Class, Inequality, and the Pandemic with John Ralston Saul


John Ralston Saul, writer and political philosopher, talks to Rob about citizenry and society in light of COVID-19. They discuss models for civic engagement that could better tackle the pandemic, as well as other social problems, such as poverty and inequality.
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Transcript

Rob Johnson:

I’m here today with philosopher John Ralston Saul. He is the former president of Pen International and the author of a number of wonderful books, Voltaire’s Bastard, The Unconscious Civilization, The Doubter’s Companion, and After Globalism, and I’m just getting started. John, thanks for joining me.

John Ralston Saul:

Wonderful to be with you.

Rob Johnson:

These are turbulent and trying times. And people who are reassuring often say, ‘Well, it’s darkest before dawn.’ And my reply right now is that’s right but you don’t know how long it stays dark or how dark it gets before that dawn occurs. And the only thing that I will say as a moderator of this podcast is anybody that pretends to know what the future looks like is more likely a demagogue than an honest explorer. But I’ve been a very, very a big fan and very influenced by your work over the years. And I think it’s really nice to explore with you in this troubling time and try to see a way forward.

John Ralston Saul:

Yeah, I mean, I think just … we have the now and then we have what happens next. We don’t even know what the now is going to look like because it’s moving so fast. But we have to be so, so careful that we don’t become entrapped, that what’s happening now doesn’t entrap us for what happens next. And I think the thing that I see every day is people off-camera to some extent, behind the scenes preparing for the after many in a good way, but many actually in a way which would lead to really destructive things. For example, I can see people preparing for who to blame, who’s going to be at fault in all of this, that which would be really an accentuation of the growing racism that we had before. But suddenly it would turn into a mainstream argument that the other is to blame. And it would be very hard to stop that if we let it get out of control.

Rob Johnson:

Yeah. We see people trying to in essence pretend that the Chinese were attacking the world because the virus began allegedly in the area around Wuhan. We see in a place like New York where the class divides are enormous people worried about those who don’t have health care and some don’t have shelter being guilty of transmitting this virus when in fact perhaps society is guilty of creating a system where certain people are extremely vulnerable.

John Ralston Saul:

Well that is absolutely the case, but it’s also that when you’re in, everyone says we’re at war. Well, it is classic in a wartime situation that everybody’s told we must hang together. But in that process of hanging together, certain people will see an advantage in saying, ‘but not you. You’re not part of the together.’ And it’s that defining of who is not to be included, which is the most dangerous thing that comes out of wars. And so we call it racism, but it’s actually almost like a religious necessity that this is our religion. This is our country, this is our religion, this is our race. And if you’re involved, you’re really to blame for what happened. And this happens so, so easily. And it happens in almost every war at a certain point, particularly when things are going badly. And then people grab ahold of it, who are basically anti-democratic and don’t believe in citizenship.

Rob Johnson:

Yes. Well as you know, and we’ve talked about it many times, I grew up in Detroit, and in 2016 I did a conference on race and inequality in Detroit. A young man named Arjun Jayadev from India and I coauthored a paper. In the paper what we showed was if you look at the geography of where disruption occurs, where economic insecurity, unemployment occur and you look at survey evidence, not surprisingly of economic insecurity, it goes up and down, fits like a glove in these regional variations. But we then went on and created a composite index for symptoms of racial animosity and that in lockstep fit like a glove. In other words, when people are put under stress, analogous to a war of economic distress, they lash out and they find an other.

And the purpose of my conference, John, was very clear, which is Detroit’s decline. It was a majority black city but its decline involved being subject to the pressures of the global economy. In this case the automotive industry primarily and a lot of people of color so that when the stress occurred it exacerbated in the downturn and the social dysfunction in policy responses reflecting that racial animosity created an amplifying deterioration. And if you look at Detroit, like a canary in the coal mine, as globalization has become more rampant and diversity and people of color have become more prevalent, it’s almost a precursor of what not to do in every major metropolitan area in the United States or beyond.

John Ralston Saul:

Yeah. And I think it’s tied really. People use words like plutocrat. It’s not a bad word, but I think it takes one away from something far more formal, which has actually been happening, which is the reestablishment of a classic, if you like, almost pre-modern class system. When you look at tax policy, you look at private education, you look at public healthcare. And it’s different in every country, the way it’s done. You see this gradual return of class as it had existed up until let’s say the first World War.

And right now I think you could argue that the United States is the most class defined society in the Western democracies. When I say that sometimes people look very shocked because they don’t think of themselves. They’re willing to talk about money and plutocrats but not about class as in, I don’t know, at Versailles or something. But in fact it’s really underneath what is happening is this concept of class. And of course in that reestablishment of the concept of class, the kind of work that you were doing in Detroit and the dangers which lie behind what’s happening today become more and more self-evident because it’s not simply money that determines how you will fare in a crisis like the COVID-19 crisis. It’s actually how you’re placed in society, which doesn’t entirely have to do with money. And it partially … for example, it has to do with we spent a long period of time coming out of the Depression in which we tried to put in place decent housing for a larger percentage of the population, and it gradually expanded and social housing and so on.

But then from the 70s on, the globalist period, this was all reversed and it looked fancy on the surface, one bedroom condos, that kind of stuff. But what we were actually doing was taking it back into the old school in which people who were not part of certain classes would live in tighter and tighter urban situations. And of course you only have to wait a short period of time to realize that small apartments in dense urban centers may seem fun when everything’s going well, but as soon as something goes wrong, that’s a disaster. And of course it is always a medical disaster.

And that’s what we’re seeing now. The inability … you and I are probably a hold up reasonably comfortably with space to move around. Well, an incredible percentage of populations in Western democracies are living with families on top of each other, which was what it was like before the first World War. And that is catastrophic. That is catastrophic. So as you said, I mean, we’ve actually designed it so that the people who we wish to push down or exclude, but I would say put in lower levels of the class system, could become the vectors of a medical problem. But that’s only because we organized it that way, without thinking that it could have some sort of impact on us. And the last comment on that is what did people like us do in the old days? Well, what we did was we went to our country estate or our houses were on the higher ground. And so we’re seeing somewhat the equivalent of that, of people fleeing to their more isolated residences outside of the urban density, which they had called for.

Rob Johnson:

Yes. Well, I live in New York City about two blocks away from what are called the Frederick Douglass projects.

John Ralston Saul:

Right, right. I know. Yeah.

Rob Johnson:

And we have apps in this city that give you alerts, Citizen, New York Notify, and so forth. And they show you the geography of where calls or distress. And in my neighborhood right now, the blocks that I live on and around me, there’s not a great deal. There really are almost no reported episodes. And you go four blocks down where lots of families live and lots of people live in very, very small compact high rises. You see episodes almost every day, and we’re still early in this crisis too.

John Ralston Saul:

Absolutely. So just a last comment on this. Admirable people like Jane Jacobs for example wrote, I don’t know if you ever read her, but I imagine you did.

Rob Johnson:

Oh, yeah.

John Ralston Saul:

Yeah, I mean said wonderful things about in a sense the importance of the return of the city state. I mean I knew her but only a tiny bit. But I always felt that yes, this is all true, but you always have to be aware of theories, which in some ways serve the purposes of less admirable people because she was a very admirable person. And in a way, this religion of the return of the city states that we’re all Athens … can be used in this other way, which is it’s very dangerous as it was in the 19th century from the health point of view if you don’t have a balanced middle-class structure, which protects everyone, in which housing is large enough for everyone and which means really good social housing.

But it also can mean, and I think this is something that needs to be talked about when we come out of this, which is it is a terrible theory to believe that particularly in the democracies, but in the world, we’re all held together because of the city states coming back … that New York has more in common with Paris and Toronto than it does with what? With the rest of the population living elsewhere. And that leads to another kind of inequality which we’ve been struggling with, which is that the people in the cities have been developing policies which really don’t take into account what happens to people in smaller communities in more isolated communities.

John Ralston Saul:

So you get things like a wonderful movement in favor of the environment in the cities but then you discover that most of the people in the cities don’t actually understand all the pieces of the environment because they really only know the cities. They don’t know what lies around them. They don’t know what lies in the rural belts or the small industrial belts. And that opens the door to the extremists. That’s one of the things that opens the door to the extremists. The majority in the urban centers haven’t grasped the nature of what life is like elsewhere in their own societies, and they’re just looking for the other cities. So this is going to be something that I think has to be really seriously rethought, when and however we come out of this.

Rob Johnson:

Well I think it is clearly the case that we might call the pressures, the intensity and depth and duration of these pressures is so high now that it will be forced onto the agenda. And it’s nice that you’re raising that awareness of the challenge. You’re adding texture to it when most people are just afraid.

John Ralston Saul:

Yeah. And a lot of that’s going to have to do with planning because we’ve ended up with this certain kind of density which turns its back on the rest of the land, partly because of planning and architecture. So there are just so many pieces that fit together in this that are going to need to be rethought very, very seriously. Or we will in fact be opening the door to a certain kind of authoritarianism, a certain kind of anger even more than today. But as you say, we don’t know. We don’t know where we’re going, to put it mildly. Yeah.

Rob Johnson:

Well John, a great deal of interesting challenge is going to push us I also believe into the realm of dealing with debt. This is something you’ve written about in great detail in what I’ll call the false consciousness that surround debt or the use of debt or the use of scarcity and yet first to fight the pandemic and then to help steer society back onto a healthy trajectory is going to involve a great deal of money. How do you see this unfolding?

John Ralston Saul:

Well I started thinking about this early in the 80s and wrote about it in Voltaire’s Bastards, and it was one of the things that upset more of my friends than anything else. Because I basically said at a certain point history shows, it’s very clear and we have thousands of years of economic history that shows what worked and what didn’t work. People always say things change over time, but lots of things change. But the relationship of how you handle debt and how you handle unmanageable debt has never really changed. It doesn’t matter how complicated the situation.

And the answer has always been from Solon, the great Athenian poet who really turned Athens into what was a democracy for the time, flawed but nonetheless, was he broke the chains as he put it. He was the greatest poet as well. And what that meant was you canceled the debt. And so it’s important to say that no matter where you go in Western society, we always trace our roots back to Athens, and it’s out of Athens comes Western civilization. It’s a slight misreading of history but there you are. And what we never say is that the Athens which we so admired flowered out of the cancellation of the debt of a terrible, terrible crisis, which Solon was brought in to handle. And history is filled with great leaders, Henry IV in France, who got their countries out of crises by canceling the debt.

So I think one of the things which is absolutely clear today is that an enormous amount of money is being spent. And I have to say that many of our leaders around the world have found guts, which I didn’t think they had. Maybe it’s because they failed in 2008 so badly that somehow they all know they failed badly, and they were ready for what would happen the next time. And they’ve reacted really by printing money, all the things which are totally forbidden in the globalist theories of economics. And not necessarily by borrowing money, but by printing money, which is, right now I’m being very simplistic, not the same thing. And I think we’re going to have to be just so, so careful not to be tempted or threatened or frightened by the banks and the international banking, World Bank, IMF, et cetera, and the mainstream of economists from the 70s on who will all want us to convert this into something which has a moral tone to it and has interest tied to it. In other words, oh my god, you’ve printed all this money, how are you going to guarantee it and so on.

We’re going to have to, I think, sit down in an international conference next year? I don’t know. And just decide that we’re going to make the money that we’ve spent into this was what was needed then, and it is not debt and that can be done. It’s really easy. It will not be complicated but we mustn’t allow the people who caused us to fail in 2008 and to destroy stability in Africa in the 90s get their hands on this as a way of making money.

Rob Johnson:

Yes. Well, one of the things-

John Ralston Saul:

Does that make sense? Does that make sense?

Rob Johnson:

Yeah. And one of the things that is of great concern in terms of morale in the United States was that in 2008, as Joe Stiglitz famously said, ‘the polluters got paid.’

John Ralston Saul:

Absolutely.

Rob Johnson:

People with mortgage overhangs and struggling and so forth did not get a writedown or a cancellation, and the too big to fail banks resumed paying bonuses very quickly. And we saw Occupy on the left, Tea Party on the right, lower house of representatives changing to Republican controlled, then the Senate, and Donald Trump was our next president.

John Ralston Saul:

Yeah, I mean-

Rob Johnson:

I can’t claim causation, but the despair was very, very profound, and we’re now in a situation where the cynicism of the public towards this legislation that was just passed, which is why are they large corporations over $500 billion and the healthcare system under $150 billion at this juncture? Especially when airlines and other major corporations have all done stock buybacks-

Their major corporations have all done stock buybacks to enrich the top corporate suite. And so their fragileness and their vulnerability is related to what you might call, how they’ve enriched themselves at the expense of their company and society. And so now the question of are those debts canceled or are those debts owed, I don’t think we can have a uniform policy like a jubilee, because I think some of these problems really have to do with asymmetries in the ability to manipulate government for your own ends and had very little to do with public purpose.

John Ralston Saul:

Yeah. Well, that is going to be the complexity of it. But I do think that one of the advantages of doing this at an international level is it will force people to come to terms with the mistakes that were made and what was done that was right and what was done that was wrong. It had already been demonstrated as you say, in the 90s in Africa, but what 2008 demonstrated very clearly was that the extent to which the economics profession… I take that back. The economics class had developed an idea and convinced society that it was true, an idea which was not based on legitimacy lying with individuals, with citizens in societies. They’d erased this from economic theory. If you look at the people who are supposedly the gods like Smith, they just would go nuts at the idea that you could have an economic theory, which actually wrote out the idea of legitimacy and citizenship.

And so they gave the money to the wrong people. And I remember at the time saying, all over the place people I remember saying it in Spain and be able to say, “This is really, really simple.” And I don’t know the exact figures, they could’ve probably taken half the amount of money they gave the banks. And instead, the American Government, for example, announces on Monday morning as of this minute, all mortgages in the United States, we’re not discriminating, all mortgages are paid off up to $300,000 period. That’s it. And this is how you apply to have it paid off. If they’d done that, they would’ve saved a lot of money. They would have stabilized the working class, lower middle class and part of the middle class who would then have not been frightened and would have begun spending money again.

Rob Johnson:

Right.

John Ralston Saul:

And so they would’ve saved the economy if they’d given money to the real source of the money. Instead of that, they gave it to the people who just sat on it and benefited from it. And as you say, the result was Donald Trump. I don’t think there’s any-

Rob Johnson:

There’s a very interesting book that affirms a lot of what you say by Amir Sufi and Atif Mian. It’s called The House of Debt. And what they essentially assert, I’m using economist jargon, but the people who are underwater in mortgages have a very, very high propensity to consume.

John Ralston Saul:

Absolutely. Absolutely.

Rob Johnson:

And the stockholders and bondholders for major financial institutions have a very high propensity to save. So had we at the time written down all the mortgages that they could have then as you described, resumed spending and obviate the need for fiscal stimulus. But the fiscal transfer would have taken the place of losses at the banks and their creditors and their stockholders would have been wiped out and the public would have then injected money into recapitalizing those institutions.

John Ralston Saul:

Yeah.

Rob Johnson:

You might call transitorily nationalizing them and then spinning them back out into the private sector where the US Treasury received the benefits of those stock sales when they were privatized. It would have involved less government debt and a perhaps more equal distribution in relation to where the melodies originated.

John Ralston Saul:

Yeah. And as you say, who is going to consume? It’s not a small percentage of very rich. They can only consume so much. They can’t really consume very much. Who’s going to consume is sort of 90% of the population. They’re going to consume. They’re what drives the economy. It’s not simply that the other 10% wants to save. I agree with you totally. It’s that even if they spent 24 hours a day, they can’t spend enough to relaunch an economy. It’s the 90% who keep the economy going. And so, as you say, you wouldn’t have needed a stimulus because the stimulus would’ve come from the 90%. But so we have to remember that today when we’re looking at debt and when we’re looking at who is this really about, this is really about that 90% of the citizens and the poorest, the next poorest, the next, and you work your way up.

Rob Johnson:

In 2008 though there was a little bit of a dilemma and I’ll use the word feasible to describe it. Given the distorted political economy of the United States and the power of Wall Street, there was a time when people felt that if you didn’t bail them out, they essentially would take the economy and the wellbeing of people down with them. So they had to be refunded. And the method that Mian and Sufi recommend, and you and I have been talking about, made sense and was equitable, but Wall Street was so politically powerful they could block that, render it unfeasible, and then leave us all at risk of that onset of depression unless they got paid in a way that they found which you might call lucrative or acceptable for the captains of finance.

And I know if I had been working in a job like Larry Summers or Tim Geithner at that time, I would have had to consider feasibility. But the outgrowth of the right thing being infeasible is you need substantial and deep political reform and we haven’t had that.

John Ralston Saul:

No. And I guess you have to ask yourself the question, and I think you might probably agree with this, that coming out of the 70s we gradually put together a system where we tried to deal with what I call the… with the absence of strong growth because we were in a surplus situation in terms of production. We tried to come out of it by talking about two things. One was services and the other was money. And the service promise turned out to be, to a large extent, a way of removing the stability of jobs in the creation of badly paid non-permanent non-guaranteed jobs without all the protections that go with them. Not entirely, but to a great extent. It’s the beginning of families that used to have one income earner becoming two parents with two jobs each sort of situation.

But the second part of it was this, and I read it endlessly, this sort of idea, well, we’re past what you might call physical objects. We’re now into spatial objects and therefore money is now real. It’s no longer the grease that keeps the wheels moving. It is the wheels. And that whole argument led us to this dependence on money as reality, which history shows us is lunacy. But what it allowed was this multiplication, multiplication, multiplication of banking, which was all about money made from money.

So if someone like me says, “Well, at some point we’re going to have to have some crisis which will allow us to reestablish other forms of reality,” which might be, for example, a value added economy that one of the ways that you reproduce growth is you, instead of going to lower priced goods, you actually go to higher price goods, which produces higher wages, which produces a larger middle class. But you have to have that kind of revolution through disaster, I hate to say it, which will force everyone to say money is not real.

Now, so what is happening right now is that government after government from the right to the left are spending as if money is not real. So this is a great sign of health. And so this is another opportunity, like the opportunity lost in 2008 where the feasibility can be dealt with because we have to deal with it. In 2008, if there’d been a clean-out of the banks, some would have survived and some wouldn’t. And I think we would have been very amazed to discover that the impetus coming from the 90% of the population would have more than replaced the artificiality of the percentage of the banks, which were not really producing anything because they were just playing with money on money. It is after all a form of inflation, what they were doing. It just isn’t counted as inflation. It certainly wasn’t productivity. Right?

Rob Johnson:

Yeah. Well, I remember even, how would I say, as this process of financialization was launching, James Tobin, the famous Nobel laureate from Yale wrote a piece, it’s in a book on the efficiency of financial markets. And he was saying in essence, I guess he was insinuating, that with all the whizzbang discussion about financialization and growth and prosperity they would engender, why was the percentage of GDP of financial intermediation going up? In other words, they were taking more of the pie. But the question was were they making enough bigger pie to justify their larger share? And he cast doubt upon that very powerfully in that paper.

John Ralston Saul:

Yeah. Well, he’s a smart man. Very smart man he was. And the answer is they weren’t because it was in a sense, something that turned in a circle. For several decades now, people have been talking about the sort of geographical, almost gated communities where the small group of people who benefit from this sort of inward-looking whirlwind of pretending that money is real and making money from money was isolated from the rest of society. When you did your amazing work in Detroit. I mean, in part, it was about that. Those who were on the outside were on the outside, right?

Rob Johnson:

Mm-hmm (affirmative).

John Ralston Saul:

And nobody was thinking seriously about, well, okay, so if production is changing, it isn’t about us handing production somewhere else and us all becoming bankers, because we’re not all going to become bankers. So how are we going to feed our populations? How are we going to have a decent middle-class, lower middle-class, whatever society? And everybody’s back was turned on that because the elite structures, the class structures meant they just turned their back on the reality of an enormous percentage of the public…

Look, I remember, I mean, you must’ve had millions of thousands of experiences like this. I remember sitting in I think Louisiana or Florida at some well known university that was a big globalist study center at a table where they brought together about 40 of them after I brought out the collapse of globalism. And they were going on and on about how workers are just going to have to become more flexible about where they live. This a sad old, old argument. They’re going to have to go where the jobs are. And eventually I just said, “Okay, so that’s easy. The population in the States, in this area is about 40 million. So you’re saying that about 35 million people have to get up and leave here because you haven’t gotten anything for them here. So how’s that going to work? Their houses are going to be worth zero. So wherever they go, they won’t have the money to buy a house. Maybe not even to rent very well. I mean how does that actually function?”

And the reality is, and I think this is a really important detail, which comes back to the question of class, which is that everybody at the top talks as if everybody is moving around the world, all the time is on the move. Well, it’s true, there are more refugees and stateless people than in living memory. But I don’t think that’s what they’re talking about. The reality is that maybe 2%, I don’t know, one and a half, 2%, 4% move around a lot. Not as retired people on cruise ships, but actually move around doing stuff for on holidays and personal holidays and things. Very small percentage of the population moves around with purpose. In fact, this is an incredibly stable period in terms of the movements of peoples. And so you’re seeing an elite so cut off from reality that they actually think that what they do is what everyone does and it just isn’t true. That is not what happens.

Rob Johnson:

It’s what Samuel P. Huntington late in his life called Davos Man.

John Ralston Saul:

Yeah, Davos Man. Exactly. Exactly.

Rob Johnson:

Well, I think it’s very interesting as we’ve been talking, INET has formed a commission that Michael Spence and Joe Stiglitz co-chair called the Commission on Global Economic Transformation.

John Ralston Saul:

Right. Great. Great.

Rob Johnson:

And I watched the meetings, I kind of administer the whole thing. In the meetings I saw our focus migrate to what I will call the four disruptors and the fifth, the induced disruptor. And the four disruptors were climate, financialization, the deterioration of the nation state associated with globalization, and technology, particularly automation, machine learning. And the induced disruptor, which is right in your breadbasket, is migration. When things become so untenable migration, potentially large scale migration, starts to take hold. And as you’ve done in your group, your work at 6 Degrees where I’ve had the good fortune of attending a couple of times, you’ve talked about, which I might call the rights of those who are being traumatized to migrate and the rights of society, who are assimilating those people to ask for something.

And when I was describing your work and it was explicitly your work to my late friend Robert K. Barry who passed away in December 2018, he was a baker and a political activist, he said, “Rob, African migration is going to teach economists once and for all that people are different than other factors of production.” And I don’t know if anybody could hit the nail on the head more succinctly than that, but all of these disruptors are putting people under pressure and it’s not to go on holiday. And I look at Africa right now, the projections I’ve seen are that a continental workforce or demographic and working age population is at about 1.2 billion now and it will be at 2.6 billion absent a major war or famine or something like that, a catastrophe by 2060.

So basically in 40 years you’ll more than double the African population. And we have a development strategy, what we might call the East Asian Model, was dependent on manufacturing and technologies upending that. Subsistence farming is under tremendous pressure from being in an equatorial region like much of Africa is because of climate change. So nobody has a game plan, but we have a lot more people coming on stream. And as my friends said that the tensions associated with reallocating people is quite different than reallocating iron or corn.

John Ralston Saul:

Well, I guess, see that really comes back to this fundamental thing, the theory behind globalization, which most of the people in positions of authority today, not just in the democracies, everywhere in the world still subscribe to because that’s what they were brought up to believe in. I mean, people actually forget this has been going on since the 70s which means in leadership terms, that’s three or four generations of leaders. And there’s a very deep well of people educated for power at all levels of power who have no other ideas in their memory bank, because they weren’t taught anything else other than the sort of ideas that rose out of globalization, which were really about the dehumanization of the arguments of what does economics look like? What does social sciences look like? What does political science look like?

And so, they’re very badly prepared to deal with questions like what about Africa? What about Latin America? What about parts of our own countries? I mean, in a sense, the Trump phenomenon is a minor example of… Now imagine that unhappiness applied to Africa, right? And you start to see the size of the challenge. So the revolution, and it’s the second time I use the word, the revolution which is required now is a massive change in what is taught in the ideas, which are mainstream in the universities, in the schools, and in the thinking institutions. I mean, INET is one of the places where people are thinking, right? But you will agree that there are so many still places which are in the service of the old ideology and they’re totally unprepared. They’re unprepared for global warming. They’re unprepared for scraping down the financial domination. They’re unprepared for the idea that people are citizens-

Nation. They’re unprepared for the idea that people are citizens and they will not just sit there and take it. So, they’re just unprepared for it. And I give you a very simple example of this. You and I spend quite a bit of time in Europe. The Europeans are convinced that they’re undergoing a kind of invasion of what they call migrants but I would call refugees from Africa and the Middle East. And they’re building walls and fences to keep them out. And in some ways inside their own countries, often they’re doing better than they think they are in terms of inclusion. It’s quite interesting when you get down to the grassroots, often there are places, even like France, Germany, Britain are really don’t doing that badly in terms of people finding their place to come in.

But the overlying attitude is they’re under attack. And so, you say, “Okay, let’s just look at the basics, the mechanisms, just the basics of how you’re handling this, the practical things. How are you handling this?” None of you have a Ministry Of Immigration And Citizenship. In every European country except one, immigration and refugees are handled by the Minister Of The Interior, The Ministry Of Police, of security and order. They’re the people in charge. So of course it’s not surprising that the whole thing is framed as a problem of security and order and attack. They don’t have a powerful minister who sits at the cabinet table and says to The Minister Of The Interior, or whatever they’re called. That’s all very well but there are other ways of looking at this. There are other ways to do it.

They don’t have the policies as a result, they don’t have the civil service as a result. So they can’t actually deal with what’s happening, from what you might call a positive point of view. And that’s not even looking at the really deep issues which you’re raising. That’s looking at just the day to day practical issues of how you deal with people on the ground and that’s what’s causing a lot of the rise of racism and insecurity in Europe is that they don’t know how to handle what’s happening on a kind of a day to day basis without even getting to the big question which you’re raising.

Rob Johnson:

Well, I’ve often said that The Institute For New Economic Thinking is really the study of two failed romances. One is the notion that an unfettered free market will deliver you from evil and the other is that in a modern political economy, if there is a problem, government will fix it. And you can kind of see the romance on the right or a romance on the left about these different institutional arrangements. But in fact, I feel like with climate, now with the pandemic, with the deterioration of the control of the nation state for the people, by the government, for the people that live within it. In other words, if these people are harmed by some kind of shock and capital has wings and money’s kept off shore and technology can fly away, how can the government protect people from these misfortunes? And it all feels frightening.

It all feels like something that would exacerbate what they call the diseases of despair or the kind of outrage politics that Boris Johnson, Marine Le Pen, the AfD and Donald Trump all may be symptoms of. And I find this very daunting, but I think breaking down those romances and getting to a place where both government and the, which I might call institutions of a marketplace are seen again as means to human ends and human ends things like philosophers and theologians reflect upon, and economists sometimes play a trickle in themselves of acting like the means, their institution, their corporation, their stock exchange are the ends that need to be supported. And it to me like we’re way off track and people can smell it. And I don’t know quite how you bring it back into balance.

John Ralston Saul:

If you think of 2008 and this as one, when things fall apart, they never fall apart for the reasons you expect. It always comes out of nowhere. It comes out of absolutely nowhere. That’s what happens. The fact that this is a virus doesn’t mean that it’s unrelated to a financial crisis in 2008. They’re part of the same thing. It’s what happens and are you prepared for what happens, and what caused you to be prepared to run, prepared and did you play a role in it?

Rob Johnson:

Yes.

John Ralston Saul:

All that fits together, right?

Rob Johnson:

Well, it’s almost as if we’re experiencing the fault lines and as they get deeper and bigger and more profound and more frightening, the underlying paradigm is in tatters. The famous philosopher, Jürgen Habermas, I’m paraphrasing, essentially said, “Elites will legitimate if they can, coerce if they have to and accommodate if they must.” But it seems like legitimation particularly vis-a-vis the eyes of young people, legitimation is just not there anymore. And the question is in this frightful time where people say, “The wisdom of crowds can become the madness of crowds,” what kind of structures of governments and democracy and other elements can be brought to bear to, if you will, right the ship and put us back on a healthy trajectory?

John Ralston Saul:

One of the most important things in society is if you reach a point where the language, which is the mainstream language, bears no relationship to reality, you’ve lost the thing that is the difference between us and animals, if you like, is our ability to talk to each other in a way that makes sense.

I’ll give you a kind of strange example of this, and I’ve forgotten the name, but what is the disease when people keep thinking they’re overweight, in fact, they’re getting thinner and thinner and they’re shutting down their system?

Sorry. It’s very common today. Anorexia. So, anorexia is somebody looks in the mirror and they see themselves as fat when in fact they’re rail thin. And it’s caused by a whole bunch of things, so they can’t see reality and words have lost all meaning because nothing that anybody says to them can convince them that in fact the reality is the opposite of what they are. And so you have to get a kind of reality check into the language. I do think that one of the things that has to come out of this is a general admission at all levels that the experiment of globalization as imagined in the seventies and the eighties and the nineties has failed. It is a failure and therefore we must not insist on getting back to what it represented. We have to say the time has come, and this comes back to what you were just saying, the time has come to think of another way of doing all of this.

And it will not come in the form of globalization. That doesn’t mean we have to shut down. That doesn’t mean we have to shut borders, we have to stop trade or any of that. It means we have to be more realistic about human relationships. But if we go on pretending that, “My God, if out of this comes the closing of borders, everything is going to collapse and it’s going to be worse and we must protect globalization,” then we will simply go deeper and deeper into this dark, dark place. There has to be realism. This is a strange thing to say, there are a lot of other economic models out there. There are the two that you mentioned, which is the role of government in service of the people and the role of the market, which is not in service of the market. In the end, it’s that thing about the 90% who drive it. It also in a funny way, it has to be in service of the people. And that’s what Adam Smith said very clearly in both of his books.

So there are a lot of other pieces that could be used. So one of the pieces that was quite successful in the early 19th century and was detested by the right and by the banks in particular was The Cooperative Movement. In a sense it still exists, but it was forced to normalize, to become more and more like the marketplace. Well, there’s a strong argument that would say that this method of doing things, which can do anything as high tech as you want, this is a very interesting other approach. It’s a third piece in the way humans relate to each other.

I think it really deserves a reexamination. For example, I see already in this crisis, examples where the co-op banks are doing much better than the dominant banks and they’re acting in a far more generous way. I mean, there’s one in Canada, which is the big co-op in British Columbia called Vancity and they were already doing all sorts of things around human beings, which are now being brought in by government. But they did it the moment they saw the crisis coming. They acted in a fundamentally different way and I do think that this is a way of moving part of the economy back into the hands of people who are not driven by artificial structures like the stock exchange and that could be very easily done with encouragement from government. If you examine the laws, you’ll find that a lot of the laws that were brought in over the 20th century were driven by the free market to cut back on the possible rivalry of the co operative market.

Rob Johnson:

Yeah. And what happens too, as you get what you might call the accelerated or increasing returns in the money centers, what we call in America, flyover America and the two coasts, you start to hollow out and then disintegrate the connection between those hollowed out markets that have lost their local banks and the big urban centers that you referred to earlier. And then you basically have two countries within the same, what you might call geographically designed country, but they have very little in common with one another.

John Ralston Saul:

Yeah. And I think the fourth part of it is, is what I mentioned earlier, which is a system, and maybe, I’m not sure I’m right about this. You’ll tell me what you think. I feel that one of the outcomes of the last half century has been, or it’s almost more than a half century now, 60 years, has been that more and more of the power to determine where the wealth goes has fallen into the hands of what are called middle middleman or middle women, middle people. That has been a key factor in driving down the money made by the people at the production end, whether they’re farmers or service workers or industrial workers. Yet at the other end, on the other side, you have this sort of obsession the capitalism has two purposes. One is low costs and high profit. And this is all driven by the dominance of the middlemen in the economy, which has become far, far bigger than it’s meant to be. So it sort of drags its profits out of both sides in a way.

Rob Johnson:

And it becomes impersonal and mechanical, sensitive to what you might call human aims goals or alleviating their suffering.

John Ralston Saul:

And because it’s a middle man structure, it has no real limitations in size. So it’s like going back to the worst of mercantilism. I’ve often said, we’re not in a capitalist era, we’re in a mercantilist era again, but this is the worst of mercantilism. This is absolutely the disastrous part of that old system, which capitalism in a way was created in part to deal with. And I think that we really have to look at this problem of the dominance of the people in the middle of the economic relationships who are not actually producing or consuming themselves, and we have to think very seriously about what our … I always think in military strategy terms. The way you win a war is by looking not at the tactics, but at these key strategic points which can turn battles.

The key to turning that battle really is, for example, something like the value added argument. Why would it make any sense at all for agricultural products to be cheaper and cheaper and cheaper when you know that the effect of that is to make it impossible to produce quality agricultural products and for farmers to make a living. I mean, you say, “Why is there a high level of suicide among farmers? Why is there unhappiness in the farmlands? Why are they selling their farms to large middleman?” It’s because the prices of the goods are too low. People say, “You mean you want to put up the price food and what about the working class?” Well of course, but the same applies to all the goods that this obsession with getting the prices down has the direct impact of impoverishing everybody who works.

So, it’s the Walmart impoverishment cycle, circle cycle. And I think we have to look at that. That’s a philosophical problem. That’s a problem for real economists who think about how would you do this? And I can imagine how it can be done very easily by starting in certain sectors that are not too complicated and showing how it would work and I think you would find that you would be relaunching the economy in a very new way with a new kind of growth. If there was much more talk about how do you build in value added into production and therefore into the salaries of those who do the producing.

Rob Johnson:

Yep.

John Ralston Saul:

I don’t know what you think about that.

Rob Johnson:

I think that’s an important rebalancing. What haunts me is that I see this notion that a capitalist system derives its moral authority from being embedded in a democracy, but the capitalist system starts to devour things like education systems and deepening the despair of people where the people who allegedly govern things, meaning the body politic are less and less able to do so. Where those people are fed, what some call fake news. I just did a segment with David Michaels the other day whose book, The Triumph Of Doubt about dark, dark money and the attack on science or Naomi Oreskes book, The Merchants Of Doubt, which profiled the relationship of information to climate change following the playbook of the tobacco industry.

In America we have a particular illness of of money politics where they don’t even care what the right thing is. It’s whether they get fundraisers done so the politicians can survive because they have to spend on media marketing in the channels which are essentially television radio thing, where the licenses are granted by the body politic. And so you have this very confused situation where if concentrated power doesn’t just take over the democracy, the building blocks of a healthy democracy, the building blocks of an education curriculum, that is how would I say, infused with the humanities. These things are being torn apart in the name of technical efficiency in the kind of abstractions like you refer to in finance. It’s hard to see the way forward. First you have to diagnose the maladies and then put together visions of things that are much more wholesome. I will say you have been a leader and a beacon for a very long time in diagnosing those melodies and hopefully in your forthcoming four or five books in addition to diagnosis, we can you use your wisdom to prescribe our remedies?

John Ralston Saul:

Well, the education piece is such an important piece. You do see the universities losing their way in part because they’ve been dragged into a kind of, United States is a bit different because of course you’ve always had these private universities. My sense is that one of the tools, the strategic tools, if you like out of this, is perhaps the time has come to say that we can no longer have private universities. If you have only public funded universities, there are all sorts of ways of doing that, they’re not in the hands of government. It can be done by nonprofit structures which are very broad and which do not allow rich individuals to design what will be taught in the universities because they’ve given money to them. And, but-

… or it’s just because they’ve given money to them. But you have to look at each of these pieces and say, how did we slip into this place where courses are being taught in a way which resembles the money that was put into the universities. Now in the United States this would be, all I’m saying, would be a horror, because you have such old private universities. But the crisis we’re in now is so great that you have to actually look at the pieces that can be radically changed in order to change the direction that we’re going in. Because if the universities continue to go in the direction they’re going, they’re feeding the problem.

Like people say, “Oh, well Harvard, Harvard is such a fabulous university. The Harvard Law School is the greatest law school in the United States, maybe the greatest law school in the world.” To which I reply, “That’s funny. The United States of all the Western democracies has the most disastrous legal system.” You’ve got 2.3 million people in prison. You’ve got a Supreme Court which doesn’t function. You’ve got a legal system which has allowed money to take over your democracy. It’s the most disastrous legal system I can think of in any Western democracy. So is Harvard responsible for that disaster? Because if it’s the greatest law school, it must be responsible in some way.

Rob Johnson:

Well, if it’s not rebellion it’s complicit, right? Yeah.

John Ralston Saul:

Yeah, it’s complicit. You start looking at, “Well where are the graduates of our Harvard Law School going? What are they doing?” In other words, you have to look through the structures. You have to look at reality. They’re producing people to do what? Are they serving justice? Are they serving justice, which is the purpose of law? The purpose of law is not to serve banks on Wall Street. It’s to serve justice. You can see in the rulings of the Supreme Court of the United States since, well, I guess since nominations really started swinging in one direction, which is how long ago now? I guess it’s Reagan.

Rob Johnson:

Yeah, 40 years.

John Ralston Saul:

40 years. You can see that the rulings are not about justice.

Rob Johnson:

Right.

John Ralston Saul:

They’re about advantage.

Rob Johnson:

About team sport of power. Yeah, and it’s a class team.

John Ralston Saul:

It’s a class team, and that’s a corruption. So again, you come back to the universities and you say there’s something wrong with the law schools which are dominated by a couple of law schools which are in private universities. You have to trace it back and make the change.

Rob Johnson:

Yeah.

John Ralston Saul:

Maybe you have to choose a certain area and make those changes. That’s going to require very powerful political changes, but clarity from people like you myself.

Rob Johnson:

Can help. Well, I’m going to say as a guy who grew up in Detroit, I used to travel over to Windsor and places to regain a little sanity in the madness of the 60s and 70s there. As I’m here today, invigorated in conversation with another Canadian, in this case yourself, I was reminded in listening to you talking about the courts and education that Robert Borosage had a panel where Naomi Klein and I were in conversation a number of years ago at the Institute for America’s future. Someone in the audience at the end asked each of us, “If you could recommend one change to repair America, what would it be?”

My answer, sitting next to this brilliant Canadian woman, was “You should make private schools illegal.” Now I’m a father of four children, all four of whom have gone to private schools, but I feel that in our politics, private schools and private universities are like an escape hatch. They allow you not to attend if you’re a wealthy, powerful, committed. They allow you not to attend as much as you should to creating a rising tide to raise all boats. I hadn’t thought of that conversation in years until I was listening to you just now. So I think there’s something awful good about what you Canadians do to my spirit in giving me direction.

John Ralston Saul:

Well, I mean that … sorry.

Rob Johnson:

Go ahead, please.

John Ralston Saul:

That issue lies at the absolute center of it. The argument about healthcare is an outcome of the lack of an argument around education. I think it’s very important to think that, to a great extent, public education was built in tandem with democracy. It was always believed in the majority of the Western democracies that public education was the key to strong citizenship, and the rise of private education was always going to be, was a disaster, was going to be a disaster for the very simple reason. It’s really what you’ve been saying, which is that once the elites are no longer in the same schools, more or less as everyone else, they don’t know what’s going on and they don’t care. So anything they can do about the public good is done in an old aristocratic way, which is, I wonder what it’s like down there in the village school.

Do we need to do anything to help those poor people in the village school? I’m exaggerating, but it’s part of that old class tradition and I think it’s absolutely true that I would say if you look at it strategically, where do you start? You start with education, and it’s all about public education. If the elites are in the public system, being educated in the public system, (a), the public system will be strong, will be very, very strong. They’ll make sure of that, and (b), there will be a different conversation happening between the kids. It won’t be perfect, it won’t be ideal. There’ll be all sorts of things that there are better schools than other schools and it depends on where they are. Nevertheless, there will be a real conversation and that conversation becomes the basis for what you do in your society.

I think you are absolutely right. I think that is exactly where I would start if I were to rebuild. You don’t start by getting money out of politics. If you do the education system right, nobody will. Those kids will not want the money in the politics. It’ll change the conversation.

Rob Johnson:

Also, I’ll give a nod to someone. I once made a video with Anand Giridharadas, who’s book Winner Take All Philanthropy, and the subtitle is The Elite Charade of Changing the World. That the philanthropy done from that distance on high, like you described in the aristocratic way, it doesn’t have the intensity. It can abide by taboos, but if your own children are in those schools, if your own children are in those hospitals, then you’re inspired. And instead a distant class is allowed to decide what the public good is. The people are, how you say, remain disenfranchised. I think reforms of philanthropy, reforms of education, underpin what we can do.

There are wise people, there are well intentioned people, very well intentioned, very wealthy people. But how do we get the balance in a system where we remain sensitive to humankind and its needs? I think we’re being what you might call, there’s a call to action around us right now in this pandemic brings, and it’s dreadful as it is, it may be an opportunity for people like yourself to advance your influence and inspire some of these much needed reforms.

John Ralston Saul:

Well thank you very much. I mean, I think that if you think that 2008 and this pandemic are part of a same crisis, because unresolved and how will we resolve this, how will we come out of this? This is, in the midst of tragedy, an enormous obligation. Obligation is always about what can we do, all of us, to see that where possible we come out of it better. A lot of it’s going to be about language. A lot of it’s going to be about the public argument and the way we talk, and we have to be both careful and determined and not defensive and not reactive but very creative. It has to be about a form, a form of what I call responsible individualism, which is about the intelligence of the citizens of the citizenry and the courage of the community.

It has to be in that format, otherwise we’ll fall back into where we were, which is kind of an old fashioned 18th century battle in English style between the Whigs and the Tories. So the good people who are doing good things are the Whigs, and then the bad people who are doing bad things are the Tories. We know what that looks like. The way out of that is public schools, public universities, public healthcare. Not to give government power. None of this has to be in the hands of government per se. It has to be in the hands of the community. I do think, and I don’t know where we are, Rob, in terms of time in our conversation, but I do think that we have to think about how do citizens find their place in all of this?

One of the greatest failures of really since 1945 was repeated technological breakthroughs. Galbraith wrote brilliantly about all this stuff and was spat upon for doing it. But all of those breakthroughs gave individuals, citizens, more time, should have given them more time and more money. In other words, the pie should have been divided up in a way which would have provided not a rich/poor divide, but a greater division of wealth among people or sharing of wealth. The technologies really are only dumb machines and could easily have been used so that every one of us would have a higher income and work less. That’s what the technology means. Higher income, work less. What do you do with the extra time? You don’t send people off on cruise ships, for Christ’s sake, to die.

Rob Johnson:

Gaines had an essay called Economic Possibilities for Our Grandchildren. I remember him more time at the arts, more time with each other, more time learning how to cook.

John Ralston Saul:

But I would start somewhere else. I would say all that free time, which was essentially inflated away, wasted by the way we allowed the economy to be restructured so that the money was not shared. The first place you start is by saying this has been a great victory, these technological breakthroughs, a great victory for civilization, for thinking, for imagination, and that comes out of the citizenry. Therefore, the first thing to be done with the spare time is more citizen involvement in society, the breaking down of how things are run so that citizens have a much bigger role. That’s got to do with public education. That has to do with healthcare. That has to do with the concept that there used to be, between the Whigs and the Tories, there was the concept of charity, and the churches. The concept of the charity.

I’m not talking about charity. I’m talking about citizen involvement, which is volunteerism. There’s a great misunderstanding today that volunteerism and charity are the same thing. They’re not. Volunteerism is an engaged citizen and that spare time, which we should have had had we not been fooled into allowing the benefits and the structures to be kidnapped in a way, that spare time is not spare at all. That is the time desperately needed for citizens to engage in their societies and to do things with each other, to strengthen their communities. People are trying, but imagine if the division of wealth and the … if we stopped saying, “Oh my God, what are they going to do if they have a 35 hour workweek?” Saying, “Well actually what you do is you increase radically what’s expected of all of us in the area of the public good.” That’s a turning which could be still taken, but has not been taken.

Rob Johnson:

Yeah. I think without taking that turn and staying on the trajectory we’re on, I see more and more deepening of despair. I had a group of Scandinavians come to see me in January of 2019, and they said, “Mr. Johnson, we used to say that Europe was sclerotic and that the US had the right growth model because you made everything, what we’ll call in economics, the supply side, all the factors of production, et cetera, flexible so you can reallocate them and everything would, how you say, be reallocated to its highest and best use, and that we were sclerotic.” But he said, this gentleman says to me, “The growth model has changed because technology is pervasive and now more and more people are afraid.

“In Scandinavia we love the robots because we don’t project jobs. We protect people. We protect people’s health, their children’s education, the knowledge they’ll have a pension and that they matter. We all celebrate the possibilities of technology. In the United States, the despair and the lack of help in transition and the protection of money has led to a place where your society is breaking down and you will no longer be the model of growth and prosperity.”

I found their conviction very, very passionate, very vehement. As an American trying to restrain my pride, I’d make a little comment like, “Well, we have a very diverse society and a big geography in many sectors, and you’re small,” but I think they were onto something about how you treat the economy and how you treat society. My friend at Berkeley, a wonderful political theorist, Wendy Brown, wrote a book three, four years back called Undoing the Demos and how the commodification of everything was tearing apart our consciousness.

We were creating a false conscious scoreboard of what was good and what was bad, and devastating the arts and devastating education and devastating people. But what these Scandinavians were saying is we’re now even devastating our capacity to have growth because we’ll engage in a pessimistic, despairing politics that freezes things and will no longer be able to take advantage of the potentials of technological change.

I don’t know, John, we’ve been exploring for quite some time today. I don’t know where we’re going, but I surely appreciate being there to excavate with you and your sensibilities and your vision and your insights. Like I said, at much earlier age, they were giving me guidance in reading and I feel very fortunate to be in conversation with you today.

John Ralston Saul:

Can I just say that as a foreigner, but the only country that the United States has this, what is it, 6,000 kilometer border with, that I feel that the United States has got trapped, has trapped itself into one option, which doesn’t actually represent its own history. It represents only one part of its history. There’s always been a struggle in the United States between these two parts. The other part of American history is this part of generosity, of imagination, of inclusion, of remarkable ideas of relationships between human beings. That has been in the last 50, 60 years put at great disadvantage and now it’s acting as if the United States was always that and only that. It was always dominant and it simply isn’t true. This is a historical lie and it denigrates what is so exciting and has historically been so exciting and remarkable about the United States.

In a way, I think from the point of view of your situation, we’re all in interlaced, but from the point of view of your situation, a large part of the battle is reminding people that the United States has several traditions within it. What people admire in the United States is not the cannibalistic tradition, what people admire is the humanist tradition. That’s what made the United States great. That’s what’s admired, and it’s recapturing that which will be, I think, for your particular country, the key element in the struggle that’s going to come out of this crisis.

Rob Johnson:

Well, that’s a very, very hopeful and inspiring thought. I think we should close there. Thank you once again. This has been a delightful conversation and I look forward to next time.

John Ralston Saul:

I love talking with you, Rob, always. So thank you for having me.

Rob Johnson:

My pleasure. Thank you.

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About the Host

ROB JOHNSON serves as President of the Institute for New Economic Thinking.

Johnson is an international investor and consultant to investment funds on issues of portfolio strategy. He recently served on the United Nations Commission of Experts on International Monetary Reform under the Chairmanship of Joseph Stiglitz.

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About the Guest

JOHN RALSTON SAUL is an essayist, novelist and long-time champion of freedom of expression. He is the former International President of PEN International. His works have been translated into 23 languages in 30 countries, are widely taught in universities and central to the debate over contemporary society in many countries.

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