Transcript of An Evening with Professor Jeffrey D. Sachs

Let me just tell you how this whole thing began. Last December 2, I was invited to speak by a junior professor at Columbia and only met her once and she wanted me to go speak on something on US-China relations and the big professor, the university professor by the name of Jeffrey Sachs found out and Jeffrey said, “Oh, I’ll be very happy to interview Ronnie.” The only problem is I said, “Jeffrey, you are big name. And that poor young professor, you know, is finally getting her program with a nobody called from Hong Kong. And I don’t want to disappoint her and you’re too big of a name. So do you mind Jeffrey that you do something else?” And so I hosted dinner with 250 people or 300 people, something like that. And then at dinner at 100 people, and I said, “Jeff, you and I have a dialogue together at dinner and then we will answer questions from the floor.”

And I ended up having the great honor of being introduced, not just in the dinner, but also in the earlier event. Jeffrey gave me the honor of introducing me and then her interim boss, which is the interim president of Columbia University, heard that I was there and she wanted to show up. And the reason is this, she was once upon a time a professor at Harvard Chan School of Public Health. And ladies and gentlemen, Sonia Sachs is a medical doctor with a degree also from the Chan School of Public Health at Harvard. Sonia, you’re good. We know how good it is.

Introducing Asia Society Trustees

Today, before I start, I have to do my duty as the Chair Emeritus of Global Asia Society and Chair of the Hong Kong Center, and that is to let everyone know that there’s a lot of our global trustees and trustees of various centers here. Fritz Demopoulos, you know that he’s from Hong Kong. He’s our global trustee. Serge Dumont, who is just—oh, Eunice, where are you Eunice? Eunice Zander is also on our Zurich Swiss board and also on the global trustee of the Asia Society.

Serge Dumont was a former Global Trustee when he chair and he was a founding chair of our Paris Center. Of course, he hailed from Beijing and Hong Kong. And you know why he’s so smart because he lived in Beijing and Hong Kong for much of his life. Anyway, so great to have you, Serge. We also have a trustee from our Filipino center. Where are you, Myla? Myla, very good. That’s Myla over there from our Philippines center. We have a trustee from our Australia center and that is sitting next to me, Michaela Browning, who also was a former Consulate General of Australia in Hong Kong. And now, she’s a CEO of Brunswick Asia Pacific. But you are based where? In Sydney. In Sydney. Well, you have room to improve. So, Makayla, if you need help, give me a call.

We also have several Hong Kong trustees here. Rona Chow. Rona, where are you? Rona over there. We have two new trustees. One is Pierre. Pierre Geddy, where are you? Pierre, over here. And then also Vanessa. Vanessa? Okay, very good. Vanessa and Ma. So we are delighted to have them. We should welcome them all.

Beginning the Dialogue

We’re here not for the food, although you will get food, okay? But if you don’t mind, in order to maximize time, with your permission, Jeff, can I suggest that we will just start the discussion right away? And then we will just let them start serving. They are very good, very professional, so they won’t make too much noise. And then we’ll just carry on our discussion today.

JEFFREY SACHS: That is perfect. Good. Thank you. Thanks to all of you for letting me join you. What a great evening.

RONNIE C. CHAN: I think it is our honor to have you here in Hong Kong. Although I’m not sure if you are as welcome in The United States as in Hong Kong.

JEFFREY SACHS: That is why I am here.

RONNIE C. CHAN: Now tell us, why are you not as welcome in The United States? Let me just tell you, give you a little bit of the land, okay? I don’t know every last one’s view here in this table, but I can tell you that most of them really, really appreciate your view. They follow your YouTube and whatever. They said, this is the only guy who tells the truth in America.

Now, obviously, it’s different to different people because Trump gave us an alternative truth. So I do appreciate some of the things that man is doing. But why are you a minority in America? Do you think that you will one day become the majority? Not that you care. I know your intellectual honesty. We have known each other for a long time. So tell us a little bit about where do you sit vis-a-vis The United States?

Jeffrey Sachs on U.S. Foreign Policy

JEFFREY SACHS: Thank you, Ronnie, and thank you for continuing our conversation, which we began in December. And I know we have some future events together as well.

RONNIE C. CHAN: Yes. He will be the speaker of the Asia Business Council in New Delhi next month. And our Executive Director, Janet Powell is here.

JEFFREY SACHS: Good. Yes.

RONNIE C. CHAN: Together with your friend, John Whitehead, I’m one of the founders.

JEFFREY SACHS: I know that. So this is a wonderful work in progress, this discussion, because every day brings new interesting things to talk about. Usually, during the day, about six interesting things. And that’s part of the problem right now, which is we have a hyperactive Washington that is a little bit confused in what it’s doing and not really so much wanting to think carefully about what it’s doing. So this is really the problem.

RONNIE C. CHAN: Although I understand that Donald Trump actually shares a lot of your view, which is a minority view so far.

JEFFREY SACHS: He shared a couple of my videos, which I thought was a good sign, but I’m not sure if it’s a sign of anything actually consistently. But we’re still waiting to see. This is the early days of the administration.

I’ve not been a happy camper about The United States for a while, so this is not in any way partisan or particular to the Trump administration. To my mind, The United States has been not the most constructive actor in the world scene for several decades, actually. I have been a bit chagrined really for thirty years about American foreign policy, and mostly because I saw in a very personal way and also a professional way how many opportunities for peace The U.S. squandered needlessly.

I was an adviser thirty-five years ago to President Gorbachev on the economic reforms of the last moments of the Soviet Union. And when the Soviet Union went down, President Yeltsin asked me to be an economic adviser for his economic team. I can tell you without question, without any doubt whatsoever, thirty-five years ago, we had the chance for sustained peace in this world without any fundamental conflicts. The Russian leadership absolutely wanted it. They sought it. They wanted it in a very practical way.

And the problem from my perspective, which I only understood step by step over many years, is that The United States didn’t want cooperation, it just wanted victory. It wanted its way. It wanted what came to be called the unipolar world. The idea that with the Soviet Union gone and China not on anyone’s radar screen back in the 1990s in geopolitical terms, The United States ran the show, so they thought. And I basically lived through professionally close-up more than thirty years of The United States trying to run the show.

And it has not gone well. It’s been nonstop wars. It has been unnecessary provocations. In the case of Russia, I’m definitely a strong minority view together with my friend, John Mearsheimer, that what happened in Ukraine was basically provoked by The United States over many years. I saw a lot of it close-up. The war in Ukraine could have been avoided easily on countless occasions. It could have ended immediately in March 2022 because there was actually a peace agreement that was on the verge of being signed, and The United States stopped that too. So these are tragic mistakes of foreign policy.

When it comes to China, I am of the view, for those of you who have happened to see me in one way or another on video, for example, I’m basically of the view that China’s big mistake vis-a-vis The United States was to be too successful and that China has not done anything in my view, and I mean anything other than what a normal major country would do to provoke the kinds of reactions and attitudes from The United States. What happened in The U.S. was that with China’s rise starting around 2014 in a very methodical way, The United States came to view China as not only a rival, but therefore as an adversary because it was a rival in scale, in success, in technology. And what The United States wanted was primacy or hegemony or unipolarity, and that all of what has happened is basically an American reaction to China’s success.

If you want to see that very well documented, I’m sure many of you know the paper, but there’s a very, very clear, vivid explanation of American foreign policy in a paper in 2015 for the Council on Foreign Relations by Robert Blackwell and Ashley Tellis called something like a grand strategy towards China or a revised grand strategy towards China. And it spells out in completely vivid terms what has ensued for the past decade. Because what Blackwell, who was my colleague at Harvard for many years and a friend and a very smart person, but I disagree with him on the most basic point. What he writes in that 2015 paper is that America’s grand strategy is primacy and China’s rise is therefore no longer in America’s interest. This is an astounding idea. It’s basically the idea that success elsewhere is disadvantageous for The United States.

If you take that view, you are bound to live in a world of nonstop conflict. If the advances of other places are to your detriment simply because they are advances, you are condemned to view the world in conflictual terms. But Blackwell says in the first sentences of this essay, America’s grand strategy has always been to be number one, and therefore China’s rise is not in America’s interest. And what he and his coauthors spell out is a list of eight or 10 specific steps. We should make trade arrangements that exclude China.

This is extraordinary. This is what President Obama tried to do with TPP. We will have a trade arrangement in Asia without China. Duh. Sorry. Look at a map. Look at some data. This is not a good idea. And the list goes on. Build up the military around China’s perimeter. Not a good idea for peace. Put on barriers to export of technology. I’m talking about 2015. This already started ten years ago. And what’s very interesting about the Council on Foreign Relations documents is that they are not statements of views, they are explanations for the community of the Council of U.S. Policy. So this was not a view of Blackwell, should be done. This was a description of what American policy would be. And it’s been carried out pretty much systematically since then.

So if you point these things out, you’re viewed as a little bit impolite in Washington. So my lack of welcome to Washington goes back many years. But I can tell you the feeling is reciprocated. I don’t even want to go to Washington, so I don’t, except on very rare occasions because there’s nothing to do there. It’s not constructive. You’re not going to find answers. There’s no one really to talk to. There is a view.

Well, brings us up to the current situation because things are changing, but it’s quite complicated how they’re changing. I don’t think they’re changing in a stable direction or a stable approach.

Trump’s Foreign Policy Approach

There’s one thing that I very much appreciate of what President Trump is doing, which is to try to end the war in Ukraine. I think the war will end because it can’t really continue without American support of Ukraine. And I believe despite an administration that reverses policies by the hour, that there won’t be a reversal of US policy vis-a-vis Ukraine because no segment of Trump’s movement has any interest in putting more funding into Ukraine. And the fact of the matter is, while the early days of the Trump administration have been consumed with foreign issues, the next months will be consumed with domestic fiscal issues. And asking for more money for Ukraine would be deeply perturbing to a very unpopular fiscal agenda that Trump is going to push through successfully in the next months, and supporting Ukraine would prevent that from happening.

That’s the only part of the Trump agenda I like. So they don’t like me probably, although I have some friends inside the government and had friends inside the previous administration and the one before that and the one before that. But we’re seeing in other parts of the world tremendous instability and lack of strategy.

In The Middle East, basically, it’s unfortunately, and to my chagrin, it is probably a doubling down of The U.S. backing of Israeli mayhem, which I regard as a genocide and I regard as absolutely destructive of peace in the region. But I don’t see Trump changing that. It’s still early days. He once did tweet something of me calling Netanyahu an SOB, and Trump posted that. And then there were headlines in Israel for about three days.

What did he mean by that? But apparently, not a lot because in the last days, we’re back to Netanyahu’s wars everywhere, war in Gaza, war in the West Bank, war in Lebanon, war in Syria, war in Yemen. And what Netanyahu wants is a war with Iran, which could be a world ender, actually. I don’t think we’ll go to war with Iran, but the Israeli mayhem is not being stopped by Trump. It’s actually rhetorically being encouraged by Trump.

So that’s a big disappointment for me. When it comes to trade, I don’t have to say more than Trump is uniting the world, because there is not a single place in the world that is satisfied with this new tariff regime, including inside The United States. It has succeeded in stopping the stock market rally and reversing it. It has succeeded in lowering automobile company share prices yesterday I didn’t check today, but down 5% yesterday when the automotive tariffs were issued. It’s a completely ignorant economic policy as far as I’m concerned.

We can talk about it, but I see no merit whatsoever on any count to the protectionism that Trump is trying to bring about. So there, the whole world is unhappy about it. And then when it comes to Asia, we’ll discuss this. Probably Trump and the administration probably want to avoid open conflict with China. Whether they are clever enough to do so, I’m not sure, but there’ll be a lot of noise and instability.

I predict I’ll make a prediction that is clear and therefore could be completely proved wrong. So I don’t believe there will be any grand bargain or any great agreement between The United States and China on anything for years to come because I think the U.S. Administration is too unstable for anything like that because any serious agreements require consideration and strategy. I, for one, don’t believe that we have any of that in Washington now.

I think we have improvisation, no role of Congress, basically a one man show, executive orders, mostly illegal, court challenges that are proliferating by the day. So I think it’s a mess, not a strategy. Well, I hope that explains why I’m not welcome in Washington.

America’s Domestic Situation

RONNIE C. CHAN: I don’t think I would let you eat too much, Jeff. Afterwards, I’ll take you to McDonald’s.

Just a couple of questions. So where do you think America is heading? I agree with you from my personal perspective that America has been more wrong than right in terms of its foreign policy for the last couple of decades. So where do you think America is heading? Let’s not forget the domestic issues.

And the domestic issue I’ve written about this that The United States cannot beat China. I’m trying to give them a few minutes to eat. The United States cannot beat China. China for sure cannot beat America. So it’s not a matter of who will win.

It’s a matter of who will not lose. And if anybody loses, I don’t think it will be because of the other party, but rather it will be because of the domestic situation. I don’t know if you agree with that. So how do you see the America’s domestic situation? After all, you are an economist by training and of course, you have gone into many other things.

JEFFREY D. SACHS: The US does not have a functioning political system and has not had a functioning political system for thirty years or so. And the, this is very interesting, American society really has great strengths, many centers of capacity in business, in academia, in civil society. And so even though our political system has badly malfunctioned, the country has done okay for the last thirty years other than troubles caused by directly these foreign policy disasters. But the country and the economy has gone on.

Many important innovations have occurred. Many great discoveries have occurred in the academic community and scientific community. So you see a country with great strengths. But for me, the remarkable fact is how poorly the political system has functioned consistently for thirty years. And I’ve tried to understand that, and my conclusion is that there are two things deeply wrong with the American political system.

The Pay-for-Play Political System

One is that it became a pay for play political system to a shocking extent.

RONNIE C. CHAN: What?

JEFFREY D. SACHS: A pay for play. That it became a corrupt political system in which campaign contributions translated into public policy. And this was not always the case.

The role of lobbying changed in The United States starting systematically in the 1970s. And there were a series of Supreme Court rulings, the most famous of which is Citizens United, in which the conservative Supreme Court ruled that limits on campaign financing were simply unconstitutional. Because the idea was, and the judges were very explicit about it, giving for campaigns is speech, and free speech predominates any interest in limiting campaign financing. This was a doctrine put forward by one judge, Lewis Powell, and it’s a very interesting history, because Lewis Powell was a corporate lawyer. He worked with the U.S. Chamber of Commerce.

And in the late 60s and early 70s, he said inside the business community, all of this environmental regulation and Ralph Nader and consumer interest groups, this is killing us. The business community has to retake politics. And on that basis, a famous memo that he wrote, he caught the attention of Richard Nixon, who put him on the Supreme Court.

And a few years after that, he wrote the first opinion ending limits on corporate campaign contributions. It was a concerted strategy, and several decisions basically eliminated any boundaries of giving. It when you do this, you reach a kind of caricature. Elon Musk is a caricature of this. The richest person in the world who funds the campaign of the presidential candidate and who says to congress, anyone that steps out of line, I fund opponents to defeat you.

And so you can’t get more vivid in the plutocratic element than having Elon Musk as your prime minister, which is his informal position right now. And this is how American politics really degenerated terribly over a thirty year period. I once was in the presence of a Democratic Party member of Congress, and I asked her about some terrible decision Congress made on health care costs, and she literally put her face in her hands and said, the lobbies, the lobbies. It became overwhelming, the money play.

And because of this, all of the issues of American society of inequality, of the widening gaps between different classes in America, of the growth of the poor underclass, of the epidemics of deaths of despair that you all know about, which are very serious afflictions of American society, not one of them was addressed in public policy.

There has been no effort once in thirty years to address inequality in The United States, to address we have an epidemic of opioids and everything else. Who gets blamed? China, of course. China, Fentanyl, Fentanyl precursors. Who takes the opioids? It’s Americans. So this is an example.

Climate change is another example. We have not had one consistent policy on climate change for forty years because of the big oil lobby. It’s not even subtle.

And there was a very humorous sting by a kind of Greenpeace organization, which called the ExxonMobil lobbyist and said, we’re headhunting, we think you could be senior position. And so they filmed the ExxonMobil lobbyist in a fake job interview, and they asked him, how do you operate? And he said, it’s easy. If any trouble arises for the industry, I just call our senator. Who’s your senator? Joe Manchin, of course. Joe Manchin is the senator was the senator from West Virginia. He owned two coal companies personally. That was the family wealth. And he was basically there in his position to block any climate change action for thirty years.

So that was one thing that broke American politics. It just stopped being representative of basic issues. Until this day, if you observe the Trump administration, there’s not a single moment of discussion about poor people, about their needs, about the role of government. In fact, the whole attempt in the next few months will be to destroy any public services for the poor, especially health care. It’s amazing. But this is Elon Musk running the show. He doesn’t have to worry about his health care costs. So this is one point.

The Security State

The second point that destroyed American politics was the security state. We became a national security state back in 1945, essentially, after World War II, and especially in 1947 with the National Security Act, which established the CIA and the Defense Department and the other institutions of the security state.

America has, as everybody knows very well, military bases in 80 countries around the world. Can you imagine? Never in history with the even the British Empire, of course, it was a different era, didn’t quite have this. And so this is American government is a military machine all over the world, plus a secret army, the CIA, whose job it is to overthrow governments that are deemed to be inimical to U.S. Interests.

And the CIA has engaged in probably about a hundred regime change operations around the world since 1947. I’ve seen some of them with my own eyes. Literally, the CIA carrying off heads of government. One was Aristide, who I advised from Haiti, and they took him away in an unmarked plane and flew him to Central African Republic in broad daylight.

And by the way, when they overthrew him, the New York Times wouldn’t even run a story about it because this is how the security state operates. It wasn’t deemed to be newsworthy that The United States or it wasn’t deemed to be fit to print, let me say, that The United States had overthrown a government in our hemisphere. Of course, it had done that repeatedly, but when I called the reporter, she told me that the editor was not interested in the story.

Okay. My point is that the government you can’t run a democracy and a security state the same way. Eisenhower told us that on 01/17/1961 when he said, beware the military industrial complex. Believe me, since then, it has only grown to gargantuan proportions.

If you look at this leak three days ago of the attack on the Houthis, okay, there are several notable things about it. First, they behave like 14 year olds, up to and including the emojis. Okay? These are children. Second, as they noted, this has nothing to do with the Houthis. This is to send a message. Third, they applauded when they destroyed a building that supposedly included some target, but it killed 50 civilians. And it was all muscles and American flags.

Fourth, this was decided in a completely haphazard way by the White House. Congress had no role. There was no discussion of it. Fifth, the only thing that the politicians find odd about this whole episode, not the bombing of a country in which we are not at war, not the killing of civilians, not the fact that this was I can’t use the right words because they’re not proper for polite company, but not the way to do this. They can’t figure out that something’s wrong.

All they care about is that it breached secrecy. You know what? That’s the least interesting part of this. The fact that you have secrecy that enables random killings of this sort on a routine basis is what’s wrong. We should be applauding the break of the secrecy, but the only thing the Congress and the press itself talk about is the secrecy element.

They don’t talk about how wrong it is to be bombing people. They don’t talk about the fact that the reason for the war in Yemen is that there’s no solution to the Palestine issue. No substance, just a war machine. So these, to my mind, are the two fundamental failures of The United States. We don’t have a functioning political system.

It doesn’t address real needs. It enables one person to decide, we’re not part of the Paris Climate Agreement. It enables one person to break apart the international trading system. This is extraordinary. If you think about it, tariffs, by the way, under the US constitution are the responsibility of Congress because tax authority, going back hundreds of years in British constitutional rule are in the domain of the parliament or the the house of commons.

That’s where parliament came from, which was to limit the tax authority hundreds of years ago. No congressman is objecting to Trump unilaterally setting tariffs. How is he doing that, by the way? It’s completely unconstitutional in substance. He’s doing it because we have emergency legislation that allows the president of The United States to declare a national emergency.

Trump’s Governance and Executive Power

So the tariffs on China are under a fentanyl emergency. Can you imagine how artificial that is, how bogus that is, how it has nothing to do with the issues at hand, but also how not a single member of Congress stands up and says, “You’re taking our authority.” If we had a functioning Congress, a congressman would stand up and say, “This is our responsibility. You cannot appropriate the voice of the people.” This is what revolutions are supposed to be about, that the king of England could not set taxes on the colonies.

That’s how we started. Now we have a mad king who sets taxes day by day, and Congress has no interest in even intervening in that subject. So this is the essential problem. The country works fine on areas where you don’t need a government, but it fails on every area where you do. Our infrastructure fails, the inequalities, the environment, the environmental protection, all of it is failing badly because we don’t have a functioning government in the United States.

RONNIE C. CHAN: Jeff? More reasons why they don’t like me in Washington. Jeff, you have been a friend for many years. Sonia is not the biggest lady I’ve seen. And is your life ever at risk?

JEFFREY D. SACHS: I’m just asking on behalf of others. Maybe from Sonia. Then you’re in good shape. But I don’t think so. I think the capacity of the U.S. Government to utterly ignore me is inexhaustible. And that is actually, in my view, really the truth. If I were a student on a student visa, I would be dragged out of our house, no doubt, because that’s what’s happening to our students right now day by day.

I don’t know what will happen in the U.S. in general. It could get worse. It really could get worse. I’ve used, since I’ve been in China for the last week, I have used semi-jocularly, but not entirely, the cultural revolution meme. We are in a bit of a cultural revolution in the United States. It’s played as culture wars, but basically, we have a leader who wants to destroy parts of government. This is clear. This is Elon is doing that work. What the real purpose is, is not completely clear.

The U.S. Budget Crisis

Maybe I’ll just mention actually one very important point to understand. I think everybody knows it, but let me emphasize it. One of the core points of failure of politics in the United States is the budget, because if you are governed by lobbying and by campaign contributions, you cannot have an effective fiscal policy.

On the one hand, you have a population which votes, and so you need somehow to not have complete turmoil. And so you can’t really cut so far Social Security, for example. You have not been able to cut Medicare or Medicaid. You can’t stop paying interest on the debt. And they don’t want to stop the military, which is about 3.5% to 4% of GDP if you include everything.

If you take those items, the pensions and including the various kinds of pensions, including veterans benefits and the health care and the interest on the debt and the military, you have roughly 20% of GDP in spending. Our taxes are around 16% of GDP at the federal level. So you start out even before you have any domestic programs at all with a deficit of about 4% of GDP.

Now in our lobby-run politics, the first rule is don’t raise taxes. So the taxes, especially on wealthy people. So the highest goal in fiscal policy of the Trump administration is to extend the low taxes that were voted ten years ago on corporate taxes, which have basically been gutted. We don’t collect corporate tax except in a very small amount now, and they want to extend that.

Now our budget deficit includes some public services also, some little bit for infrastructure, which is falling apart, a tiny bit for housing, some for labor, some for education. And that adds up to roughly another 3% of GDP if you include everything, the judicial system, the public administration, all the infrastructure, all the environment, National Science Foundation, everything except the military, the pensions, the health care costs, the interest costs, and a couple of other mandatory things, all civilian government is about 3% of GDP. It’s not enough. That’s why we solve no social problems in the United States.

But if you add in the parts that they don’t want to cut or can’t touch, plus this meager 3%, you end up with a budget deficit of about 6% to 7% of GDP, which is what we have now. This has been going on for twenty years. So our debt is 100% of GDP and rising. The Congressional Budget Office yesterday issued a new report saying by 2055, the debt will be at 155% of GDP on current policy. So if you keep current policy and just extrapolate for thirty years, we reach 155% of GDP debt.

Trump’s Fiscal Strategy

So what is Trump trying to do? Trump is trying to cut taxes relative to baseline. This is all technical because the baseline includes ending some of the tax cuts from ten years ago, but he wants to extend those. How to do that with such a huge budget deficit? There’s no way. There is no way to do this other than to completely destroy the civilian government. And that’s what Elon Musk is doing day by day. He’s not rooting out waste. He’s just closing the government as much as possible.

The public will hate this week by week, month by month when nothing works, when they can’t get health care, when there’s no one to answer a call for Social Security and so on. And that’s where we’re heading in the next months.

That’s why I was saying you can’t ask for more funding for Ukraine in that context period because there’s really going to be at least a public brawl. Trump will win this budget battle, in my best estimation. It will be brutal and ugly to essentially keep the revenues completely inadequate and brutally slash spending for poor people or even working class people in America, but he’ll probably get this through because it’ll be a straight party line vote enforced by Elon Musk who will threaten anyone who steps out of line.

He’ll probably win this battle, but believe me, you’ll see a very ugly, very unhappy country, a very unpopular government, and nothing’s going to get better out of it because nothing that’s being done is going to make people’s lives easier. Several thousand dollar rise of prices for automobiles is not going to make people’s lives easier. Higher tariffs is not going to make people’s lives easier, and the budget deficit will remain significant.

And this is, I think, what we’re likely to see within a few months. In other words, not a president who is using his vast popularity with the masses to push through radical change, but rather a very unpopular government that is in fundamental inconsistency of policy with what his own voters want. And then what do you do? Well, you can deport more people. You can try to make more noise. You can double down. You can become more authoritarian. I don’t know what will happen, but it will not be a happy course in the coming months.

Regional Outlook

And that’s why I believe on the constructive side, I’m very optimistic about this region. I really am. And I don’t think the U.S. is going to upset anything in this region, actually. And I think we should be clear about that. But I don’t believe in a grand bargain or anything else.

I think the U.S. is mainly to be viewed with some sadness, maybe a little bit of alarm, but not to expect something very constructive because the contradictions are just too large right now, and we need to work out a new political arrangement in the country. And we’re not going to do that simply. It’s going to be many, many years, in my view, before all of these contradictions get sorted out.

RONNIE C. CHAN: Before we leave America and go to other parts of the world, this one, can you, Jeff, comment on the following statement? That Trump probably has a deep fear and worry and recognition that America is no longer the hegemon, no longer the number one player in the world in many areas. Although, overall, I think by far America is still the number one. But the fear in him is perhaps driving a lot of the decisions that he makes. So he’s not speaking out of inward strong belief of their own success, rather it is a strong belief of America’s waning in a relative sense. Is that your reading of the situation?

America’s Declining Hegemony

JEFFREY D. SACHS: It’s a very good question of what Trump himself views and what the political elites view the situation. Marco Rubio said one clear, direct, correct, and honest statement when he said the unipolar world is over. That’s probably the single most important statement that’s been made in the American political scene in the Trump administration. It wasn’t contradicted. No one jumped up and said, “Oh, Marco, you’re too pessimistic,” or “Why are you saying that?”

So I think that there is a real understanding. Yes. There are multiple powers. And, yes, the United States is no longer in charge. I don’t know what implication they take from that and how much Trump’s actions are in some response to that, I think there are several points that do follow that we could trace.

One, as I said, Trump is not interested in the Ukraine war at all, so he would like it to end. He’s in no position to ask for more financial support for Ukraine in any event, so that’s why the war will end one way or another. But he probably also understands we’re not defeating Russia, and so the whole point is pretty useless to be having this war. That’s a reflection of reality, in this sense.

But take another implication of that. One implication is he’d like to divide the spoils of Ukraine with Putin. “You take these minerals, we’ll take these minerals.” So, they’re dividing up Ukraine. Ukraine is the absolute loser in this. This is basically what Trump is doing or trying to do. I don’t think it can work so crudely as Trump believes, but that’s the level at which this is being done. He and Vladimir will divide Ukraine and will end the conflict, and we’ll respect each other on that.

Trump’s Territorial Ambitions

But then Trump is also asking, how can America regain its strength? And he comes up with multiple answers. One answer that he’s absolutely dead serious about is recognizing that because of global warming, ironically, the northern route and the Arctic has been opened up, and the United States is not an Arctic country other than a small stretch of Alaska.

And so Trump absolutely believes that Canada needs to belong to the United States and Greenland needs to belong to the United States. That is not rhetoric. It’s not a joke. It is obscene, but it is not a joke. And the reason that he wants it is that the Arctic has become a strategic part of the world because it’s no longer an ice-bound wilderness. It’s now going to be central for international trade and resource development. And so that’s where that comes from.

So that’s a kind of limited imperialism. It’s a Western Hemisphere imperialism that Trump is actually trying to invoke. Again, I think the US probably will militarily occupy Greenland during his administration. That’s an invasion of Europe. I bet that it will take place. I don’t think the US will occupy Canada. But I do think that with the 50,000 people of Greenland, the United States may just decide it’s going to take Greenland, and that’s that. It won’t stand. It won’t work for the longer term. It will be a disaster, but it could very well happen.

Economic Policy Failures

Trump also, I’m sure, believes that the tariffs are necessary for America to restore its greatness in some sense. And probably what he has in mind is we don’t produce enough steel and aluminum to build our arms industry and so forth, and we can’t compete with China unless we restore basic heavy industry. So I think that is on his mind in the way you’re saying, Ronnie, that this is part of the rebuilding process for the US.

The problem that I have with all of that is I’ve never seen more illiterate economic policy. It’s not even policy. That’s a grandiose term for what passes as a thought process day by day. We have no institutional process in the United States asking the question about industrial policy or strategy, none. We have no planning agency. We have no NDRC. We have no economy ministry. We have no institutional process thinking about America’s economic future because this is not how it’s done in the United States.

The only industrial planning we have in the United States is the Pentagon, and that’s to build F-35s and so on. It’s not to do infrastructure or economic revitalization. So what Trump is doing is complete improvisation. You cannot run a $30 trillion economy on improvisation, but that’s literally what is happening right now in terms of government policy. We don’t even have congressional hearings where ideas are discussed, where experts testify. We don’t have white papers. We don’t have green papers. We don’t have any process of thinking right now. We have edicts from the White House. That’s a very strange way to run a country.

U.S. Foreign Policy and International Relations

RONNIE C. CHAN: Let me change the direction a little bit. I’m with you and John Schmiesheimer by the way, that why should America protest in 1962, the Russian moving the weapons into Cuba? Why is that unacceptable and yet now they are against Russia after Russia warned the West repeatedly not to move NATO one inch to the East as Bill Clinton promised. So I have no problem with that.

But what I do have a problem with is this: I am really impressed how Donald Trump is able to, before the war of Ukraine ended, to become friends with Putin again and shake hands.

I’m not so interested in the personal psychology of it or the social political aspect of it. But what I am concerned is what will that do to the rest of the world? What will that do to Russia? It’s truly amazing. And other people dare not think certain things, let alone say it.

And if you were to say it, people will say you are the craziest guy and stupid. And yet Donald Trump says it as a matter of fact and nobody objects. And being the President, he has the wherewithal to do a lot of things about it. And this is a brave new world that we are seeing. By the way, personally, I agree with a lot of things that Trump is doing.

But what is the cost of it? The international institutions are being totally ignored, if not damaged, wiped out. The rules, the rule-based society, which America loves to say, the rule-based society has no more rules because America is breaking it and nobody dare to say a word about it. And so is it worth it to do what he says he is doing, which may have a legitimacy to it in some ways? I’m making my question longer so that he can finish his fish.

Please comment on what I’ve said, many points. You can finish it.

JEFFREY D. SACHS: It’s very good. I think that there are a few points to say about the so-called rule-based order that are probably worth saying. I did a study last year with a colleague on comparing how countries do or do not abide by the UN principles, and whether they vote with or against the majorities in the General Assembly, whether they join UN treaties or don’t join UN treaties, and so forth. And we call this an index of alignment with the UN Charter. The United States ranked last in the world over the last twenty years.

The US has not ratified a major UN treaty for decades. In fact, the mere fact that it is a UN treaty leads the Senate to reject it, because there’s a view that, well, if the rest of the world wants it, it must be against us. It’s a kind of paranoia, which predates Trump, but is very pervasive.

We once had legislation to prevent discrimination against people with disabilities. The US adopted this. It was one of the first or the first in the world. And then it went to the UN, and it became a UN treaty. When it became a UN treaty, the Senate refused to ratify it because it was a UN treaty.

And so this is an absolutely pervasive, weird phenomenon. The United States votes least of all countries with the majority in the UN General Assembly. Part of that is that it votes with Israel against the whole world on issues of Palestinian rights, but it’s more than that.

The US became the great champion against the developing country call for any kind of social justice. Every year, the UN votes a massive majority against the use of unilateral sanctions. You know, under international law, no one country is allowed to put on economic sanctions against other countries. Sanctions are reserved as a right for the UN, not for an individual country, but which country uses sanctions every day is The United States by presidential decree, not even by congressional action.

So in this sense, The US has, in my opinion, not been a leader of a rules-based order. The US has been a leader of a US-based order. Okay, you could say it had some advantages, it had some disadvantages, but the phrase rules-based order was never defined.

Whose rules? Not the rules of the UN, certainly, not by any objective measure. This is not something new. This is what I was saying has been true for thirty years. Trump says publicly what is hypocritical privately.

So Trump is stunning in saying, I don’t care about rules. I don’t care about treaties. I don’t believe in any of this. But The US behavior has been quietly to neglect all of this while professing to lead a rules-based order. So Trump is just making explicit what has been implicit for a long time.

He’s much worse in my view, because who walks out of the World Health Organization or who walks out of the Paris Climate Agreement? It takes a lot of nerve, in my view, to do that. It’s repudiating the world interest in the most explicit way. So our earlier governments didn’t do that, but they also did not do anything positive to assist.

When it came to the Paris Agreement, for example, The United States has expanded tremendously its supply of fossil fuels since 2015. We have never had legislation in The United States on climate change, never. We had some tax cuts for renewable energy in the so-called Inflation Reduction Act, but that was quite different from climate action. Congress will not vote climate action because of the corruption that I talked about before, because big oil is more powerful than renewable energy in the American political scene.

So all of this is to say that I abhor the way that Trump behaves, but it’s not so different in many ways from long-standing behavior. When it comes to Ukraine, that’s a whole another matter which we won’t discuss at length, except I’ll just repeat, I believe that The US was the provocation. Ronnie said and explained, Russia didn’t want NATO on its border any more than The United States wanted the Soviet Union in Cuba in 1962. And Condie Rice has been saying it all along that NATO must expand to the East. And this was a very direct provocation.

Look at how, by the way, if we want to talk about hypocrisy, United States has military bases, of course, all over this region. And yet, Hutchinson can’t have a port in Panama. Okay. That’s the double standard that gets us into a ridiculous amount of trouble.

Because under The US mindset, the Western Hemisphere is ours up to and including Greenland and Canada, by the way. But all the rest of the world has been America’s playground to do as it sees fit. The Middle East, anywhere. NATO enlargement, anywhere until Trump at least, saying no on that. But in East Asia, still, of course, anywhere.

My own view, by the way, I don’t know whether it would be subscribed to here or not, but my own view quite strongly is The United States should stop unilaterally any armaments to Taiwan, period. And I say to do that for the safety of Taiwan. There’s nothing more dangerous for Taiwan than sending Taiwan armaments, in my view. This is the same as happened with Ukraine. If you wanted to be friends with Ukraine, keep NATO away.

And there’s a famous adage which people know, which I and others repeat almost daily, Henry Kissinger’s adage that to be an enemy of The United States is dangerous, but to be a friend is fatal. And Taiwan should be very careful. They’re not careful. But this is the kind of thing where the double standard – imagine if China were arming the Upper West Side of New York because we’re against Trump, it would not go down well. And I think we should be very cognizant of this risk.

Q&A Session

RONNIE C. CHAN: Well, there’s a few of you who have never been to this meeting. So they are asking a question, which is unbelievable in this setting, and that is, will there be a time of Q and A? There’s always a lot of time for Q and A. So Jeff is not going to go home, sorry, for quite a while. We know that.

Thank you, Sonia. By the way, twenty years ago so that you can finish your dessert. Twenty years ago, I was invited by Mitch McConnell and his wife Elaine Chao to Kentucky to their hometown. And they, the two of them, drove me around personally and showing me this building, that building, and I had zero interest because Hong Kong has far more bigger buildings than in Kentucky. My only interest that day was to try to convince Mitch McConnell to start paying United Nation dues for America. And America has a habit of not paying. That’s it. And that is truly amazing.

But let me ask you another question, and that is… You remind me, by the way, of about comparing the size of buildings to an American who was visiting Israel, a kibbutz. And this Texan, the farmer shows him around the kibbutz. And at the end, says, “You know, that’s fine. But where I come from, I can get in my car in the morning, I can drive the entire day, and I’m still on my farm at night.” And the Israeli looks at him and says, “You know, I once had a car like that too.”

Now, Jeff, I want you to extend what happened with Donald Trump’s view about Russia. And that is if Russia, which America has been against ever since the Ukraine war started, America can make good with Russia, at least Donald Trump can. And nobody else is objecting it publicly.

Now, could it be that, well, America really knows that in order to revive its hegemony, it’s got to get its economy right. And picking a fight with Russia or with China is not necessarily good for Americans’ economic health. And so is avoiding fighting Russia. Could it be that Donald Trump would be so enlightened that, hey, let’s not pick on China either. It’s not good for ourselves.

And so concentrate on rebuilding the economy while keeping peace with China. After all, he has slapped tariffs on Mexico, Canada and China is sort of 20% extra. But anyway, it’s on the side right now. It’s not yet the focus. Could it be that they will never get to that focus and have a direct confrontation with China? Is it possible?

JEFFREY D. SACHS: It is possible. It is actually the big question. The relations with China will not be warm, let’s be sure about that. The American mindset across the political class and now in this society as well is China’s a threat, it’s an enemy, it’s a danger.

I don’t think that is going to go away. It could. I think it’s completely fallacious in my view, but I don’t see that as going away in the same way as with Russia. But I think the question is “Why not?”

There was, up until very recently, and there still is in some parts, a view in Washington, a real view, maybe like in Ukraine, that we are heading towards war with China. To my mind, it’s a mind-boggling view. First, if it were to happen, The United States would be defeated, period, because it’s a big ocean. And if there’s a war in the South China Sea or in Taiwan Strait – China’s neighborhood – The United States cannot win that war.

And every war game done in The United States has that result. And it’s even more true with the advances of technology of the last few years where everything is surveyed, including ships, and every ship is vulnerable to hypersonic missiles. And projecting power across an ocean depends on a navy, and it can’t be done the same way as it could have been done twenty or thirty or forty years ago, given technological change.

So in my view, the whole idea is horrendous, not to mention the fact that it could easily lead to the destruction of the world. But there are still definitely parts of the American scene that want to project that there is quite possibly a war coming with China. Maybe it’s to build missile systems. Maybe it’s to justify the Pentagon budget. Maybe it’s the belief that, yes, that could really happen. But that is not a small view in Washington.

It got into our official documents in shocking ways. I was shocked when last year’s naval strategy document of our the head of the Navy said we must prepare for war with China, we must be ready for war with China by 2027. This was in print in the opening lines of this naval strategy.

Just to even talk like this is so reckless and provocative in my view, but that found its way into many, many areas. So given all of that, and one more thing to say about Ukraine in this regard. Why did Trump come to the view to not pursue the Ukraine war? Well, fundamentally, because The US was losing this proxy war. In other words, The US tried. It wanted to see whether Putin would back down or not. It wanted to see whether the sanctions would be enough to destabilize the Russian economy. It wanted to see whether Putin would resist mobilizing the domestic population. It wanted to see whether the HIMARS and attack missile systems would prevail and so forth. All of that failed.

Ukraine got very badly mauled. It’s losing on the battlefield. It’s expensive. It’s a losing hand. There’s no practical way to change that. And so Trump is throwing in the hand on that basis.

When it comes to China, that kind of view has not yet happened. We’ve had three years of failure in Ukraine, in fact, many more years than that, but at least three years of direct failure. Whereas when it comes to China, the view is the big battle is still ahead. And one of the reasons for some of the Trump people to, say, get out of Ukraine is not for rebuilding America, it’s for the bigger battle ahead.

Trump’s Approach to China and International Relations

Actually, John Mearsheimer takes that position in not that he wants war, but he says Ukraine’s a sideshow. The real issue for U.S. security is China. So we shouldn’t squander our limited resources on a sideshow. We should be building for not war, but for the contest with China.

So psychologically, the mood is really very different regarding China. Now having said all of that, I think Trump does not want conflict with China. He’s actually not a warmonger. Correct. He’s not a warmonger, it’s strange. Yeah. He’s nasty, by the way. Right. He’s attacking American institutions. He’s in favor of locking up our students. He’s in favor of breaking the law. He’s in favor of abuse. He’s in favor of deporting people. He’s a nasty person. He’s a bully, but he’s not a warmonger against an equal adversary. He doesn’t like war.

And so in this sense, it’s possible to distinguish between an unpleasant economic relationship and threat, hostility, blame, and still say, “and my good friend, President Xi,” and not view it in any personal level and not view it as warmongering. So I think that’s the optimistic view. I don’t think it gets better than that, in that they will be best buddies and have some kind of economic grand bargain. I may be pleasantly surprised. I don’t think it will go that way. I don’t think it will even go as far as what’s happening with Putin. But I do think that avoiding conflict is absolutely possible.

The Balance of Power Between U.S. and China

RONNIE C. CHAN: It seems to me, Jeff, that the only way to keep U.S.-China from having direct conflict is for the relative strength of the two sides to be somewhat more balanced. Historically, America is way ahead, but it seems that all the number of things that the Chinese have done in the last two or three years are really to tell America that we—something that I heard that Xi Jinping said to Biden in Indonesia, in Bali. And that is, “I don’t want to muck around with you, but don’t force me.”

So you look at all the—somebody said that China has hypersonic missiles. They probably do. The balloons, the U.S. nuclear sub that was forced to surface in the South China Sea and on and on. A lot of these things seems to me to be unprovoked on the part of the Chinese to tell America that, “Hey, you are stronger, but you have your Achilles heel and you don’t know what I have. And so let’s show you a little bit what we have. That way, you won’t underestimate us, in which case you will become adventuresome.” I think China is telling America that.

But let me turn to Europe. Let me put it a different way. I was with four ministerial or some ministerial level friends from the Middle East in the last eighteen months from four countries, Egypt, Saudi Arabia, UAE and Israel. All four of them told me that America is no longer the dominant player in this part of the world. They are on the way out.

And then I had Barroso, the European Commission former President, together with the former Foreign Minister of Spain and then a former Director General of the Foreign Minister of France, all at my office for dinner a few months—two, three months ago. And I said, as far as I’m concerned, America is also on the way out of Europe. I want to see what is their reaction. And their reaction was surprising to me, zero. Nobody had a reaction. That means they take it for granted.

And I bumped into your friend—I think you must know him, a friend of mine of twenty some years, Gutenberg, Katie Gutenberg, who became the Defense Secretary under Angela Merkel. And it was just a couple of weeks ago, we found ourselves in Abu Dhabi and I said, what is Germany’s position in this regard? They said, “Oh, as far as Germany is concerned, America is already long on the way out.” And I talked to some local German people, average people, and they all know that the United States is no longer the dominant player.

So it seems to me that America is really moving toward isolationism. At the same time, you have the Greenland thing. By the way, the Greenland thing, it seems to me to from what you have said, it’s a repeat of Monroe Doctrine. Anyway, so America is retreated. Do you see that America may be returning to its roots of isolationism perhaps because of mistakes overseas, plus maybe more important domestic problems. What is your take on that?

American Expansionism vs. Isolationism

JEFFREY D. SACHS: The US actually was never really isolationist, so it’s important to understand a little bit of the US history. Remember, the US started as a sliver of the Eastern Seaboard of the North American continent. So the mission of the United States from the beginning was expansion. The U.S. has always been an expansionary force. It was never isolationist. But for the first hundred years, the expansion was across the continent of North America.

That was imperialism because there were many indigenous nations all across, and there was the Spanish, of course. And so the United States built an empire across North America. Wasn’t called an empire, but it was effective and basically, by the way, unlike other empires, they didn’t incorporate the nations, they destroyed them. So the US was more genocidal than anyone else. The demographics were much more in favor of the United States rather than the native populations, which were beset by many demographic woes, and the U.S. exterminated virtually many of these populations.

Okay, as soon as the U.S. reached the Pacific Ocean, it started its overseas imperialism. So there wasn’t a break. There was expansion from the beginning. And as soon as we—usually put the date 1890 as the end of reaching the Pacific, then came toppling Hawaii and beginning the empire in Hawaii.

Then in 1898, on completely hokey circumstances, weapons of mass destruction in Havana Bay, we went to war with Spain because they said Cuba is just ripe for dropping into the American empire, and we took Cuba and Puerto Rico and the Philippines. So that was the beginning of the American empire overseas. So I don’t think that the U.S. was ever isolationist.

In the 1920s, by the way, the Senate rejected America’s membership in the League of Nations. And sometimes historians say that was American isolationism, but that was actually the opposite of isolationism. The opposition of Henry Cabot Lodge, who led the Senate revolt against the League of Nations, was that it would limit American discretion. We are an empire and we will not be beholden to an international institution. So Henry Cabot Lodge was an imperialist who opposed the League of Nations because it called for international co-responsibility, and he didn’t want that. He wanted American right of maneuver.

After World War II, Roosevelt had a much more collective security vision, but we became the security state. And as I explained, our foreign policy was definitely interventionist, but usually in regime change operations and many wars of choice. So the U.S. is not isolationist, but it never—it didn’t take on European powers until the twentieth century when it had become the biggest economy.

And until several weeks ago, it didn’t acknowledge any limits to its power. Now the question that we’re asking is, given that Trump has acknowledged the limits of American power vis-a-vis Russia, will he do the same vis-a-vis China? I think the answer is probably yes. Then what will America do? It still has its expansionary fervor. It will try to beat up its neighbors in Hemisphere. So it’s a more limited version of imperialism, which is Canada, Panama, Greenland, too good to ignore, too easy to take.

Of course, not really so easy as Trump thinks—the world is not quite as lawless, God help us if it becomes that way, but it’s not as lawless as Trump imagines in his mind. This is not a real estate play in Midtown New York. This is the real thing, and Canada’s not going down quietly. And my student, Mark Kearney, who’s now Prime Minister of Canada, said today, “No, Canada remains Canada. Don’t even think about it.” And I believe him, and I think he’s going to probably remain Prime Minister also in view of the upcoming psychological warfare that’s going to come.

So can America learn to play by the rules? That’s a good question. This rule-based order only liked the rules that America made. And now the question is, can America play by rules that others make or that are made in a shared way? This is what we really need. We need a functional United Nations. We don’t have it yet.

Trump doesn’t like the idea. There’s even the fancy term now that they’re “sovereigntists,” that the highest aspiration for a nation should be the right to do what it wants to do, which is a kind of a three-year-old vision of the world, not the vision that we should all play by a common set of rules. So I think the United States is going to take some time to learn those basic ideas.

As in many things, and I think all of you know it, America is much better than Washington. If you go to Middle America, these are not the views of Middle America. Middle America supports the UN seventy percent in most surveys. Middle America does not want wars. Middle America wants kind of normal life. And so our political system got broken. We need to solve the political crisis so that our politics reflects the kind of mainstream, rather more pacific, not warmongering of American society.

All the wars America has been in have either been unpopular or covert. This is quite interesting. Americans didn’t say bomb the Houthis. They don’t know who the Houthis are. They don’t know where Yemen is. They don’t have a clue. And Hegs has said as much in the signal. He said, “Nobody knows who the Houthis are. We need a story,” he said. That’s America. We need PR operation. We need a story. It’s about Iran. It’s about freedom of navigation. No one knows who the Houthis are.

I have a principle, by the way, which is—or a principle that I want to establish, which is that the United States should not bomb any country where if at least 50% of Americans cannot name two cities in that country. That would basically end all American wars because Americans don’t know any geography at all. That is my solution for peace.

Q&A Session

RONNIE C. CHAN: Okay. We have twenty to twenty-five minutes open to all of you. Any one of you want to ask a question, please raise your hand and tell us who you are, okay, so that we can get to know each other better. Yes, you start.

AUDIENCE QUESTION: Hi, Joseph Law. Thank you so much, Jeffrey, for your sharing. My question, we’ve talked a lot tonight about international relations, but given you’re an economics professor and you’ve went into great description of how poor the US fiscal situation is, what’s your view of where the US dollar is heading in light of the fact that there’s probably no better alternative currency or very, very, very low likelihood of that.

JEFFREY D. SACHS: In terms of investment, do the opposite of whatever I’m about to say, because I get it all wrong all the time in the short term, though I’m not bad at the longer term, okay? So I’m going to give you a ten-year answer, not a ten-day answer.

The ten-year answer is the dollar will play a far smaller role in the world in ten years, not even a marginal decline, a big decline. We’re going to have a multi-currency world. The renminbi is going to play a much larger role in the world. Local currencies are going to play a much larger role in the world. And the role of the U.S. dollar is going to be tremendously diminished.

Why? Because first, technologically, the SWIFT system and the dollar-based system as just sheer mechanics is nothing to write home about anymore. We will move to digital central bank currencies because that’s how settlements will be made far more easily than a SWIFT system. So technically, settlements can be done much more efficiently and digitally, and that will already level the playing field.

Second, I think that the share of the U.S. in the world economy will continue to decline. I believe we didn’t talk about it, but I believe that this region will be a region of rapid economic growth for years to come. I think ASEAN will have 5% or 6% growth consistently. China will have five percent growth consistently. Hong Kong will do very well in this mix as playing many critical roles in a very successful region. And the U.S. will grow 1% to 2% per year, and the share of the U.S. in everything will diminish.

And also, this tariff policy will not succeed. The U.S. is way behind China on all green technologies. It will be behind China on all digital technologies. Not that there won’t be some breakthroughs from the U.S.—I’m sure there will be some great breakthroughs in AI or other technologies, but China will mass produce them, demonstrate them, put them into operation on a much larger scale than the United States, and will become the low-cost producer of all of them.

So I think that the economics point to a diminishing role of the U.S. economy and the world economy over time, which is to the good, because we are right now 4.1% of the world population, and on a purchasing power basis, 14.8% of world GDP. So what I envision in a world of peace is that the developing countries grow faster than the rich countries, and that they catch up step by step over a thirty, forty, fifty year period, and that that means that the share of everybody goes to their population share gradually, and the U.S. share may diminish to 10% of GDP in thirty or forty years, not the 14.8% share that it is today.

I believe Africa, which is almost a no-show in discussions, will actually achieve significant economic growth in the next forty years, because their technology will enable that kind of rapid growth. In that context, and with large budget deficits likely to continue, fiscal instability, higher interest rates in the U.S.

Than in China on a Long Term Basis

China’s interest rates will remain much lower as a high saving region. The U.S. will become more of a credit risk and a savings scarce country, fiscal policy will not support a strong dollar, and monetary and confidence in the dollar will diminish.

And then finally, I don’t know when, but the United States is going to so abuse the sanctions that the BRICs really are going to make systematic methods for non-dollar payments soon, within the next couple of years. It’s an interesting question, by the way. The U.S. pressure is slowing things because India and Brazil are not as gung ho as China and Russia and Iran and others on making the non-dollar payments.

But it will come because who wants to rely on the U.S. dollar when the U.S. government really freezes your money or takes your money?

And if Europe does something so stupid as to actually try to seize the EuroClear frozen deposits of Russia, that will also not only destroy the euro role, but it will destroy the dollar role as well because the U.S. is complicit in that. And so all of this is to say, in my view, we’re moving to a multi-currency world, but mainly where the renminbi plays a much larger role.

I think that’s inevitable that China makes the currency much more of an international currency. I think Hong Kong is going to be dealing in renminbi denominated bonds and renminbi denominated finance much, much more in the coming ten years. And why not? It’s going to be a very effective alternative.

You know, I think no one today—I go around the world a lot—no one today trusts America. You talk to the leaders in Europe, not one of them trusts America. You go to the Middle East, not one of the leaders that I’ve met—I’ve met a number of them—trust America. The only one who trusts America was a military intelligence chief of Israel. And I said, you’re the only one in the world that trusts America. And his answer is, “I have no choice.” That means he knows that he doesn’t trust America.

I mean, that’s a sad thing. Speaking as an American, it really hurts me to see that happen. I think the world is going to be a really messy place when that is the case, not just the U.S. dollar diminishing in its relative significance, but also without someone that the world can trust is really not a comfortable position. And only the dummies who don’t know anything about China say that China will be happy to take over that place. Whoever says that is so ignorant of China that I can’t believe it. And so the world we are facing is very, very troubled.

On U.S. Political Dysfunction

AUDIENCE QUESTION: Jeffrey, quick question. You’ve talked about a lot of examples of political dysfunction in the U.S. and it’s really shocking that there seems to be no checks and balances on many levels. And it almost seems like there’s a design failure in the governance framework of the political system. How could this be changed? If a group of people were to get together to say, we’re going to start a movement, an initiative, how could their actions be done to even have a slim chance of making an impact?

JEFFREY D. SACHS: If you ask the American public about do you trust the politicians? The answer is overwhelmingly no. If you ask the Americans, are the politicians out for themselves or are they out for you? You can guess what the answer is, and these are questions that Gallup, for example, asks frequently. If you ask about the ratings of different institutions, Congress rates about 10% approval rating. Congress’s public approval is negligible in the United States because it’s viewed as a corrupted institution that is just dysfunctional.

And for the accurate reason that it is money infested, it is lobby infested, it’s not representing the constituencies. So the public gets what’s wrong, I think quite accurately, maybe 70% majority right on, in my judgment about what right is in terms of accuracy on most issues. If you ask the public, should campaign finance be restricted to avoid corruption, 80% or so say yes.

Interestingly, when the Supreme Court made the Citizens United ruling, there’s actually a paragraph in the majority opinion that says, “Our decision will not lead to corruption.” Okay. This was completely either phony or naive, but it’s been proved massively wrong. It says actually in the opinion, not just about corruption, it won’t lead to a loss of confidence of the public in the political system.

So what should be done to fix the American system? You know, it’s not bad on paper. In fact, it’s somewhat ingenious. It’s a little outdated. It was made in 1787. You wouldn’t do it exactly the same way now, but it could work. And the two main changes that I would recommend to get it started in the right direction would be radical reform of campaign financing, and other changes to allow third parties and other kinds of political representation to take hold. And second, eliminating much of the apparatus of the security state, which I regard as inimical to democratic practice and to sane foreign policy.

So I think there is a practical agenda of what to do. Now, if the Supreme Court, in its wisdom, would continue to say, no, you can’t change the campaign laws, that is a deadly trap for America, then you’d either have to have a new Supreme Court that would be more sensible, which would overturn its own decision, which they do usually thirty or fifty or seventy-five years after a bad decision. Or you would have a constitutional amendment, which by the way, would be wildly supported across the United States, but would be very hard to muster against the vested interests that are benefiting from the current system. So there would be massive legal challenges and obstacles and so forth.

So again, I believe we’re structurally in a corner for identifiable reasons that the American public also senses, and that is the way a reform party could possibly take hold. But I can tell you, reform is very difficult, partly because the two corrupted parties have their own hold on getting on ballots, running candidates, being heard in the media. This system is designed right now in a way that is very hard to overcome. Impossible? Not at all. We’re past the point where you have to raise the consciousness of the public.

We’re into the mechanics of power that is at stake right now. So the public knows what’s wrong. And maybe that’s an optimistic sign that some political entrepreneur will be able to come along and like Trump’s entrepreneurship, he’s a very clever political entrepreneur. He sensed a way to win power on what I regard as a profoundly flawed basis, but somebody could perhaps come along and win power on the right basis and actually lead an era of reform. It’s possible.

On Israel and Middle East Policy

AUDIENCE QUESTION: Thank you, Jeffrey. But I know it’s getting late, so I’m going to make it quick. First of all, you probably have not seen this thirty minutes interview by Brad Baer of Fox News with Elon Musk and his senior Deutsche team today.

JEFFREY D. SACHS: No, I did not.

AUDIENCE QUESTION: Yeah, it’s actually very, very good. They describe the type of abuse and the waste they have discovered. And at least somebody is doing this. And someone close to Musk told me personally, his bodyguard is actually bigger than the president of the United States. So he’s clearly putting his personal life on the line for this. Second thing is, you used the word provocation with respect to Russians and the Ukraine conflict. And you use the word mayhem to describe the Israeli situation. Clearly to me, both if Russian was provoked, Israel was provoked as well. And if Israel is doing the mayhem job, Russia clearly is doing that as well. So how do you square these two with each other?

JEFFREY D. SACHS: Sure. So just as a, again, as a simple arithmetic matter, no matter what Elon Musk cuts, it doesn’t address the core of the fiscal situation in the United States. I know the numbers. There is no way in the world that he solves the fiscal problem. The fiscal problem requires higher tax revenues. That’s all. There’s no way in the United States that we are going to have a fiscal policy of a budget that is responsible, that meets basic needs of the American people, that honors Social Security and health care other than through higher taxes. And the fact that we can’t discuss that is because of the broken political system. So that’s just fiscal arithmetic, and we could go through the numbers. I don’t care what they find. It doesn’t add up to what is really at stake here, which is 7% of GDP budget deficit, not even close.

When it comes to Israel, the reason for Israel facing the attacks that it does is that from 1967 onward, and one can even discuss the 1967 war, but let me put that aside for the moment, Israel has taken the view that it will keep all the land that it conquered in 1967. That’s the basic policy of Israel since 1967. One political party which has dominated Israel since 1978 is the Likud party, which is Netanyahu’s party. It is the core of Likud, the very core of the movement that there will never be a Palestinian state.

Now given that there are 16 million people in the territory of so-called mandatory Palestine before Israel was created in 1948. Half of those are Palestinian Arabs and half of those are Jews. That’s the situation. Right now, the 8 million Jews rule over the 8 million Palestinians.

Netanyahu’s entire strategy spelled out since 1996 has been that we will hold on to all of Palestine. And if anyone tries to stop us from doing so, our big buddy behind us will clobber them. That’s Israel’s policy. So Israel’s policy, and it’s very explicit. I could go through a very detailed account of it. Israel’s policy is we know that this will be unpopular, and we will have to overthrow any government that supports the Palestinian cause.

And in 2001, the so-called neo-cons who are also the so-called the Zionist part of the U.S. government produced a document which is also well known, and I’ve talked to two people who know it very well, General Wesley Clark and another air force commander, Dennis Fritz, that called for seven wars in the Middle East in five years after 2001. And those seven wars were to take out Israel’s enemies. And those seven wars were Lebanon, Syria, Iraq, Somalia, Libya, Sudan, and Iran. And there have been six of those wars fought on Israel’s behalf, and they have led to an ongoing bloodbath in the Middle East.

In Africa, Libya is in civil war. Sudan now has two civil wars because the U.S. divided the country and then each one has a civil war. Somalia doesn’t exist as a state. Lebanon is under attack of Israel today. Syria today literally is under attack of Israel after being taken over by Al Qaeda, backed by the United States, by the way. And the United States is pushing for Israel is pushing for war with Iran.

I have no sympathy for Israel’s policies at all. I find them abhorrent, I have to say. As an American Jew, I find them disgusting because they have prevented peace with the Palestinian people. And the answer for peace is a state of Palestine and a state of Israel. And when one asks, is that possible?

I speak regularly with the foreign ministers across the Middle East. I’m talking about Egyptian foreign minister, Jordanian foreign minister, Turkish foreign minister, Saudi foreign minister. I know all of them personally, and I talk to them at length. The Arab world has been asking for peace with Israel since 2002 in what’s called the Arab Peace Initiative, and Israel has been giving them the finger and saying no because we will keep all of the territory. Now this is suicidal in my point of view for Israel, and it is illegal and utterly cruel.

So an attack comes on October 7. Did that come out of the blue? No. The attack on October 7 came after more than fifty years of brutal occupation by Israel and complete rejection of the state of Palestine. So I have no sympathy for Netanyahu. I regard him as one of the most violent, deranged political leaders in modern history, actually.

I want them to stop because I know I speak to the Iranians. I speak to across the Organization of Islamic Cooperation, fifty-seven countries. I probably know half of the foreign ministers of the OIC. Everybody wants peace except Israel. Israel wants control. It doesn’t—does Netanyahu offer a single alternative other than we defeat Hamas? Has he uttered one sentence about a political outcome? No. And you know why? Because his whole career, his whole life is based on preventing a state of Palestine.

What’s the answer? You know what their answer is? Kick them out. That’s their answer. That is literally the policy. That’s what Trump was talking about a few weeks ago. And then people told him, no, no, no. Mister president, don’t say that. And the Egyptians and the Jordanians said, we’re not taking them. We’re not going to have ethnic cleansing in our neighborhood again.

So all of this is to say, I’ve been going to Israel since fifty-three years. Fifty-three years ago were the first illegal Israeli settlements in the West Bank. It was explained to me when I was a high school senior. “We’re putting facts on the ground, Jeffrey.” Okay. We’re fifty-three years later, and the Middle East is in a bloodbath still. So that’s why I have no sympathy at all.

AUDIENCE QUESTION: My first trip there was fifty years ago, so you beat me by three years. Al Reyes, our scholar in residence at Asia Society Hong Kong. And also with the University of Hong Kong. Thank you very much. I’m wondering if you could comment on two things. One, what is the impact of the U.S. withdrawal from the Paris Agreement? Where does that leave the international effort on climate change? And the other thing, the situation at Columbia University of interest. Thank you. Your university.

American Foreign Policy and the Israel Lobby

Go ahead. All right. Let me take Columbia and then the last one, because the last one is all about you, actually, about Hong Kong’s role. American foreign policy is guided by the Israel lobby, pure and simple. The attack on Columbia University is an attack by the Israel lobby on American universities.

It’s not close to being subtle. You cannot state support for Palestine. What I just said, if a student says that with a foreign visa, they get deported. They cannot say what I just said. And literally, they will get dragged out of their dorm.

We wonder whether I will. I don’t think so. But the truth is if a student says this, they will get expelled now. That’s because we’re in the hands of a lobby. That’s how American politics works.

American politics works by control, by very specific vested interests.

The Need for Energy Transformation

Now let me turn to the last question, the second part. World needs an accelerated energy transformation, and there’s a lot more than energy in this. By energy transformation, I mean going to electric vehicles, I mean going to zero carbon energy sources, I mean going to the hydrogen economy, all of that, plus we need a similar land use transformation for deforestation and for other related areas. Analytically, it’s quite clear what to do, even what technologies and how to the timing and so on.

When it comes to climate change, without going into detail, the situation is dramatic on climate change. It’s worse than the IPCC and other official bodies have said, and my colleagues at Columbia have been telling me this. I happen to have as colleague James Hansen, who I regard as the world’s greatest climatologist. And I’ve been leading hundreds of climatologists when I directed the Earth Institute at Columbia University, so I know this community. He’s the best. He’s been telling me for twenty years that the situation is much worse than the consensus statements.

In the last three years, just to make one point, the temperature rose 0.3 degrees C in three years. Why? Basically, according to Hansen’s very important work, pollution has been partly controlled, especially on ocean shipping, the sulfate aerosols. And as that has gone down, that used to dim the sunshine. As that has gone down, the underlying warming has come to the surface.

So he’s been saying for years, we’re warming more than the temperature shows because the temperature is being masked by pollutants. And now that the pollutants are being cleaned up, now the underlying temperature increase is becoming more evident. The energy imbalance is becoming more evident. So we’re really already at 1.5 degrees C warming. The limit that we said, we already reached it.

That was supposed to be the top limit. In ten years from now, we’ll be at 1.8 degrees or even higher. We’re on a trajectory that is really extraordinarily rapid. Now what does that mean? It means we need to stop producing fossil fuels.

It means we need to end the coal based economy in China. It means we need to have a massive build out of zero carbon power. It means everybody needs to drive BYDs, okay? This is the basic idea. We need a plan for that.

Let me give you one piece of the plan. Chinese solar companies have the capacity of 1.2 billion gigawatts of solar module production per year. Right now, China is exporting or deploying half of that capacity. The U.S. calls that overcapacity. That’s crazy. We need all of that capacity to be deployed urgently on the planet. So China should be selling twice as much as it’s produced selling right now, twice as much. That requires throughout ASEAN, throughout Africa, throughout other countries, an accelerated energy transformation.

Why doesn’t that happen? Partly, there’s lack of plan. Partly, there’s lack of finance that’s adequate. Where you come in, in my view, is to finance this energy transformation at an expanded, accelerated scale. I believe the Greater Bay Area, by the way, is at the center of the global solution space because between Hong Kong and Shenzhen, you have all the technologies.

Throughout the GBA, you have all the production facilities. Hong Kong, you have all of the finance capacity, the ability to harness all of that capacity at a vastly expanded scale. And I think this should be incorporated into the next into the fifteenth plan that Hong Kong’s role is this massive scale up of deployment of China’s green capacity as part of Belt and Road, as part of ASEAN scale up, as part of other initiatives of China, GBA, Hong Kong.

So where does The U.S. fit in this? It just handed you the leadership and the responsibility. The United States said, we’re not going to do this. Okay? We’re not going to do this.

And The United States is not going to be a player in this for four years at least. And then when it wakes up, it’s going to be ten years behind China in competitiveness, if not more. You think anyone is going to sell an electric vehicle other than China? I don’t think so, in a third market, other than in a highly protected U.S. market because China’s way ahead. China’s way ahead on solar. China’s way ahead on wind. China’s way ahead on hydrogen. China’s way ahead on green shipping, everything.

China’s got so please, you guys implement this at rapid scale. This is the vocation for Hong Kong to save the world now. Wow. Honestly. I mean it I mean it for real.

I don’t mean it just rhetorically. And all of this can be put into place because nothing’s magical about it. The capacity is there. The finance is there. The low interest rates is there. The Belt and Road Initiative is there. And The United States did a great favor to you. Trump is doing the best favor to global climate. Why? Because up until now, I can tell you, I know this hour by hour, day by day, The United States has slowed down everything in this global consensus.

So everything’s negotiated and everything is basically halted by The U.S. There’s no real money. There’s no real plan. There’s no real action, but there are agreements.

Now The United States has said, we’re done. We’re out of here. So China should say, okay, we move and prove that it’s not overcapacity. It’s just wonderful capacity.

RONNIE C. CHAN: Before I tell you, Jeff, how you misspoke, I want to and the last two questions. I want to recognize the a global trustee of the Asia Society have just walked in, and that is Nicholas Agusen and his wife, Ines. Great to have you. And Nicholas has a lot to say, so I suggest, Jeff, that before you go home that you talk to Nicholas briefly. The last two questions goes to Brian Gu and then Eddie Tam. And Brian happened to be the President and Vice Chairman of Xpeng, the other EV company with a competitor of BYD. So we’ll forgive you.

JEFFREY D. SACHS: We’ll forgive. Prove me wrong.

RONNIE C. CHAN: All right. Anyway, so Brian and then Eddie. And then finally, I wonder if the youngest person in this room would like to ask a question. If he does, you know who you are, you’re the youngest, you’re welcome to ask a very last question or you can concede, it’s up to you. Brian?

AI and the Future World Order

BRIAN GU: Yes. Well, Professor Sachs, very excited about your vision for new energy, which we share host wholeheartedly. The other area, I think where…

JEFFREY D. SACHS: And this company is in the Greater Bay Area.

BRIAN GU: Yes, we’re the Greater Bay Area EV company as well.

JEFFREY D. SACHS: Wonderful.

BRIAN GU: But another area everybody talked about is AI. Again, U.S. obviously still has the leadership to date. But my question to you is, how does you think about AI helping shaping the world order going forward? On one end, can talk about, anytime you have technology, especially transformative technology like AI emerging, you’ll help players to catch up with the existing powerhouses. We saw China catching up, German in previous years, Japan. So there’s a democratization happening with technology, especially with powerful technology AI.

But on the other hand, U.S. clearly are using AI as a tool to really force allies and countries to fall in line, because they feel like they possess the chips, the algorithm, the talent, the money and AI becomes their way of continue the unipolar world. So how do you envision the development AI shaping the future world or in the way that you see it?

JEFFREY D. SACHS: Yeah, that’s a great question. Basically, at the fundamental level, AI is a profound empowerment for sustainable development. It really could play, as I think we all sense, a decisively positive role in ending poverty, expanding health care, expanding education, expanding public services across the board. So I think that it can work in an extremely important way for humanity. It’s a remarkable set of new tools. Having said that, all the caveats jump to mind.

One is that AI can be profoundly misused, of course, in many different ways. It can become the basis of militarization rather than the basis of sustainable development. And from an economic point of view, the fascinating question is, what does it mean for jobs and what does it mean for income distribution? It’s an absolutely fascinating and unknown answer. I’m trying myself as a macro economist for the last fifteen years, even before the large language models, to try to understand better what will happen, because one vision is, well, we’re going to be in a world of abundance because the robots will do all the work for us, and that’s great.

And there’s some truth to that. And the other vision is the dystopian vision that there’ll be no jobs because the robots will do everything. So a small group will own everything and the rest will be in surfed or completely impoverished. When you as a theoretical economist, I can nicely write a mathematical model of either the utopian or the dystopian vision. In other words, I don’t think you can rule out on logic alone whether this is a godsend for everybody and we all have endless leisure time because the humanoid robots that are being produced nearby here are going to do all the work for us, or whether we really have a society completely divided between Elon and the rest of us.

And both are probably possible. In my theoretical analysis, I give a lot of role to government as playing a distributive role in an AI world to ensure that the benefits of AI spread everywhere. So I don’t think that market forces alone with powerful AI benefit everybody necessarily. You could have a tremendous divide in society resulting from that. So this is one part of the answer.

On the geopolitical question, I’ve always believed, because of historical experience, that no country keeps a monopoly on technology. But it could keep it long enough to win a decisive advantage over others. The British had the steam engine long enough by themselves that they ended up conquering the world in the nineteenth century. And it was because of the steam engine that Hong Kong became Hong Kong, of course. And so in this sense, we have to ask, are there such choke points?

My general belief has been for decades that technology moves faster than governments or economies across borders. And the most important single case of that was eighty years ago this year, The US invented the atomic bomb and believed in the inner councils of government that The US monopoly would last for thirty years, and it lasted four years until the Soviet Union produced its own atomic weapons. This year, deep sea ended the sense of American chokehold on AI. You probably didn’t need deep sea for that to happen, but deep seek was a wonderful proof of concept that there are not choke points on technology. I think China can work around or replicate or find other means when it comes to small nanometer semiconductors.

I think China competes or surpasses The U.S. in AI. Now it’s got a bigger scale of researchers. It’s got a bigger scale of universities. It’s got a bigger R and D ecosystem than The United States has right now. Where China certainly surpasses The United States is in production of everything, maybe except the most advanced semiconductor chips, but I would give that also a short period of time before that surpassed as well. But The U.S. can’t even come close to competing on EVs.

Tell me if I’m wrong, but I don’t believe The U.S. could ever compete with you on cost, on quality. I don’t think The U.S. can compete on humanoid robots. We don’t have the production ecosystems to do it. Shenzhen does or GBA does, but Silicon Valley doesn’t produce anything other than ideas and blueprints. It doesn’t produce hardware. And they can’t run a factory in The United States because they can’t even find a workforce for the factory that is qualified anymore.

So I think that I don’t believe that The U.S. can hold this. And I think the genius of deep seek and more generally of the Chinese approach right now, if I may if I’m right in understanding this, is going open source is a great jujitsu move and on top of everything else. You know, it builds an international ecosystem that OpenAI or other U.S. Tech giants won’t build. And because they think they can do it on a proprietary basis, China couldn’t do it on a proprietary basis as a second mover perhaps, but it just opened up the source code. And now China’s going to control the global source code environment because of this, And that’s a great benefit for the whole world. And I think a winning move for China.

That’s my interpretation.

RONNIE C. CHAN: Okay. Eddie, we’ll fast.

EDDIE TAM: Yes. This is Eddie Tam. Thank you very much for a wonderful talk. Actually, very good setup for my question. So it may sound wonderful that if America acknowledges its limit with respect to Russia and then hopefully also China and then hopefully they’ll stop supplying arms to Taiwan and they’ll probably close a lot of military bases around the world. But is that really paradise? Because I think we have already starting to see evidence that this may prompt nuclear proliferation back to your point.

So now, I think Poland, Romania, Germany, as well as even Korea, Japan and God knows if Taiwan will want to develop nuclear weapons. So if that were the case, does that lead to a safer or less safe world?

JEFFREY D. SACHS: Yeah. That’s a good question. Terrific, big question.

Europe’s Future Security Arrangements

I think that Europe will create an autonomous security regime and military. And I think that one way or another, France’s nuclear capacity will become a European wide capacity. Not that Poland will get nuclear weapons on its own, but that there will be some regional approach based on France’s nuclear deterrence. Or maybe Britain will rejoin Europe and it will be a British, French nuclear umbrella. This is my own view.

I don’t think that there are pressures on places like Poland, which I advised and know well and let us hope that they don’t try anything in terms of nuclear weapons. When it comes to this region, my own strong view is that other than Cold War legacy and US politics, there is no reason for ongoing tensions between the ROK, Japan, and China, just for the three. So I believe in ten years, we’re likely to see much closer relations in Northeast Asia among Korea, Japan, and China. And even the meeting of the foreign ministers a few days ago, I think, points in that direction because who can rely on the United States anymore? So Japan has to have a different approach.

And I don’t see any intrinsic conflict among those three. North Korea is a little more complicated, but North Korea also, by the way, could have been handled in a completely different way. It was John Bolton and the United States, which blocked off any kind of peaceful approach towards North Korea. And so there was a way even to address the North Korean issue as late as the 1990s. Clinton made some halting start in that direction.

John Bolton is one of our most distinguished incompetents in modern American history, and he completely messed up everything. So, vision of the future organization of the world is stronger regional cooperation in general. Maybe RCEP becomes really an operational region for here, not divided by any kind of Cold War, divides the African Union, what’s called CLAC for Latin America and the Caribbean countries, the US, Russia, China, India on their own because they’re all giants, basically. And that because of the size and the scale of these different regional entities rather than smaller nation states, we find peace across the major regions, and no major region can defeat another major region.

And so, hopefully, we will have nuclear deterrence with each side maintaining 20 nuclear weapons rather than 1,600 nuclear weapons and go back to nuclear arms control. It’s not impossible that we go in that direction. Even Trump, by the way, has said he wants to resume nuclear arms control. It’s shocking – sorry to open another line, but I won’t do it. The US undermined the nuclear arms framework starting in 2002 by unilaterally abandoning the Anti Ballistic Missile Treaty.

This was the most destabilizing action of all vis-a-vis Russia, actually. And so Trump is talking about going back to some kind of nuclear arms control, and that’s extremely positive.

Ronnie Chan’s Comments

I hate to tell you all this, but in 1999, I invited John Bolton to speak right here. We accept people from all sides. We are neutral.

And the next year, he came back and called me up and said, “Ronnie, I’m back. Can I speak again?” I invited him back. The only problem is our Deputy Director at that time told me, Ronnie is a good New York girl. She said, “Ronnie, you invite this guy back one more time, I’m out of here.” So ever since that, he has never come back.

However, I harbor some hope that perhaps China, which is not going to replace America as the international police for sure, together with EU, perhaps a little bit reconstituted, not the same 27 countries we know it today. And number three, the United States, which is not going to totally retreat from the world. My Middle Eastern and European French words notwithstanding, the three of them will have to, for self best interest reasons and for human existence reasons, come back together to work in some way in order to prevent the situation that Eddie has mentioned.

Now Max, I think you are the youngest. There’s two that are 22 years old. And I think, Max, you may be the younger of the two. So Max, get it. The microphone is yours.

Q&A Session

AUDIENCE QUESTION: When you made the age comment, you winked at me. So I figured. Yeah. Since we’re talking about regions, you touched on it briefly, Professor Sachs, but I was wondering, particularly in the development cycle of things, where Africa lies in the equation. Could you elaborate a little bit on that?

JEFFREY D. SACHS: Yeah, thanks very much. Of course, I find it very interesting and pertinent that Africa, China, and India right now have the same population basically, 1.4 billion people each. The biggest operating difference aside from poverty and the ecological conditions and so forth is that Africa is 55 independent countries. India and China are unified states, albeit in a kind of federal arrangement or semi decentralized arrangement in both cases to some extent.

So Africa’s biggest issue, in my view, is unity, creating a free trade area on the continent, organizing its infrastructure on a continental scale, having continental wide monetary and financial policy, and really trying to replicate scale so that the internal market of the African continent and other benefits of scale can be achieved.

And this is a huge political issue. Obviously, countries don’t easily cede sovereignty to a super national entity, but Africa is so far behind, so much in need of development right now, so vulnerable internally and externally, that I think the case can be made, and I’m certainly trying to make it all the time to African leaders, that they better create an effective union right now. And this is a message that I give all the time.

Having said that, if the union can really be created, one can actually foresee a rapid growth period for Africa, which would be unprecedented, basically. And the reason is poor countries have headroom for rapid growth. This is the most basic idea in economic growth, which is that if your capital is scarce, the returns to investment are very significant. If you don’t have electricity, it’s great to add electricity. If you don’t have roads, it’s great to add roads. If you don’t have rail, you get a really big return to adding rail. If you don’t have high school completion, boy, do you get a big kick from going to high school completion.

So you can identify the investment strategy that’s needed. And I’ve worked out in a recent study that I did with the African Development Bank, a scenario for the next forty years modeled on China’s forty-year growth from 1980 to 2020, in which Africa becomes a high income economy by 2063, which is their one hundredth anniversary of African unity.

Now, just one added footnote to that, Africa was about seven percent of the world population, if I remember correctly, in 1950. Today, it’s about 18%. Africa is the only region of high fertility in the world right now. It’s the last place with the demographic transition. It will have it, but it hasn’t had it yet because it hasn’t had the breakthrough to girls’ education through high school and other things and urbanization and so on. So the transition will come, but in twenty years from now, perhaps.

And this means that on a reasonable trajectory, I mean, plausible is what I mean, I don’t mean good, but just plausible trajectory, Africa will have 2.5 billion people around mid century, maybe 2055, 2060. And on the current UN medium forecast, which I don’t think is accurate, but it’s their medium forecast, Africa reaches 3.8 billion people by 2100, and constitutes 38% of the world population by 2100.

Now imagine if Africa grows rapidly in economic terms and has this population growth, Africa becomes actually a major part of the world economy, not a fringe part of the world economy even by mid century or by 2060. So this is my view of what should happen. It is a major political action that is required more than anything. It is the unity to say we’re going to do this in one coherent step because, frankly, 55 countries are not going to make it on their own, and 14 of them are landlocked. Landlocked countries can’t even function if they don’t have ports.

So to put it bluntly, if Africa gets its political act together and again, it was Europe that created this messy map. But if Africa gets its political act together, it’s going to be a big part of the world in the twenty-first century.

Closing Remarks

RONNIE C. CHAN: Okay, ladies and gentlemen, don’t clap yet, okay? Don’t clap yet. Isn’t it wonderful, fantastic, great to have with us in Hong Kong, the Asia Society? Yes.

Now you can clap. Nevertheless, let’s save the most enthusiastic applause to our speaker today. We are delighted to have Jeff with us. Ladies and gentlemen, Jeff Sachs.

Well, ladies and gentlemen, there’s a few of you who are not yet members of this organization. I welcome you to sign up with Sonali. Where is Sonali over there? Holly, you are somewhere. Munera, right? Any of those Alice, sign up.

We have a lot of programs that are reserved only for President’s Circle members because they are in high demand, like tonight. I mean, if we open it, we’ll have 400 people here. But we cannot because I know Jeff doesn’t necessarily enjoy a big, big, big, big crowd, which he gets all the time everywhere anyway. So we thought that a smaller event like this will be more reasonable. And so we have to limit it.

And so we only have our corporate members and President’s Circle members join. So please, if you’re not a member, pick up a membership form on your way out. The rest of us will all clap for you. So thank you very much for coming. Goodbye.

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• Transcript: Why Your Money Buys You Less Every Year – Dominic Frisby on TRIGGERnometry Podcast