Back in the USSR. Are We the Soviets Now?

"Unherd" interviews Sir Niall Ferguson

Fascinating point of view regarding the current political situations in the USA and Europe from across the Atlantic. This is not for those who want a quick, pre-digested overview but rather provides a deep intellectual dive into an alternative narrative that differs sharply from the approved.

I recommend that Americans pay particular attention to his comments on the current malaise that has swept the country, DEI, Cold War II, and the consequences of the US Federal Budget Deficit.

Personally, I do not agree with everything Niall Ferguson says in this interview, but I really appreciated the opportunity provided by the British publication Unherd to listen, learn, and ponder his perspectives. Of course, Unherd has been heavily censored by the powers that be, which many of us now see as a pointer towards media outlets that we should consider supporting.

I hope you enjoy this interview as much as I did. I have had it transcribed for those who prefer reading or clipping quotes.

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With public calls to remove the sitting US President, a UK election set to unseat its government and the rightward swing in Europe, it’s all change on the Western front. Best-selling historian Sir Niall Ferguson joins UnHerd’s Freddie Sayers for a wide-lens tour of populism and its discontents.

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Niall Ferguson:             The elite now has an ideology that is very radically different from the ideology in which the United States were supposed to be based. That it would be like a Cuban missile crisis in reverse. In a war between the US and China, the disparity would be very serious. Donald Trump doesn't want to talk about it. Joe Biden doesn't want to talk about it too. You have to escalate to de-escalate. It will be DEI up the wazoo.

Freddie Sayers:             Hello and welcome back to UnHerd and to one of the more momentous political weeks I can remember. The first round results of the French election are in and seem to show a drubbing of the centrists and a triumph for the right-wing National Rally Party. Here in the UK we are about to vote in what is universally expected to be a change of government election, nominally in the opposite direction. And, of course, the United States has an octogenarian who has been a US senator for 50 years, fighting to stay as the Democratic standard-bearer against a apparently confident seeming Donald Trump. Is there a pattern in all this or is it just chaos? Well, Sir Niall Ferguson, recently knighted by the King, is one of the best known historians and theorists of geopolitics there is. If anyone can bring this together for us and position it in the larger context, it is him. So I'm delighted that on this of all weeks he is in the studio here at UnHerd to help us do just that. Welcome Niall.

Niall Ferguson:             Nice to be with you, Freddie.

Freddie Sayers:             Quite a tall order I've set out there for you. I think given that we are about to vote in the UK, it's best that we end with that. So let's start looking at the situation in the US. You wrote a provocative column for The Free Press last week about how it almost feels like in this new Cold War the US is seeming like the Soviet side. Explain that for us.

Are We The Soviets?

Niall Ferguson:             Well, the headline that we ended up agreeing on was We're All Soviets Now, but I really wanted to call it Are We The Soviets? Uh, a little bit like "are we the baddies?" Uh, and the idea is that some of the pathologies of the late Soviet Union are visible, uh, in the United States today. And most people like Jonah Goldberg, for example, immediately went, "But, but, but the economy." But my point is not about the economy, it's about political and social pathologies. And, uh, sure enough there was a debate between Brezhnev and Andropov. Oh, wait. No, uh, between Biden and Trump, two obviously over-the-hill old guys. One more manifestly senile than the other, but both old guys. And that's the choice? And, I guess, it probably felt a bit the same if you were on the politburo, uh, in the late '70s and, and early '80s. That's the choice? Brezhnev, Andropov, Chernenko? So that, that was part of the starting point for the argument. When your political system is only producing degenerated old guys, uh, there's something up.

Freddie Sayers:             The gerontocracy comes when the fresh ideas are out. And it's the sort of stitch up among the old guard because they can't think of anything new.

Niall Ferguson:             The Soviet Union had one party that monopolized power and therefore an elite, uh, that the new class that emerged out of the Bolshevik revolution. And over time it became a completely corrupt elite. In the United States, there are two parties. Uh, but there are only two. It's... So it's a duopoly. Uh, and one of them has that pathology of an entrenched and, uh, corrupt elite. They don't have dachas, uh, they have houses in the Hamptons. That's the Democratic Party. Interestingly, the Republican Party elite lost control of the party back in 2016 to Donald Trump and they've not been able to rest it back from him. But the Democrats look a lot like, uh, the Soviet Communist Party. Uh, this rigid hierarchy could only come up with Joe Biden as the candidate to beat Donald Trump, uh, in 2020 and they can't think of anything better, even although it's been perfectly obviously to anybody who knows Joe Biden even slightly that something's gone pretty badly wrong with his cognition.

Freddie Sayers:             And it's worth saying, in the days since that debate, that slight Pravda atmosphere has very much returned. There was about a 24-hour window when it felt like the Democrats might possibly reconsider this was that bad. But already, the Congress people are back on the air, the spokespeople saying, "No, no, he's in better form than ever, it was a blip. He's come fighting..." You almost felt like the drugs kicked in-

Niall Ferguson:             Yeah.

Freddie Sayers:             ... for his post-debate-

Niall Ferguson:             Yeah.

Freddie Sayers:             ... sort of performance. It's, it is Pravda-esque.

Niall Ferguson:             Right. But, but it's part of a wider pathology. It's very hard to find another example of an advanced economy where life expectancy declines, where mortality amongst young males rises. And I've been thinking for a while, "Why is this trend in the United States familiar?" It's been a, a trend for, uh, a while. Angus Deaton first started writing about deaths of despair quite a few years ago, uh, pointing to the increase in, uh, death from opioid overdoses, particularly fentanyl. Uh, but also, uh, deaths from alcohol, uh, abuse, deaths from, uh, gun shots, often suicides, as well as, as crimes. And so we have this strange pattern where Americans, particularly, uh, young male Americans, uh, or middle-aged white Americans, are dying, uh, prematurely. And life expectancy actually has gone into reverse. And this wasn't just COVID, this would've happened regardless of, of COVID. There's only one other case I can think of and it finally hit me, perhaps 'cause I was asking myself, "Why have we got these two old guys?" And it's like, "Oh, yes, the Soviet Union."

It was in the Soviet Union in the 1980s and then in Russia after the Soviet collapse, that we last saw a dramatic decline in life expectancy and a surge in premature mortality, particularly amongst males. It was mostly vodka, uh, although smoking also killed (laughs) a lotta Russians prematurely. But deaths of despair I've only seen once before and I remember it 'cause I spent time in Russia in the late '80s and the early '90s. And it was just a kinda grim scene. The s- the streets of, uh, what went from being Leningrad to being St. Petersburg or Moscow were j- were littered with people drinking themselves to death. If you walk through central San Francisco, the streets are littered with people drugging themself to death. So at the core of the piece what some people, I think, mistook for a provocation, was a very, very serious point. You cannot name another example where the trends in public health as so adverse, despite there being a very advanced economy.

Despair and DEI

Freddie Sayers:             So why were people so despairing or drinking themselves to death in late Soviet Russia? And why are they doing it in the US?

Niall Ferguson:             And this goes to the even deeper point, a crisis of morale. One of the, the really interesting things about the disintegration of the Soviet Union was the sense amongst ordinary people that the whole system was completely and utterly a sham, that the people, the nomenklatura who ran it, the Communist Party elite were just running it for their own benefit and everybody else was essentially just being handed hypocrisy account about the workers and peasants really being in charge. And I... The s- the same crisis of morale in the United States today. And you could see it in the polling. Confidence in the institutions is at an all time low, if you look at polling, uh, that Gallup has done all the way back into, uh, the 1970s. And it's amazing to see that something like 8% of Americans have confidence in Congress, their elected representatives, their legislature. And it's there right across the board, confidence, uh, in the press, confidence in the police. You name an institution and confidence has declined in it. So I think what we see here is a somewhat similar thing where ordinary people feel it's a rigged system and it's a hypocritical system.

The nomenklatura insist in diversity, equity, and inclusion, uh, that America is constantly progressing, that there should be all gender restrooms, that mentality which is ensconced at Harvard and, and Yale and Columbia, uh, is, uh, entirely at odds with the mentality of ordinary people.

Freddie Sayers:             It's a very, very grave situation though if individuals are feeling like there is no point carrying on with their lives. I mean, uh, uh, you can't get a worse indictment to the society than that.

Niall Ferguson:             Well, there... more, more people have died from these deaths of despair than died from COVID. And I don't think people in Aspen, Colorado, where I was, uh, last week have really any clue what's going on in those, uh, cities in the, in middle America where the fentanyl overdoses are at, at the highest, uh, level. Uh, uh, that disconnect between life in Aspen or in the Hamptons, uh, uh, and life in, in middle America, is very reminiscent of the disconnect between life if you were in the Soviet elite with your nice dacha and, and life at, at the sort of dreg... amongst the dregs of, of society. If you're at the top of American society your life can be prolonged until the point that you can be president into your 80s, just about.

Freddie Sayers:             So at that lower end then, something is happening where, first of all, they're not meaningfully gonna get ahead.

Niall Ferguson:             Right.

Freddie Sayers:             So there's no point making an effort.

Niall Ferguson:             Yeah.

Freddie Sayers:             And somehow perhaps the structures are so big and far away and incomprehensible that it, it feels a bit like the Soviet structures did. And your, your positioning of DEI in that is interesting 'cause it often gets called just a culture war talking point, you know? This is... I heard some people respond to your latest, uh, column saying, "Oh, of course, now there he got the DEI mention in," as if it's this sort of headbanger talking point. But actually it is a, a good example of just that because if you don't feel you're being judged on your merits.

Niall Ferguson:             Right.

Freddie Sayers:             And you don't feel that you can advance through... up the ranks through your own efforts, the results are gonna be imposed top-down to fit some kinda criteria, that is quite a Soviet atmosphere.

Niall Ferguson:             It's an ideology in which your identity, uh, whether it's class-based, race-based, gender-based, minority-based defines you rather than your individual merits. I mean, if you're a, a white male working class American it, it probably has sunk in that the game is now explicitly rigged against you in the elite, uh, institutions and probably elsewhere too. Uh, and so that, that seems to me quite distinctly Soviet that the elite now has an ideology that is very radically different from the ideology on which the United States were supposed to be based in which you... individuals were equal before the law and opportunity was equal for all. So I think that, that disconnect explains a lot of the, the crisis of, of morale in the sense that the American Dream has, in a sense, turned into some strange, uh, utopian nightmare in which progressive ideologies about race and, and gender now determine outcomes as opposed to individual merit and, and hard work. So it's not obviously a perfect match, but I think the critical point is that corrupt elites controlling a system with an ideology that ordinary people think is weird and hypocritical, are the common variable.

Cold War II

Freddie Sayers:             So the flip side of this argument is, where China has the rival pole in what you describe as the new Cold War, where they sit. Because a- again, a lotta people would say... I understand the parallel with, with Brezhnev and Biden and so on. But realistically China is literally a communist state, to live there under a surveillance state as they do, with much fewer freedoms than even modern America, it's just, it's just not sensible to say that they are less Soviet than the US. What, what's the case there? How does, how does China fit into that picture?

Niall Ferguson:             Well, if you think about Cold War II as being between two superpowers, there only are two, in terms of AI or quantum computing, that are engaged in an ideological competition, a geopolitical competition, a technological competition, I think that's been going on now certainly since 2018 when Americans woke up to what China was trying, uh, to do. Then the point I would make is that in Cold War II, uh, the Chinese have the upper hand in a number of important ways. For example, if there were a conventional war over Taiwan this, this week, which is possible. I mean, Chinese could blockade Taiwan any point. Uh, the United States would be in a meaningful disadvantage. And the way I like to put this is, that it would be like the Cuban missile crisis in reverse. It would be the Taiwan semiconductor crisis, only in this crisis, unlike in 1962, it would be the other side that got to blockade the island near their coast and it would be the United States that would have to send a naval expedition across the ocean. Which is what Khrushchev had to do in '62.

So that in that sense, there's this strange mirror image quality where any crisis over Taiwan is, is the Cuban missile crisis in reverse and the US president gets to be Khrushchev, where you have to choose between, "Am I gonna run the blockade and cause World War III? Or am I going to compromise?" Which is what Khrushchev in the end chose to do.

Freddie Sayers:             And you think the A- the American military power... literally, were that conflict to get hot-

Niall Ferguson:             Yeah.

Freddie Sayers:             ... is less strong than we might think?

Niall Ferguson:             Much less. Because, for example, in a recent CSIS war game the United States ran out of a particular kinda precision missile, anti-ship precision missiles in a week. The, the, the Chinese have much deeper stockpiles and much broader production facilities for almost any item of hardware that you might name, from drones to nuclear reactors. The Chinese are the manufacturing superpower. Just to give you an illustration, 20 years ago manufacturing value adage, which pretty good measure, uh, in the US was twice that of China. Today manufacturing value added is in China twice that of the United States. So there's been a complete reversal of manufacturing capability. And what we've learned from the war in Ukraine, which I think we'll probably get to in a minute, is that in a conventional war you have to be able to mass produce all kinds of hardware, uh, including artillery shells, uh, as well as drones. And Russia has an advantage there and it's actually quite a struggle to keep pace with, uh, what the Russians, the Chinese, and the North Koreans, and the Iranians could put into the battlefield.

In a war between the US and China, the disparity would be very serious. I was very struck the other day when the new commander of Indo-Pacific Command, who's just, uh, come in, gave an interview to The Washington Post in which he said, "Well, if this war happens, my job is t- is to turn the Taiwan Strait into a hellscape with unmanned..." uh, he implied drones, sea and air drones. "And that will buy us a month and then the rest of our plan can happen." And to me it was extraordinary that, A, he gave the interview and, B, that it was such a, an unconvincing scenario that he presented, uh, to, uh, the press. I think there's a bluff here. The United States has tried to talk tough on Taiwan, particularly Joe Biden's administration, at a time when it's much less able to deter China than it was, say, in the 1990s when the last major Taiwan Strait crisis happened.

We're at a relatively early stage of Cold War II. The Korean War analogy is Ukraine, which was the first big... uh, Korean War was the b- first big conventional war of Cold War I. That, I think, is what Ukraine is. But if we then go to our Cuban missile crisis, I think we will be exposed as being quite vulnerable. And you don't wanna be the Commander in Chief sitting in the Situation Room, realizing that your choice is, uh, World War III, which you might lose, having to go nuclear if you start to lose, if the aircraft carriers are sinking in the Taiwan Strait, or capitulation or some kinda deal that makes you look weak. That's what I'm really getting at.

Freddie Sayers:             Do either side of the political argument in the US have the answers do you think? I mean, what, what... I suppose that you would need to counter what you're describing-

Niall Ferguson:             Yeah.

Freddie Sayers:             ... is a kinda massive uptick in industrial capacity. Um, I suppose reshoring, that kind of thing. What is the, the Niall Ferguson prescription to, to re-level the balance?

The US Federal Budget Deficit

Niall Ferguson:             Part of the problem is that the US fiscal position is, uh, in a pretty, uh, dire state. Uh, you have a deficit at the moment that the Congressional Budget Office puts at around seven or 8% of gross domestic product, that's at pretty much full employment. Uh, i- if there were a recession you could imagine that going significantly higher. And that means that if you look at the Congressional Budget Office projections, the resources available for defense are going to decline over the next, uh, 20 or 30 years and the US defense budget's gonna go down to something more like a European level of two-point-something percent of GDP. So the US is on a very bad fiscal path and it is not all the fault of Joe Biden because the bad fiscal path goes back several administrations really. It goes back to George W. Bush. There's a big fiscal problem that nobody wants to talk about. Donald Trump doesn't wanna talk about, Joe Biden doesn't wanna talk about it too. The parties have basically agreed that deficits don't matter, but they do and they will turn out to matter a lot now that interest rates have gone up and the Fed is not about to get them back down to where they were, uh, before the pandemic.

So I think that's the binding constraint, whoever is president is gonna discover that the resources available, uh, to beef up, uh, the US military aren't there because they've been diverted, uh, into these non-discretionary welfare programs. Of course, both sides talk about reshoring, both sides have become protectionists. They've both now embraced industrial policy and going after China's reliance on semiconductors.

Freddie Sayers:             Are they good things?

Niall Ferguson:             Well, I think-

Freddie Sayers:             That you've just listed?

Niall Ferguson:             ... some yes and some I'm skeptical about. I'm old enough to remember the 1970s.

Freddie Sayers:             Mm-hmm.

Niall Ferguson:             You got to the 1970s by thinking that the government should make decisions about the allocation of capital. And so I'm somewhat skeptical about, uh, what's being done in the name of the so-called Inflation Reduction Act. I'm not a fan of, of, of protectionism, I'm a free-trader. Adam Smith-

Freddie Sayers:             Even with-

Niall Ferguson:             ... uh-

Freddie Sayers:             ... China, your direct competitor in this?

Niall Ferguson:             I th- I, I don't think tariffs are the way to deal with China's repeated violations of its World Trade Organization obligations. I'm skeptical that breaking up the WTO is the way to do it. So I'm a dissident on these issues, I adhere to Adam Smith principles. Sorry, can't help it. Scottish enlightenment has its legacy. But I think it will be clear that there are problems with this kind of intervention, particularly when it relies heavily, uh, on the central government, uh, having the ability to spend money, uh, on building, uh, semiconductor manufacturing plants in Arizona. The one thing I think is right is the, the Trump administration was more effective in deterring adversaries than Biden has been. And this doesn't really call for additional resources, it just calls for a different stance towards the adversaries. And I think part of the problem with the Biden administration has been they, they, they de-escalation when they should say deterrence. And this posture of de-escalation has actually led to us failing to deter the A- the Taliban in Afghanistan, Putin in... with respect to Ukraine. We've certainly failed to deter Iran in the Middle East. And I worry that deterring, uh, China over Taiwan is not going well either.

Trump vs Biden on Foreign Policy

So I think one could argue that a more muscular approach, uh, to foreign policy, would be, uh, preferable to this constant attempt to de-escalate, which I think just invites the axis of ill-will, China, Russia, Iran, North Korea, to push the envelope further.

Freddie Sayers:             So to spell it out, does that mean that you think, uh, President Donald Trump would be better or preferable than a President Biden, to deal with this imbalance?

Niall Ferguson:             On foreign policy there's no question that Trump was better than, than Biden. I think Biden's been quite disastrous as a foreign policy president. The way I put it at the beginning of the year was, this election is empire or republic. If you're worried about the empire, then you should probably incline towards Trump. If you're worried about the republic, that's a little hard to do because it doesn't seem like Trump is overwhelmingly respectful of the Constitution. On the other hand, is Biden? Are the democrats really respectful of the Constitution? I think the Constitution protects the republic better than anything protects American global power. And I think American primacy is very vulnerable if there is another four years of Biden-Harris, which of course, uh, it's better to [inaudible 00:20:56] start to believe that Joe Biden's really making the decisions even up to the midterms if he's re-elected.

European Populism

Freddie Sayers:             Let's move the focus to Europe. We've just had the French elections and it feels like a lot of the political rebellion that is happening across Europe... We've seen obviously Giorgia Meloni in Italy. There is a s- resurgent right-wing party in Germany. Hungary has just had a slight step back, but it's still a majority properly right-wing government. And now France looks like it might well have a prime minister, Bardella, come this time next week and may have a president, Le Pen in three years' time, both of those are not clear, but the movement is definitely clear. First of all, do you think those same factors you just described for the US, uh, economic weakness, a lack of addressing the hard reality of their situation, are almost more true of Europe?

Niall Ferguson:             I think it's different. First of all, I don't think there's a clear trend. I mean, if you look at the European parliamentary elections, actually the center-right won. And Ursula von der Leyen will be, I think, almost certainly re-elected, re-appointed as president of the European Commission. And a lot of the journalistic commentary engaged in elision. France clearly swung to the right, I don't think Europe did. So that's the first point I'd make. The second one I'd make is that you don't have the same crisis of public health and, and morale in, in European countries. Something different is going on here. Let me try and characterize it. European societies are aging, uh, relatively rapidly. Uh, they're all aging, some faster than others. And yet, uh, they, they require, uh, immigration to off-set this aging process. That's the one thing that European voters really don't like. And European voters' interesting because they are relatively elderly in two ways. Uh, one, the demographics, two, turnout. They just turn out more these older voters. So older voters want, uh, a mid-20th century welfare state to carry on, uh, paying out, allowing them to retire relatively early, uh, and live, uh, comfortable and prolonged retirements. Uh, but what they dislike is that for this to be possible there has to be quite large scale migration, which obviously changes, uh, the, the atmosphere in their, in their towns and cities.

Part of what happened in France is revolt of the provinces. La France profonde has swung, uh, to the Rassemblement National and against, uh, President Macron. Uh, Macron who, in a sense, was attempting, uh, his own version of Blairism... That is to say, a kinda center-left-ish trend combined with center-right-ish policies. Uh, that game is up, just as he was up in Britain some time ago. But I don't think there's any easy way to square the circle in European politics because if you really take the action that you say you'll take on immigration, uh, you actually blow your older voters up, uh, with in- with higher inflation. You blow them up with, uh, with the Na- National Health Service not having sufficient staff to function, in the British case, or it's French equivalent. So I think there's a real contraction at the heart of European politics that the right talks, uh, the talk about immigration, it can't really deliver the restrictions without, uh, in some way hurting the interest of these, of these elderly voters. So, I guess, a slightly different story.

Plus, there's no superpower dimension to this. The truth is, we know that Europe is not a superpower because when the US stopped supplying (laughs) Ukraine with aid for six months Europe could not, uh, fill the gap. Europe relies on the United States for its security, period. There's no path to strategic autonomy that's credible. So I think European politics has a slightly smaller scale feel, a kinda provincial feel to it. And at heart of it all is this, I think, big fiction that you can somehow turn the clock back socially or culturally, but magically maintain the welfare systems, uh, that no longer work without large scale migration.

Freddie Sayers:             You said there wasn't a, a drift to the right. I mean, I think it is definitely factually true that within the European Parliament the left-wing block and the Greens lost and the center-right and the hard-right blocks gained. So there was a move to the right, even though, as you say, there was some complicating moves underneath the surface. And to me the thing that is striking is, is that the big economies of Western Europe are the ones leading that move. So France, Italy, and a little bit Germany is coming up. And it would've been-

Niall Ferguson:             Yeah.

Freddie Sayers:             ... unthinkable-

Niall Ferguson:             But this is wrong way to think, Freddie, about European politics. The way to think about European politics is that the center-right and the center-left, Christian Democrats, Social Democrats, created post-war Europe and they created it at the national level, uh, where they wanted to make sure that the far-left and the far-right could not make a comeback. So they would create welfare states that kinda bought the allegiance of voters to a democratic order, which had completely collapsed, remember, in nearly every country in the 1920s and 1930s. And the same Social Dem- Democrats and Christian Democrats of the European project and that European project was to create at least the rudiments of a European federation. And therefore to call the right, the center-right plus the far-right is a completely misleading framing. That the hard or far-right are people who question both aspects of the Christian Democrat, Social Democrat settlement, the national welfare state, uh, plus European integration. If you are looking at what they're offering, uh, in the Le Pen Rassemblement National, it is to undo Macron's reform of, uh, the age of retirement, to get... to allow people to retire-

Freddie Sayers:             I think they've gone soft on that recently.

Niall Ferguson:             Of course, because it's completely fiscally indefensible.

Freddie Sayers:             Mm-hmm.

Niall Ferguson:             And the markets will kill him if they tried to do it. But this is the problem, you're, you're really dealing in nostalgia, that's what you're selling in provincial France. I had a very interesting conversation with one of Macron's ministers about this. He said, "You know, we've created the best rail system, uh, in, in Europe, if you are a wealthy Parisian with a nice house in Provence. But if you live in Clermont-Ferrand, if you live in provincial France, the railway system's actually worse than it was in the 1970s and you know it." So the Front National taps the sense that la France profonde has been short-changed by people like Macron, you know, worked for Rothschild, is part of the elite, lives in Paris. You've kinda been short-changed by those people and what you really want is a sorta better version of the old France, but you can't have it. Because you just can't run that kind of a welfare system with your demographics and yet you don't want the immigration. So I think all of these right-wing projects, whether it's the Alternative für Deutschland, who didn't do that well in the European elections, but they did okay or-

Freddie Sayers:             They made gains.

Niall Ferguson:             ... or your Fratelli d'Italia. Now let's, let's-

Freddie Sayers:             Mm-hmm.

Niall Ferguson:             ... take Meloni and Meloni's really interesting-

Freddie Sayers:             Right.

The Taming of Meloni

Niall Ferguson:             ... because since being elected, this person who was described in the British media as far-right, you know, even f- post-fascist or crypto-fascist, has been entirely moderate in practice. Uh, even an attempt to take on the banks was very quickly abandoned when the markets went "yuk". And in truth, uh, Giorgia Meloni is on the phone to Mario Draghi for tips on how to be prime minister of Italy. Now, the word that they now use in Paris when they look at, uh, young monsieur Bardella is, [foreign language 00:28:44]. Can he be Melonized?

Freddie Sayers:             Mm-hmm.

Niall Ferguson:             In other words, can he be tamed the way Giorgia Meloni has been tamed in Rome? And that remains to be seen because I think the f- Rassemblement National is actually in some ways seriously populist. But my hunch would be that there's so little fiscal (laughs) room for maneuver that they will Melonize Bardella if, and it's still if, he becomes prime minister. I'm not convinced that he's a [inaudible 00:29:09]-

Freddie Sayers:             It feels like he's already being Melonized. I mean, lot of the policies has been-

Niall Ferguson:             Oh, yeah. Process has begun.

Freddie Sayers:             ... watered down, his rhetoric about the EU has changed. There's a lot of caution.

Niall Ferguson:             Yeah.

Freddie Sayers:             It feels like they are already positioning themselves roughly where Meloni was.

Niall Ferguson:             And let's not forget, the populists have all walked away from exit. I mean, Brexit killed exit for all the continental populists. Nobody now talks about leaving, certainly not leaving the euro. So, uh, in a way the [foreign language 00:29:35] process has been going on since around about 2016. But that's why I'm skeptical about Europe swings to the right. Really?

Freddie Sayers:             Just to be clear, would you call Marine Le Pen's Rassemblement National far-right?

Niall Ferguson:             You know, I struggle with this term because, I mean, it, it's right in the sense that they are to the right of, uh, Les Républicains. Or at least some of Les Républicains who split after the European results came out. But far-right I think is often used as shorthand by journalists in the English-speaking world to imply they're practically fascists, but they're not fascists. And I've been saying this since 2016 to try to explain the difference between populism and fascism. The fascists, if you could take a time machine back to the 1920s and '30s, march around the streets in uniforms and are quite keen on, on war. Populists are quite different, populists essentially say, "We've got too much immigration, too much globalization, we need to do something to kinda get back to what we used to be." But they're not in, in uniform and they're not talking war. So I think this is really populism. And the problem about populism, as was true in the United States in the late 19th century, is that it's quite difficult for it to deliver meaningful results to the people who support it.

Freddie Sayers:             So perhaps the Italian population are content to have a leader who is sort of nominally a little bit edgy and right-wing, and she does what... some things around family policy, that are a little bit shocking to kinda liberal centrists. She talks about immigration in a different way, although it's not yet clear whether she's succeeding in reducing numbers.

Niall Ferguson:             The operative word in your sentence is talks. So it bec- [foreign language 00:31:23] means you still get the speeches, you still get the language, you still get appeals to a, a traditional way of life, but you don't get any of the actual costs of turning the clock back. And that, I think, will be what happens, uh, in, in France and in other European countries. Of course, in some countries, in Scandinavia for example, you see the established parties just moving themselves rightwards, particularly in the immigration issue.

Freddie Sayers:             Yeah.

Niall Ferguson:             Take... Greece is a good example where Kyriakos Mitsotakis is clearly a product of the Greek elite with a, a elite US education. But he is managing to run a center-right government which is tough on immigration, very tough in some ways, um, and that's working because he's delivered economic results. And I think delivering the economic results will always transcend making great speeches. I mean, if you aren't delivering economically then it doesn't matter how good the speeches are, you're in trouble. Meloni's managed to avoid what really bedeviled more recent Italian governments, which is the bond market going, "Oh, God," and the banks getting into trouble. So I think that will be the same constraint on Bardella, if he becomes prime minister. He's gonna have to be very careful not to cause a spike in French borrowing cost.

Freddie Sayers:             Again, the Brits provided the warning there with the Liz Truss-

Niall Ferguson:             Lizz Truss.

Freddie Sayers:             ... episode. Exactly.

Niall Ferguson:             You know, you'd rather be Meloni than Lizz Truss.

Freddie Sayers:             Mm-hmm.

Niall Ferguson:             That would be my kind of analysis of anybody who finds themselves prime minister in a European country.

Freddie Sayers:             Just to make sure we're not underplaying the victory by the Rassemblement National, it, it's true that some things would change if they have meaningful power in French politics. That the standoff with the European Union could go up a few notches, there could be budget scraps that would definitely add a, a sort of insecurity in the European structures. And there can be some things on immigration. It is possible the that they can at least slow the pace of immigration. Those things might be considered-

Niall Ferguson:             When you put-

Freddie Sayers:             ... victories to their voters.

Niall Ferguson:             ... when you put it like that, the word far just doesn't seem really appropriate 'cause this is all kinda m- mildly a bit to the right of the center-right, not far to the right of the center-right. And I, I, I'd a- argue that if, if one looks ahead to the second round, it's not clear yet, uh, given the complexity of the French system, that, that, that, uh, the Rassemblement National actually gonna have enough seats to form a government. It could be a hung parliament even now because of the strange way the French electoral system works. And the same will apply when it comes to the presidency, the two round system is designed, it's intended to keep, uh, political extremes out of power. It'll, it'll still be quite hard for, for the, the RN to get the prime ministership and, and the presidency. And even if they success they will be constrained in the way that we've described, by the fiscal and the financial market pressure.

The Ukrainian War

Freddie Sayers:             Many of the so-called populist right parties in Europe are a little bit more skeptical about the NATO/Western-led efforts to resist the invasion in Ukraine. On the basis, I suppose, that a lotta people are dying and not a lot, not a lotta progress seems to be being made. You take a very different view on that. You, you, you d- as I understand it, you'd be critical of those right-wing parties' hesitation and feel, like, the effort needs to be strengthened if anything. Is that fair?

Niall Ferguson:             I think first of all, when you look at any people, any of the parties on the so-called far-right, the first question to ask is, "How much money have you received from Russian sources in the past 10 years?" And if the answer's none, then we can assume that there's a good faith debate going on, but it's not gonna be none in every case 'cause the Russians have thrown money at populist parties on the right, uh, over the last decade. And not without some success in influencing the direction of travel. Second question-

Freddie Sayers:             You're thinking of Le Pen?

Niall Ferguson:             There was-

Freddie Sayers:             You're thinking the RN in particular?

Niall Ferguson:             ... certainly, there was certainly Le Pen, uh, Putin connections. But there's been money, uh, going into the Eastern-Central European, uh, populist, uh, parties too. So this is a-

Freddie Sayers:             Is that not-

Niall Ferguson:             ... this is a bit-

Freddie Sayers:             Are we not getting a bit conspiracist there?

Niall Ferguson:             No. No, I don't think that-

Freddie Sayers:             Even if it's factually true that-

Niall Ferguson:             Well, a fact-

Freddie Sayers:             ... that, that... But if it's-

Niall Ferguson:             If it's factually true, it's not conspiracy, is it?

Freddie Sayers:             ... if it's factually true that Le Pen's party was borrowing money from Russian banks because she was being frozen out of Western banks, uh, is that proof that she's a Putin puppet or are we-

Niall Ferguson:             Follow the money is a good journalistic rule, as you know, Freddie. And I just say, if you're gonna have a debate about Ukraine, first can we be clear that this is a good-faith debate? 'Cause it isn't in every case. Uh, secondly, what exactly do you think would happen if Russia achieved its objectives? Which, uh, were at the very least, to render Ukraine non-viable as an independent, uh, democracy. I mean, annexation was, I think, uh, the most ambitious of Putin's war aims, but I think he would consider it a victory if Ukraine, uh, was, uh, sufficiently broken that it couldn't really function as an independent democracy. Now, how good would that be for the rest of Europe? You don't need to go, uh, very far to get an answer to that question, just go across the border from Ukraine to Poland or go to any of the Baltic States and say, "How would that be for you guys?" And the view there is, it would be disastrous. Uh, because it was-

Freddie Sayers:             You mean, if he was allowed to continue or allowed to-

Niall Ferguson:             If Ukraine fails-

Freddie Sayers:             Or if, if the conflict was frozen in its current form? What are we be, what are we talking about?

Niall Ferguson:             Well, I, I think the term f- So this is the critical problem, any of the kind of options that have been discussed to date seem likely to leave Russia in control of at least some parts of Ukraine that it didn't control prior to February 2022. Parts of the Donbas that it didn't control and possibly parts, uh, of the, of the Black Sea coast, the so-called land bridge to Crimea. Now, I don't think there's any, uh, viable Ukrainian government that could accept that, so I don't think any peace treaty is in the offing. As in the Korean case, you end up with an armistice, the fighting stops, and you have this, uh, border that is not really stable or accepted, but could very well become, uh, for a long period of time, the functional border, uh, between Russia con- Russian controlled Ukraine and independent Ukraine. That's a plausible outcome.

Freddie Sayers:             And is that bad if it's a... if it stops people dying and there's-

Niall Ferguson:             It's only bad, Freddie, if it leaves a rump Ukraine that is not economically viable. And that, that has a lot to do with how much territory the Russians remain in control of. Now, the problem with the suspension of US aid that began late last year and continued into this year, but has now, uh, stopped is that in that period Russia began to make territorial gains again. And the further west Russia goes the less viable Ukraine is, the harder it becomes to imagine successful economic reconstruction of Ukraine and, and a stable Ukraine. Uh, so a lot depends on where you actually stop the fighting, where the armistice, uh, f- uh, froze, uh, the Russians in, in control. Now, I think from an Eastern or Central European perspective, if Ukraine's left a South Vietnam, i.e. it's only a matter of time before it's gone, as opposed to South Korea, uh, in which case it has a viable and possibly very successful economic future, that makes a huge difference.

Freddie Sayers:             So you would support a freezing of the conflict and an accepting of an armistice, if not a full treaty, as long as... What? There was access to the sea from-

Niall Ferguson:             That's vital.

Freddie Sayers:             ... Ukrainian, uh-

Niall Ferguson:             That's vital.

Freddie Sayers:             ... point of view.

Niall Ferguson:             It's very [inaudible 00:38:59], it's very, very important that Russia not be in control of so much territory that it le- it renders Ukraine not viable. That's especially important on the, the Black Sea coast. But it's, uh, also quite important that they not be too close to Kharkiv, for example. So it's a very difficult-

Freddie Sayers:             So roughly where they are now, perhaps?

Niall Ferguson:             Uh, it'd be better if they were further east. But we are where we are and I think to be pragmatic, it's hard to imagine the fighting continuing, uh, for much more than another year because the costs on both sides are just unsustainable. The critical thing missing at the moment is a perception on the Russian side that they just are gonna have to keep on fighting and incurring costs. As long as they think, "Victory for Donald Trump in November makes the aid to Ukraine end, we get to win," they'll keep fighting. If Trump wins and signals, "No, no, no, we're gonna keep supporting Ukraine," which by the way Trump has said recently in an interesting, uh, change of direction, then I think the Russians will have to settle. Uh, so I think inevitably the intensity of fighting has to diminish and if it's anything like the Korean War, uh, it's sorta year three that both sides decide "enough." It's just a question of where the line is drawn at that point and what security guarantees Ukraine can then get. Because it's pointless from a Ukrainian point of view, to have an armistice if it just gives the Russians and chance to have a breather and then resume the reconquest of Ukraine subsequently.

So there's a huge amount that is very difficult. We know how difficult this is because back in May of 2022 when it was clear that the Russians had failed to take Kyiv, they did start negotiating. As we know what kinda the issues are, it's really, really hard, but I think exhaustion will-

Freddie Sayers:             Boris Johnson got involved.

Niall Ferguson:             He did. It's not clear how constructively. I think he encouraged... It's, uh, it's argued that he encouraged Zelenskyy to play hardball when there was some kind of a deal on the table.

Freddie Sayers:             What you've said is actually not so far from some of these, uh, populist parties that are accused of basically being Putin apologists. And that's what I object to. It's now accepted that it's a fantasy that the west are gonna push Russia out of Crimea and the Donbas and return to pre-2014 borders. Even though that is officially the position of all the western powers, as I understand it. So there needs to be a sort of a- adjustment to reality. And if you want that and if you accept what you were saying earlier about the relative weaknesses of the Western powers, it just seems sensible to adjust reality and expectations closer together.

Niall Ferguson:             But we must be clear who we're putting pressure on. It's not Ukraine. The pressure has to be on Russia to force them to negotiate in earnest. And that, that's where I differ from a lot of the more skeptical voices in, in the west and particularly in the United States. It was very, very bad that the House Republicans interrupted the aid to Ukraine. It created a huge opportunity for Putin to strengthen Russia's position and it exposed the Ukrainian forces to the nightmare of being in a d- defensive positions without enough ammunition. If the Russians think, "Ah, there's never gonna be any Western resolve here, it's only a matter of time before right-wing governments come in and pull the plug on Zelenskyy," then there's no way there's gonna be a negotiation. The pressure has to be on Russia and the only way you put pressure on Russia is you d- arm Ukraine, you actually need to give Ukraine more arms. They need to start being able to inflict real costs on the Russians so that the Russians realize, "You know what? Actually, we're gonna have to settle." And that's what's not happening.

Freddie Sayers:             Okay. So the question is, where are all these arms and all this money coming from? Because what you started off telling us was that the US is not capable of producing enough to guarantee its own safety.

Niall Ferguson:             Well, don't confuse-

Freddie Sayers:             And so characters like Elbridge Colby-

Niall Ferguson:             Yeah.

Freddie Sayers:             ... who's been on this show will make the case that, "Yes, what Niall Ferguson says is exactly right, the US has strategic weaknesses so it can't afford to throw everything it's got at Ukraine. It needs to focus on China."

Niall Ferguson:             My view is that if you just s- uh, cut off Ukraine, maybe cut off Israel too and focus on Taiwan, you, you have a self-fulfilling prophecy on your hands because first of all, you show that the West has no resolve 'cause you've just abandoned two allies. Uh, and then you arm Taiwan to the teeth, which is precisely the kinda thing that the Chinese will take to cross their red lines. I think there's a grave danger in that approach. What's interesting to me is that in the last year or so Republican thinkers like Mike Pompeo, Mike Gallagher, Matt Pottinger, people who I take very serious. Robert O'Brien, our former national security advisor, have realized the critical point that you have to maintain strength on all these fronts. Eastern Europe, Middle East, and Far East because they're part of one Cold War in which China, Russia, Iran, North Korea are working together as a kind of axis of ill will. And weakness in one will only encourage them in the other theaters. Now, it's true that there's a real fiscal constraint, but that's not an argument for appeasement, we did try that in the 1930s in this country when were fiscally constrained and you'll remember how that went.

Freddie Sayers:             Everyone always talks about appeasement, uh, it's always the, the argument that people reach for. I think a more relevant example is, Iraq and Afghanistan, recent examples where there has been an idealistic i- sort of ambition, which was not met by real power and real capability. If you're right that the US is strategically weak and doesn't have the resources it used to, it can't afford to fight on all of these fronts. Can't happen overnight that it rebuilds capacity. So in the medium term it needs to make choices and a lotta people think that just pouring money into Ukraine-

Niall Ferguson:             But we're not po- we're not pouring a significant amount (laughs) of money into Ukraine. Look at the numbers, it's a very, very small part of the US, uh, defense budget. It's a rounding error. The cost of arming Ukraine is really not large. What has constrained us has been Joe Biden and his advisors' insistence that we mustn't escalate because terrible things could happen. So we haven't delivered, uh, the kind of armaments that would really have kept the Russians at bay. The Germans are still sitting on their, on their Taurus missiles that the Ukrainians badly need. Not because they're strapped for cash, the missiles are there and paid for, but because of this fear of escalation. My point is that you have to escalate to de-escalate. You have to send a signal to Russia that we're not contemplating throwing in the towel. And fiscally, this is not a problem. Uh, you have to look, for example, at the Ukraine Support Tracker, the data from the Kiel Institute on the world economy, to see how trivially small support for Ukraine has been, compared with large scale fiscal efforts that the, the Western powers have made in the recent past.

The financial crisis, COVID cost orders of magnitude more than support for Ukraine. So this a kind of, I think, economically illiterate argument people are making. Aid to Ukraine is really not the same as intervention in Vietnam because American troops are not on the ground, neither are British troops. We are confusing ourselves by not understanding the orders of magnitude. And in all debates about policy you have to begin by realizing that it's a bargain to keep Ukraine in this war. The Ukrainians do the fighting, they do the dying, and we are not supplying them with sufficient weaponry to win. We're supplying just enough for them not to lose and that's not a sustainable policy.

Freddie Sayers:             Final question on this 'cause I wanna get to the UK. And we could, we could go on... But we talked about Pravda and these kind of complicated messages. I mean, escalate to de-escalate might sound a little bit Pravda-esque. It's a kind of paradox that... what does escalate to de-escalate mean?

Niall Ferguson:             Well, if you've never been in a fight-

Freddie Sayers:             But the-

Niall Ferguson:             ... then you won't understand it. If you have been in a fight, you will. I mean, you... the way you end a fight is not by saying, "I'm not gonna hit your face, I'll only hit you on the shoulders." So it's actually quite simple. The logic of, of violence is not well understood in our s- in our highly civilian societies where only a tiny number of people serve. And then most people don't experience any kind-

Freddie Sayers:             Yeah.

Niall Ferguson:             ... of organized violence. If you do not signal to the Russians the cost of this war is gonna remain high and get higher for you, we will never get to meaningful peace negotiations. This is not a profound and-

Freddie Sayers:             And what if-

Niall Ferguson:             ... paradoxical idea.

Freddie Sayers:             ... what if there just isn't public support for it? So you might think it's sort of strategically wise to show that strength, commit those additional resources, what you had said about it being a bargain because Ukrainian lives are being lost instead of, uh, American lives. Some people will hear that and think, "That doesn't sound like s- a policy I wanna stand behind.

Niall Ferguson:             Well, what would you rather?

Freddie Sayers:             It sounds-

Niall Ferguson:             Would you rather have Russia... Le- just put it [inaudible 00:47:29]-

Freddie Sayers:             Well, let me [inaudible 00:47:29]-

Niall Ferguson:             Let me put it such, to such people-

Freddie Sayers:             Regardless what either of us might think.

Niall Ferguson:             Let, uh, put two such people-

Freddie Sayers:             If there isn't popular support-

Niall Ferguson:             Yeah.

Freddie Sayers:             ... in Western countries like the US-

Niall Ferguson:             Well, then-

Freddie Sayers:             ... for those kind of measures, then it's-

Niall Ferguson:             First of all, the, the-

Freddie Sayers:             ... it's not possible.

Niall Ferguson:             ... the, the popular support has not diminished, uh, that significantly as you would imagine 'cause it's not as if there're body bags coming back, uh, to Idaho, uh, or Iowa. Uh, popular support's actually fairly resilient. There's some... there were some erosion amongst Republicans, there's been some erosion amongst, uh, people on the European, uh, right. Uh, but it's not actually a huge shift. If one looks at the polling over the last two plus years of this conflict. But the point is simple, if you allow Ukraine to be defeated, if you turn it into South Vietnam, whether it's defeated tomorrow or three years from now, what does that mean? Do you honestly think that Vladimir Putin would say, "That was it. That's all I wanted. I'm fine now." Or would it not a matter of, of a, a short time before Lithuania was next in line? Russia is clearly not gonna rest content with victory, uh, over Ukraine any more than Iran is going to stop seeking ways to destroy Israel. And China is not about to say, "As long as you respect the One China policy we won't do any more fly overs or blockade simulation.

So let's try and learn some history, some serious history. Unlike people who like to talk about appeasement, I've studied it, I wrote a book about it, War of the World. One of the things that I try to show there was, that if you allow yourself to be fiscally constrained to the point that you say, "Well, our debt burden is such that we just can't do this. We better give Hitler a, a bit of Czechoslovakia and hope that that will do." You know where that leads. And if we've forgotten that, if we haven't understood how the British Empire got into the disastrous situation in 1940, then how are we ever going to advise the Americans as they face the same challenge? If you're gonna match them as they build their nuclear arsenal, you've got to learn the real lessons of the mid-20th century. And I worry that in a whole bunch of different ways we're forgetting them. We're forgetting them with respect to the fate of the Jews. That seems to be one of the more striking features of the past year. A kinda weird amnesia about, uh, what the Holocaust was and where it came from. And we're suffering the same amnesia when we are confronted with an obviously fascist regime in Russia, if we think that, uh, handing them Ukraine is going to somehow buy us peace in our time-

Freddie Sayers:             But no one is talking about handing them Ukraine.

Niall Ferguson:             But that would be the effect.

Freddie Sayers:             You, you were talking about South Korea as an e- example-

Niall Ferguson:             That's what we have to, that's what we-

Freddie Sayers:             ... which is still-

Niall Ferguson:             ... can realistically get to.

Freddie Sayers:             Many people would still say that was surrender, if you were gonna allow some part of pre-2014 Ukraine to formally become Russia. That's really the argument.

Niall Ferguson:             That seems like a wild-

Freddie Sayers:             Is it appeasement-

Niall Ferguson:             ... conflation-

Freddie Sayers:             ... or is it Korea?

Niall Ferguson:             ... of completely different terms. Because what was amazing about our intervention in the Korean War was that we prevented the dis- disappearance of South Korea. And South Korea then went on to become the single most successful economy of the late 20th century.

Current UK Politics and the State of the Nation

Freddie Sayers:             I promised that we would get to our own election here in the UK. Uh, the country of which you are now a Knight of the Realm. Let's talk about that because it looks... if the polls are even vaguely right, it looks like Labour is definitely gonna win a majority. The expectations game has been such that even if the Tories are reduced to 150 seats, from 376, that would be considered a relative success because so many predictions have put them down at 50, 60, 70 seats. Uh, I gotta start by getting a prediction from you. We're voting this week, um, how many Tory seats will it be come Friday morning?

Niall Ferguson:             I have already made a bet, uh, that it will be fewer than 100 Conservative seats.

Freddie Sayers:             And what is your explanation for that?

Niall Ferguson:             Well, in practical terms the tactical voting in a first-past-the-post system can really kill you if you've been in government, uh, for 14 years. And in some ways this is the natural, uh, pattern of, of British politics. I'll, I'll... Let me try and give you historical perspective. There have been previous eras when a party suffered a profound, uh, defeat after a period of, uh, of rapid changes at the top, uh, around about electoral reform, for example, around about free trade. The 19th century saw periods when there were multiple prime ministers in short spaces of time. So what we've seen in recent years in Britain is perfectly precedented. And there are elements in, in... it seems to me in the recent past that are very family to any student of 19th century, uh, British politics, including the fact that, you know, all the prime ministers were educated at Oxford. Uh, so some things are kind of, uh, perirenal about the way that British politics works. The question is, will this be one of those seismic shifts that ends a party's ability, uh, to form governments. That happened to the Liberals, is it about to happen to the Conservatives?

I think it's a reasonable question to ask and that's why I think the conservatives are in grave danger of falling to, to such a, a, a rump in the House of Commons that they no longer seem like a, a credible future government. I think the reason they're in this position is, again, partly just the familiar pattern of exhaustion that comes if you're in politics and if you're in government for 14 years. Uh, and so we, uh, we shouldn't really be surprised that the conservatives are heading for defeat.

Freddie Sayers:             Compared to Europe, who... which we were just talking about.

Niall Ferguson:             Yeah.

Freddie Sayers:             It is quite striking that just as Europe, whether it's leaping to the right or edging slightly rightwards, definitely is going in apparently the opposite direction to us. Is that just a kind of random coincidence-

Niall Ferguson:             No.

Freddie Sayers:             ... it's the cycles of politics? Or is there-

Niall Ferguson:             But Britain faced the same problem that the, the European political center face, whether it was the center-left or center-right. And the problem was a populist backlash against globalization, against large scale flows of people across borders, against European integration, happened here just as it's been happening in Germany and happening in Italy and happening in France. And David Cameron as prime minister decided that the only way to prevent the Tories being out flanked by some party on the right, whatever it called itself, UKIP, Brexit Party, whatever, now Reform. The only way to preempt this was to have a referendum. And that fateful decision, I think, has had more or less inevitable consequences, uh, for the conservative party. If the outcome of that gamble is the biggest Conservative defeat in history, then it really will be stairway to hell. And if the outcome is the most powerful Labour government in history, which seems highly likely. I mean, I'm certain the Labour majority's gonna be bigger than Tony Blair's in 1997, then the law of unintended consequences will really have won the day.

Freddie Sayers:             But you see this as a kind of playing out of the Brexit central flaw in some way? That it all stems from 2016?

Niall Ferguson:             I mean, some people listening to this interview will hate me for saying this, but the problem about it is obvious. A lot of people voted, uh, Leave in England and Wales because they believe the proposition that money going to Brussels would now be available for the National Health Service and control over migration would be returned, uh, to the UK government. Since Brexit there have been a number of striking developments. One is that the National Health Service works a great deal less well than it did in 2016. But the most striking unintended consequence for people who voted Leave is the surge in net migration to unprecedented heights. And the paradox that there is now much more migration from outside Europe than there was before. And so it's hardly surprising that many voters feel disillusioned, in addition to which economically the collapse of investment, which was the most striking consequence of the Brexit vote, has had a really impact on productivity growth, so that the UK is really barely growing, relative to the trend that it was on prior to 2016. And again, one wouldn't expect voters to be very cheerful if they had the combination of low growth and the spike in inflation that, that followed the, the pandemic and the outbreak of t war in Ukraine. So, uh, I don't like the term-

Freddie Sayers:             [inaudible 00:56:03]-

Niall Ferguson:             ... perfect storm, but if you add all of these things together, it becomes hard to think of a very strong argument for voting Conservative because none of the things that were promised-

Freddie Sayers:             Mm-hmm.

Niall Ferguson:             ... has been delivered.

Freddie Sayers:             Meanwhile, there's been this big surge in support for Reform UK, led by Nigel Farage. Compared to some of those European populists we were just talking about, he's a different kind of character because he has much more of a Thatcherite economic vision. He's about trimming... in fact, it sounds a little bit like what you were talking about.

Niall Ferguson:             Well, this was part of the problem about Brexit. It also sold itself as some kind of, uh, renewed Thatcherism, if we could only free ourselves from Brussels there would be a, a kinda saw away, uh, free market Britain. And, of course, none of that happened. On the contrary, it seemed as if at least under Boris Johnson a big government vision, uh, came back in. So-

Freddie Sayers:             So t- my question is, do you like Nigel Farage? Because he sounds... What he's proposing, which is a sort of robustness on immigration and culture issues, but really quite a Thatcherite economics, sounds like you might quite like it.

Niall Ferguson:             I don't think that Nigel Farage is a serious person. And I don't think that he offers a serious solution to Britain's problems. Unfortunately it's not clear who does, uh, because what Keir Starmer, Sir Keir Starmer and Rachel Reeves offer is a kind of remnant of the old social democracy. A little bit more money here, a little bit more money there. They're gonna face a national security crisis that will blow Rachel Reeves' arrhythmic out of water because Britain is in such a parlor state, with respect to its defenses, uh, that, uh, the, the, the shopping list, the spending priorities in Rachel Reeves' speech, I think, will, will not last very long at all. Labour will find itself re-enacting the 1970s, only it'll be the public sector unions that they'll have to grapple with. And it's clear to me that they have no real solution to the productivity problem, the investment problem, the demographic problem.

Britain's problems are the familiar problems of these mature European countries, we simply don't have anybody offering serious solutions that would get Britain back to higher investment, a productivity growth, exploiting what we still have. We still have some of the world's best universities, we still have some real human capital, but we have a massive structural problem in the age structure and in the productivity growth. And nobody in this t- election, and I dutifully listen to the Today program hoping to hear some sense. Nobody has a sensible answer to the question, what do we do to get the British economy growing again?

Freddie Sayers:             So let's get a sense of what we're going into then. There are sort of two caricatures of the Keir Starmer project. Uh, the one that he himself leans into and h- his critics on the left shout about is that he's basically a Blair-right. His vision for the economy is growth. He thinks he's gonna put in some sort of industrial strategy or make investments that are gonna allow that productivity gain to happen, et cetera. Uh, are, are you sold by that version of Keir Starmer? The kind of surprisingly right-wing Keir Starmer?

Niall Ferguson:             Well, he's Harold Wilson and, and what's great about Britain is that while other countries just flirt with re-enacting the 1970s, we're going to do it like some BBC costume drama with meticulous attention to details. We have somebody whose hero is not Tony Blair, but Harold Wilson. Uh, and he's going to have exactly the problems that Harold Wilson had because you can talk a big game about industrial strategy. I um, waiting for the white heated technology to come out as a phrase. But, uh, it's the pound in your pocket that you start talking about next because the economics is just not pretty. Uh, the fiscal position they're inheriting are like the fiscal position that, uh, Gordon Brown inherited as chancellor, is dire. And it's dire for the reasons that we've, uh, we've discussed. Uh, public finances will constrain the next British government the way they constrain the next French government, the way they constrain the current Italian government. Uh, and, uh, I think that will be the problem just as it was for Harold Wilson. It's lovely to imagine Britain somehow embracing technology and achieving, uh, higher productivity growth. But then you run into the realities that your clients include public sector unions who think that Christmas has finally come.

Uh, you've got a whole, uh, House of Commons full of people who probably never expected, uh, a year and a half ago that they would become members of parliament. Uh, maybe they manage to get all the core ministers out, I'd be impressed if the [inaudible 01:00:40] was that thorough. Uh, but I don't believe that a really, really large, a historically unprecedented majority, like a majority comparable with the national governments of the mid 1930s, is actually gonna be good news for Kier Starmer. Because will be extremely hard to temper the expectations of the people who suddenly find themselves in the House of Commons.

Freddie Sayers:             So rather than the version I just presented, the alternative demon that we heard about from Peter Hitchens, who was here during our Hastings, he actually said he thinks Keir Starmer is the most left-wing person ever to put himself forward for the office of prime minister, which did surprise-

Niall Ferguson:             That's a little hard on [inaudible 01:01:15].

Freddie Sayers:             ... me in the context too. But yeah. Jeremy Corbyn and Micheal Foot. Do you, do you go along with that more then, that actually despite all the rhetoric, that both the instincts of Starmer and the constructural pressures from unions, from his own back benches will be such that really it would be quite a left-wing, big spending government?

Liberal Government Financial Constraints and DEI

Niall Ferguson:             I think the left today has a different set of temptations. We saw that with the Biden administration. It's not that Joe Biden's a, a progressive, but if you find yourself, uh, uh, in power at the head of a, a government that sees itself as left-of-center, the easiest thing to do is to make concessions on all the diversity issues that the progressives really care about. And I think that will be one of the painful features of, uh, the Starmer years that, uh-

Freddie Sayers:             DEI on steroids?

Niall Ferguson:             It will be DEI, uh, up the wazoo, uh, because that's easy to, to... That's the easiest, uh, uh, vegan burger to feed, uh, to your progressive, uh, folks 'cause you can't give them a huge increase in public sector pay and you can't give them a huge increase in NHS budget and you are gonna have to force increased defense spending down their throats at some point. And so what do you do? You give them the culture war, uh, other f- other side, the flip side of the culture war which is all the progressive causes. So I think that will be the way in which it's a left-wing government. He can't afford to be a left-wing government in the old way, I think.

Freddie Sayers:             You don't think they'll just borrow more?

Niall Ferguson:             I think markets will have a thing or two to say about that. And this is the key thing. To give you one example of the problems Rachel Reeves will grapple with. The exodus from London has begun. It's not only that the Treasury has miscalculated the impact of changing the non-dom rules, it is also that every wealthy person who came to London over the last 20 years thinking, "Well, this sure beats Paris or it sure beats Milan," is now thinking, "You know what? Maybe Milan sure beats London." If this government is gonna have to sort out the fiscal mess that it inherits and it, it's clearly it's default impulse will be to sort it out, uh, by taxing the rich. So I think there's gonna be quite a flight of wealth from London, it's already begun. And that's gonna be the kinda problem that they find themselves dealing with early on. The Lizz Truss scenario isn't quite the s- the, the, the thing they'll have to face, but there's a version of it for a Labour chancellor of the exchequer that could be just as unpleasant.

When you're borrowing, when your debt has reached the point that it's in excess of 100% of GDP, in an environment in which interest rates are not going back down to where they were, uh, in the period of the financial crisis, bef- and before the pandemic, it all costs a lot more than it did, that great, big debt. Just as the mortgages of your, uh, supporters, if you're a Tory prime minister, cost a lot more than, than they did. And that's the new world that all of these people are in. The fundamental structural change that's happened is that inflation went up and rates have gone up, and with the large debts that accumulated between the financial crisis and the pandemic, it is much more expensive to run the government than it was.

Freddie Sayers:             Mm-hmm.

Niall Ferguson:             That leaves you with very, very little fiscal room for maneuver. And the market is waiting, like piranas, looking for the bleeding cow in the Amazon, to pounce on whoever screws up first. And we've already had some trailers, Lizz Truss was one of them. Bond markets, uh, paroxysm, will be a big part of the story of the next few years, whether you're a Labour, uh, prime minister or a prime minister of the Rassemblement National.

Freddie Sayers:             So actually, I'm sorry to say, it's a little bit of a depressing picture you're giving us because if we're walking in to this Labour government, it's so constrained anyway that it won't... I suppose one could be reassured that it won't be able to do anything too interesting in a direction that you might think is unwise. But it sounds like it will be just further managed decline.

Niall Ferguson:             Well, let's a- let's ask ourselves, well, what institutions work really, really well in Britain? What are the, uh, the, the... still the institutions that work well? How about the private schools? They're clearly better private schools than the United States, it's one reason that my family is spending much more time here than in the US. And what is Labour gonna do? Well, of course it's gonna (laughs) attack them by putting VAT on, on school fees. So it, uh, you know, you get a sense that, that the wrong things are gonna get prioritized for the old familiar reasons, class war. It still sells. It's Britain, it's class, it's where we, it's where we always seem to meet and default to. So I can't be full of glad confident optimisms about, uh, about the Labour era. It's not 1997. I can remember the morning after, uh, Tony Blair's 1997 election win doing, uh, In Our Time with Melvin Brag. And Melvin was so hungover from celebrating, uh, that during the show he had an enormous cramp in his leg. Uh, and I, I've never seen anyone sorta be simultaneously happy and suffer a agonizing cramp. But that was the mood at that point. It won't be like that.

There's just not going to be, uh, the same euphoria because this Labour government is inheriting a hot mess, whereas the last Labour government inherited the legacy of Margaret Thatcher which even John Major hadn't been able, uh, meaningfully to degrade.

The Long View

Freddie Sayers:             I always like to look for a little tiny beam of hope at the end of these conversations 'cause we can leave our audience kind of really, really depressed. What about this scenario for the coming Labour years? That there is actually a benefit of the UK being seen as this sort of stable, sane place, in comparison to quite a hectic populist Europe? Maybe capital does start moving back to the UK, the kind of Davos crowd will like the Starmer project. They, they're already getting endorsements from, uh, s- very popular in the Financial Times it appears. So maybe, uh, even though you don't like it on principle basis, there will be a kind of boom of a kind because of the fact that they're not crazy Tories?

Niall Ferguson:             Dream on, Freddie. That's just not happening. I think what's much more likely, if you wanna be optimistic, is that over a 10-year time horizon the axis of ill will, the other side in Cold War II, will have problems of their own that we don't yet fully foresee. Remember, the people who run these authoritarian regimes aren't immortal. Xi Jinping's health is, uh, not that great. I don't think the Chinese... next generation of Chinese leaders will really be wanting to pursue the aggressive Cold War policy he's pursued. I think change is coming in Beijing. I think change will come in Moscow. I think change will, will come in Tehran. I think what now seems a formidable axis 10 years from now could have fallen away. And that's why all along I've argued that in this Cold War you need a strategy of détente to buy time, not a strategy of brinkmanship when we're not ready. And so, if we can pursue that kinda strategy, then I think 10 years from now as, you know, I turn 70 and, and you make it to 30 or whatever age-

Freddie Sayers:             Let's leave it there. We'll go with that.

Niall Ferguson:             ... you'll be, um, it might look a lot better geopolitically. But I think that's the one consolation that I offer, our enemies are not 10 foot tall and they are mortal and their systems are dysfunctional. The demographic problems that we talked about in connection with Europe are worse in China, they're worse in East Asia generally. Uh, they're never gonna get their fertility rate back up. And in that sense, the West is not doomed. And I use the word doom in my last ironically, it's not the end of the world we have to worry about. Incredible thing about human beings is that despite our ability to screw things up politically, we're still quite good at technological innovation and, and scientific breakthrough. And that stuff goes on and it tends to go on at a higher rate and more successfully in free societies. That's what we got going for us. Uh, if Britain can retain the educational edge that it's had, the fact that it still has at least three, maybe four of the world's best universities, then it has a shot at being part of that next phase of innovation that will solve the climate crisis, that will solve the kinda problems that we currently confront. The problem of the chronic problems of public health that make healthcare so expensive.

Most of the problems we confront that lie behind the fiscal difficulties are quite fixable actually. We can probably make the cost of aging much lower if we just apply, uh, some of the technology that is already there. So I'm an optimist about that kinda thing. And to me, history is partly about how humans contrive mostly through politics, to impede the technological progress that is going on in free societies. That's really my story. And if you just look at how these two forces interact, you could say we've been talking about the least interesting aspects of life in 2024, which is the politics. And what we should've been tal- or the public finance, what we should've been talking about is what's going on in artificial intelligence, in drug discovery through AI, what's going on in improvements in, uh, in our understanding of human genetics. We, we could've talked about a lot of, or really more optimistic things.

Freddie Sayers:             Well, we'll, we'll have to, we'll have to get you back, uh, to do the positive side. I'm gonna take that as a beautiful, not exactly sunny up plans conclusion to our conversation, but definitely not exactly doom, as you wrote in your previous book. Niall Ferguson, thank you so much for your time.

Niall Ferguson:             Thanks, Freddie.

Freddie Sayers:             Well, I promised you a comprehensive world tour and that's what we got. The world according to Professor Sir Niall Ferguson. Lots to think about there. Thanks to him and thanks to you for joining. This was UnHerd.

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