't mean to interrupt you. Go ahead. I'm sorry.

John Darsie: (38:16)
Stealing my thunder here, Anthony. Come on.

Anthony Scaramucci: (38:18)
I'm sorry about that. Go ahead.

John Darsie: (38:19)
We have one more question from the audience, and then we'll let you go, Daniel, back to your hammock there in beautiful Cape Cod. How come there's been no mention of your hit play, Old Jews Telling Jokes? And is there some value to the connection to humor when dealing with ideas around the acceptance of immigrants and the problems in our society?

Daniel Okrent: (38:39)
My colleague Peter Gethers, with whom I wrote Old Jews Telling Jokes, Peter and I learned by working on this show, which was a hit. This is the way that everybody deals the tragedy and sorrow. Make fun of it. It's the only way of making it tolerable. And so very quickly, one quick old Jew joke about Mr. Grossman goes to the doctor. He's a very old man. He said, "Doctor, doctor, I can't pee. "And he said, "Well, how old are you, Mr. Grossman?" He said, "I'm 94." He says, "Ah, you've peed enough." That's how he dealt with it.

John Darsie: (39:19)
Alright. Well, it was a pleasure having you on, Daniel. Anthony is a big fan of your books. I need to read all of them, still, but I started in preparation for this talk, but it's been fascinating to hear your perspectives. And Anthony, if you have any final word for Daniel before we let him go.

Anthony Scaramucci: (39:36)
Well, listen, I just think that you're identifying a strand as is Lepore in her book, Jill in her book, about America that we need to all understand. And we have to face that reality and work towards progressing and improving America. And so, very, very grateful for you writing those books. Before we do let you go, though, are you writing something now that you can discuss, Daniel, or not?

Daniel Okrent: (40:03)
I'm thinking about something. It's a story of old New York, about the family that was the second-largest landowning family in New York after the Asters. And nobody has ever heard of them. And it's a story of who they were, and why they disappeared. It's pretty interesting stuff.

Anthony Scaramucci: (40:20)
Alright, well, I'll look forward to reading that as well.

Daniel Okrent: (40:23)
Stay tuned.

Anthony Scaramucci: (40:24)
And I wish you a great rest of the summer. And let's stay in touch, please. And hopefully, when we get back to our live events, Daniel, we can have you come to one of our live events. I think you would enjoy it.

Daniel Okrent: (40:34)
Thank you very much, Anthony. This was a pleasure. And thank you, John, too.

John Darsie: (40:37)
Thank you, Daniel.

Jim Mccann: The Universal Need for Social Connections & Interactions | SALT Talks #37

“We help people express themselves and connect with the most important people in their lives.“

Jim McCann is the Founder & Executive Chairman of 1-800-Flowers.com, Inc., which he grew into one of the world’s leading floral and gourmet gifting companies. The company’s namesake was the result of a well-timed purchase during the 800-number craze.

Jim ran St. John’s Home for Boys, a group home for teenage boys, for fourteen years. He also worked multiple side jobs: covering odd shifts at a clothing store, flipping houses and bartending. Jim had the opportunity to buy his first flower shop for $10,000 just after he had sold a building in Brooklyn for $10,000, a serendipitous event he couldn’t say no to.

“There is a universal need for social connections and interactions.” Jim would go on to acquire companies that satisfied this basic need as a way to expand his portfolio: Cheryl’s Cookies, Harry & David and The Popcorn Factory.

LISTEN AND SUBSCRIBE

SPEAKER

Jim McCann.jpeg

Jim McCann

Founder & Executive Chairman

1-800-Flowers.com, Inc.

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology and public policy. SALT Talks are a digital interview series we've been doing during the work from home period, featuring leading investors, creators, and thinkers. And what we really try to do during these SALT Talks, is replicate the experience that we provide at our SALT conference series that we do in Las Vegas every year, and then internationally as well. And our goal at those events and on these SALT Talks is to provide our audience a window into the minds of subject matter experts and provide a platform for what we think are ideas that are shaping the future of business and policy. And today we're very excited to welcome Jim McCann to SALT Talks.

John Darsie: (00:53)
Jim McCann, if you don't know him as a very successful entrepreneur, business leader, author and philanthropist, whose passion is helping deliver people smiles. Jim's belief in the universal need for social connection and interaction led him to found 1-800-Flowers.com, which has grown into one of the world's leading floral and gourmet gifting companies. Jim's strategy for growth has included an effective combination of birthing and acquiring new businesses and brands that resonate with customers for their gifting and celebratory occasions. Jim is also deeply involved in philanthropy, and especially devoted to helping individuals with developmental disabilities, which includes his continued work as founder and chairman of Smile Farms, which is a 501(c)(3) organization established in 2015.

John Darsie: (01:41)
Smile Farms provides meaningful jobs in agricultural settings to young adults and adults with developmental disabilities, allowing them to master new skills, experienced teamwork, contribute to their community, and importantly, take home a paycheck, and the dignity that comes along with that. In 2018, Jim established Clarim Holdings, which is a private holding company, that expands market opportunities for clients by providing capital along with an extensive network of high tier support partners. Jim also serves as the director for a Amyris and International Game Technology PLC, as well as a variety of private and not for profit board seats that he sits on.

John Darsie: (02:21)
Just a reminder to all of our audience today, that if you have any questions for Jim during today's SALT Talk, you can post them in the Q&A box at the bottom of your video screen. And hosting today's SALT talk again is Anthony Scaramucci, who is the founder and managing partner of SkyBridge Capital, which is a global alternative investment firm. Anthony is also the chairman of SALT. And with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (02:42)
Hey John, thank you. And Jim, thanks so much for joining us. You're Long Island strong, which I love about you. Unfortunately for you and I, I think this is the longest I've spent on Long Island since elementary school, Jim. But before we get started on the business side of this stuff, tell us a little bit about the personal side. I think he just have this fascinating story about growing up in Queens, what the family was like and how you found your way into the flower business, or the floral business.

Jim McCann: (03:16)
Sure. John, thanks for those kind remarks, even if they were too many. My story is a simple one, not terribly different from yours, Anthony. We grew up in South Queens. My dad was a small businessman. He was a painting contractor. I'm the oldest of five children. And in my neighborhood, the kinds of role models we had, were public service workers. So policemen, firemen. We had a shopping area, main street called Liberty Avenue, where we had a lot of retail shops. And of course we had some other characters who were in another business, a family business too, only, they were five families in that business. And that was not a path we wanted to follow. So growing up, I thought, I'd either work my dad did in a small business, or my dream was to become a policeman.

Jim McCann: (04:10)
Along the way, you make life's decisions and it changes your optionality quite a bit. Mary and I married very young. We started our family very young. I've only had two really career kind of jobs. I worked for my dad as a kid, I worked in retail. Working for my dad, I learned how to do that stuff. So as a young man I'd buy a house and fix it up and sell it, or I'd buy a little commercial building and fix it up and rent it out. But both of my real career, so first was as a social worker, and then the second was as a florist. My old came from bartending, which is a genetic requirement. If you're an Irish Catholic from South Queens, that you make your way as a bartender. And working as a bartender in Queens, a good friend of mine was a customer.

Jim McCann: (05:01)
He worked in this home for boys. He ran a group home. Every time he'd come in, I'd ask him all about it. So at one time he called my bluff and said, why don't you come have dinner with me and the guys, in the group home. It's in a very, very tough neighborhood, 10 teenage boys, 14 to 20 years old living in a house. And lo and behold, he challenged me and said, well, if you think you'd to give this a try after dinner, you're on duty tonight and he flipped me the keys. Well, that was the start of a 14 year career at St. John's home for boys, which frankly I loved. And it was terrific for me. I wasn't good at the job at first, but I learned to get along. But the things I learned about myself and people and what makes people tick, are the things that I try and exercise today.

Jim McCann: (05:48)
It was putting small groups together and rooting for them and setting boundaries and trying to get them to see that they could accomplish things that they didn't expect or appreciate that they could on their own. And then rooting for them along the away, setting goals, making it fun, and letting them know that they were cared for and in fact loved. So I had that great career, but the challenge in being a social worker, is that, not-for-profit world, you don't make very much money at all. A lot of good people doing the genuine good work. Lo and behold, now at 24 years old, the administrator of the home, so it wasn't 24/7 job like it was when I lived in and ran the group homes for a few years. And I found myself attending Barney up, recite Manhattan on Friday and Saturday nights to supplement my income.

Jim McCann: (06:40)
One of those bottle flipper guys, and I had a customer, regular, would be in there every Friday, Saturday night and stay late. And he owned the flower shop across street, told me he was going to be selling it. And I thought, geez, flower shop, where I grew up there was a guy had a big flower shop on the corner, seemed to be quite successful. It was retail, you're working with people. So I asked him if I could work there a couple of Saturday afternoons before I went to the bar. And he said, sure, but why? I said, well, maybe I'm a buyer. So I did that a couple of Saturday afternoons and liked it. I liked how you were working with people in celebratory moments in their life. I asked him how much he was asking for the business, and he told me $10,000.

Jim McCann: (07:19)
Well, I had just sold a building in Brooklyn that I had a $10,000 profit on. So I thought it was serendipitous. And I bought that flower shop. Now, I bought a flower shop, Anthony, not just to be a florist, which of course I became, but also to build a business. So I didn't give up my full time job at St. John's right away, I kept that for a few more years, so that everything I had in the flower business, I could reapply and open up more shops. So I'd open another shop every six months. And then every quarter, until I had to leave St. John's, I'd accumulated a chain of shops and realized that there was no economies of scale in owning multiple shops. And I said myself, I got to find a better way to grow this business.

Anthony Scaramucci: (08:06)
Your vision at that time though, was to have small flower shops potentially, or your vision at that time was the mega scale of what you ultimately became an international brand. Explain your vision and the incrementalism of your entrepreneurship.

Jim McCann: (08:23)
I didn't get a good business education. I told you, I thought I'd become a policeman. So I went to John Jay college, which was a wonderful place to go to school, but as a psychology major, it didn't exactly train me for business. But I just thought if I built it big enough, it would get to be valuable. So I had 40 or so shops by that time. And I realized, no economy of scale here. I was playing with small shops and then big shops, what made the difference. It was ancient history, Anthony, but back then on TV, everyone was trying to get you to remember their 800 number, and they'd spend a fortune. I remember Sheridan hotels had a campaign where they'd have singers and dancers and kick lines, getting you to remember, 800-325-3535.

Jim McCann: (09:17)
So one person remembered the number, but I thought, geez, if you could only spell out the number, you don't have to do that much to get people to remember your number. And I found a company that had in it, that assigned ID number. And being a street kid from Queens, the company was in dire financial straits. They were broke, there was nothing left of it. And it was based in Dallas, Texas at that time. And I figured, why waste all that money with lawyers and accountants and bankers and do this diligence thing. So this wise guy skipped all of that, wound up doing due negligence, right? Bought the company to get the 800 number. There was nothing else left in there. And then discovered, because of my naivete, I accumulated $2 million so that I could put my hands on, to buy this company, which I did.

Jim McCann: (10:15)
And then I found out I had another $7 million in debt that I had just signed for personally, that I didn't have any idea about. So I had great motivation to get up in the morning and try and build the business. But I did have this 800 number now, and it changed how we operate the business. So that was our primary access modality. I changed the name of the store, to 1-800-Flowers. Didn't have capital, everything I could accumulate or borrow, I just put into this company, and now I have to market it and pay off this debt. So I started selling the stores or to franchisees who are better suited to be operated to these stores, because fitness is a family business. The economics of it suggest it should be a family business. So I took the capital from selling the stores off, to build up the brand and then had some good fortune and some wonderful accidents that happened along the way, so that we became a brand.

Jim McCann: (11:07)
We became the brand in this small flower business. And we changed the way the industry works. And 10 years, 11, 12 years into the business at that point my younger brother, Chris just graduated. So he's the youngest of the five of us. I'm 10 years, his senior, he just joined the business after he graduated from school, and so I gave him some old bandwidth and we decided to grow it out. But because we had just changed the flower business, with no money, just an idea, and then novel way of approaching the business. We were paranoid that, hey, what's the next technology that's going to come along, that could knock us out of the box. So I think that became part of our DNA. And in particular, Chris being interested in the technology side of things, we're always looking for what's next.

Jim McCann: (12:00)
So in the early 90s, we had our website, and it didn't much matter, because no one could find you. We were the first online florist in AOL. So we became to be, part of our culture is to be early on technology, early adopters, and to try a lot of new things. And that's served us as a culture now for 30 years.

Anthony Scaramucci: (12:31)
I've heard you speak about it, but I'd like you to speak here about it. The flower business, the celebratory business, there's a pretty steady Eddy nature to it. And you and I both know, because we live in this area, whether it's falconers or Manhasset florist. These places I've been here since I was a little kid, Jim, they're not going anywhere. And they have this 30 stability to it. Just describe that to our listeners for a second, the remarkable nature of the business.

Jim McCann: (13:05)
And those are people who are all partners. So we partner with the best florist in each community around the country, in fact, around the world. And so we're their front door, how people can access them, and they can come to us, we still have stores. We have obviously 800 number, but 95% of our business is e-commerce, through the online world. So the way we think of it, Anthony is, we've been through five waves. First, retail stores, then the 800 number, then the internet, when Netscape came along in 1995, and organize the world, those websites we had, really started to matter. And then it was everything about mobile and social. So even back during the recession of 08, 09, and 10, I don't know if you remember that, but there was this little recession thing happened.

Anthony Scaramucci: (13:57)
It was a dress rehearsal for today, Jim. We're going to get into that in a second.

Jim McCann: (14:00)
I think you're right. We remained profitable throughout, but we went backwards in sales, two years, a little bit. And so we had to cut back on a lot of the developmental things we'd been doing, but we didn't cut back on our technology spend and we didn't cut back on our social media spend, or on our efforts in and around mobile. And thank goodness, because when we emerged from the recession, having spent a lot of money and a lot of energy on those developmental efforts, they gave us that fourth wave. So everything social, everything mobile. But right now I think that we're going through the fifth wave, which I think is the most exciting. My brother, Chris turned to conversational commerce about five or six years ago. He's the first person I heard use that term.

Jim McCann: (14:46)
And now we think it's morphing to be more about engagement commerce. So what is it we do? We're a flower and gift company. We help our customers express themselves and connect to the important people in their lives. We do that with gifts and sometimes no transactions. We've been following our customer's pattern. So when you say we've acquired companies and birthed companies, we do that with the idea of following the customer's purchase pattern. If we're there to help them express and connect to the important people in their lives. Flowers are not always the perfect way to do that. When it is fine, we're there. And we have these wonderful partners around the country, around the world, who we've worked with, and we're tied to.

Jim McCann: (15:34)
But sometimes our customers would go to a company like Harry & David to buy a wonderful food gift, fruit peaches or pears. And when that company came available to us, we said, wow, they're already our customers, let's acquire that. And it had been a company that was in decline for 15 years. And when we bought it, we were fortunate. Now we've had it for five years and it's had five years of accelerating growth. And we did that with chocolate businesses and cookie companies.

Anthony Scaramucci: (16:01)
You made some changes to the company though, Jim, tell us a little bit. You bought Harry & David and it was in decline, but you made some changes. What were some of the changes that you made? Because the thing is a major growth engine now.

Jim McCann: (16:13)
Well, we focused on what we know how to do, and where the trend lines were taking us. And that was e-commerce. So instead of expanding their store footprint, we put all our efforts into building a relationship with your customers, expanding your product line along the lines that they tell us they'd like us to, and investing in the technologies to be convenient to them, to improve our delivery capacities. The product was and is terrific. We're vertically integrated there. We're selling our peaches now. We have a peach sets, our own trademark Oregon, because we grow them in Oregon and they're out of this world. So the product was good. It's just as good today may be getting better all the time because our ag, people are doing some terrific things, but we have 5,000 acres of production, we grow the food.

Jim McCann: (17:03)
So we're not afraid to be vertically integrated where appropriate. And so for us, it's all about e-commerce, knowing the customer, engaging with the customer. When we talk about all this technology, Anthony, it's ironic, back when we had one shop on the upper East side, and we had 40 years ago, single shop, upper East side, we had 40 customers who really made that business go. But those 40 customers just didn't come in to buy flowers from us. They came in to have a cup of coffee. They came into ask of a restaurant recommendations, they went in to hang their dry cleaning up in our place, while they ran around the neighborhood on this side. We had a relationship with them. And now the irony is, that we use technology today, because now we have 40 million customers. How do we effectively build a relationship with them?

Jim McCann: (17:58)
Our commitment has changed. Look, you're a business leader. You're a leader beyond business. And you know, and you've taught me, frankly, that vocabulary matters. It matters how people think about what their job is, what their mission is, what they do. And it just clicked for us earlier this calendar year, we were listening to all the people in our shop talk about, how much it cost us to acquire a customer and how we get them to place another order. And it was bothering me that we were losing sight of the relationship. When I was chatting with Meredith, a young lady who's my chief of staff. And we were on the phone. It was back in January. She was home in rainy New York. I'm in Florida with family over new years. And we're having this conversation.

Jim McCann: (18:47)
So she says, "So Jim, what you're saying i, you don't want to acquire customers. You want to acquire or earn relationships." And just when she said it, it changed how we think about things. And Chris now, using that vocabulary to change how we behave. I'll give you an example-

Anthony Scaramucci: (19:06)
That's very smart.

Jim McCann: (19:07)
... market differently, Anthony. As a florist, the sympathy category is important to us.

Anthony Scaramucci: (19:13)
Sure.

Jim McCann: (19:15)
And sympathy has been a declining category for us florists for 20, 25 years. But it's still an important category.

Anthony Scaramucci: (19:22)
Why is that Jim? Because it's charitable contributions. Why is it? Because ever since in lieu of flowers, is that why?

Jim McCann: (19:29)
All of the above, Anthony, plus cremations. Now 50% of the deaths in this country result in a cremation. So, an event, as often as they used to be, so cultural changes, religious changes, geography changes in lieu of all of those things, are making the declining category. So we put our heads together and said, look, how do we market simply, well you say, when you have a death, we have really good flowers. You can't do that. It makes no sense. So we went to a friend of ours, another guy from long Island, John Tesh. John has a radio show, 350 markets. He's married to a wonderful lady. An actress named actress named Connie Sellecca.

Anthony Scaramucci: (20:08)
He used John anchorman here, right Jim?

Jim McCann: (20:10)
That's right.

Anthony Scaramucci: (20:11)
Am I talking about the right John Tesh, CBS?

Jim McCann: (20:12)
CBS. Yeah. Host of entertainment tonight, and a very, very accomplished touring musician. And so no, John, like John, I love that he has his radio show that it's all about making people's lives a little bit better every day. So I went to him and I said, John, here's our issue on sympathy. And we'd to mark it on your show, but I don't want to buy any ads. He said, "What?" I said, sympathies is an important category for us. And what we would to do, is use you in the relationship you have with your audience to initiate a dialogue, with our community, around the subjects that are hard to talk about. So people you would know, I gave him this example, another friend of mine also named John. I called him one night, said, hey, if you guys are getting together at dinner tonight, are you going? I said, yes, it was a Wednesday night.

Jim McCann: (21:00)
I said, but John, I'll be a little late because a family lost their dad in our neighborhood, and I was going to stop at the Fair Child's chapel on the way home, pay my respects. He said, "I was thinking about that. I knew them too, but I didn't think I knew them well enough to go." And I said, John, let me ask you to pause there. I said, my sisters and brothers and I have been in front of the room too many times, and I can assure you, John, that we never once said, geez, that person didn't really know us well enough to come here to pay their respects. They said on the contrary, we'd always say and think, how nice of them to come and pay their respects. It makes us feel so much better.

Anthony Scaramucci: (21:41)
Amen. Very well said.

Jim McCann: (21:43)
10 minutes later. He calls me back and said, "Thinking about what you said, I'll meet you there. I'll tell them we'll both be a little late." And I told that story to John Tesh. And I said, so let's have a conversation with your audience about how do you handle expressions of sympathy when Nadine in the workplace, his dad passes away, he's returning to India for the services. How do we as a group express ourselves? What's appropriate? What's culturally appropriate? So we've been building this conversational massive information and serving it up to our customers on our website. So we never say buy flowers. We just have this conversation. John tells us that in a two and a half years, that we've been doing this together, his audience has never been more engaged on a single topic. So I think the lesson for us was, it's about engagement and about serving your audience.

Jim McCann: (22:38)
If you serve them, if you're doing something with no ill intent or no commercial goal in mind, but doing it in a service kind of environment, you'll earn the due consideration when a purchase is appropriate. And so that's how we've been changing all the ways that we interact with our customers. And in fact, we're kicking off a big new research program, because frankly COVID changes everything. Especially seeing, now, how many people have you known in the last five months, where there's been a loss and you guys would have gone to the service, but now they're telling you, we're having a private family ceremony. And we'll let you know when we're going to do something else. So all the rules are changing here. And so we're going to pull in all the experts and the public and our community and say, what are the new rules? What's the new appropriate ways to express and connect, especially at a sad moment, like a loss? So it changes how we think about quote unquote, marketing.

Anthony Scaramucci: (23:41)
Well, listen, I think it's a brilliant insight. I'm glad you're sharing it with everybody. Because at the end of the day the less transactional we are, the more relationship driven we are, the more we're comfortable expressing our vulnerability to each other, the tighter the relationships get, and then you can ride it out with each other in these periods of difficulty. So, I think it's a brilliant insight. Let's stick on the COVID-19 thing for a second, Jim, because you and I have had conversations, not live like this, but in your backyard, where we've talked about the impact of COVID-19, the impact on the airlines, the impact on New York city, the city we love, our neighborhood here. Tell us a little bit about your thoughts, about how we pull things back together. And what do you think happens over the next six, 12 and 18 months?

Jim McCann: (24:31)
Well, I think everything gets turned upside down here. Let's look at the big macro trends, what's going on. I had a conversation back in March with one of my friends and hero, a guy, well, Henry Kravis. We were chatting on a Sunday afternoon about what's this going to mean? When you get the chat with really smart, thoughtful, nice people like that, you hang on their every word. Now, what we agreed to, we were trying to get to what happens. And we agreed that the three big macro trends that we're going to at least hit the pause button, are globalization, urbanization and the sharing economy. And we see that with WeWork and Uber and Lyft, they're having their struggles. Well-run companies, they'll make it through, but they have to rethink how they do things.

Jim McCann: (25:20)
But those three big trends are put on pause. And then on the other side, what are the other big trends that you've spoken about in this program many times? I've learned a lot from those conversations. So real estate is changing dramatically. That pause on urbanization has closed the suburban, rural flight. I remember in the beginning of this, Adam Hamm, who's one of my board members said, "Second, third and fourth ring suburban around big cities will benefit." I said, you said second, not first? Because we live in the first spring, Anthony. You said, first spring is already too expensive. And the taxes are too high. So the guy who would to live on Long Island, let's say Dix Hills, just into Suffolk County, the reason he doesn't, well, he would to be there, because the houses are bigger. there's more land and the taxes are lower, and the school systems are still really good.

Jim McCann: (26:17)
But he's got this hellish commute. If he or she has to go to Manhattan, it's just a forever commute. So he's forced to go in closer, but now it's not so troubling to commute anymore. If he only has to do it one or two days a week.

Anthony Scaramucci: (26:34)
Or doing it in this period of time, Jim. I'm getting into the city 25 minutes from our town, which is only 17 miles away. So thing things have changed. Is it-

Jim McCann: (26:47)
But now the other trends emerging, nesting, cocooning and faith popcorn, crafted that term back in the 90s. But some of the mental health professionals are talking about it now as being a negative thing.

Anthony Scaramucci: (26:59)
Mary Lou still likes you Jim, or is she just tolerating you at this point?

Jim McCann: (27:02)
We learned that, that we actually like one another. Every once in a while, she speaks to me. We had an anniversary last week.

Anthony Scaramucci: (27:12)
How many years you married, Jim?

Jim McCann: (27:15)
47.

Anthony Scaramucci: (27:15)
God bless you.

Jim McCann: (27:16)
I told you we married young.

Anthony Scaramucci: (27:18)
That's amazing.

Jim McCann: (27:19)
And she's still speaking. I don't get it. And more than that, we have three grown kids, who you know.

Anthony Scaramucci: (27:23)
She lets me in the house. So I take that as a good sign. She's still-

Jim McCann: (27:26)
She did make you take the shoes off.

Anthony Scaramucci: (27:28)
Yeah, that's true. And she did stick me out in the backyard by the bird feeder, but that's fine.

Jim McCann: (27:33)
We got to be careful in this environment.

Anthony Scaramucci: (27:35)
So your future of bricks and mortar retail, Jim. What do you think?

Jim McCann: (27:43)
You and I had that conversation back in the backyard there, we talked about the great acceleration of COVID. We said then, everything that was going to happen in the next five years in terms of e-commerce and place-based commerce, retail was going to accelerate five years and five months. Here we are five months and we weren't great Sears, but it's exactly what's happened. So retail is going to continue to struggle and get crushed. Interesting stories in the last few days about Amazon talking to, about some Sears stores and some JCPenney stores, that they might want to use as distribution warehouse facilities. So you're going to see this ugly gyration of retail being repurposed. So I think stores are going to continue to struggle. I think we're in a situation like we're in now, for probably another year.

Jim McCann: (28:38)
I'm hopeful. I've seen you're reporting on what's happening in treatments and with vaccines. And I'm on the board of one of the big health systems in New York. And so I stay very plugged into it. I think some great things might come from this. We're spending hundreds of billions of dollars to find a vaccine. The first time man will have ever had a vaccine for COVID disease. So I wonder if after that, after we get three or four or five vaccines that we're using, that we're comfortable with, that they test out properly and knock this thing down, that's going to take another year. And we have 45% of us, nudniks, running around here in the United States saying, well, neither are going to take a vaccine. So it's going to take that time to work its way through.

Jim McCann: (29:23)
But in the mean time, the restaurant industry is decimated, hospitality, airlines and retail in general are going to continue to have a very, very tough time. And look, we're about entering this very important season for us. The holiday season, we were just, the team meeting in the last few days at flowers, about Halloween is going to be very different. Back to school is already crazy. Grandparents days in September 13th. All the grandparents like us, I get the weight to my grandkids, but the biggest threat I have now to my grandkids, when they get to see them in person is, hey, you don't watch out I'll hug you. I wonder what the long term effects on kids and relationships are there.

Anthony Scaramucci: (30:09)
No, it's true. In the young words, this is long periods of time, five months for a six year old or a 10 year old, long periods of time. I'm going to turn it over to John Darsie in a second, Jim, but I want you to address this before I do. We just celebrated the 30th anniversary of the Disability Act that was signed by president George Herbert Walker Bush. And you have been an unbelievable champion to helping people with disabilities. And I want you to talk a little bit about that charitable effort of yours and how it's being impacted by the pandemic, and where are things going for you and in that realm of your life.

Jim McCann: (30:51)
I think you're right, Anthony. I think it's having an enormous impact on the disabled community, but even before you think about how hard it is on the people, the disabled community. One of the things that has me concerned as a husband, as a father, as a grandfather, as a business person, is this terrible epidemic that I first became aware of in December of 2018. And it's this loneliness epidemic. And there are a couple of terrific young editors in Wall Street Journal wrote a piece back then, in December of 18. And the story in front page, lower center of the front page was, baby boomers, my generation, the loneliest generation, and then the continued for two big pages inside. I read every word of it and I've read it a dozen times, and had a chance to correspond with them to great thinkers.

Jim McCann: (31:42)
And the journal has been on this theme now for a while. And certainly the big healthcare companies, I think of United Healthcare in particular, Cigna, all realized that this loneliness epidemic has a real consequence in terms of healthcare, healthcare outcomes, and disease. Cigna and United Health will postulate that someone who is suffering from loneliness or most serious one, depression, is 50% more likely to have very serious health consequences, not just mental health. So they have a vested interest in working on this. And I think it's also, their good citizenship that has them investing so much time and research here. So these two editors in the journal said that, boomers were the first generation to have divorce in any great numbers, but to move away from where their family systems were for a better place, to be estranged from their children perhaps because of divorce. We were first-generation that really embraced diabetes.

Jim McCann: (32:44)
You put all these things together and we're living longer in spite of the disease. And so we're running out of money. We didn't save enough, we didn't have pensions. So you put all of those things together and you have people in poor health, without means, living by themselves, the tax from the family. 27% of baby boomers are women, 27% women never married or don't have a spouse or a child. And so the social networks are strained, but not to be out done, the millennials and generation X and generation Z are claiming... So generation Z, the youngest kids, 22 and below, who grew up digitally, Anthony. These are people who are so comfortable with devices and all the social media networks. 79% of them say, they're lonely, don't have any significant relationships in their life. 20% of them say they never had a single friend.

Jim McCann: (33:40)
So as much as we think we're connected, we're not. And I'm concerned because it has consequences for us as family people, as business people. And then if you add on top of that, people with disabilities, so you are fortunate enough to live in a nice community. And we're right near a friend and a hero of mine. He runs a place called the Viscardi Center. His name is John Kemp. And I think of him, when you mentioned the Americans with Disabilities Act, because he worked very closely with Senator Kennedy on drafting that legislation, 30 years ago, which has made an enormous impact in people's lives. But he was telling me just recently, he cares for kids in a vocational training and educational environment. So he has about 120, 140 young people. 99% are in wheelchairs.

Jim McCann: (34:31)
Many of them have to use the breathing to activate the wheelchairs, but he had me emotional about their consequence during this time. School is a lot more than a place to go to learn for them. It's a raise on the edge tray. It's why they get up in the morning. It's their whole, their socialization, so many of them. And he's extremely concerned about their mental health, being in that apartment by themselves now, for five months. Talk about being afraid of not having enough food or healthcare or medicine, nevermind the social interactivity. So I think it's having a devastating impact on people with disabilities. And I think we have to be mindful of that and be overt about doing things to reach out and connect. And I think these holidays are going to be so different. Thanksgiving is going to be so different this year, but if we just say, darn, it's going to be horrible.

Jim McCann: (35:30)
I loved when the family would get together and all the people around, the kids and it's just going to be miserable. All right, I give you a minute or two to have that feeling. But then we have a responsibility to ourselves, to our family members, to our coworkers, to pick ourselves up, dust ourselves off and say, it's going to be different, but it doesn't have to be bad. We can make it good. We have responsibility for those around us. And so, maybe we were constrained by how many people we could get around the Thanksgiving table, by how much you could cook, or how much room you had. Well, we're not going to be so constrained this year.

Jim McCann: (36:02)
So who else should we be inviting to participate in the Zoom carving, in the zoom preparations, to make them realize that you want them to be part of your community. I think we have an opportunity. I think we have a responsibility to think outside of ourselves and how annoyed we are that it's not perfect, and think about how do we make it good, and how do we make it good for people beyond just us.

Anthony Scaramucci: (36:28)
Just listening to you speak, Jim, it is so obvious why you're so successful in the flower connection, gratitude, sympathy, business. You're doing an amazing job. I'm going to turn it over to Darsie. He's now got big photos with his young stardom, Jim. So just look out okay. But he's coming in strong now with some questions from our viewers.

Jim McCann: (36:53)
It's not bad enough he's young, he also has too much hair.

Anthony Scaramucci: (36:55)
I'm okay on the hair side. Certainly regardless of you. Let's put it that way.

John Darsie: (36:59)
Anthony has invested a lot in that meme.

Jim McCann: (36:59)
So what is it about, $2,500 a month on hair care products that are here?

Anthony Scaramucci: (37:08)
Well, that would probably be at the low end, Jim. All of my hairstylists and dermatologist have signed confidentiality agreements. Let's just be clear.

Jim McCann: (37:17)
Did that happen during those famous 11 days?

Anthony Scaramucci: (37:20)
Well, I was losing hair. That was one of the reasons why I had to go so quickly. Okay. John.

John Darsie: (37:26)
You talked about school and how school is such an important time for young people to socialize. And that socialization is part of their education. For businesses, it also feels like work in the collaborative environments that exist. And a lot of businesses or are part of not just socialization that's good for people's mental health, but also creativity. There was an article. I can't remember what outlet it was in, about how the work from home has allowed people to maybe achieve a little bit more work life balance in some cases, but it affects people's creativity. What do you think the future of work is? Do you think that the migration to the suburbs, the second, third and fourth wave suburbs is a permanent phenomenon, and how do we create a framework for work, that allows people to have that balance, but also factors in elements like creativity, teamwork, and things like that?

Jim McCann: (38:17)
John, I think the essence of your question is absolutely spot. This changes everything. Take me, I'm an old fur here. I never thought I could work from home, but five months in, I get up in the morning, I start working, I stop working, I go to bed. So I've figured out how do it, I do have to figure out how to be more productive and how to spend the time on the right thing. So there's things I have to learn, but I'm never going to be jumping on airplanes like I used. Thank God this technology was here, but how about the third of New York city school kids? One third who don't have access to technology? Are we all kidding themselves saying, the spring was fine, they did remote, pat ourselves on the back. When a third of the kids who live in public housing don't have access to the internet, we're kidding ourselves to say these kids are getting educated.

Jim McCann: (39:07)
And nevermind the socialization part of it. It's extraordinarily painful to see what's happening. I think over the next month or two, you're going to have fits and starts. You have to have a very high tolerance for ambiguity. And as employers it impacts us too, because the girl, who's a digital marketing guru, who has two kids at home, live suburban, and now one kid's school is starting, the other one's going to be remote. This one's doing two days a week. So we have to be a lot more flexible and a lot more creative. And I heard my brother working with the management team on this just yesterday. How do we build constructs that allow people, some people dying to come back to the office. Well, we've reopened, but it's very light in terms of attendance.

Jim McCann: (39:48)
So it changes everything. I will never jump on airplanes like I used to. I won't be going out to dinner five nights a week like I used to for work. I'll eat at home a lot more. So nesting is very much, it has to impact what products we have, what products we sell. Our Harry & David gourmet foods business is exploding with demand. Well, the whole business is, but in particular, the prepared meals. Because by the way, I love having David chicken pot pie, because it really easy to pop. You pop them in. They're delicious. They're not calorie-free, but they're delicious. So it changes everything. How we eat, how we dress. Anthony, when was the last time you bought one of those famous, beautiful suits of yours?

Anthony Scaramucci: (40:29)
Well, I don't even know if could fit into them anymore, Jim, because I've been eating all the Cheryl's cookies that you send me. So I don't know what's going to happen.

Jim McCann: (40:36)
But it changes-

Anthony Scaramucci: (40:37)
My tailor thanks you, because he's expanding my waistline.

Jim McCann: (40:39)
Look, what's happened to the champagne industry, without international travel, weddings, all these celebratory events. Wine business is booming, the booze business is booming, but champagne is considered to be much more celebratory. There's a hundred million bottles of champagne, just in champagne France, in storage that won't be sold this year. So Anthony, if you can do your bit in order a couple of cases, just to help them out there.

Anthony Scaramucci: (41:04)
Well, I'm going to order a couple of cases for you, when the meds get sold, Jim.

Jim McCann: (41:07)
Thank you.

Anthony Scaramucci: (41:08)
We're going to be back at your house, in the back yard when that happens.

Jim McCann: (41:11)
Pick a scab, why don't you. John, I think you're right. It has consequences in every way. So our job as family people, as business people, as community involve people, is to try and get at those changes. Cities, look, old people like me, kids move out, you get an apartment in the city wide. We love pubs, restaurants, live theater, live entertainment, retail, all of which are on their butt right now. So the cities will come back. It'll take a while. It's going to take the fall before they come back. It's going to take some inspired municipal leadership. And I see that around the country. I see it in Providence, Rhode Island. I see it in Cleveland. I see it in Savannah, Georgia. I'm not seeing a lot here in New York, which as Anthony mentioned, is extremely important to us.

Jim McCann: (42:01)
So technology is going to play, and cities will get younger, because the cost will come down. That'll create a lot more residential units out of old retail or repurposed office space off. But I'm worried about an aftershock here. So I said, you got to look to the future. The shocks are coming. And what I mean by aftershocks is, I've spoken in the last month to six or seven CEO friends of mine, who run big companies. And they all telling me the same thing. They have way too much space all around the globe, physical, real estate, and we have way too many people. So I'm concerned. I saw just yesterday that they have been 130,000 IT professionals laid off in the last 30 or 45 days. I'm afraid a lot of people said, I work for this big company, we got this huge balance sheet, I'm in IT, nothing to worry about.

Jim McCann: (42:53)
And all of a sudden in January, they find out that the department is being reorganized to be more efficient, because their company has been challenged on the revenue side of things. And they had to figure out a way to be more efficient. And this guy or girl, is sitting out there going, Oh my God, I thought I was safe, and I'm not. So I think there's a second wave of shocks coming there. We have to figure out a different way to finance the transit system. Sarah Feinberg, who's running the MTA. She's the interim chief of the MTA. Very smart, very sophisticated. But I asked her, I said, Sarah, if half the work is in Manhattan, not New York city, but just Manhattan, our servers work. So they have to come in. And the other half have now found out they can work from home, at least some of the time.

Jim McCann: (43:41)
What happens if they come in one day, a week less, and her concern was, not only is it a multibillion dollar hit for the transit revenue, but what about the shoe shine guy? What about the guy who works on the deli counter? What about the barista in Starbucks? If you have 10%, fewer workers every day in Manhattan, and I think that's unbelievably optimistic that it would only be 10%. So it's going to have tremendous consequences and we need powerful, engaged, incredibly brave leadership now. And I hope we see it emerge

John Darsie: (44:21)
Well, Jim, thanks so much for joining us. You're another one that we could have on for three hours and we would still not get to cover every topic that we wanted to cover. So we'll have you back on, hopefully in a few months and the coming years to see how these aftershocks play out and the next waves of innovation that you drive at 1-800-Flowers, which is sort of the way you drive your worldview and the success of your business. I feel you could be successful in so many other areas. And I know you're investing in some other areas as well, which hopefully we can talk about next time you're on.

Jim McCann: (44:49)
Great John. It was good to be with you. I'll pay attention, because I need ideas from you and the guests that you've been having on to try and guess at where the future will go so that we can adapt.

John Darsie: (45:01)
Absolutely. And that's what we're trying to do. We weren't able to do our in person SALT conferences, which I believe you've been to in the past. And it's been sort of a blessing in disguise that we've started doing these SALT Talks and it's allowed us to expand our audience beyond the number of people that we could gather in an auditorium in Las Vegas or in Abu Dhabi or in Singapore. We've been able to broaden our scope, have a lot more interaction. So it's been a lot of fun.

Jim McCann: (45:24)
I've heard Anthony say this, about this timeout, this pause. It's caused you to think about your group, your attendees, much more as a community now, that you have this more regular contact. And I think that's a positive that's going to come out of this for all of us.

Anthony Scaramucci: (45:41)
No question. I think it's interesting what you said about engagement at your business. We're going to steal some ideas from you as well, Jim. Thanks so much and hope to see you soon. We're going to get you at one of our live events. We got to get you on that stage again.

Jim McCann: (45:56)
Keep that in my backyard.

Anthony Scaramucci: (45:58)
All right. And if you're not nice, man, I'm going to come over to your house and hug you.

Jim McCann: (46:03)
There's a threat.

Anthony Scaramucci: (46:04)
Scare you and Mary Lou. Okay. You be well, sir. Okay. God bless.

Jim McCann: (46:07)
Thank you pal.

Anthony Scaramucci: (46:08)
All right. Bye. Bye.

Jim Sciutto: Author "The Madman Theory: Trump Takes On the World" | SALT Talks #36

“Trump's got his own brand of the Madman Theory…he uses it not only against adversaries, but also against allies.”

After more than two decades as a foreign correspondent stationed in Asia, Europe, and the Middle East, Jim Sciutto returned to Washington where he is now CNN’s chief national security correspondent and CNN Newsroom anchor. In his latest book, The Madman Theory: Trump Takes On the World, Sciutto looks at how a provocative approach to foreign relations, made famous by Richard Nixon, is today employed by President Trump on the world stage.

Trump’s mindset around America's relationship with other nations is understood in one word: transactional. “Trump's view of the world with adversaries and allies is ‘What are you doing for me? What are you doing for us?’” This has often led to extremely narrow points of view on issues where President Trump doesn’t see the big picture as it relates to broader alliances.

We see this playing out with China. Tensions have escalated sharply under the Trump administration with a trade war and attacks on industries like Huawei and TikTok. Some of the biggest challenges of our time will play out over the coming decades as conflicts around Taiwan, Hong Kong, and national security intensify, and China marches towards their stated goal of overtaking the United States as part of their 100-year plan.

LISTEN AND SUBSCRIBE

SPEAKER

Jim Sciutto.jpeg

Jim Sciutto

Chief National Security Correspondent & Anchor

CNN

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the Managing Director of SALT, which is a global thought leadership forum at the intersection of finance, technology, and public policy. SALT Talks are a series of digital interviews we've been doing during the work from home period in lieu of our global conference series, the Salt Conference and really our goal with these digital interviews is to provide a window into the minds of subject matter experts and to provide a platform for what we think our big world changing ideas and we're very excited today to welcome Jim Sciutto to SALT Talks.

John Darsie: (00:43)
Jim is CNN's Chief National Security correspondent and the anchor of CNN newsroom. After more than two decades as a foreign correspondent stationed in Asia, Europe and the Middle East. He returned to Washington to cover the Defense Department, the State Department and the Intelligence agencies for CNN. His work has earned him many awards including multiple Emmy Awards, the George Polk Award, the Edward R. Murrow Award and the Merriman Smith Memorial Award for Excellence in Presidential Coverage. Jim is a graduate of Yale University and a Fulbright fellow. Today, he lives in Washington D.C. with his wife and better half Gloria Riviera, who is a crisis communications professional and journalist for ABC News as well as their three children.

John Darsie: (01:30)
And conducting today's interview will be Anthony Scaramucci, the Founder and Managing Partner of Skybridge Capital, a global alternative investment firm. Anthony is also the Chairman of SALT. And with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (01:43)
Well, Jim, thanks for coming on. I'm just going to hold up the book here. I thought it was a fascinating book and when I finished reading it, and I think we just talked about this before we went live, I would say that this is the best book and the most objective book on the last three and half years related to the President's foreign policy. So, whether you like the President or dislike the President, you pick up this book. It's a seminal study in what is going on and what he is thinking, but before we get to him and your book, I want you to tell us a little bit more about your background, because it's fun to read people's Wikipedia, but it's way better to hear some. Tell us something about your background that we wouldn't learn from Wikipedia, Jim.

Jim Sciutto: (02:26)
Well, first of all, thank you, Anthony, for inviting me it really is a privilege. Thank you, John, for the nice introduction. Thanks to all of you for taking the time. I'm always grateful when people take time to hear the story of the book and how I came to write it.

Jim Sciutto: (02:35)
Okay, a little bit about me. I'm a New Yorker. Probably my biggest claim to fame is going to the same high school as Dr. Anthony Fauci. What could be better than all-boys Catholic school in Manhattan. I went to college and studied China, because it was just interesting to me and it was something different and the only thing I knew I wanted to do after college was to go overseas and travel and learn and study and work. And I did that I spent my first 10 years as a reporter pretty much in China. And then after 9/11, switched gears and spent a good chunk of my life covering the Middle East and Iraq and Afghanistan and all the conflicts around that.

Jim Sciutto: (03:20)
And it's been sort of, as I'd like to say to folks, it's a paid traveling education about the world and I've enjoyed that as a career. What I've tried to do in this book and others is sort of connect the dots for people where I can on some of these big picture issues. And like you said, I mean, my goal on this, and by the way, for this book, I only spoke to people who worked for Donald Trump, current and former. My goal here was to take a look without prejudice at what he changed and where we are four years after he came in.

Anthony Scaramucci: (03:55)
So, I want to talk about the title you named it the Madman Theory. It's interesting because we go back to Richard Nixon's assessment of Nikita Khrushchev. He told his staff that he thought Khrushchev was brilliant and making people think he was "a madman," a result of which it made the rest of the world cautious. Of course, Richard Nixon had less success convincing people he was a madman as it related to the North Vietnam situation, but here we are with the President. Why did you name it the Madman Theory? Some of it's about the President, frankly, some of it is not, so why did you come up with that title?

Jim Sciutto: (04:32)
So, it started a bit with something that the President and his supporters have said about him from the beginning, right? This is someone who was going to shake it up and the nature of the way he did business, and the way he would do government is by keeping everybody off balance, right? Some of this is in the heart of the deal. I'll be unpredictable. I'll surprise. I will disrupt and then bring that all together by the seat of my pants and we'll get to a better result.

Jim Sciutto: (05:00)
Now, as I heard that and then saw it play out as a reporter with him in charge. It seemed familiar to me because as you said, Richard Nixon tried to harness this same dynamic and he owned it. He called it the Madman Theory. He had Henry Kissinger communicate in no uncertain terms with the North Vietnamese and the worst part of that war that he was just crazy enough to nuke them. There are White House conversations on tape, where he even dictates the language to use. Kissinger communicated that to the North Vietnamese. It didn't work, as you know. Those negotiations got no better. The war did not end well for Nixon or for the U.S.

Jim Sciutto: (05:42)
So, 50 years later, Trump comes into office. He's got his own brand of Madman Theory, but it's different, right? One, in that he uses it not only against adversaries, but also against allies, keeping NATO allies, Canada, Mexico on edge, off balanced arguably as much as China, Russia, Iran, et cetera. But even and this the more disturbing dynamic, his own advisors and senior officials. I chronicled a whole host of situations during his presidency, when he caught the entire National Security community off guard. His two withdrawals from Syria, for instance, where the decision-making, the policymaking rather follows the decision. It's not preamble to it. He comes up with something and then they got to figure out how to deal with it. So, Trump's madman theory is definitely unique to him.

Anthony Scaramucci: (06:40)
And you do point that out in the book that there was a 10-month lapse between him trying to make that decision and the actual execution of the decision because many people frankly disagreed with him on that decision, including Secretary Mattis, who more or less said he resigned over that policy decision. I want to go back a step though. I want to take you right back to you finished the book, you've done all this research, the book closes, and someone comes to you and says, "Okay, so give me Trump's foreign policy. Give me his strategic worldview." What is it, Jim?

Jim Sciutto: (07:14)
I asked everyone I interviewed for the book that very question. "Crystallize it for me, put it on a bumper sticker, or a campaign slogan," and the common refrain is transactional. The Trump's view of the world with, again, adversaries and allies is "What are you doing for me? What are you doing for us? Do I perceive that to be equal and balanced, right?" Now, that can serve your interest, right? Because you can arguably find a way to make a deal, for instance with China. Someone who is competing with you and wants to unseat you as the world power.

Jim Sciutto: (07:53)
And you saw some of that, slices of it in the phase one trade deal, although even and I tell this story to his own advisors involved in that, consider that a capitulation. The trouble is with allies as well he has a very similar view of it. We've seen this play out with trade disputes with Canada, for instance, reignited just last week or dealings with NATO allies over the budget or right now, with South Korea over quintupling how much South Korea pays to support deployment of U.S. troops there The trouble with that transactional worldview and again, don't listen to me, listen to the folks who work with him at the highest levels, is that it's so narrow-minded, that you miss all the other things that go into that relationship, right?

Jim Sciutto: (08:41)
I mean, HR McMaster talks in the book about how much trouble he had convincing the President that alliances have ancillary benefits, right? That can't be boiled down to a bottom line. Things like intelligence sharing or backing you when you go to war, say post 9/11 when NATO invoked the Article III, mutual defense, beyond that, shared values, goals, support for rule of law, et cetera. So transactional, but a very narrow view and by the way, sort of an end of any sort of American exceptionalism, right? The Trump has a very, what's the word, sterile view of America's position in the world, it's-

Anthony Scaramucci: (09:26)
I don't want to give the whole book away, but you do point that out and it's in conversations with Putin and the realization in his mind that America doesn't need to be "exceptional" or do exceptional things for the world, it can just be another player on the world stage. So, I want to thread this question and get your reaction to it. If you go back to Dean Acheson and the book Present at the Creation and the understanding of the infrastructure that was put in place after World War II and you tie it to Brent Scowcroft, the legendary National Security Advisor that just passed this past week. There was a continuous threat whether you were a Democrat or a Republican, there was an idea until the Berlin wall fell down of a policy of containment. There was an idea that we were going to be constructively engaged around the world helping our allies and we were going to disavow our enemies, but we were going to do it in a way that hopefully didn't lead to conflict, we would use soft power, some hard power, but you got the point.

Anthony Scaramucci: (10:27)
That continuum from 1947 to let's say 2017, January ended. It seems like the cord got caught on that and we're into something new now, which you referenced in the book. Are we permanently into something new now, are we going back to something old or do we now have to reengineer everything, Jim?

Jim Sciutto: (10:51)
It's an open question. I think what's the most immediate question is does it last another four years or just another three months, right? I mean, that's an open question.

Anthony Scaramucci: (10:58)
Well, you tell me. Does it last another four years or does it end it in another three months?

Jim Sciutto: (11:03)
I know no better than probably anybody else on this call. I mean, we look at the polls, but listen a lot can change in a short period of time. I mean, the thing is and this is again a point repeated by many of the folks I spoke to, confidence is easily lost, far more difficult to gain, right? Confidence in an alliance. For instance, the NATO Alliance, how quickly can you turn that around? And by the way, folks I spoke to for the book share John Bolton's concern that in a second term steps like leaving the NATO Alliance are possible or reducing or eliminating U.S. troops on the south, on the Korean peninsula or removing all troops from Afghanistan, right? These things that we sort of-

Anthony Scaramucci: (11:50)
Or repositioning the Seventh Fleet in the Pacific, you got all of those different things.

Jim Sciutto: (11:56)
No question and a lot of things that happen in half measures in the first term, you might go whole hog in the second term, and therefore, the results of those things become far more lasting. I'll tell you one thing, the alliances. Alliances are, they're about how you feel about them in a way, right? Beyond what's on the paper. Do you believe them? Do your fellow allies believe in them, and more importantly, do your adversaries believe in them? So, when you look at like a NATO alliance, yes, we're still in, but Russia senses the fissures, right? And they listen when the President questions, for instance, the obligation to abide by the mutual defense, clauses of that.

Jim Sciutto: (12:40)
So, once those questions are raised, how quickly can you tamp those down? That's an open question. It's an open question for this country, regardless of who's in the White House on January of 2021 and the genuine concern of folks who worked at the highest levels with this President about how lasting those changes are.

Anthony Scaramucci: (13:02)
Okay. So, let's switch to China for a second. You studied Chinese history. You were based in Hong Kong, as you referenced. One of my friends who's in the foreign policy establishment said that the decision to go after China as aggressively as the President is, I want your reaction to this, is tantamount to the decision of Germany attacking Russia in 1941. It will have the same sort of consequences. And I want to give you a specific example. Let's go to WeChat. We're going to ban WeChat. There will be retaliatory measures on Apple Computer and other great companies, multinational companies in China. So, what's your reaction to that statement about how the President's handling China? Again, I don't want to give the book away, but then secondarily, you see that potential retaliatory situation that could set itself up, which will lead to further bellicosity and more conflict. What's your reaction to all that?

Jim Sciutto: (14:01)
So, where we are right now with China's very dangerous moment and before I go further on that, just for the sake of the folks listening here, I spent a good 20 years covering or working in China and I spent a couple years in government there as Chief of Staff to the Ambassador. I have watched up close Chinese malign activities against their own people. I've spoken to dissidents who were tortured, but also I've spoken to companies and maybe some of you who are on the call here right now who've had your IP flat out stolen. I've spoken to folks in the Pentagon, who've watched U.S. National Security secrets go out the door to China. So, I have a real granular experience of China's bad behavior here.

Jim Sciutto: (14:47)
And by the way, in the book, I make the case for pushing back hard against China, right? Giving credit where the credit is due to this President and just my own experience of watching the U.S. be so deferential to China through the years for no good reason. So, you know where I'm coming from in terms of personal experience here. So, Trump comes in and says, "I'm not going to stand for that anymore." And we've seen that and we've seen some benefit from that. Where we are this year is different though because he is clearly ratcheting up the tension, misstatements from Pompeo, et cetera, the real moves and ones that really hit China in the gut on some of its most valued national industries here, Huawei, TikTok, et cetera.

Jim Sciutto: (15:40)
And Trump officials, Trump himself, Peter Navarro, too, he talks about in the book, they speak openly about wanting to damage China here. They want to move the supply chain out of China, so people in Beijing are like, "You want to screw our economy," right? I mean, they take that seriously. So, the question then becomes, and this is something with all of Trump's National Security priorities is okay, you got every right to push back against them and I can understand each of these moves you're doing now, individually. Tell me how it ties together? What is the end game here? Where does this take us? Is there a negotiation point you're trying to come towards? Is there a phase two trade deal that solves some of these issues? Is this a case where there is a quid pro quo, where there's a transactional point where you can reach some sort of agreement because Steve Bannon speaks very openly in this book about the possibility of war with China within five years? Is that eventuality that the President is prepared for? Does he have an off ramp before there? Those questions aren't answered, so that's the question of where we are.

Anthony Scaramucci: (16:45)
You do point out in the book, if it's okay, I don't want to give up the book. I thought the book is amazing. It's why keep holding it up. I think it should be a bestseller. Jim, God bless you for writing it, but it would be very tough to have a land war with China. It would be very tough to have a naval war with China. We've also overextended ourselves over the last 20 years in other wars. And so this sort of nonsense, I mean, I consider my only contribution to American history is knocking Steve Bannon out of the White House alongside of me. I think that that probably saved more people's lives than people fully understand, but we can go into that at another point. But that nonsense and that ideological nonsense that can flip the switch and end up into a violent war, how likely do you think that that is, Jim?

Jim Sciutto: (17:32)
I asked everybody for this book and I constantly am asking my contacts in the Pentagon. I'll tell you one thing I watch very closely is Taiwan, right? And I think, as the U.S. has sailed ships more frequently through the straits there and advertise that in a way we haven't done in the past. And as China take steps, like if you've seen just in the last few days, flying warplanes over Taiwan. I mean, the nature of how these things escalate it follows was a pattern here.

Anthony Scaramucci: (18:01)
It's like the guns of war. It's like Barbara Tuchman referenced about the beginning of the First World War. What do you think of the National Security Law that was just implemented in Hong Kong?

Jim Sciutto: (18:09)
Well, it's-

Anthony Scaramucci: (18:10)
How does that tie into Taiwan?

Jim Sciutto: (18:13)
It is sad. I lived in Hong Kong for five years. I still got a lot of friends there and that was a special place, right? Right on the side of China. They're ending Hong Kong. Hong Kong, as we know it, is over. Hong Kong is effectively now part of China with all the bad reasons you can imagine. I think from the U.S. perspective it is a measure of U.S. policy that if getting tough on China was going to deter them from doing things you don't want them to do. It didn't work there, right? China has said, "You know what? We're going to do it. All the threats you have, you can sanction us, whatever, we're taking it over." It's a loss, right? I mean, they could have done it to any President or any administration, but it's a loss for the world, it's a lost for Hong Kong and it's a loss for the U.S.

Jim Sciutto: (19:06)
And it does show something that folks have been writing about for some time and it's in the public commentary, too, that listen. There are two players in this game here, right? It's not just Trump. I mean, Xi Jinping is no slouch and he has a very cocky, ambitious view of the world and view of the U.S. and actually somewhat a dismissive one because it's interesting. China talks about the U.S. in increasingly dismissive terms. They see us in an accelerating decline in terms of our economy, our political system, and even in their public commentary, they move up their aspirational date for taking over the U.S. from 2049, 100 years after the founding. They start to talk about it in the 2030s. They're ambitious and Xi is an aggressive SOB.

Anthony Scaramucci: (19:56)
Yeah. And they've got population and they've got obviously 5-, 10-, 15-, 20-year plans. You're mentioning 2049. I would recommend you people on this call to go look at that plan, because it's a very detailed plan for the 100th Anniversary of China. And United States and our political leadership has no plan and so, this is something people should really consider.

Anthony Scaramucci: (20:21)
Let's switch to your day job, which you write in the book in your Acknowledgement Section of the book is your dream job, which is being an American journalist and having your television show, but you have an American President that says things like the fake news media, and he does say that the press is the enemy of the people, which you know as his former communications director, I had to write an op-ed denouncing that sort of rhetoric, someone who believes obviously in the First Amendment and our Constitution. So, what do you say to that? Has your job become more challenging or the ratings are certainly up because the guy's obviously an attention grabber, so you like where we are right now? Is it good for you? Bad for you?

Jim Sciutto: (21:05)
Well, let's talk about the country first. I don't think it's good for our country, right? I think that listen, Donald Trump's not the first President to attract the press. It's happened before, but he's done it in a different and far more aggressive and insidious way. And remember, Trump is often very transparent and when he did that interview with Lesley Stahl, I'm sure you remember right after the election, December 2016, and said, "I do this, so that if you write critical stuff about me, folks won't believe you," right? I mean, that's essentially the plan here, right? It's just that we've seen it writ large as someone who has been a Commander-In-Chief.

Jim Sciutto: (21:42)
Forge about, you know. We all get attacked every day. You get attacked. I'm sure people on this phone, you get attacked. Social media empowers people to say what they want often behind the veil of any sort of distance, et cetera. I don't care about that I do care about there being a generally accepted view of reality, because that's necessary for the functioning of democracy. And in the midst of a pandemic, where you would think at least science would tramp politics, right? At least, the wisdom of taking a step like wearing a mask would tramp politics. At least, accepting the number of deaths is real and not "Well, maybe exaggerated by the left to damage my presidency," but no, even that's politicized.

Jim Sciutto: (22:33)
And I'll often, I'll ask my friends who were in business who will defend the President on moves like this, and I'll say, "Could you make good business decisions without hard data that's acceptable? Could you do this?" They'll say, "Well, no." And it's like, "Well, this is what the President's basically asking us to do because he's attacking facts that are inconvenient to him." And that's the most damaging thing. For me personally, my approach is just keep doing my job as best I can and try to follow professional standards, talk to both sides. And that's what I tried to do on this book, the best you can do, but for the country, I'm genuinely worried.

Anthony Scaramucci: (23:10)
I'm going to turn it over to John Darsie in a second, because we've got a ton of questions. We got great audience attendance on this, which is fantastic, Jim, but one of the people that you interviewed, I can't give up his name, but I now just gave up the gender, so it has put me in a little bit of a box. But one of the people you interviewed is huge fan of yours wanted me to ask you the following question and see what your take would be, the President, this is his observation, likes going against his staff. Meaning someone offers him an idea and it's an informed idea and in order to prove them wrong, they'll counter intuitively do the exact opposite as a way to make them lose face. Did you see that? What's your opinion of that? Is that true based on your analysis and in this book?

Jim Sciutto: (24:02)
Based on firsthand accounts multiple, that's a consistent thing. The President has an almost reflexive desire to play the other stock, right? Say, "Well, you say that, but what about this." [crosstalk 00:24:13]

Anthony Scaramucci: (24:12)
That would speak bad who it was then, right? Because that's the word he's always using, the word reflects it. Well, we'll talk about who it is after the call is over, but-

Jim Sciutto: (24:20)
But I wouldn't say, but I will add the differences, so it's one thing, Susan Gordon, who I spoke to in the book and who has briefed the President repeatedly as the second highest ranking U.S. Intelligence official before she was forced out by the President said she'll never question a President's ability or right to question her analysis or opinion or advice, but she said that the worrisome part becomes where he questions things we know, we know, not sort of questionable intelligence, but we know.

Jim Sciutto: (24:52)
"Here are the pictures of these bad guys doing bad things," right? Or we know this where when the President either because he refuses to see it or it doesn't fit his worldview or it doesn't fit his current position. When he denies a clear reality that that, that's the most worrisome thing and we've seen it right. I mean, U.S. Intel reports that North Korea is expanding its nuclear program, not shrinking it, right? Just as one example or Russian interference in the election. When what you know and he still won't move them, that's what really worries them.

Anthony Scaramucci: (25:28)
So, I have to follow up, John, then I'll turn it over to you because another person that you interviewed for this book came to see me and said that the President's worldview is because he's not intellectually defining it, but when it comes through his telescope, into his sniper range he starts firing at it because he really wants to bring the United States back to the 1890s. He wants to wall off the United States literally and figuratively from the rest of the world and he wants to produce everything in the United States. So, if this plastic cup is a half a cent in China, $24 in the U.S. doesn't matter, you'd like to produce it here in the U.S., disengage the United States from the rest of the world and turn it back to the prior to World War I. And every time it comes into his wheelhouse from your transactional description, he starts firing at that. Do you believe that that's the case?

Jim Sciutto: (26:27)
He does have a mercantilist view of the world, right? I mean, it's old school, both in terms of trade, make it all here, damn the rest of the world but also, of course, national security, right?

Anthony Scaramucci: (26:40)
Do you think that's the right thing for the U.S.? I know you're a journalist, you want to be objective, but give me an editorial comment here. Is that the right thing for the U.S. at this moment in world history, in U.S. history?

Jim Sciutto: (26:50)
Well, two answers to that, personally. One, it doesn't fit the reality of today's world. It's far too interconnected, right? But we're not sailing around on wooden ships anymore, right? I mean, a heck of a lot harder to do what he's talking about, but also, I don't personally believe based on my own experience that that serves our interests best. I think that the U.S. has profited benefit just speaking from our own view of the world, but we've benefited a lot from an interconnected world, a world where there's not war in Europe, right? And that allows for a healthy partner there and a healthy customer.

Jim Sciutto: (27:24)
Two, where the trade routes are open in Asia, where rule of law matters, where there's more, not less democracy, because it's a fact, democracies are less likely to go to war with each other. So it'd be nice to stick our heads in the sand, I guess, I find that a much more boring world, but it doesn't, in my view, serve our interests.

Anthony Scaramucci: (27:43)
All right, John. I'm going to turn it over to you. Jim, look out. He's going to ask mean, tough, intimidating questions. Okay?

Jim Sciutto: (27:50)
I'm ready.

Anthony Scaramucci: (27:51)
[crosstalk 00:27:51] interviewer than me, Jim.

John Darsie: (27:53)
All right. Well, we've covered your most recent book, I want to rewind a little bit to your first two books for a couple of questions. So, the second book you wrote was called The Shadow of War, talks about primarily how Russia and China are waging a war that the average American might not realize is being waged, but the United States might be losing. The intelligence community concluded that Russia interfered in the 2016 election to elect Trump and the intelligence community is saying again, that Russia and others, including the Chinese are interfering in U.S. politics again, what does that interference look like based on your sourcing? What are we doing to stop it and what scares you most about the President being set by the level of foreign interference in recent elections?

Jim Sciutto: (28:41)
Where we are today after 2016 is just jaw dropping, right? I mean, in 2016, and this is not an issue of politics except frankly for the President because it was bipartisan agreement. Russia interfered to help Trump and you saw it in the record. You saw it in the theft of DNC emails and the drip by drip exposure of them. You saw them in the theft of John Podesta's emails and the convenient release of those emails 22 minutes after the Access Hollywood tape dropped. I mean, this was interference with intent. And yes, Russia and other countries had interfered in elections before, but the degree, the brashness, the aggressiveness was different.

Jim Sciutto: (29:22)
So, here we are four years later and it's happening again, right? I mean, you have a Russian backed politician in Ukraine feeding information to Republicans on Joe Biden. I mean, it's so obvious and it's happening in the public. It's not even happening secretly. What's different is one, you have Americans participating in it, right? I don't know. Listen, you can make the argument that it's worth investigating everybody, but you got to know your source, right? If it's coming from Russia and if your Intel agencies are assessing that they're interfering again and want to advantage the President, it seems to me you should take that information with a grain of salt, but in addition to that, we have a President who just has repeatedly refused to say, "No, don't do it."

Jim Sciutto: (30:11)
Now the concern is does Russia and for that matter China, North Korea, and Iran, who were also messing around, do they take a step they did not take in 2016, which is to mess with actual voting systems, vote counting, registration, because the concern expressed to me for The Shadow of War about 2016, which didn't happen, but they were concerned about it, is that the probing attacks that they've done sort of sneaking their way into these systems that they activate that stuff.

Jim Sciutto: (30:39)
And just and think of this, on election day, you would not need to blow up voter registration databases in 5,000 voting districts, you could do in three in Florida or one, just imagine the upset and the questions and the fear that that would cause. They're already interfering In the informational side of this election, do they go into the systems? It's an open question. And let's be frank, they haven't been warned off it, not by this President. So how do they read that signal? Do they say, "Can we get away with this?" You could imagine them saying that.

John Darsie: (31:19)
Right. If Biden were to win and you did see that level of interference and he overcame it to win the election, what type of response do you think you'd see from a future administration regarding election interference?

Jim Sciutto: (31:32)
Well, I don't know. I mean, I think here's the thing, it wouldn't take much, right? I mean, the response that you need is not rocket science. It's a definitive statement that we won't stand. Now, again, credit where credit is due. I do it in this latest book, The Madman Theory, in terms of Trump standing up to China, and I did it in The Shadow of War talking about the Trump administration has enabled Cyber Command to be more aggressive in terms of responding to cyber-attacks that the Obama administration did.

Jim Sciutto: (32:04)
Some of this is, a lot of this is classified, but some of it's sort of snuck its way out, implanting U.S. weapons, tools, whatever you want to call them and they're crucial systems, kind of letting them know about it, so that if they go too far here, we could say, "Hey, we could turn our weapon on, too." So, so the U.S. has taken a more aggressive posture. The thing is, the President has not indicated in his public comments that interference in the election is a red line for him, right? He hasn't made that clear and a lot of this is about messages delivered.

John Darsie: (32:38)
So, you talked about how Trump's general foreign policy actions are defined by a transactional approach to foreign policy. So, you talked about a couple of the big headlines that have generated a lot of controversy regarding Trump's foreign policy. One, intelligence he has reported that Russia put bounties on the heads of U.S. troops, which in some cases they believe might have led to some deaths of U.S. troops. He pulled U.S. troops out of Northern Syria and basically left the Kurds for dead allowing Erdogan to come in and have his way in that part of the world. What do you think the transaction is that's taking place? Is it something extremely cynical, like blackmail or financial inducement or do you think it's part of that reflexive contrarianism that Trump likes to engage in with his staff?

Jim Sciutto: (33:24)
I think it's different. I asked everybody for this book, "How can you explain the President's deference to Vladimir Putin?" And their most consistent answer is this one: That the President admires him. He's got an admiration for Vladimir Putin for his power and some of this again, is in his public comments, right? "He's a strong leader." You remember him saying that a couple years ago. His power, the power he has in-

Anthony Scaramucci: (33:48)
Can I interrupt you for a second though, because some journalists have suggested something more nefarious than that. Do you think that there is anything nefarious or you just think it's that he admires his power? You've done the homework.

Jim Sciutto: (34:00)
Well, here's the thing. And again, I asked everybody about that, everybody I interviewed for this book and I delve into that question in this book. Without proof that there's a kompromat or something, I don't think it's a substantive conversation.

Anthony Scaramucci: (34:19)
Did you read Bolton's though? Chapter Eight was like the orange jumpsuit chapter. You know what I mean? It was like ridiculous, so you don't think any of that is true?

Jim Sciutto: (34:26)
Well, the melding of, the idea that the President has business interest in Russia, I think is I mean, but again, that's in the public record, so that's very believable. The idea that he has debts to Russian investors is also credible. I don't have proof of that and the people that I spoke to for this book, don't have proof of that. They have their suspicions. But I didn't want this book to be about printing suspicions. I wanted it to be about things that people had personal experience of. So, the consistent thing and this could live right alongside what Bolton has alleged and others have alleged, but the most consistent thing they had personal experience of and witness was that the President expresses and shows admiration for Vladimir Putin for his power, but also that he shares Putin's nihilistic worldview, that it is a zero sum game, that no one's really better than anybody else on the world stage.

Jim Sciutto: (35:24)
And you saw that, go back to the Bill O'Reilly interview, right? 2017, Putin's a killer. Well, aren't we all? Anybody else? Any of us really that good? But even more recently, after the bounties story and when the President was reminded that well, it's not just the bounties, Russia armed the Taliban to kill U.S. soldiers in 2018. And the President's answer is, "Well, we are in the Taliban in the '80s. It's all the same." And that, why does that matter? First of all, do any of us here, is that our view of our country, right? It's not my view of my country, certainly not what I want it to be. But in addition to that, what Intel officials, who I interviewed for this book told me is that Putin knows that Trump admires him and he seeks to take advantage of that. In fact, they say that some of Trump's worldview is influenced by Vladimir Putin, for instance, that a number one source of the President's hostility to Western European leaders, our allies, is Putin, that they have an affinity on that.

Jim Sciutto: (36:22)
It's like, "Yeah, that Merkel, what a pain the ass," right? And that has consequences. We just pulled troops out of Germany. So, one Intel official I spoke to, used this term that Putin is Trump's honey trap, right? That's a remarkable thing to hear from someone who served him at the highest levels and the Intel agencies, again, I write about this a lot about this in the book, feared that Putin was in effect carrying out an influence operation on the President, right? To influence and shape his views and therefore shape the policy. And if you look at the public, so even if you don't have a P tape or a giant Russian debt load, that enough is a fairly disturbing thing to hear about your President and the proof is in the pudding. It's in a lot of the decisions and moves the President has made and hasn't made.

John Darsie: (37:10)
So, going back even further to your first book, which was published in 2008, it's called Against Us, it covers sort of the forces behind Islamic radicalization and you argue sort of as the crux of the book about the need to rebuild more constructive relations with the Arab World. Twelve years on from that book, has anything changed? Have conditions improved? And are we any closer to solving the quagmire that is the Middle East?

Jim Sciutto: (37:36)
Officially, I wrote that book, one of the thesis was about the appeal of Islamic extremism in the Western world among Muslims in the West. It came out in 2008 and then you saw what happened. I'm not sort of claiming credit for it, right? But we saw that bear out with ISIS and these homegrown terrorists and all that, lone wolves, et cetera, the appeal of ISIS, all these folks who went to Syria from Europe, et cetera. So, the question was "How to address it" is I think the security response to this kind of terrorism, it's certainly advanced, right?

Jim Sciutto: (38:14)
I mean, and again, in this book as well, I give credit to Trump for accelerating the dissolution, not the dissolution, but the defeat of ISIS in Syria, they're still around, accelerated after the Obama administration. So from a security perspective, probably better off although things haven't gone away. In terms of the relationships, no, not really, and in fact, I mean, where U.S. policy is going regarding Israel, the Middle East, some of those relationships, it's taking it in a different direction.

John Darsie: (38:52)
So, I want to ask you one last question. We ask this question of every guest who sort of covers National Security as a national security expert, what types threats and maybe ones that Americans, the everyday Americans aren't as aware of, what type of threats and future methods of warfare are the ones that really keep you up at night and make you worry about where the world is headed?

Jim Sciutto: (39:13)
Well, cyber and space, right? Cyber space and space-space. The degree, I think people are generally aware that cyber is a problem and if you work for any company in this country, you've been attacked, right? And you're probably getting attacked right now, you might have faced a ransomware issue. All of us on this call, I've been hit. It's interesting. The four biggest cyber thefts in the last like five years I've been hit by all four of them. One, because I went for the government OPM. They got all me and everything you want to know about me and my family. They got that. Anthem, Blue Cross/Blue Shield, so they got all my health information for my family. Married Hotel so they know where I've traveled and all of that kind of stuff. And what's the other? Oh yeah, Equifax, so they know all my final financial position. I'm like, and all of that, lots of that goes back to China, so they must have a really thick file on me.

John Darsie: (40:09)
You got nothing to worry about now. Everything's out there. You're like an open book.

Jim Sciutto: (40:12)
I'm not. I'm just going to throw it all out there. There's that. So that's like on the business side, but as it relates to how all the stuff, the lights, they could turn the lights off in Washington, D.C. based on penetration of critical infrastructure systems. Our very election systems are even more worrisomely under attack, our political discourse, so that's the cyber side. And then connect the dots on that and it's a real threat to everything we rely on. The space part, I think, is one that folks didn't know a lot about. They're getting to know more about with the space force and even some movies and TV shows and so on, but there are weapons in space.

Jim Sciutto: (40:51)
And every couple of months, I'll read about Russia or China launching another space weapon. You'll see it. Just keep your eyes open for it. It's up there. There are lasers in space. There are Kamikaze satellites. China wrote about it in The Shadow of War as a satellite that moon-raker style could steal other satellites out of orbit. And we depend on that technology, both for our security but also for business communications, et cetera. I think that's the front of this war that folks haven't really gotten their heads around yet.

John Darsie: (41:20)
Just one follow-up on the space piece. How do you regulate, space warfare, and how do you counter threats in space in a super national type of way to prevent just all out mayhem from breaking out in terms of the space race and space weapons?

Jim Sciutto: (41:35)
We need it. We don't have it. We don't have a SALT Treaty for cyber, right? And we don't have it for space, rules of the road where red lines, all the things that we established for nuclear weapons and help keep the peace, right? We don't have that for cyber or for space yet. I mean, you have some communication probably more at the state level about what each side considers a redline attack in the cyber sphere, but you need treaties if you want to avoid the prospect or not avoid, minimize the prospect of war.

Jim Sciutto: (42:13)
But if you talk to folks in Space Command, and they're like, it's in my book, and you'll hear it elsewhere, I mean, there's a like Star Wars is not far away. The nature of the way human beings is with war is that war moves to the next available front and we're already there and it's going to be more threatening over time, not less.

John Darsie: (42:36)
All right. Well, Anthony, do you have a final word?

Anthony Scaramucci: (42:38)
I got one last question.

John Darsie: (42:39)
Yep.

Anthony Scaramucci: (42:40)
And then we'll let you go, Jim. We try to keep these things tight. Madman Theory, loving the book. The book was awesome. Are we safer as a result of Donald Trump's madman theory or less safe, Jim?

Jim Sciutto: (42:55)
In most spheres less safe. The final chapter of the book is Before and After and just, I do it very academically. Here's where we were with North Korea, they had X number of nuclear weapons. This advanced the ballistic missile program, they have more now. Iran is closer, not further from a nuclear weapon, right? Russia is more not less aggressive in the world sphere. Now, we've stood up to China, but the fact is, China hasn't backed off in any of the places we've challenged them, actually they've gotten more aggressive. Now, will that change over time? But the sad fact is, we're less safe and if you don't believe me, just do me a favor and read that chapter folks and tell me if you disagree and I will accept all criticism.

Anthony Scaramucci: (43:40)
I wanted to ask you that because you do, you end the book with it, but the last thing I will say it's a phenomenal book, but it's also a cautionary tale on going against the grain of discernible thought and opinion that's been bipartisan and established for 80 years. Maybe they established it, it wasn't really that wrong after all. Who knows? We'll have to see what happens here, Jim, come November. But I want to thank you for writing the book, I want to thank you for being on SALT Talks. John Darsie downgraded his room. He had like George Washington pictures and all kinds of stuff like that, so you and I could stay competitive with them. But we'll let you go and hopefully, we can get you back before the election if you don't mind. We'd love to have you come back before the election. Talk a little bit where you see things prior to Election Day.

Jim Sciutto: (44:31)
Anytime. Deep gratitude to you, to John and everybody who took the time here. You do me a great honor if you had a look at the book and I wish you all the best as we get through all this.

Anthony Scaramucci: (44:40)
It was a great read. Thank you, Jim, for writing it. See you soon.

Chris Fenton: Author "Feeding the Dragon" | SALT Talks #30

“I think that the belief was is that over 50 years China would become more like the west so that when they did take over Hong Kong, Hong Kong would be the same as that it always had been.”

For seventeen years, Chris Fenton served as president of DMG Entertainment Motion Picture Group and GM of DMG North America, internationally orchestrating the creative and business activities of DMG—a multi-billion dollar global media company headquartered in Beijing. He has produced or supervised twenty-one films, grossing $2 billion in worldwide box-office. As an author, Fenton chronicled much of that work in Feeding the Dragon: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA, & American Business.

20 years working in the US-China arena around ideas of culture and commerce gave Fenton a high level of applied expertise that he used to assist individual and companies. In the fast pace environment of rapid globalization and business between the US and China, it was difficult to step back and survey the big picture. A tweet from the Houston Rockets general manager in support of Hong Kong independence set off a firestorm between China, the US, the NBA, and its fans that caused Fenton to step back and fully recognize the fraught nature of US-China relationship. “What I didn't see, and I didn't even think of, was how the American public was going to perceive that situation as something that woke them up to the pandering that our capitalistic endeavors were doing in regards to getting access to that market.”

Fenton identified what he termed, “Fenton’s five forces of diplomacy” in describing key elements of the US-China relationship: national security interests, politics, human rights, commerce, and culture. Commerce and culture currently represent the two areas where US and China are able to align easily.

LISTEN AND SUBSCRIBE

SPEAKER

Chris Fenton.jpeg

Chris Fenton

President (2002-2018)

DMG Entertainment Motion Picture Group

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT which is a global thought leadership forum at the intersection of finance, technology, politics and increasingly we've had some interesting guests in the field of entertainment. And the guest that we have today crosses a lot of those different lines, it's going to be a very interesting talk. SALT talks are a series of digital interviews we've been doing during the work from home period in lieu of our global conference series, the SALT Conference. And really what we're trying to do is provide our audience a window into the minds of subject matter experts who are leading investors, creators, and thinkers. We're also trying to provide a platform for big, important ideas that we think are shaping the future and changing the world.

John Darsie: (00:48)
Today we're very excited to welcome Chris Fenton to SALT talks. For 17 years Chris was the president of DMG Entertainment Motion Picture Group orchestrating the creative and the international business activities of DMG which is a multi-billion dollar global media company headquartered in Beijing. And he's produced or supervised 21 films grossing $2 billion in worldwide global box office revenue. As an author Fenton chronicled much of that work in his new book which is out today. Congratulations to Chris on the release of his book. The book is called Feeding the Dragon Inside the Trillion Dollar Dilemma Facing Hollywood the NBA and American Business. You can learn more about the book at feedingthedragonbook.com. We highly recommend it.

John Darsie: (01:37)
As you'll learn during the talk Chris has a very practical real world experience on dealing with China and he offers really practical insights into the path forward for U.S. China relations. At present he speaks regularly as a China expert and serves as the CEO of Media Capital Technologies having concluded a successful term as senior advisor to IDW Media Holdings focused on streamlining operations, expanding international business and restructuring investments.

John Darsie: (02:08)
Chris also hosts U.S congressional member delegations on diplomatic missions to China focused on trade, media and investment. He's a trustee of the U.S. Asia Institute and serves on several company boards. Chris is a contributor to Real Clear Politics, the Federalist and the Rap, and he regularly appears as a U.S. China commentator on Bloomberg, Fox News, Fox Business, BBC and CNBC among many others. Chris holds a bachelor's degree in engineering from Cornell University and he resides with his wife and his two children in Manhattan Beach, California.

John Darsie: (02:45)
So, hosting today's interview as usual will be Anthony Scaramucci the founder and managing partner of SkyBridge Capital a global alternative investment firm. Anthony is also the chairman of SALT. And just a reminder, if you have any questions for Chris during today's interview you can enter them in the Q and A box at the bottom of your video screen. And with that, I'll turn it over to Anthony for the interview.

Anthony Scaramucci: (03:05)
Well John, thanks so much. Chris, I'm very excited to have you on. This is incredibly timely. Some of your issues were on the front page of your local newspaper and the LA Times today which I appreciate you sending me this morning. But I want to start where I always start in a SALT talk is I think we have a lot of young people on as well and we would love to get your background, your backstory. I know it has something to do with Olive Garden. I keep hearing that it's central to your backstory and it's had some impact on your life. So, why don't we start there Chris?

Chris Fenton: (03:39)
Yeah, there's not a lot of uniqueness to it. I think there's similarities to a lot of middle class, upper middle class upbringing. So I was born and raised in South Florida. My father was an engineer for United Technologies. I had one sibling, a younger brother, two years who's actually with United Technologies now and my mom. Thank God they're both still around. And we moved to Connecticut when I was in high school, went to Glastonbury High School, public school there, and graduated and shot off to Cornell University, got an engineering degree.

Chris Fenton: (04:18)
In 1993 when I graduated school we were in a bit of a poor economic environment. I didn't have a lot of opportunities. I was not the best student in the world, I think I was a C plus B minus at best. So I hopped in my car, stayed in a bunch of fraternity houses across the country and just tried to find a city I wanted to live in and set roots. It took me about six or seven months to do so and a buddy of mine who was a hotelee at Cornell was working as the beverage director of that Pretty Woman hotel at the foot of Rodeo Drive in Beverly Hills and he talked me into visiting for a couple of days and I never left.

Chris Fenton: (05:01)
I was flat broke at the time so I wanted to get a bartending job like I had up at Cornell and I looked around and realized oh my God every beautiful actor and actress works their way up through the bartending hierarchy of every nice restaurant over the course of a decade. So I realized that wasn't going to get a good job that way so I got the first job I could get in order to pay my rent which was as a waiter at the Olive Garden and that's where the journey into Hollywood started.

Anthony Scaramucci: (05:35)
And how many breadsticks did you have at the Olive Garden before we get into the more serious stuff?

Chris Fenton: (05:41)
I wasn't a breadstick consumer. I was eventually fired because I was addicted to tiramisu and I would sneak into the freezer every night and eat a bunch of them and then smooth the plates around so that no one noticed they were missing.

Anthony Scaramucci: (05:57)
That's a good thing to do pre pandemic but. John and I live in the same hometown, there's an Olive Garden on Old Country Road that I had to stop going to in 1995 because I was, unlimited breadsticks not a good look for me. I want to dive right into the book. You're pretty much talking about your career, China, U.S., China relationship this book is coming out in a very timely way it's right before the election. There's a lot of stress in that relationship right now. We were talking before we went live to our SALT attendees about you can't go back to where we were, we have to go forward. What happens here Chris? Lay it out for us, what do you think happens here?

Chris Fenton: (06:47)
Well, it's funny after spending almost 20 years in the U.S. China space and the exchange of culture and commerce I became a bit of a practical applied expert in that space. I'm not a [inaudible 00:07:03] think tank expert with a PhD in China studies. I didn't live in China full time ever during that time. I spent a lot of time on planes going back and forth. But just over that amount of time I gathered a lot of information and intel and experience and expertise. And quite frankly, I felt like a lot of people could have just fallen into the same position and done the same thing. But it was a very colorful journey.

Chris Fenton: (07:29)
So, one of the things I really wanted to do at some point was to write those memoirs out and I had a bunch of opportunities from publishers that were interested and they approached me more on like a, "Hey, give us the 10 best business practices to abide by when dealing with China or some sort of expertise type of book." And I said, "No." I always looked up to Michael Lewis and the way he wrote it and I always loved Liar's Poker which I'd read 100 different times and just thought it was a really, really entertaining, engaging look at something that could be very off putting for most readers because maybe they don't want to know much about the intricacies of Wal Street. But he wrote it in a way that engaged almost anyone and that's what I wanted to do with this.

Chris Fenton: (08:14)
And part of that was to engage readers in 15 years of what we had been doing under this mission of rampant globalism and how that rampant globalism was great for capitalism but on top of it, it was great for Americans. And to open the market of China any way possible, any way you could, was in the best interest of everybody. So, we always were stuck in the fog of war during those colorful years of trying anything we could obviously within the rules of law in order to open that market more and more and we succeeded more and more. But what happened as I started thinking about the proposal for the book was all of that colorful journey was going to add up into, "Hey, and we've got to continue doing this. This is great for us."

Chris Fenton: (09:09)
But then something happened when I got back from the last congressional delegation trip I had in September. I Took three members of Congress over there. We met with Carrie Lam and the protesters. President Trump was in the middle of a lot of tweeting and really heavy handed rhetoric towards the Chinese during that time. We went up to Beijing, we met all with the officials up there and we got back and a month later the Daryl Morey tweet, the Houston Rockets GM who I didn't even know who he was I just knew Houston Rockets, biggest brand in NBA when it comes to China because of Yao Ming. I knew the moment that tweet came out and I saw it I was like, "That's going to be a terrible situation for the NBA," and I was right.

Chris Fenton: (09:54)
But what I didn't see and I didn't even think of was how the American public was going to perceive that situation as something that woke them up to the pandering that our capitalistic endeavors were doing in regards to getting access to that market. And that was the moment that made me go, "I'm going to tell this journey. I'm going to explain how we all got here to this date but I'm also going to put out there that we need to change things." This turned out not to be the best experiment out there. It hasn't worked out the way we wanted it to and we need to come together as a country to address it.

John Darsie: (10:35)
Chris, there's a part of your book where you talk about something called Fenton's Five Forces of Diplomacy. You talk about all the different areas where countries can find common ground and build some level of consensus. But obviously in the United States, in China, we have very different political systems and a lot of different value systems. But you talk in the book a lot about how the exchange of culture and commerce is so important if we're going to find some common ground and avoid a cold war between the two world superpowers. Can you talk a little bit more about those five forces and why you think on a practical level that exchange of culture commerce is so important?

Chris Fenton: (11:14)
Yeah well, a lot of times in regards to dealing with North American companies in China during my tenure of doing this I've found that the more in the weeds you got with China the harder it was to get something done. So, China's a lot like an onion and if you keep peeling away there's just more and more peels. And on top of it, with the depth of my experience in China there was only so much I was going to learn before I got over my skis in explaining things about that country. So, one of the things I did was try to comprehend and then also be able to explain the super power relationship.

Chris Fenton: (11:54)
And I had a meeting once with Andy Campion who's the CFO of Nike and I was talking about how I feel like there's five different bars of service that work between the two superpowers. And he said, "Well, that's like Porter's five forces in business. Why don't you call them Fenton's five forces, a diplomacy?" And I said, "Hey, that's a great idea." So, that's where the name came from. So let's talk about what the five forces are.

Chris Fenton: (12:19)
Assume that China and the U.S. Are cell phone and cell tower. To have a perfect communication between the two of them you want five bars of service. Those five bars of service in my view are national security interests, politics, human rights, commerce, and culture. Unfortunately, we have learned that in politics they're not coming any closer to the way we run a democracy. They're very happy or at least the CCP is very happy running that country as a communist country. Human rights, we have definitely seen some huge differences there. National security, we're starting to see them as a dragon spreading its wings whether it's the South China sea or issues and other parts of the world with the belt and road initiative, et cetera.

Chris Fenton: (13:05)
We're starting to realize that there's three forces that we need to agree to disagree on. So that leaves us with two left, commerce and culture. One thing I know from 20 years is that they love the culture from the West. It's aspirational, it has freedoms that they don't have, it has really interesting things that they are excited about and they engage in. And that is the same as some of the movie posters behind me or wearing a really cool Nike pair of shoes. The second thing is there's a lot of commerce going on between the two countries. We are very entangled in that web so this idea of de-coupling is very difficult. So we have two bars of service that seem to be working pretty well. And quite frankly, even through all this crazy rhetoric and a lot of the barking between both sides that commerce and cultural exchange is still happening. So my feeling is if we continue it under a fully rebooted bilateral relationship which we need to address we can avoid a cold war or even worse something that escalates to war.

John Darsie: (14:11)
So you've been advising a few House members on Congress's China task force. You're also working with the Senate side as well. You talked about the idea of a larger reset. What do you think it's going to require to too put that reset in motion and to baby step into a more healthy relationship between the United States and China?

Chris Fenton: (14:31)
Yeah I mean, well one thing about China is that a lot of times when somebody goes over there and sees the opportunity with that market they get overwhelmed with how big the potential is and oh my God the world's our oyster and they can never get anywhere because they're thinking too big and they're not thinking about intermediary steps. And you bring up the idea of baby steps in this reset and I agree there's got to be baby steps that we can accomplish that continue to build towards a true resetting of the relationship. So, in some of the conversations I've had with congressional members, and by the way I'm not the smartest guy in the room I'm just offering suggestions and I hope everybody comes together and offers voices from different points of view to get this done.

Chris Fenton: (15:18)
But some easy ones, I mean are as basic as, I mean, one thing they're fighting is the WTO designation of China as a developing nation. I think we should get the WTO to actually call them a developed nation at this point. That's something that even we had the fight early in our industrial revolution with the United States until Europe said, "Hey, you've caught up to us now in fact you stole a lot of our stuff and all that kind of thing so you're going to be on the same footing as us." We need to do the same thing with China. We need to also do this and as you guys know in the financial services...

Anthony Scaramucci: (15:55)
Well Chris, let me stop you for one second. Why do you think we haven't done that thus far? It's been almost 20 years as the WTO introduction.

Chris Fenton: (16:03)
Honestly I don't know the answer to that question. I'm assuming there's a very strong lobbying effort to keep it the way that it is and that's keeping us from being able to get that done plus the WTO involves other countries too that are involved with that designation. But it's something that seems very obvious to me. On the China side I know because I've been in the meetings with our congressional members when they pitched the idea of, "Well, we're still developing. Have you been to a third tier city? Have you been to a fourth tier city? Have you been to our suburbs? They look like any developing nation. Our per capita income is way below yours and at the level of developing nations." I mean, they have every argument in the book you can imagine. So, there's obviously a lot of forces fighting on it but it seems like a pretty basic principle to come to an agreement on at least if you're not China.

Chris Fenton: (16:55)
The other thing too is and this is the same situation where the accounting practices by companies over there, particularly the SOEs that have state secret laws that they're hiding behind they haven't had to partake in the same accounting practices that other companies do when they're accessing capital markets here in the United States. That's obviously something that we're seeing a push for and that's something that should get done.

Anthony Scaramucci: (17:24)
What do you think of the new national security law that was invoked in Hong Kong? What kind of problems do you think that presents for China with the West?

Chris Fenton: (17:35)
Well the biggest, I mean one problem when you work with China for a long time is you start to understand their point of view a little more. When I was there with three members of Congress it was obvious that you started to absorb the idea that Hong Kong was always China's so China did have a deal to take it back with [inaudible 00:17:58] And I think that the belief was is that over 50 years China would become more like the west so that when they did take over Hong Kong, Hong Kong would be the same as that it always had been. Unfortunately, we have learned that China doesn't seem to be coming more to the West and on top of it that 50 year agreement ended after 23 years just a couple months ago.

Chris Fenton: (18:23)
The national security law is obviously something that's really it's happened as we are looking the other way and it's creating a lot of issues. I mean, in one particular instance and it falls in line with some of the issues that I have with Hollywood's business in China is cross border censorship. So you have cross border censorship of movies where a movie studio is told to change certain things in a movie not just for the China market but for the world to see. And we're seeing the same thing through the national security law where the voice of anybody outside of the border of Hong Kong or China could be punishable under this new form of law because China's calling it in the jurisdiction of the world partly under their domain.

John Darsie: (19:17)
So Chris, I want to go back to the Hollywood piece. So, that's the crux of your experience in China is bringing large Hollywood productions to the Chinese market and obviously it's a great cashflow stream for a lot of these studios but it involves a lot of cross border censorship. As you mentioned, there's a couple of example case studies that we've spoken about in the past one of them is Looper, another one is Iron Man Three. Could you talk through those case studies and explain to our audience exactly the process that takes place with these studios in bringing movies to the Chinese market? This was the subject of the article in the LA Times this morning about whether Hollywood is cowtowing to the Chinese excessively. And just explain the challenges of that from a business perspective. And then obviously you talked about the general public's reaction to the NBA's decision to go soft on the China thing. Could you just talk us through that process?

Chris Fenton: (20:09)
Yeah, for sure. Well, one thing in regards to the baby step approach of changing things so that we add up to changing a lot of things in the microcosm of Hollywood there's a lot of simple changes that I think we should push for too. For instance, we only get 25 cents of every dollar that a movie makes in that market whereas the global average is between 45 and 50% so we need to change that. On top of it they have severe regulations over how many of our movies, our international movies get into that market so that's another issue that we need to address which is this quota situation that most other markets don't have.

Chris Fenton: (20:50)
Moving into the censorship world one of the things that I'm okay with because Hollywood has been okay with it with other countries like Japan, Korea, middle East, et cetera, is that there is a censorship of the content within the borders of China. So they might see something that they feel is offensive or maybe there's drug use or maybe there's criminal activity in the movie scene that they want to remove from the film. And we comply by doing that the same way we would do if we were showing something in the UAE or in Korea based on what are the standards for their censorship practices.

Chris Fenton: (21:32)
Where I have a big issue is what I call cross border censorship and that's when as Senator Ted Cruz said in regards to this latest Tom cruise movie the flight jacket that Tom cruise wears had the Taiwanese flag on it. Obviously the CCP in China don't recognize Taiwan as a separate country nor having their own flag so they asked to have it removed from the movie. But they didn't ask to have it just removed from the movie that's shown in their territory they asked for it to be removed from the content that's shown around the world and for me that's a big problem that we need to address.

Chris Fenton: (22:11)
One issue that's super offensive about it is the fact that you could argue that the biggest goal of the CCP is to keep 1.4 billion people just happy enough that they don't revolt so that there's another Tiananmen Square incident. And you could argue if they see certain things like the Taiwanese flag which might, and for independence from the PRC at one point or whatever, and that might instill discontent towards the government that the government wants to have that off of the flight jacket in their territory to keep the populace happy.

Chris Fenton: (22:47)
The issue is for me that's super offensive is they have a firewall in China. So if that flight jacket with the flag on it is shown in Peoria, Illinois they have a way of keeping the majority of their population from seeing that flag. Yet, they still want us to remove the flag not because they care about their own populous but they want the rest of the world not to recognize Taiwan as a separate country or they will censor LeBron James or Daryl Morey outside of their country even though they could firewall them inside. Because they don't want anybody on the outside of their country talking about Hong Kong protesters and their fight for freedom and the support for that, that's a big issue.

Chris Fenton: (23:32)
And we saw that when we did certain things like Looper. Looper, we actually took a movie that was supposed to take place in the future. It was a movie that starred Joseph Gordon Levitt and Bruce Willis and Emily Blunt. Bruce Willis played Joseph Gordon Levitt 40 years in the future. In the future in that movie it was supposed to take place in France. But over time we were able to convince the filmmaker Ryan Johnson who now is directing the Star Wars movies to take a flyer and say, "Hey, let's move the future to China because China's probably going to be a big part of the future in the world today and 40 years from now."

Chris Fenton: (24:10)
He agreed, we moved it and we actually put Shanghai as the center location of the future. And we worked with the Shanghai municipal government to design their skyline the way they saw making their future 40 years to be. And keep in mind, time travel is censored in China. They do not like any content with time travel because they want to control the narrative of the past and they definitely want to control the narrative of where things are going. But we convinced them they could control the narrative of where the movie goes by working with us with the plot and with the locations to make it look like the city of the future.

Chris Fenton: (24:53)
Now, the one thing that they did do that we almost lost all our money on is they came to us and said, "Hey, we want seven minutes of that Shanghai footage in the film." The problem is only about three to four minutes of it really worked. So we cut out the extra three minutes and they said, "You know what? If you do that, we're not releasing the movie in China." Then we actually had to take that seven minutes and put it into the Chinese version of the film so they at least had it there. And then they fought with us to get it into the global cut because they wanted the globe, the sea, all of that footage. It was a big war between us and China Film Group and the state of administration or radio and film and television that we ultimately won over with various other concessions. But it was a perfect example of how they're not just trying to control a narrative in country they're trying to control a narrative outside of their borders. And that's a real problem we need to address as a nation.

Anthony Scaramucci: (26:00)
You're on top of a lot of different things commercially and you're seeing the world in this real politic sort of way. So, envision for us what a good future would look with China in terms of the health of the bilateral relationship, respect for the two systems and not brow beating each other too much but also not stealing intellectual property and so forth what do you say?

Chris Fenton: (26:27)
It's a great question. So, the book partially because it tells a colorful journey it brings in a lot of characters like myself and you realize we weren't evil doers or greedy capitalists we were actually on this mission under the guise of globalism is good for everyone. And you learn that and you see the collaborative effect between the two countries working together in various different case studies that I walk through in the book in an entertaining way. And you see the comradery that's built between the two superpowers, how it's covered in the press and how it's seen by the leadership.

Chris Fenton: (27:04)
So, we know that it is to our benefit if we can do something like this in the future not just decouple fully. But what we need to do, obviously in order to feel good about that type of cultural and commercial exchange moving forward as we need to address a bunch of things that have come to light recently. I mean for instance, repatriating manufacturing particularly in the areas of national security interests we have to do. We either have to bring them back here or we need to bring it to Western allies.

Chris Fenton: (27:36)
Number two is we're realizing and [inaudible 00:27:40] was on I guess a month ago with you guys talking about this theory of the fourth turning which is something that I find an interesting theory also. But if you're looking at how globalism and particular relationship with China has caused an effect, a negative effect on probably 90% of Americans you realize that a rebalancing or a resetting or a fourth turning needs to occur to address the system so that 90% of the country is feeling benefits of what we do moving forward. And part of that is rebuilding our middle class, rebuilding a labor class, rebuilding skillset jobs that come back here and are repatriated.

Chris Fenton: (28:21)
So, when we repatriate manufacturing obviously national security issues are a big issue, but also ones that create jobs here are another big one. On top of that we want to make sure that we, and we talked about this earlier, we rebalance the trade that is going on between the two countries, the tariffs, the quotas, the technology transfers, the IP theft, the forced joint ventures. For instance, Disney owns just 43% of their theme park in Shanghai, China owns the other 57%. In order to sell cars like GM in China they have to give a JV ownership to China of 51% in order to get access to that market. We need to change that.

Chris Fenton: (29:09)
I mean, there's a laundry list of different things that we need to do. They're all very tangible and a great sort of, "Hey, check that box, check that box, check that box." There's going to be compromise on a lot of that stuff but the important thing is, is we can get it done. There is a road to victory in that kind of situation that we can follow on a baby step approach and then create a better bilateral relationship on the back side of it.

Anthony Scaramucci: (29:36)
I think it's very smart. I just want to follow up and then John ask some questions from the audience. So, as a capitalist you're doing the right things, pragmatism, you're trying to intersect with a system that's different from our system and be respectful. There are some things going on inside of China. I don't know a lot about them but there's concentration camps, potentially. They deny some of that. Western investigative journalists say that there are concentration camps where there is Muslims that are being held in certain situations in China. As a capitalist how do you feel about that and how do you feel about aiding a system that is doing that? Is that something that we should be doing, not be doing? Should we be ignoring that as capitalists? What's your recommendation there?

Chris Fenton: (30:27)
Well, I think as a human being you don't want to support it and a capitalist is a human being. And there's no capitalist I know that supports that kind of treatment of other human beings.

Anthony Scaramucci: (30:38)
No, but hear me out. If you're over there doing commerce in China and it's supporting their markets and it's supporting the government and that government is doing that how do you reconcile?

Chris Fenton: (30:48)
So the reconciliation is as a unified front. If Bob Iger at Disney says, "We don't stand for the way you're treating the Hong Kong citizens or the [inaudible 00:31:03] and we want that to change ASAP." There's shareholders and investors that obviously are inspired and passionate about creating revenues from China and they'll simply replace Bob or whoever takes his spot with the person that does comply, it becomes a whack-a-mole situation. If LeBron James comes out in support of the Hong Kong protestors which is the right thing to do he'll get all his endorsements replaced by some other basketball player. In fact, if we don't even unify with our Western allies on this but we get all of Hollywood backing the idea we might find [inaudible 00:31:43] out of Germany or Studio Canal out of France or Bollywood taking the spots of some of our studios.

Chris Fenton: (31:49)
So, I talked about it earlier but one thing we need to do is obviously keep this from being a third rail issue. Joe Tsai the Brooklyn Nets called it a third rail issue when the human rights issue was talked about in terms of the Hong Kong protesters. We need to air it out. I mean, this is not, the amount of compliments I've gotten about how I'm being a squeaky wheel here from friends in Hollywood is really flattering, it's amazing, it's nice. But the fact that they end every email with, "I can't say this stuff publicly but I'm glad you are," that's the problem. We need to talk about this stuff we shouldn't be ashamed of it.

Chris Fenton: (32:28)
I mean, we were under this mission of globalism is great and look the other way with certain things but now we're woke to it or whatever the word is we want to use. So let's talk about it and create rules for the road. What are we okay with and what aren't we okay with and everybody has to abide by it. I mean, the accounting practices thing which is not even a human rights issue well have Goldman Sachs comes out and says, "We're going to stand for the way it should be." Well, JP Morgan comes in and takes that business. But if everybody's on the same playing field suddenly we have a way to address this stuff and we might actually be able to create change.

Anthony Scaramucci: (33:10)
It makes sense it's just it's a big issue for people. We're all trying to reconcile. Listen, I'm pro the diplomatic bilateral strengthening of that relationship. We can't live in each other's systems and we can't police people internally any more than other countries can police us internally. So, but it's hard, it's a very hard issue for a lot of people.

Chris Fenton: (33:33)
Well, I'll tell you I was [crosstalk 00:33:34].

John Darsie: (33:35)
As Chris writes in the book there was one person who called him out on some of the obsequiousness and [inaudible 00:33:41] that he practiced toward the Chinese and that was his wife so it's a lesson to all of us always listen to your wife.

Chris Fenton: (33:48)
Yeah. I'm ready for The Mooch and the Mrs. to come back. That was one of my favorite podcasts when working out.

Anthony Scaramucci: (33:54)
Yeah. We're going to bring it back after labor day actually but we put it on hold because of everything that's going on. But yeah, no, she takes a cheese grater to the side of my head for about 45 minutes. And Fenton let me tell you something, it's a lot cheaper than therapy. So trust me that is definitely coming back.

Chris Fenton: (34:12)
By the way, you're a 100% right. It is like rainbows and unicorns to think this is easy but what we definitely need to do is at least start talking about it. There's so much ostrich in the sand going on right now and we all know it's there, it's that elephant in the room. I mean, I even suggested to one senator's chief of staff the other day, "Why don't you call up one of those C suite guys and just get together in Omaha or something? Don't tell anyone and actually say hey what are the pressures? What are the things that are causing you not to be able to talk about this and address it? And I as a Senator I'm going to tell you the pressures that I have that are making me talk about it." And how do we find a Venn diagram that intersects at some point, so we can actually deal with this thing and quite frankly move on. We need to figure this out but it's crazy and it's bifurcating the country in a terrible way.

John Darsie: (35:09)
So, just to further dive in to the complexity of this issue so you've been critical of the hypocrisy of the NBA silence on Hong Kong but you've defended people like LeBron and Disney executives for example for their silence and for the approach they've taken towards China. Could you square those two points of view for us?

Chris Fenton: (35:34)
Well I'm not, it goes to the whack-a-mole thing. I mean, if we don't have a rules of engagement that everybody's abiding by what's the use of somebody standing up and saying something because they're just becoming a sacrificial lamb? I mean, it drove me crazy, I got called onto a lot of shows right after the Daryl Morey tweet and in fact it was a Bloomberg interview that I did where they asked me about LeBron. And they asked about Senator Marco Rubio who was telling him, "You've got to say something." What's crazy is that the personal sacrifice that LeBron makes by saying something that we all want him to say is huge whereas a senator telling him to do it there's nothing that really affects that senator personally, there's no sacrifice. It's just a good soapbox stance to take and it's something we all want to say but we can't.

Chris Fenton: (36:31)
What we need to do is set up a situation where everybody's following the same way. If we're cool with what's going on with the [inaudible 00:36:39] and the Hong Kong takeover and all that stuff then no one should have to talk about it publicly. Because we're saying, "Hey, we're good with that as a nation so LeBron we're not going to put you on the spot about it." But if we're not good with it as a nation then we've got to say what we are good with as a nation and if somebody does speak up about it we've got to back them.

Chris Fenton: (37:00)
And Disney is the same way, Disney has a really difficult situation with Mulan. That's a movie which by the way is not coming out when it's supposed to which I think is a blessing in disguise because I don't think United States citizens are going to be super excited about watching a two hour tentpole movie with a lot of Chinese faces, Chinese locations and Chinese mythology right now. But on top of it, Disney has a problem where the two biggest stars of that movie have spoken up on behalf of the CCP supporting them and the takeover of Hong Kong against the Hong Kong people.

Chris Fenton: (37:36)
So in a perfect world, Disney would come up and say, "We don't agree with that. We support the rights of the Hong Kong people and the fact that they have another 27 years before the turnover." But Disney can't do that they have so much money at stake in that market. And if they do it, you know what Universal's theme park that opens up in Beijing will just take all the business away from Disney's theme park in Shanghai. It just becomes a sacrificial lamb whack-a-mole situation so we just need to be unified on it.

John Darsie: (38:07)
Chris, we're going to leave it there. I know you have a lot of media hits today on the release day of your book so congratulations again. Hold the book up for our audience so they can go find it. It's feedingthedragonbook.com. You can find out more about the book. Chris talks about his career in Hollywood, a lot of the issues that we spoke about and he writes about them at much more length. So go check out his book. it'll be worth your time.

Anthony Scaramucci: (38:28)
Chris, it's a fascinating discussion. I hope that we can get you back before the election if that's okay because I'd love interview you as we're heading into middle October.

Chris Fenton: (38:38)
I would love to be on. I'm completely honored and humbled to be on this to begin with. I mean, your guests are unbelievable. The stuff that I've learned from listening to them has been incredible. So thank you for having me on and...

Anthony Scaramucci: (38:51)
We feel the same way about you, your pragmatism and realism in dealing with this issue is something that we're going to need no matter what direction we go from a political perspective. So thank you Chris, I greatly appreciate you being on.

Chris Fenton: (39:04)
Thank you guys. Take care and be well.

Anthony Scaramucci: (39:07)
Okay. Thank you.

Brad Thor: Author "Near Dark: A Thriller" | SALT Talks #29

“I want you to keep flipping those pages. Probably one of the nicest introductions I get when I do media stuff is, "Ladies and gentlemen, it's because of our next guest that I didn't get any sleep last night. I wanted to read a little bit of this Thor book and before I knew it, it was 4am.”

Brad Thor is the #1 New York Times bestselling author of twenty thrillers, including: Near Dark, Backlash (One of Suspense Magazine‘s Best Books of the Year), Spymaster (“One of the all-time best thriller novels” – The Washington Times), The Last Patriot (nominated Best Thriller of the Year by the International Thriller Writers Association), Blowback (One of the “Top 100 Killer Thrillers of All Time” – NPR), and The Lions of Lucerne (“One of the best political thrillers ever” – Barnes & Noble).

As a prolific writer, it is essential to write the kind of stories you, yourself want to read. That passion requires a PHD-level of knowledge and understanding in order to truly succeed in a genre, especially in a climate saturated by entertainment options. “I know I compete with Netflix, I compete with the internet, all that kind of stuff, so my chapters have to be short, crisp, cinematic, each one has to end with a cliffhanger, so that people want to go to the next one. That's the definition of a page-turner.”

A style of writing termed “faction” creates fictional storylines that draw closely from real world people, places and events so as to make the storytelling and its stakes all the more compelling. Scot Horvath serves as the long-running protagonist in many of Thor’s books, where he serves as an American special operator who faces big moral questions around rules of engagement in pursuit of enemies around the world.

LISTEN AND SUBSCRIBE

SPEAKER

Brad Thor.jpeg

Brad Thor

#1 New York Times Best-Selling Author

Near Dark

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:08)
Hello everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology and politics.

John Darsie: (00:19)
SALT Talks are a series of visual interviews we've been doing during this work from home period in lieu of our global conference series, the SALT Conference, to provide our audience a window into the minds of subject matter experts who are leading investors, creators and thinkers. What we also try to do with SALT Talks is provide a platform for big, important, world-changing ideas that we think are relevant to our audience.

John Darsie: (00:42)
We're very excited today to welcome Brad Thor to SALT Talks. Brad is a novelist, and he's a number one New York Times bestselling author of 20 thrillers, including his most recent book, Near Dark. Some of his other books include Backlash, which was named one of Suspense Magazine's best books of the year, Spymaster, which was quote, "One of the all time best thriller novels," as written by The Washington Times... There's The Last Patriot, which was nominated as Best Thriller of the Year by the International Thriller Writers association, Blowback, which was named one of the Top 100 Killer Thrillers of All Time by NPR, and the first book in the Scot Harvath series, The Lions of Lucerne, which was quote, "One of the best political thrillers ever," according to Barnes & Noble.

John Darsie: (01:29)
Brad is not only a novelist, but he's also appeared on several major media outlets, including ABC, CBS, NBC, PBS, Fox and CNN, among many others. He discusses terrorism as well as how closely his novels of international intrigue actually follow real threats that are facing the world today. Brad has also served as a member of the department of homeland security's analytic Red Cell unit. He's also lectured law enforcement organizations on on the horizon and future threats that are facing the country and the world. He's been a keynote speaker at the National Tactical Officers Association annual conference.

John Darsie: (02:10)
In 2008, Brad shadowed a black ops team in Afghanistan in preparation for researching one of his thrillers, The Apostle. Brad graduated cum laude from the University of Southern California, where he studied creative writing, film and television production. Prior to becoming a novelist, he was the award-winning creator, producer and writer and host of the critically acclaimed national public television series, Traveling Lite.

John Darsie: (02:35)
As a reminder to everyone watching today, if you have any questions for Brad during today's SALT Talk, you can enter them at the Q and A box at the bottom of your video screen. Hosting today's interview is Anthony Scaramucci, who I know is very excited about this interview. Brad is one of his favorite authors and I know that he has either almost finished or he's picked up Brad's new book, Near Dark. Anthony is the founder and managing partner of Skybridge Capital, a global alternative investment firm, as well as the chairman of SALT.

John Darsie: (03:02)
And with that, I'll turn it over Anthony for the interview.

Anthony Scaramucci: (03:05)
Hey John, and thank you Brad. Thanks for being here. I'm going to hold up the book. Phenomenal book, and I actually did finish this. I got in trouble last week, I had Daniel Silva on and I hadn't finished the last four chapters, so I had to make sure I finished it this weekend. Phenomenal book, and once again you are right on it in terms of what's going on in our society. It's a fascinating book. I recommend it to everybody.

Anthony Scaramucci: (03:29)
But I want to go to the back story behind that amazing biography of yours, so give us a little more color on your personal. Where did you grow up? What did your parents do? How did you make the transition into being the brilliant novelist that you are?

Brad Thor: (03:45)
Thanks, and thanks for having me Anthony. I appreciate being here and you sharing me with the SALT audience today. I grew up in Chicago. My dad was a Marine, and my mom was a flight attendant for TWA in the glamor days, the 60s, when travel really was elegant.

Brad Thor: (04:00)
My dad was in the Marine Corps for a while, and used the G.I. Bill to go to college. The Marines were his ticket out of the south side of Chicago. He graduated, went to work in real estate for a big developer named Arthur Rubloff in Chicago. Arthur developed a ton of stuff in Chicago. My dad basically carried Arthur's briefcase, and learned everything from Rubloff. And then my dad started a firm, he's still got it, he's still going, called Code and Construction Consultants, and he goes in and works for owners, works for [inaudible 00:04:33], all kinds of stuff. You may be developing an office building, a hotel, or renovating an office building or hotel, and he truly represents the owner in making sure that they are getting the best materials, the best labor, at the best prices. He puts out RFPs and 20 subs will come in. 20 electrical contractors will come in. Goes through everything.

Brad Thor: (04:53)
When I was 16 my dad wanted me to see what the family business was and took me on a job meeting out in San Francisco, and I remember they were negotiating down to how much door hinges cost, and could they [inaudible 00:05:04] stock, certain things on the site, so that they could guarantee the price would not go up for the developer and all this stuff. So I learned a lot about negotiating from my dad.

Brad Thor: (05:12)
My mom was an entrepreneur as well. She became an executive recruiter. So I learned a lot growing up, to never rest on your laurels, always treat every day in your office as if it's the first day on the job and it could be your last if you don't give it everything, and never take your customers for granted. And probably the biggest thing that I take from all that is, I say this in all my book events Anthony, which is I don't work for the publisher. I work for the readers. Those are my bosses. And when they leave reviews or give a colleague a book at work or a family member one of my books, that's my annual performance review, so I always want those five stars or somebody saying, "Try this Thor book." And that I get from my upbringing in the Midwest.

Anthony Scaramucci: (05:53)
That's great. You have a writing style that's been dubbed faction. When I read your books I feel like I'm reading a presidential daily briefing, and so let's talk a little bit about that. How did you develop that knack? Is it from your travels? Is it from your relationships in Washington, intelligence services... How did you develop that knack?

Brad Thor: (06:14)
It's a little bit of everything. I'm in the entertainment business. My job is to give you escape. I want you to keep flipping those pages. Probably one of the nicest introductions I get when I do media stuff is, "Ladies and gentlemen, it's because of our next guest that I didn't get any sleep last night. I wanted to read a little bit of this Thor book and before I knew it it was 4:00 AM, my eyes were bleeding, I couldn't believe that I shut it. Great book."

Brad Thor: (06:38)
So my style has developed and improved over the years. Being a Midwesterner, I always want to do better than the last time. There was a great book called The Content Trap a couple of years ago and it said, "One of the biggest mistakes entrepreneurs make when they're trying to grow their client base is to improve the product. And you may do little tweaks with the screwdriver that the client never sees, the customer never sees, but that's not where increasing the customer base lies." I thought that was very interesting, because I'm a perfectionist at heart. I want to get better. I'm 20 novels in, and as you and I have talked about before, my thrillers are like the James Bond movies. You don't have to have ever read a Brad Thor book before to jump into the latest one. But I'm always trying to go a little bit further outside my comfort zone, get better as an author, so that means I'm reading books, I'm writing all year long.

Brad Thor: (07:34)
I think Stephen King had one of the best pieces of advice, which is to write the kinds of books you love to read, because that's where your passion is. And for me, I add on to that that you probably have a mini PHD in that genre if you've been reading them for a long time. You know what books you like, what books you don't like and all that kind of stuff. I know I compete with Netflix, I compete with the internet, all that kind of stuff, so my chapters have to be short, crisp, cinematic, each one has to end with a cliffhanger, so that people want to go to the next one. That's the definition of a page-turner.

Brad Thor: (08:10)
So over the years I've realized that attention spans have probably gotten a little bit shorter. We've taught people not to wait a week for the next episode of the series. You can binge everything right now. So it's just kind of my business acumen that I got from my parents, is how do I compete? It's not only how do I compete, how do I win? And I win by being more entertaining than anything else I'm competing with. Because it takes a lot of discipline to sit down, start a book and finish it, so I want to make that process as easy as possible.

Anthony Scaramucci: (08:39)
Well it's no question. I was going to say every time I get to the end of something I'm like, "Oh man," and I've got to go again, so you're very, very good at that. But you've also captured something which I think is very unique. This Scot Harvath, I'd like you in your words to describe him to people that have never met him before. I've met him 16 out of the 19 times. I've got 3 more I've got to read, but I want you to describe him for us. And then secondarily, how many Scot Harvath are there in the United States, working for the United States right now?

Brad Thor: (09:16)
So Scot Harvath is my protagonist. Harvath grew up in Southern California. His dad was a SEAL. And he was very rebellious. He got into skiing like a lot of my Southern California friends do. Crazy, you wouldn't think of kids growing up in LA and San Diego skiing, but they do ski, whether they go to Big Bear or whatever.

Brad Thor: (09:34)
And Harvath ends up deciding he doesn't want to go to college, and he's got a shot with the US Ski team. His old man hates that. His dad ends up dying in a training accident as a SEAL instructor, and Harvath decides, "I no longer have the will to compete in professional sports. There's a greater calling for me." He decides to go finish his college degree, gets into the navy, becomes a SEAL himself.

Brad Thor: (09:57)
Ends up distinguishing himself, he works his way up to SEAL Team Six, distinguishes himself on a presidential detail where the president was appearing by water. Comes into the White House, and the then president in my book says, "This guy is too good to have on defense just trying to bolster our counter terrorism expertise. We need to let this guy off the chain and go after the bad guys."

Brad Thor: (10:17)
And one of the questions or kind of the debates, Anthony as you've seen in my books over the years, is we have these things called the Geneva and Hague Conventions, and basically they set out the Marquess of Queensbury Rules for warfare, that if you are going to be a lawful combatant, you at least have to show up on the battlefield with an armband. You can't hide behind women and children, put bombs in cars so that when soldiers go by you can clack off and kill them.

Brad Thor: (10:43)
So there's been this debate about what does it mean for the United States to abide by rules when certain enemies won't. And I think one of the reasons that Jack Bauer and Kiefer Sutherland in 24 were so successful is we all want to have some heavies on the side of the United States. We believe we're the heroes in our own story. I believe that too. I think this is the greatest nation in the history of the world. We're very fortunate to live here. What are we willing to do to protect American lives?

Brad Thor: (11:11)
So if you are willing to suspend the rules or to kind of turn a blind eye to rules being broken if it means the bad guys can be caught and dealt with, well then you have to ask, "What kind of person do you send out? Who do you trust to break the rules?" Because it can't be someone that breaks the rules only because they're a sadist. It's got to be somebody that if they bend or break the rules, it's for a greater good. And I don't take a side on that, actually.

Brad Thor: (11:35)
It's very interesting, because you'll have different politicians or different spies or special operations people talking about it. This is a big thing for Marcus Luttrell in Lone Survivor. I had the great honor of becoming friends with Marcus. And this was the big debate if you read the book or saw the movie, When the goat herder stumbled across that four man SEAL team. What do we do with these guys? If we kill them, we're going to go to Leavenworth. If we tie them up to a tree overnight, well the wolves are going to eat them, and that's just as bad as killing them. If we let them go, we may die. And in fact three of them died, and Marcus barely made it out.

Brad Thor: (12:06)
So this question about what we should be allowed to do [vis-a-vis 00:12:10] what our enemies... If they don't have a rule book, should we have one? How many pages can we peel out of our rule book if we really want to be effective against these people? So that's a continuing theme, but that's who Harvath is, is really this guy that is trusted to go out there and make the right calls and maybe we don't want to know what he does, as long as he gets the job done, sort of a thing.

Anthony Scaramucci: (12:32)
So how many people are like that in our intelligence community?

Brad Thor: (12:36)
Not enough. We have some incredibly brave men and women. The majority of people at the CIA, DIA, we have amazing people. We have some kind of messed up structures within there. We're not policing, particularly on the intel side. People like Chelsea Manning, Edward Snowden, Reality Winner... We're getting these young 20 somethings in there that are willing to expose some of the most sensitive secrets in the United States because they've got this woke kind of social justice attitude which is completely incompatible with the job they're being asked to do. We don't want to know what their personal feelings are about what the government is doing. If you really think something is bad, I've always said you could go to Rand Paul in a heartbeat and say, "Senator Paul, I discovered this and this bad thing is happening," and let Rand Paul help you work it out.

Anthony Scaramucci: (13:28)
So more of a process of following the whistleblower rules as opposed to becoming a rogue operator, is what you're saying.

Brad Thor: (13:36)
Yeah. And you know what, I probably shouldn't even put Snowden into that category, because everybody right now that's listening and watching this knows what Snowden looks like. There's no way he was dating a stripper in Hawaii. I'm telling you. I have all these feelings about Snowden and then he runs over to the Chinese and the Chinese are like, "Oh okay, well we'll give him to the Russians." A lot of that just doesn't feel right to me, but this idea of vomiting up intelligence because you don't like what the United States is doing, I agree it's not a good thing. It's not safe.

Brad Thor: (14:10)
I didn't like the Chelsea Manning sentence. The rest of the sentence got commuted and all this stuff. We have not made a strong enough example of one of these people so that it doesn't happen again. And when it comes to secrets, that's one of... It takes so long to develop the intelligence that we have. That it can be given away like that, we need to make sure that doesn't happen.

Anthony Scaramucci: (14:30)
Well I mean, just giving my feedback not that it's worth anything, but when I was in the White House, albeit for that very short period of time, you learn very quickly how complex these issues. You learn very quickly that if it's in the White House, it's a very hard decision, because 5,000 other people, Brad, would have made the decision, so now it's filtering up to the president. And then you find out that there's so much complexity, and frankly, you've got your ideals and then you've got American lives at stake and you've got this whole soup that you have to live in.

Brad Thor: (14:59)
And no certainty. It's 80% certainty, 90, if you even get that high. It's rarely 100.

Anthony Scaramucci: (15:07)
Yeah, well that was the bin Laden raid. It was very uncertain, the bin Laden raid.

Brad Thor: (15:09)
And the Russian bounties on American troupes, most recently. They made it into the PDB and the certainty level was high enough that we shared it with the Brits, so it's very rare you get a 100%. But the bin Laden raid, if you watch Zero Dark Thirty, that whole debate back and forth, what level of certainty do we have, that's right on the money.

Anthony Scaramucci: (15:27)
Yeah. So this makes things very complicated. You do a very good job of sifting through that. Again, I feel like I'm reading an intelligence briefing when I'm going through your stuff. Lets talk about that. You do extensive research on global terrorism, what are the greatest threats right now facing the United States? I don't want to give away your plot here, but just talk existentially and talk generally.

Brad Thor: (15:50)
Right. The worst actors are the ones you always hear. It's Russia, China, and Iran with North Korea in fourth place. I pivoted a while ago off of Islamic terrorism, because I kind of got the feeling that there were other things that were bubbling up that were of concern. One of the biggest obviously being the annexation of Crimea by Russia, which got the Russians tossed out of the G8, brought it down to the G7.

Brad Thor: (16:15)
But one of the biggest thing people don't think about, why we tossed the Russians and why that was such a big deal, is because when the Soviet Union broke apart, about a third of their nuke arsenal was in Ukraine, and we guaranteed as the United States to the Ukrainians, that if you get decommissioned, if you let us help you get rid of those nukes, we will guarantee the integrity of your sovereign territory. We'll make sure that you don't get invaded, it doesn't get gobbled off. And the Ukrainians said to us, "Sounds good. Can you get the Russians to sign that piece of paper too?" And we're like, "Okay, for what it's worth, yeah. We'll get the Russians to sign it."

Brad Thor: (16:48)
And then what happened, Putin invaded under the Obama administration and they rightfully got thrown out of the G8, but that was kind of it. So we didn't live up to it. It was almost like that little slice of Czechoslovakia, little slice, it's a substantial slice of Czechoslovakia, being given away to Hitler when Hitler said, "Oh, I just want to protect ethnic Germans." The Sudetenland.

Brad Thor: (17:06)
There's that famous quote, I think it was [inaudible 00:17:11] that said that, "History doesn't repeat, but it does rhyme." And so I started looking at, "What does a revanchist Russia look like?" Now we've been in Afghanistan, we've been in Iraq for a long time, and Putin wants to gobble back up all of old Soviet Russia, so if Putin chose to...

Brad Thor: (17:29)
The RAND Corporation for instance did a study, if Putin moved on Latvia, Lithuania or Estonia, the three Baltic members of NATO, how quick could he do it? Could we get it back? Would it succeed? They ran the simulation something like a thousand times, and switched generals, top US generals from red team to blue team, Putin won every single time. And it's amazing, because if they take Gotland, the island off of Sweden, and they put their air defense batteries on Gotland, we will not be able to get ships into the Baltic. We won't be able to fly planes there because of Russian air superiority on that side of the Baltic, and the biggest quirky thing that I learned from my novel Spymaster, Anthony, was that if we want to move men or material from Germany or Poland up into that area, the railroad gauge changes. You actually have to remove the equipment from one train, put it on another, and the Russians have all of those transit points marked for sabotage.

Brad Thor: (18:25)
So it's basically impossible to win, and as you know the NATO charter, Article 5 says, "An attack on one is an attack on all," so we would have to go and defend those members. But there's a lot of Americans that are tired of war, couldn't find one of those Baltic places on a map if their life depended on it, and probably wouldn't want to send their sons or daughters there.

Brad Thor: (18:44)
So as I look at this as a thriller writer, I say, "Okay, this is fertile ground, because what in my fictional world would a president do to ever even get called into war in that part of the world? What might he allow my fictional character and my teammates to do?" That's been some of the fun that I've been having in the novels lately.

Anthony Scaramucci: (19:02)
Yeah. No look, it's a nonstop thriller read and it's very insightful. Again, I don't want to give away the plot, but I want to ask you this about NATO, because I think it's very important for the Americans, and certainly you've thought about this. The global alliance, the post World War Two order was setup to be offensive and defensive, and its primary responsibility in Europe was to contain Communism. You could say it was a global responsibility if you factor in the Korean and Vietnam war.

Anthony Scaramucci: (19:31)
We're here now in a post communist era, if you will, because these countries are not really operating in pure communism anymore. Is NATO obsolete? Does NATO need to be refreshed? And if it needs to be refreshed, do we need to protect those nations? Is that important? Is that in our global and national interest? I'm not an isolationist I might add. There's reasons why, but no one wants to hear my opinion. They want to hear yours, so what do you think?

Brad Thor: (20:00)
I think NATO is critical, and I absolutely think NATO should continue to go on. By any measure, NATO has been a huge success. We have not had another global war since World War Two, and that's thanks in large part to NATO. Communism or no communism, I think it's really important. Because regardless of what the ideological subscription is of Russia, they took the Crimean Peninsula. They would take more if they could, so I think it's very important.

Anthony Scaramucci: (20:26)
So why aren't they taking those Baltic States? If a thousand times out of a thousand they could take them, why wouldn't they just take them?

Brad Thor: (20:37)
I think while the military option is very difficult for us, I think there's a lot of financial... There's a lot of different things we could do to the Russians if they did make that move. I think there's a lot of damage we could cause and it doesn't necessarily have to be with dropping bombs on them, so I think that's number one.

Brad Thor: (20:54)
This issue of the NATO members not living up to their 2% of GDP to be invested in their own military, I think is a big issue. I think if you have nations that are not contributing what they said they're going to contribute, that's a problem. I don't like the public fights over that stuff. I'm not a fan of that. I think behind the scenes there's more we should be doing to get them to meet that standard, but I still think NATO is absolutely one of the top, if not the top military alliance ever created in history. I think it's very important and should stay.

Brad Thor: (21:26)
And by the way, that Article 5, "An attack on one is an attack on all," that lever has only been pulled once, and it was by us, the United States, after 9/11 when we went into Afghanistan.

Anthony Scaramucci: (21:42)
One thing I want to bring up and I want to get your reaction to, because I think it's interesting. George Marshall, there was a biography written about him. Obviously with [inaudible 00:21:51] and the father of the Marshall Plan. He was a Truman Secretary of State after being the chief of staff for Roosevelt of the army.

Anthony Scaramucci: (21:56)
When NATO was slipping in terms of their percentages, he said to his fellow team mates if you will, "Let it happen. We want to be the military superior nation on this planet for as long as possible." It was his belief that we're a benevolent democracy, and the less military out there the less potentiality of use of military, even if it was among our allies who during the Second World War frankly were our enemies.

Anthony Scaramucci: (22:26)
It's an interesting concept about where we sit in the global spectrum. But I do agree with you, there's a lot of things the United States could do to Russia. Although with Russia having the GDP of Italy, to be this much of a force, tells you that we're doing something wrong in terms of containing them in a more appropriate way.

Anthony Scaramucci: (22:46)
But lets go to my next question, then I got to turn it over to John Darsie, who once again has been bested in the room rating, because he has all this fake interior designing going on. You've never seen a more room rating overbite than John Darsie. I don't know what there is. You've got all that natural stuff going on behind you, so once again John, in a SALT Talk you've been trumped by one of our guests.

Anthony Scaramucci: (23:11)
But I want to ask this last question, then I'll turn it over to John. Do you have a favorite among the books that you've written? Something that you really say, "Wow." You closed the manuscript, you shipped it off to the publisher and said, "That's my opus."

Brad Thor: (23:25)
You know what, every one is different. Every one was a challenge. Every one has been harder. You think doing 20 books it would get easier. It doesn't. That's just part of my nature. I consider myself a small business person. I'm only as good as the last thing I've written, because that's the highest the bar has ever been for me personally. I always say my favorite book is next year's book because that's the one I'm writing right now. That's the one I'm super passionate about.

Anthony Scaramucci: (23:48)
Have you started next year's book Brad?

Brad Thor: (23:50)
Yeah. I have. And by the way Anthony, for the benefit of those who are watching, the one thing I can tell you is the current book Near Dark, if it was a movie poster, the logline would be, "A hundred million dollar bounty has just been put on the head of America's top spy." That's really what Near Dark is about. My guy, hundred million dollar bounty on his head, can't trust anyone, reluctantly he has to trust one person, and it bounces all around the world.

Anthony Scaramucci: (24:17)
It's fascinating. The ending is even more fascinating than the beginning. So I'm holding it up again. I'm going to turn it over to John, Brad. He's got questions. You've got a lot of fans out there that are coming in, asking questions, so go ahead Mr Darsie.

John Darsie: (24:34)
Yeah, we have a lot of questions. A lot of engagement on today's talk. Brad, thanks again for joining us. So as I mentioned in the open, you embedded yourself in Afghanistan in 2008 with a black ops team, and authenticity is obviously very important to your work. Some of our viewers want to know, "Why is that authenticity so important, and what was that experience like in Afghanistan?"

Brad Thor: (24:56)
So first of all, I think that the details are the bedrock of a good thriller, and you've got to get those right. My wife, if she picks up a book, she'll finish the book no matter what. You get maybe two strikes with me. If you put a safety on a Glock, that's a big strike against you. You've only got one more after that, and I will put a book down and not pick it back up. There's no reason not to do your homework. You have the internet for God's sake.

Brad Thor: (25:20)
Poor Clancy, I don't know how he got the details he got for Hunt for Red October, the libraries and places he must have haunted forever to write that novel without the benefit of the internet the way we have it today. So details are really important.

Brad Thor: (25:34)
The Afghanistan trip was amazing. I got told three things. Make sure all your life insurance is paid up, get in good shape, and grow the biggest beard you can. Got to Kabul and one of guys said, "Do you have any sunglasses?" I'm like, "Yeah, I've got my sunnies with me." He's like, "Let me see those." He takes them, puts them in his pocket. He goes, "You get those back at the end of the trip." I'm like, "What do you mean?" He goes, "Nothing marks a westerner from a distance like a pair of sunglasses."

Brad Thor: (25:57)
It was really these little things, and John, that's what I was interested in. They were going out and building human networks, gathering intelligence... So the best fried chicken I ever had was in Jalalabad. Best ever. And the other thing that was really interesting, was learning... I spoke about with Anthony, Marcus Luttrell and Lone Survivor, and how those Afghans protected Marcus. Well that's based on something called Pashtunwali, which is their code of honor. And every village I went with this team to, we already had permission of the village elders to be there as their guest, because what happens is if you're their guest, they will fight to the last man and boy in that village to keep you alive.

Brad Thor: (26:40)
I always joke, "Try to find somebody to help you change a tire on the way to the airport in the rain when you're off to the side of the road. It doesn't happen." So here's this incredible code of honor there. The people were fantastic. It was great. But just even little things, like it would be on and off [inaudible 00:26:54] and they'd have pallets of water. You grab a case of water and throw it in the back of the truck. Just the little color details that you had to be there to pick up. It was a once in a lifetime opportunity, and that all went into my thriller The Apostle.

John Darsie: (27:09)
Next question is about, "What type of books and authors do you read, and have any in particular inspired your style as a writer?"

Brad Thor: (27:18)
I grew up grabbing whatever book my parents had just finished and set down. I would mark, I would watch my dad or my mom, and they read Le Carre, Ludlum, Freddy Forsyth, Clancy, and no sooner had that book hit the coffee table or nightstand, then I'd come and swipe it and I'd read those books myself. So those were really good, those great cold war books, because they dealt not only with the turmoil and private lives of the spies themselves, but the overarching global politics and why these things matter. Why the successful accomplishment of a mission was critical to the future of the west and things like this.

Brad Thor: (27:56)
I've always loved the tension between spies and government, or war fighters and government, because as long as we have gathered together in tribes and picked up rocks and sharpened sticks to go get our women back or take back the crops that the other tribes stole from us, there's been politics involved. So that intersection for me is fascinating, and it creates a real dynamic tension that can lend itself to the excitement in a thriller.

John Darsie: (28:22)
We have a couple questions that all sort of aggregate into one about your own writing process. You talked about how you don't really create a universal arc for your character Scot Harvath, and you don't have a destination in mind for him. You're really talking current events, weaving them into different stories that you're writing about that character. What is your individual writing process like? How do you write? Where do you write? What's that challenge like in terms of crafting a new narrative, like a Bond movie as you mentioned, with each book that you write?

Brad Thor: (28:57)
Great question. So like I said, I've done 20 novels. It does not get any easier. I'm not an outliner. Dan Brown who wrote Da Vinci Code is a buddy of mine, and Dan at one point shared with me the outline for Da Vinci Code, which was really cool, because Dan is like a mega outliner and I got to see all the things that didn't make it into the final novel. Which is kind of neat, to see like a highlight reel or something, everything that ended up on the cutting room floor. It was very cool. He had some cool stuff he was planning for that.

Brad Thor: (29:22)
So I'm not an outliner. I really believe in the quote from Robert Frost that says, "No joy in the writer, no joy in the reader. No surprise in the writer, no surprise in the reader." I want to have the same experience writing the novel that you do reading it. I want my palms to sweat. I want my heart to pound. I specialize in absolutely sticking it to myself. I paint myself in the corners all the time. I'll go home at night and my wife can tell by the expression on my face if it's a red wine night or a Bourbon night, how badly I've put myself in a corner, and she always says, "Don't worry. You'll figure it out tomorrow."

Brad Thor: (29:58)
That's what makes my job hard, John. That's what makes it challenging, but that's also what makes it so rewarding, because if my job was easy, it would be boring. And I don't have the kind of brain and personality that deals well with boredom. I constantly have to have stuff going on, so I've got kids that get up in the morning, in the before time we get them off to school, breakfast and everything. I'm a big health nut, so I'm working out six days a week and then I'm in the office early, and I treat it 8:00 to 6:00 because I have a family. I want to be home for dinner with my kids and that kind of a thing.

Brad Thor: (30:29)
But listen, this business is seat of pants to seat of chair. And Jack London was famous for saying, "You can't wait for inspiration. You have to go after it with a club," particularly if you're putting out a novel a year like I am. So it really is about mental toughness and discipline and paying attention to the details.

Brad Thor: (30:48)
The old thing, watch the pennies and the pounds watch themselves. Any business where you're going to be successful, you have to be a detailed person, because if you're not watching the details, you're not going to build a successful product. You're not going to build a successful company. So the same things you see in the world of finance, wherever it might be, whether you're a hedge fund manager, whether you're just doing [MNAs 00:31:07] constantly, it really is attention to detail and self-discipline. It's the key to success no matter what your business is.

John Darsie: (31:14)
So 19 of your 20 novels cover the character we've been speaking about, Scot Harvath. You have one that covers a band of female intelligence officers and special operation forces. We have a question about other minor characters that show up in your books that people seem to be infatuated with. Scott Coleman, Nicholas being another. Do you see yourself branching out of that Scot Harvath series?

John Darsie: (31:38)
We had Daniel Silva on last week, and he sort of fell into the Gabriel Allon series because it was so popular, sort of what you talked about with Scot Harvath. You didn't intend to make it a serialized stories about that character specifically. But what do you see as your future as a novelist in terms of the characters that you write about?

Brad Thor: (31:58)
Well it's such a great question. I've got about 60% male readership, 40% female readership, and that female readership is going up. So we came at this book with, and I probably have the mirror image up, the way Anthony did it looked a lot better, but we have this really cool foil cover that catches the light, and it's got [inaudible 00:32:17] on the cover which is one of my favorite destinations. I've always wanted to put it in a novel. I finally got to do it with this one because it was just the right story for that location in France.

Brad Thor: (32:27)
So what I challenged myself to do with this book was I wanted to create a female character to go with Scot Harvath that was just as good, maybe better than Harvath. So she works for the Norwegian Intelligence Service. She's a spy for lack of a better term, for Norway. In real life, the Norwegians have an all female special forces team that's called Jaeger. When they were being created it was called Tundra. That was the code name for them.

Brad Thor: (32:54)
I created her, she gets in there, she joins up, they turn her down, turn her down, turn her down, she works harder and harder and harder, gets in, gets onto the special forces team and there's not enough action for her. They were putting her in Afghanistan to go talk to the wives of Taliban guys and all this kind of stuff and she's like, "No, I signed up for what the men get. I want to kick in doors and shoot bad guys in the face." And she ends up leaving and joins the Norwegian Intelligence Service, there happens to be a kind of [inaudible 00:33:20] who's there to get her right at the right moment.

Brad Thor: (33:23)
So I've done almost this reboot of the franchise, where maybe Harvath is not going to go back to what he's doing. He may run off with this woman and they may do operations together, which is kind of fun. But yeah, Nicholas is a great person. God bless whoever asked about Scott Coleman. That's a Mitch Rapp, Vince Flynn character, okay. I'm a big fan of the Mitch Rapp books, by the way. And it's funny because Vince Flynn, God rest his soul, gave me one of my first blurbs. And Kyle Mills is writing the Mitch Rapp books for Vince Flynn's estate, and I knew Kyle before I was even an author. His dad was in the FBI and my dad's best friend who is like a godfather to us was in the FBI.

Brad Thor: (34:11)
So spinning off characters, absolutely. Nicholas is one. A lot of people want to see me bring The Athena Project back, which is the all female Delta force team. So be careful what you wish for John, because I always said I needed more time, and now we're on lockdown. Guess what? I've got nothing but time.

John Darsie: (34:29)
All right, so we need two books a year now, Brad.

Brad Thor: (34:32)
Well if I don't come out of this with two books, shame on me, because I get to look back on this time in the pandemic and I can become a better husband, better father, and I can crank out a second book. If I don't, if I fail on any of those, I've let myself down. So I think it's probably a safe bet that you're going to get a second book out of me from this.

John Darsie: (34:48)
All right. Fantastic. We talked about this a little bit before we went on the air, but what are the chances of a Harvath movie or TV show?

Brad Thor: (34:56)
Some great questions. Right before late fall, early winter, we had one of the top producers in Hollywood come to us and say, "Love these books. I've got an awesome idea, because Brad, you've got 19 Scot Harvath books, and yeah we could do them in any order. You've got the one Athena Project. This is like buying the Marvel Universe. I mean we could do films, we could do television, we could spin off characters. It is an amazing package."

Brad Thor: (35:24)
And the producer was fantastic. Done some amazing deals. Been recognized with Oscar nominations and all this kind of stuff, and I said, "Okay, well you and I both know that the big thing is the director." And he said, "Well who do you want as the director, Brad?" I said, "I get to pick?" He goes, "Yeah." And I said, "Well, who are you looking at?" He goes, "Well, here is my top three." And his number one guy was the guy I want. And I said, "You can really get this guy?" He says, "What are you doing tomorrow at two o'clock? I'll get him on the phone."

Brad Thor: (35:50)
I had a talk with this director. I love this guy's stuff. I guarantee you John, you, Anthony, everybody at SALT, everybody who is watching has seen this director's work. And I get on the phone with him and he's like, "Brad, long time fan. I love the Scot Harvath..." And it has just worked out great.

Brad Thor: (36:05)
So what we're trying to do now, is to get all the pieces lined up. I can't say who the director or the producer is and that kind of stuff, because they want to make the big splashy press announcement and be the first ones out of the gate and into production as soon as COVID disappears or who go overseas to shoot some place where there's no COVID.

Brad Thor: (36:20)
That's the one big thing we're working on now is putting the writers together and all this kind of stuff so that everything is in place, so when the financing drops in, either we go to someplace like in New Zealand and start shooting, or the minute California fully opens up or... My books are so international, we could go anywhere. We could go to Iceland and shoot one of the books if we wanted to. And that's what they said is really the blessing of my books, is that we don't have to let COVID dictate to us. We can let the book dictate where we go and when we start. So fingers crossed we'll find a place and we can go to work soon.

John Darsie: (36:53)
All right, well good news for Scot Harvath fans. You talked about how from a topical perspective you've pivoted a little bit from focusing on Islamic terrorism to focusing on things like Russia, Crimea, things of that nature. Do you see anything on the horizon that might become an increasing focus of yours? Or as a specific question about sort of the domestic threats as well, the rise of domestic militia groups and social unrest taking place in the country. But generally, where do you see maybe where the puck is moving in terms of your storyline?

Brad Thor: (37:26)
That's always my favorite Gretzky quote, which is, "Don't go to where the puck is. Skate to where the puck is going to be," which is precisely what I like to do. Listen, I think we've got a lot of problems that have gone way too long unaddressed with China, but I think that as tensions rise with China there's a chance for a mistake to happen, whether that's in the South China Sea, who knows?

Brad Thor: (37:48)
We have a lot of influence operations that are happening right now with China and Russia trying to exploit all the cultural and political divisions in the United States right now. And one of the things I complain the most about is how many Americans get their news from Facebook, because you're not really getting the news, you are siloing yourself in areas where you feel comfortable. So you're going to places within Facebook where you are getting your beliefs reinforced, not challenged. And the Russians and Chinese know that, and they are exploiting that. So they're going in where people feel comfortable and unchallenged, and they're giving them bogus information and trying to manipulate them.

Brad Thor: (38:22)
It's a big problem there. I don't know how you spin that into a thriller, but I am concerned with what happens... I'm really good John, I pride myself in being able to peer over the horizon and tell you what's going to happen next, but COVID has kind of wobbled my radar a little bit, because a lot is going to depend on, "Is there a vaccine? Does it burnout? How bad do things get?" And we've also got a pretty major election coming up in November, which is going to impact what certain adversarial powers are going to feel good doing.

Brad Thor: (38:52)
China and Russia are going to feel comfortable doing certain things under a Biden administration or under a Trump administration, and that's the one item that is just kind of hanging out there, and I don't know how that ball is going to come over to the plate. It could be a little outside, right down the middle, I'm still trying to focus in. Ask me again in 45 days. I'll see if I can have a better answer for you.

John Darsie: (39:12)
All right. Amazing. Well Anthony, do you have a last word for Brad? As I mentioned earlier, Anthony is a huge fan of your books.

Anthony Scaramucci: (39:19)
Well yeah. Well, I love your books. I look forward to your book, Daniel Silva's book during the summer. I think that it's phenomenal writing Brad. I hope that we can get you back on when your next book comes out. I'm going to recommend it again, and I love the cover. Probably not great to see it here on a Zoom call, but it captures everything that's inside the book and more. We wish you great success with the book, and I hope I get a chance to see you in a non-COVID environment. Hopefully, somewhere in Nashville where we can listen to some great music and get a beer together.

Brad Thor: (39:52)
I love it. Sounds like a plan.

Anthony Scaramucci: (39:54)
All right. God bless you, sir. Have a great success with the book, and we'll see you soon.

Brad Thor: (39:58)
Thanks Anthony.

Daniel Silva: The Greatest American Spy Novelist | SALT Talks #26

“Americans should be concerned about the general level and openness of racism in the country right now.”

Daniel Silva is the award-winning, #1 New York Times best-selling author of The Unlikely Spy, The Mark of the Assassin, The Marching Season, The Kill Artist, The English Assassin, The Confessor and A Death in Vienna. Daniel’s books are critically-acclaimed best sellers around the world and have been translated into more than thirty languages.

Prior to his novelist career, Daniel became a journalist at the age of thirty-three, directing CNN’s political talks. There is a tremendous amount of historical content worked into all of his novels.

On racial tensions in the United States, Daniel reiterates his concern for minorities and warns against giving in to mob rule.

LISTEN AND SUBSCRIBE

SPEAKER

Daniel Silva.jpeg

Daniel Silva

#1 New York Times Best-Selling Author

The Unlikely Spy

MODERATOR

anthony_scaramucci.jpeg

Anthony Scaramucci

Founder & Managing Partner

SkyBridge

EPISODE TRANSCRIPT

John Darsie: (00:07)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum at the intersection of finance, technology, and geopolitics. SALT Talks are a series of digital interviews we've been doing during the work from home period in lieu of our global conference series. We're really trying to replicate that experience that people get at our Las Vegas event and at our international events. And what we really try to do is provide our audience a window into the minds of subject matter experts as well as provide a platform for big, world changing ideas.

John Darsie: (00:41)
And today we're very excited to bring you something a little bit different than a lot of the talks we've been doing on SALT Talks so far over the last few months, and that's bring your Dr. Daniel Silva. Daniel is the award-winning, number one New York Times best selling author of a long list of books, The Unlikely Spy, The Mark of the Assassin, The Marching Season, The Kill Artist, The English Assassin, The Confessor, A Death in Vienna, Prince of Fire, The Messenger, The Secret Servant, Moscow Rules, The Defector, The Rembrandt Affair, Portrait of a Spy, The Fallen Angel, The English Girl, The Heist, The English Spy, The Black Widow, House of Spies, The other Woman, and The New Girl. And I think he will soon be on that list for his lated book, which is The Order.

John Darsie: (01:25)
He's best known for his long running thriller series starring spy and art restorer, Gabrielle Allen. Silva's books are critically acclaimed best sellers around the world and have been translated into more than 30 languages. Daniel resides in Florida with his wife, a television journalist, Jamie Gangel, and their twins, Lily and Nicholas.

John Darsie: (01:45)
If you have any questions for Daniel during today's talk, a reminder, enter them in the Q&A box at the bottom of your video screen. And I'll have to say that we've been doing these SALT Talks for a few months. We've had several billionaires across finance, technology. We've had some people in the entertainment realm, but I've never seen our host today, Anthony Scaramucci, more excited for any SALT Talk than the one that we have today. Anthony, as most of you know, is the founder and managing partner of SkyBridge Capital. He's going to conduct today's interview, but I think it will be fascinating. Anthony, I think has read almost all of Daniel's books, including most of his latest book that came out about a week ago. So, I'll turn it over to Anthony Scaramucci for the interview.

Anthony Scaramucci: (02:26)
Hey, John. Great. Daniel, great to have you on. It's a true honor for all of us. And you'd be blown away at number of fans you have as they're populating the Zoom call, but also friends of mine that were excited that you were going to be on today. But I want to take you back. Tell us a little bit more about your personal background beyond what we would read at the back of a book. Where were you born? How'd you get started? Why did you go into journalism? And how did you flip over to becoming the great spy novelist that you are?

Daniel Silva: (02:58)
Well, contrary to what it says about me on Wikipedia, I was not born in Detroit, Michigan. I was actually born in Kalamazoo, Michigan, if you can believe that. I lived there until I was about seven years old. My parents are both school teachers. We headed west. I spent the rest of my childhood in Central California. And I attended college ... undergraduate work at California State University of Fresno, where I studied journalism with the great Roger Tatarian, one of the great wire service editors of all time, who was a great mentor of mine. I attended graduate school at San Francisco State University, a great conservative university in California. I'm being facetious, of course.

Daniel Silva: (03:49)
I studied international relations for my graduate work. One of my great regrets is I actually didn't finish my degree because I got the job I wanted. I was hired as a journalist for United Press International in San Francisco. Within a year, I was working on the foreign desk in Washington. And a year after that, I was living and working in the Middle East as a foreign correspondent at the age of 26 years old.

Daniel Silva: (04:24)
I met my wife in the Persian Gulf in 1987. We decided to marry. I came back here and worked at CNN for a few years as a television producer. And when I was about 32, 33, I confessed to her that I had become a journalist so that I could become a novelist, which is what I always wanted to be. And I told her that I needed to start working on my first novel. When she started laughing, or stopped laughing I should say, she said, "Go ahead. Have fun." And I went down, and I wrote my first manuscripts. It was The Unlikely Spy. And I left full-time journalism and became a novelist, I guess in nineteen about ninety-eight I left journalism, and I've been writing ever since, full-time ever since.

Anthony Scaramucci: (05:25)
Because you're a very creative human being, so you had these characters in your head. You had an idea of ... There was a storyboard in your head for how many years, Daniel?

Daniel Silva: (05:35)
For the first novel?

Anthony Scaramucci: (05:37)
Yeah.

Daniel Silva: (05:39)
I carried it around with me for a while. I loved World War II fiction. I loved World War II history and decided that was going to be my first book. The interesting thing about it is I wrote it while working. I mean, I had an enormous job at the time. I was the executive producer of all of CNN's political talk shows, so that included Crossfire every night, Capital Gain, Inside Politics, Reliable Sources, Evans and Novak, all of those programs. Jamie used to call them the shout shows. When I look at the landscape of television news today and all the opinion that comes through the screen all night long, I sort of feel at least partially responsible.

Daniel Silva: (06:31)
And so I would get up very early in the morning. I still do by the way. I don't really sleep much past about four o'clock. And I would write for a few hours. And then I would stop, would set it aside and resume my work day. I sent the book in ... I didn't have an agent, and I sent it in. We call it an unsolicited manuscript in the business. Inside the publishing houses, they call it the slush pile. And I actually got my first novel picked off the slush piles at a couple of houses. It was read. And as things are want to happen in New York Publishing, one person reads it, someone else reads it, someone else reads it. And within a very short period of time, I knew I had a book deal.

Anthony Scaramucci: (07:22)
I always find great insight in your books, historical insight, insight into the art world, the Vatican, obviously the Mossad. But tell us why you named the character Gabriel. Is it because he's the interpreter of Daniel? Is that why you named him that? Because you've left that in a few of your books, and I'm just wondering you're telling the readers something about yourself in the book.

Daniel Silva: (07:47)
Well, first of all, it's a beautiful name. I just love the name Gabriel. I love the translation of the name Gabriel, which is God is my strength. All of us with the I-E-L, that means God is in our name. So I'm Daniel, so my name translates as God is my judge. It's not a great name to have. Apparently people who are given this name have a sense that God is looking over their shoulder all the time, and I definitely feel that way. So I love the name. I love the fact that it is the name of an important archangel. He was the defender of Israel, the prince of [inaudible 00:08:33], the interpreter of Daniel's visions, and the messenger. That's his other great quality. So I thought that was a perfect name for him.

Daniel Silva: (08:44)
And then his last name, Allon, allon is just an oak tree in Israel. It's a very common name. I thought it was simple, that it was sort of in its own way a little bit anglicized to begin with. And I just liked what it meant, solid as an oak. And then also that he's a restorer who works on wood and panels and frames, it suited his character. So I did work hard on the name in service of a character who was supposed to be in one novel, by the way. He was not supposed to be a continuing character. He was supposed to appear in one novel and quite literally sail off into the sunset, and that obviously didn't happen, but that's the genesis of his name.

Anthony Scaramucci: (09:33)
Well, thank God it didn't happen because these stories are ... They're beautiful stories. They're very suspenseful, and it's always an exciting summer read. Tell us a little bit about the research that goes into this because you are precise. You blew up one of my friends restaurants, Café Milano. [inaudible 00:09:53] he loves showing me the spot where the bomb went off. You've got the restaurants down in Italy better than the Zagats community.

Anthony Scaramucci: (10:00)
And so tell us a little bit about your field research and tell us a little bit about your research in the potential intelligence community to the extent that you're able to talk about that. How do you get the ethos of these players so well?

Daniel Silva: (10:15)
Well, in terms of site research and trying to soak up as much of a place as possible, I do try to do that. I try to spend as much time in a place as possible that I'm writing about. We've obviously spent a tremendous amount of time in Italy. And one summer, we spent virtually the entire summer there. I used the house where we lived, this farm that we lived on in a couple of novels. I've spent a lot of time in the Vatican. This book has a conclave scene in it. I've been in the Sistine Chapel alone. I've opened the door of the [Nero 00:10:56], the little stove where they burn the ballots. I've been in the crying room.

Daniel Silva: (11:00)
So I do a lot of site research, as much as I can. And if possible, I like to go before I write, in that little bit of down period. For example, when I wrote Moscow Rules, we spent a couple of weeks traveling in Russia. That trip really influenced me. I could not have written that book without that time that I spent there. Sometimes I will go to a place in the middle of the process. For example, in House of Spies, I wanted to set the end of the book in Morocco, and so I dragged everyone to Morocco for their winter break and settled there, traveling the country. And literally the way that the chase at the end works in that book, I was in each place writing it on the spot.

Daniel Silva: (11:56)
A tremendous amount of book research. If you look at my acknowledgements in the book in front of you, you'll see the research that went into that book. Often times for a project like this, I mean, I am up until 1:00 in the morning with a book open doing my research. I obviously do a lot of research on security issues. I talk to as many people as I can in the business. Some of my best friends are spies, and some of my best friends actually work for the Mossad. It's not a relationship where I ask them, "How do you do this?" They wouldn't tell me anyway, and frankly I want the freedom to sort of use my imagination and make it up. What I do get from them is their view of the world, their incredible intelligence, their sense of humor, which I hope comes through in the book.

Daniel Silva: (13:00)
One of the things I discovered after creating Gabriel is that there are a number of really talented artists and musicians who happen to work for the Mossad. I don't know if it's a gene pool or the type of person that they look for, but Gabriel Allon is not the only painter that works for the office, as I call it.

Anthony Scaramucci: (13:21)
And you have great insight into the Catholic church, by the way. And in your novels, I'm always reflecting upon my catholicism and the evolution of catholicism. And I saw your interview on Morning Joe, and I just wanted to ask you an elaborative question related to the Catholic church. You suggested on Morning Joe that they are obviously under financial pressure, but there's something else going on. We see empty churches here in the United States. There's empty churches in Europe. Do you think that this is a temporary pause in this 2,000 year old institution, and there will be an eventual renewal, or do you think that this is a more ominous sign of what's going on for catholicism?

Daniel Silva: (14:07)
I think it's difficult to overstate the depths of the crisis facing the Catholic church right now. I'm sure that you talk about it with your Catholic friends. I certainly talk about it with my Catholic friends. The sexual abuse scandal, this systematic abuse and coverup for decades and decades and decades has just shaken the church to its core, and there's just no getting around that. I'm not sure it's an extinction level event, but it's going to take a long time to get over that. The immediate effect of that is I think we're up to 19 diocese and orders in the United States that have declared bankruptcy. I'm told that the Vatican is just really hanging by a thread, the Holy See I should say, in terms of its finances. That they're going to face a real financial crisis in the very near future.

Daniel Silva: (15:16)
And when I talk to my more doctrinaire Catholic friends, more to the traditional end of the spectrum, they talk very openly about a coming schism within catholicism. I would hope not. But friends of mine who are not necessarily Opus Dei but sort of that end of the spectrum foresee a small church that adheres to the traditional doctrines and sort of says goodbye to a portion of the church that wants to move on and ordain women and make other changes. So, we'll see, but it's definitely not out of the realm of possibility.

Anthony Scaramucci: (16:05)
It's fascinating. You always say it's the oldest organization. It seems to me when you think about it as an organization and its survival over two millenniums, this seems to be a very hard blow. And so we'll have to see what happens there, but it's a good segue into my next question, a question inspired by your wife actually, about the book, The Order. I'm going to hold it up here. Great advertising. Great cover by the way.

Daniel Silva: (16:31)
Thank you.

Anthony Scaramucci: (16:31)
But Jamie wanted me to ask you this. I think it's a perfect question. The book deals with fascism. It deals with neo-fascism. It deals with neo-Nazism. It deals with anti-Semitism, and it deals with radical orthodoxies, like an Opus Dei or the Saint Helen's Order, et cetera. And so why did you incorporate all that in this book, at this hour, in the current zeitgeist going on in the world?

Daniel Silva: (16:58)
I have watched for several years in Rome. Talking to people inside the church and in Italia politics, just that with certain fascination that the hatred that populous far right has for Pope Francis. And that extends to this country as well. American conservatives despise the guy. And then you couple that with an internal doctrinal war that's going on, it seemed to me to be sort of the perfect setting to explore the rise of the far right in an accessible entertaining way, and in a very real way.

Daniel Silva: (17:52)
I wanted to couple that and pair that with the accompanying rise of anti-Semitism in Europe, which has reached levels really not seen since the middle of the last century. It's on the rise here as well, by the way. And to explore in this novel the roots of anti-Semitism. I don't know about you, but when the Tree of Life Synagogue shooting happened in Pittsburgh, I was deeply alarmed by that. I mean, it was not only the worst single act of violence ever directed against Jews in this country, but the nature of the attack ... You had a guy who's sort of a white nationalist. I don't want to say his name. Sort of a white nationalist, white supremacist, immigration opponent, and his act of violence that he chose to carry out was not against immigrants, brown-skinned immigrants, but against Jews. I was incredibly alarmed by that.

Daniel Silva: (19:02)
And I wanted to explore, "What is going on in this guy's mind? Why would he have targeted Jews when he's really angry about Hispanic immigration to this country?" And so just combining numerous elements, it's the way I assemble a book, and the result of that is The Order.

Anthony Scaramucci: (19:23)
I don't want to give up any of that plot line, but I do have to ask this question because one of your characters, and I won't mention who, says to one of the protagonists, obviously he's an antagonist talking to the protagonist, says, "Well, the lifespan of Jews living in their second homeland, America, is about to expire." And I'm sure you remember writing that. And I was left reading that thinking to myself, "Is there something ominous there? Is that a warning that you're putting in the book?" And again, just for context for people listening that haven't read the book, you do mention that during the execution of Christ certain things are discussed that are put into the gospels about blood being on the children and the forebearers of Jewery or Judaism, and is a very controversial nine words, to use your expression. And so my question is, where do you feel things are? Is there a cautionary tale here in your great novel, your thriller?

Daniel Silva: (20:31)
Well, let me answer that this way. I'm a little concerned about where we're headed in this country in the next ... in the short term. I am deeply concerned that we are going to get a clean, conclusive election. I worry what's going to happen if and when Donald Trump loses, and if it's a tight race, if he doesn't ... He said again on Sunday that he might not accept the results of the election. He actually said it again. I am concerned about just the general level of racism that's just bandied our country right now. It's flowing to the internet like Niagara Falls. And just the openness about it ... Look, am I suggesting that Jews in the United States are in immanent danger? No. Am I concerned longterm here about sort of the direction of this country and what's happening in particular in western Europe and in Germany? Yes, I am concerned. I am very concerned.

Anthony Scaramucci: (22:03)
When I visited the Yad Vashem Holocaust memorial, the museum, and I went through the display, there was something that was left me, that is burnt into me. It was that Jews had lived peacefully in Germany for 500 years.

Daniel Silva: (22:19)
At least.

Anthony Scaramucci: (22:20)
At least. And this is the reason that 40% of them didn't really understand the danger, because they felt that they were Germans, and their bloodlines were German's, so therefore this sort of catastrophe, this fascist catastrophe couldn't happen to them. And so they stayed put while 60% fled. I guess the reason I'm bringing this up though is it ties back into your novels. You're fascinated with the Middle East, and you're fascinated with Europe. And so these seem to be your plot lines. It's the Middle East and Europe, and why? Give us a little bit of color on that. Is it because of this history between the two reasons?

Daniel Silva: (23:01)
Without question. I mean, my ... If you could see my wall back there, you'd see one section that have-

Anthony Scaramucci: (23:10)
I'm very envious of your wall. By the way, John Darsie was going to be asking some questions, Daniel. That's a fake wall behind him. I just want to assure everybody. So if he gets a room rating, it will be a fake news room rating, but you've got a genuine thing going on there.

Daniel Silva: (23:24)
And you would see an entire panel of that bookshelf, it contains every seminal work on the history of the Holocaust, the second World War, the history of Judaism. That corner over there is the history of Roman Catholicism. It's a subject that endlessly fascinates me, the Jerusalem to Rome axis, Western civilization, how we came to be. And Gabriel stands astride to that. And from the beginning of his career, Europe was his area of ... I guess he's gone to the Middle East a little bit, but mainly because he was a descendant of German-speaking Jews who came to Israel after the Holocaust, at least his mother. And because German was the first language he heard, it's still the language that he dreams in, it was just natural that his area, where he was going to operate, was Germany and Europe. He's picked up a couple of other European languages, Italian. He speaks decent French. And that's just where I choose to set the books.

Daniel Silva: (24:37)
So, yes, I've gone ... He's operated in Cairo. He's operated in Morocco. He's gone to the Persian Gulf, but I like European settings for my novels.

Anthony Scaramucci: (24:47)
I think one of the things that I'm always fascinated by about the origination of Judaism, and taking it right back to the Foundation Stone to where we are today, the seminal ideas are really about liberty. You can tie most of John Locke, and J.S. Mill and Jefferson, frankly, back to the Torah. Most Americans probably don't realize that, but that is the case. And one of the biggest things for me is the protection of minorities and the protection of not being ruled by the mob, but always having some minority protections in a situation. And so, for so many years, the Jewish community has represented that as a beacon of liberty. And here is your protagonist, he is a defender of that idea.

Daniel Silva: (25:32)
Without question. I mean, if he were an American kid in the 1960s, if he was that age, he would have definitely been in the South, fighting for voting rights and civil rights in the South. That's who he is.

Anthony Scaramucci: (25:47)
Yeah. No, he's the quintessential man of liberty and the quintessential man to protect individual rights and personal freedom. And so this is my question for you. It's not on the list, but I'm just very curious. We once had lunch together, and you said Israel, the country, is in a pretty good position. It's a very strong country now in terms of being able to take care of itself in that region of the world. Given everything that we just talked about and the rise of anti-Semitism, do you still believe that? Is it still on an upward trajectory, the state of Israel?

Daniel Silva: (26:25)
Without question. I mean, you're a businessman. You know the region and the economies-

Anthony Scaramucci: (26:30)
I knew the answer. I was leading you. I knew the answer, but I wanted you to state it.

Daniel Silva: (26:34)
Look at in terms of what they're doing with their technology, how they modernized their economy so quickly relatively speaking. They went from this sort of socialist economy early in the state to this thriving high tech economy. They got their water problem fixed. They got energy. And they've got one major problem. They've got a problem with the Palestinians, and I jut wish that we could come up with a formula to fix that in a way that can just have these two remarkable peoples living and working side by side because it would just be ... It would be the coolest country in the world.

Anthony Scaramucci: (27:27)
No question. I see it.

Daniel Silva: (27:30)
And if we could find some formula to bring true peace and get these two people who have been living side by side in this place for centuries and centuries and centuries and to work together because it's ... I don't know how much time you get to spend there, but it's a lot of fun. The food is great. The weather is great. The beaches are great, and we just can't get over that problem.

Anthony Scaramucci: (28:02)
I try to get there twice a year, and I find it to be one of my favorite countries. Before I turn it over to John, because we have a ton of questions in the queue, and I want to get to some of them, we all know that you're a voracious reader. Give us one book that you would suggest on the Holocaust and one book that you would suggest on the history of the Catholic church that's on your wall behind you.

Daniel Silva: (28:30)
Well, it depends on what kind of Holocaust book you wanted to read, but the Friedländers and ... Gilbert's one volume is a very, very good-

Anthony Scaramucci: (28:44)
Yeah, Martin Gilbert.

Daniel Silva: (28:45)
Martin Gilbert's one volume, he arranges it nicely so that you have a time, the of what's happening. And you can just sort of see the evolution of the Holocaust very clearly in that one book. And then there are numerous ... It depends on how deep you want to get, but in terms of specific things, like I read down to the various death camps and the personnel and how it all happened. I am deeply immersed in this stuff, and you can spend many years reading about it, studying it, if you choose to. But I love Martin Gilbert's book.

Anthony Scaramucci: (29:36)
Yeah. That's a great-

Daniel Silva: (29:36)
And I'm sorry. The second question was?

Anthony Scaramucci: (29:37)
Was on the Catholic church, the history of the Catholic church.

Daniel Silva: (29:40)
Oh boy, I don't-

Anthony Scaramucci: (29:41)
You've referenced James Carroll's book, Constantine's Sword- [crosstalk 00:29:45]

Daniel Silva: (29:44)
But that is not a history of the Catholic church per se. I think that the subtitle of that is the roots of anti-Semitism in the New Testament. I believe that's the subtitle, so that's very specific. But you will actually ... When you read Carroll from beginning to end, you will go on a journey. The way he arranges it, you'll start with John Paul and his important work that he did on this issue, incredibly important work, and you'll just go along for the ride. You'll go back to why the gospels were written the way they were, and the church fathers, Augustine, the Middle Ages. He will take you on a sweeping journey. I cannot recommend it higher than that.

Anthony Scaramucci: (30:39)
All right. Well, I'm going to turn it over to John for questions from our audience. They're all waiting here to ask you those questions, Daniel. It's a phenomenal book. I'll hold it up one more time for everybody so everybody can see that. And I'm on Chapter 56, and so I have to confess I couldn't quite finish it this morning because I got sidetracked by SkyBridge oriented business. What can I say, Daniel?

Daniel Silva: (31:02)
I'm sorry about that.

Anthony Scaramucci: (31:04)
But I'll have it done by this afternoon. Well, go ahead, John.

John Darsie: (31:06)
Yeah. Going back to the topic of the fact that you're a very voracious reader, what type of books did you read growing up, and how did it impact your writing? I know you've mentioned F. Scott Fitzgerald, George Orwell, and John Steinbeck as some of your early inspirations.

Daniel Silva: (31:24)
Yeah, they were. And I read them at an early age. I was lucky enough to sort of read at a high level as a young kid. But my mom was also ... is also a voracious reader. And I used to get into her stuff, including books like Sidney Sheldon and Harold Robbins and commercial fiction. And I still have that sensibility, I think. And my writing is a blend of literary and very, very commercial. And along with Steinbeck and Fitzgerald and Orwell and Graham Greene, I count Sidney Sheldon proudly as one of my most important influences.

John Darsie: (32:15)
So we have a question. It goes back to one of Anthony's earlier questions about the level of research you do. And sometimes in your books, you almost seem to not just talk about things in real time that are taking place in the Middle East or elsewhere but even predict events that happen. How are you able to do that? And are there any specific books that you wrote that you especially enjoyed preparing for and researching for?

Daniel Silva: (32:38)
Well, I mentioned Moscow Rules earlier. I loved doing the research for Moscow Rules. I studied Russian history and Soviet history in college. It was my first foray into using Russia as a villain. It was before the Russians were quite villains, so I was kind of ahead of the curve on that one. A book I did a few years ago called The Black Widow truly forecast and predicted that ISIS was going to be a problem in Europe, that these guys coming out Syria and settling back in Europe that it was only a matter of time I felt before Europe came under attack from ISIS.

Daniel Silva: (33:28)
I started The Black Widow before the attacks of November 2015. As I say in the forward of the book, I almost set it aside because it was just ... What I had written was so close to the way those attacks unfolded, including the fact that I had used Mol and Beck in Belgium as a setting and a place where the attacks were planned from. It was so eerily close that I just almost set it aside. I didn't want people to think that I had watched the attacks and then wrote a book about them, so I explained what happened in the forward and finished the book as planned.

John Darsie: (34:14)
We have a question, and obviously we don't want you to give away any future storylines of any future books, but someone asked how the current discussions in Israel about annexation of the West Bank might inform your storytelling and characterization potentially in the next Allon book? especially given the disparate emotions and opinions on the Barak team of agents that Gabriel works with.

Daniel Silva: (34:38)
Yeah. Who asked that question?

John Darsie: (34:41)
It was Suzan. And I'll protect her identity, but obviously a fan of yours.

Daniel Silva: (34:45)
That's a really great question. Look, I am ... I did something in The New Girl where Gabriel and KBM, as I called him, my Saudi crown prince, are actually driving through the West Bank. And KBM is annoyed at all the settlements that he's seen. And I had Gabriel say aloud for the first time that, "The two state solution was dead, and we have to come up with a new formula." And I believe that is a statement of fact, that it is dead. And I will say that annexation for me is going to be interesting to write about because I do not support annexation, and I'm not sure Gabriel does.

Daniel Silva: (35:45)
His mentor ... We used to wonder what they really thought. Was Gabriel a one-stater or a two-stater. And he was a two-stater at least for a while. He recognizes now that two states are not possible. But annexation is going to be difficult for me to deal with.

John Darsie: (36:07)
The next question, The Order sort of feels in many ways like a book of celebration of core Christian teachings. What are some of the lessons that you want the reader to take away from The Order?

Daniel Silva: (36:19)
Some of the lessons?

John Darsie: (36:20)
Yeah.

Daniel Silva: (36:22)
I think that he first lesson would be to understand the roots of anti-Semitism and to stress how important it is that we deal with this issue honestly and forthrightly, because I am concerned about the rise of anti-Semitism. I'm sorry. The second part of the question was?

John Darsie: (37:00)
Just in general, the book seems very thematic about Christian teachings and just lessons to draw. And you answered that pretty well. And we can move on, or you- [crosstalk 00:37:08]

Daniel Silva: (37:07)
No, no. But in terms of ... Look, in the end, it's a story of a remarkable friendship between a Jewish man of faith and a Christian man of faith. And that these two guys can work together to try to repair the damage of the past. In the end of this book, it's definitely a novel of hope.

John Darsie: (37:38)
We have a lot of questions about what's next. I think a lot of your fans have probably poured through The Order and are wondering to themselves what happens next in this story and what happens to some of your other characters. Have you thought about in terms of whether you're going to write another Gabriel Allon book, you're going to go back to Michael Osbourne? What's the future of Ari Shamron? and other things like that. What is next in your mind after this book?

Daniel Silva: (38:02)
One of the things I do in order to sort of heal from the process of finishing a book is I start the next book right away. And so this is the manuscript for the next novel. It's about 60 or 70 pages that I've got. It is a Gabriel Allon novel. It deals with Russia, and it will contain all of the characters that we've come to know and love and a couple of new ones.

John Darsie: (38:30)
We have a couple questions about Ari Shamron and whether he's being phased out of the books or whether we're going to see him again and again. I don't want you to give away anything in your storylines.

Daniel Silva: (38:41)
Ari is aging, obviously. And I simply cannot even wrap my head around the idea of his death. And so he will continue to occupy the place that he has previously, as Gabriel's father-like figure, his advisor, his mentor. Because of the structure of this novel, he actually doesn't appear in this one. It might be the first one he's never appeared in, but I have no plans to usher him off the stage any time soon.

John Darsie: (39:23)
Another question about your future writings. Would you ever consider writing a non-fiction historical analysis based on all the research you've done of these geopolitical and religious issues, or do you think you'll continue to write in the context of fiction thrillers?

Daniel Silva: (39:38)
Yeah, I will always write novels. I think at a certain point [inaudible 00:39:44] write a non-Gabriel book in the envy-able position that 20 books into the series that they're still on the way up. I sell more with each publication. So I guess it would be publishing malpractice for me to suspend the series any time soon, but at some point I really do want to write some standalone novels, and I'll get to them eventually.

John Darsie: (40:12)
Well, Sandra adores Christopher Keller and wonders if there's any chance that he might appear in a standalone book in the future.

Daniel Silva: (40:20)
Yes. Yeah, I actually have several sort of one sentence outlines, two sentence outlines for Christopher books. I think he's getting fuller and fuller with each outing. I think he's been ready for his own book for some time, but he's really ready for one now.

John Darsie: (40:41)
This is question relevant to us. We recently had our SALT Conference in Abu Dhabi, and we've become close with several prominent Emirati families and officials there about the rise of the UAE, and its warming, and its relationship with Israel, and its general disposition to try to foster collaboration in the region. Do you think Gabriel might spend some time in Dubai or Abu Dhabi in the future?

Daniel Silva: (41:04)
Definitely. I mean, it's not something that I actually write about, but he does spend time in Dubai and Abu Dhabi and Saudi. It's just the most interesting development ... important developments in the last five years, this growing closeness between Israel and to particularly the Gulf states. And that's one of the things that annexation is going to throw a spanner in the works. I mean, hopefully it won't collapse that new cooperation, but I think that if I were the director general of Mossad, and I've got great relations with the Gulf states that I've built up, good relations with the Saudis, I would worry about what annexation is going to mean for those. And then they've delivered blunt warnings about it, that there's going to be blow back if and when the Israelis do move forward with annexation.

John Darsie: (42:14)
So we'll ask you one more question. First I have a comment from Ana. She says, "It's not question, but thank you. My heart isn't ready for Ari to die." So thank you for that.

Daniel Silva: (42:24)
[crosstalk 00:42:24]

John Darsie: (42:24)
Last question. We have several about this that I'll combine into one, but is a movie series about Gabriel Allon forthcoming? Is there any update on those plans that you can provide?

Daniel Silva: (42:34)
Yeah. I sold the book about three years ago to MGM Television with a plan to turn it into a television series. My timing was not so great in that the little scandal known as Me Too blew up in Hollywood, and the rights reverted back to me. My wife is my business manager and handles all the negotiations on this front, and I think that she probably handles ... gets two or three calls a week at a time like this about potential entertainment packages. I had one of the best meetings I ever had last week with a group that wants to make it into a television series and just did the most beautiful outline of how they would do seasons one through five. So I guess I'm cautiously pessimistic that we can get this done.

Daniel Silva: (43:32)
And I'm the problem. I'm very picky. He's a special character. My readers have a relationship with him, and I am obligated to make sure that the character that ends up on the big screen or the small screen is like the one that I write about. I think I've been able to maintain a lot of control in these attempts. I've tried to make it into a series, and that will remain true, but I am hopeful that we can get this done.

John Darsie: (44:09)
Well, if Jamie's managing the process, then we're confident it will get done right, just like your background. So don't try to take credit for your beautiful room rater. It's definitely Jamie's work.

Daniel Silva: (44:19)
10 out of 10. What did Anthony get on his last one? I'm sorry.

Anthony Scaramucci: (44:23)
I got one over-

John Darsie: (44:24)
I think it was one out of 10, Daniel.

Anthony Scaramucci: (44:25)
No, I got one over a Scaramucci, which is one out of 11. It was very disappointing by the way.

Daniel Silva: (44:31)
I'm sorry about that.

Anthony Scaramucci: (44:32)
Which is why I have a HD television screen behind me right now, but I ... Look, I have a lot ... There's a lot of progress happening in my life, Daniel. We'll have to see what happens.

Daniel Silva: (44:40)
See, I got depth and flow, but I don't have that. You have a television set. And you look so beautifully lit and-

Anthony Scaramucci: (44:50)
See, that's a good dermatologist, trust me. But, Daniel, thank you so much for your time. One of the things I want to say to the young people out there. Here is a man that lived his dream. He had a great idea. He idealized his life, and then he did not want the mystery of whether or not he could do something. He actually went out and did it, and he's on 20 books, and he's a legend today. And so for the young people out there, you've got to start one foot ahead of the other and try and live your dreams. And so, with that, Mr. Silva, thank you again for an unbelievable read, and I look forward to seeing you soon.

Daniel Silva: (45:28)
Thank you, Mr. Scaramucci.