Can We Trust Billionaires to Save Democracy?

Listen to their full discussion, which spans everything from analysis of current trends in democracy to thoughts on how China could serve as a model for the West. You can also read a transcript of the interview below the media player and find past episodes of “Scheer Intelligence” here.

Robert Scheer: Hi, this is Robert Scheer with another edition of “Scheer Intelligence,” where the intelligence comes from my guests. In this case, it’s Nicolas Berggruen. He was once known as the Wandering Billionaire, because he did a lot of his hedge fund and other investing business while living at hotels. He’s since become a concerned citizen and a leader of a think tank bearing his name. And he’s written a truly provocative and important book called “Renovating Democracy: Governing in the Age of Globalization and Digital Capitalism.” And it’s really about the need to profoundly alter our way of making decisions, because otherwise we are doomed. And so I guess I’ll leave it to you now to sort of give me, why this book, and what is the urgent message?

Nicolas Berggruen: Well, thank you, thank you for having me on your program. I’m honored and delighted. So, the book really covers, I would say, two main themes. One, the one you talked about, which is capitalism; and the other one, democracy. And what we are trying to think about are sort of two paradoxes. On one side, capitalism has conquered the world; it’s brought, frankly, billions of people out of poverty, so it’s been successful. And the question is, can it continue to be successful? Will it be rewarding for most people in the future? And rewarding not just from a material standpoint, but also from a moral, human, and dignity standpoint. And so these are serious challenges, but they’re not impossible to solve. Because with technology, with communications, with let’s call it a reasonable moral compass, we have the means, actually, I think, to address these issues. We need new thinking. And the question is, how do you take an old model which divided up the spoils in a certain way, and which created competition, which was healthy—but how do you make this competition fair? And what we are proposing is what we call pre-distribution, which is to give everyone something from the beginning, sort of a chance from the beginning, meaning obviously education, healthcare, the opportunities to have a future, the opportunities to have access to jobs and a dignified life. And the question is, how do you do this? And what society has evolved to is, some people start businesses, invest the capital, own these businesses, employ people, share some of the fruits of the investment with their employees, and ultimately with society through taxes. It’s been OK, but it’s becoming quite toxic–meaning the haves and the have-nots, not just in terms of money but also opportunity, are increasingly put in a position where they’re going to fight for those spoils, or fight for a position. And what we are proposing is to see if what is being created in terms of wealth, but also in terms of the sort of, the cultural value of what society produces. And this is, more and more will be, frankly, done by machines as opposed to people. How do you give this to everyone in a way that’s fair? And what we are proposing is, as opposed to redistributing through taxes, which is again, I would say, a very competitive and almost toxic environment, why not give everyone a chance from the beginning? And to put it in concrete examples, if going forward–you can’t go backwards, but going forward, if one creates a business, let’s say in California, as a compromise to potentially, you know, pay a different rate of taxes, let’s say lower, one would give a stake—which, that’s the important part, a stake of the business to the state. So that the state, and therefore all citizens who are part of the state, would really become owners in the business in the future of, hopefully, something that is successful. And there are always successes, and these successes are much bigger than the failures overall. So the successes become really quite valuable. So how do these successes get, if you want, come to the benefit of citizens as a whole? So why not give or contribute a share of new businesses to society as a whole, to the state as a whole, which would go into a large fund. That fund would obviously have value, and the cash flow from all these different businesses ultimately would accrue to citizens by contributing to the budget. And with modern technology, frankly blockchain technology, you can attribute to everyone a share of everything. So that everybody knows that they own part of something. They feel—and that’s very important—that they’re all in the same boat. So if a business is successful, that business is for the benefit of everyone; it’s not just for the benefit of the capital or shareholders or employees, or, frankly, the state as a recipient of taxes. It’s a more fundamental way to involve everyone, to have everybody be in the same boat from the beginning, as opposed to through redistribution.

RS: Yeah. And also in the book, “Reinventing Democracy,” you actually hold out—it’s interesting, the first time I thought of this idea was with John Kenneth Galbraith, a famous economist who was also our ambassador to India when he wrote a book called “The Affluent Society.” We’ve had it with Daniel Patrick Moynihan, who talked about a guaranteed annual income for everyone. And your idea in the book is really, separate the job–you know, the job may go; it may go because of artificial intelligence, it may go because of patterns of international trade. But the worker is entitled to the basic necessities of life. Would that be a fair statement?

NB: Yes. So—

RS: But let me just put a finer point on it. So in other—and some of this, I mean, is to my mind unquestionably a desirable thing to do. It’s actually what informs that cry for universal health protection, some kind of a living wage, basic safe communities, decent schools, and so forth. So that the wherewithal of life is not dependent upon having a specific job, and if the job disappears or if people go on to do other things, you know, they will be supported in what is needed for life. And I must say, we’re getting a lot of this kind of request from people like yourself who have been very successful—extremely successful in the economy. I remember interviewing Bill Gates about this once for Talk magazine, where he talked about how he was going to give away all of his money at some point. I think you’re a part of that, is it called a living trust, or—?

NB: Giving Pledge.

RS: Yeah. And the idea being that society requires some kind of floor that separates the basic needs or requirements of living, separate from whether your job is still needed. And that way you could have progress with artificial intelligence, robotics, and so forth. The missing link, it seems to me, is what will—there are some good folks out there, you know, Elon Musk, who you quote in your book, a lot of people. The question is, what pushes it over the finish line? Because it seems to me most of the reform that we’ve had in capitalist society, and in any society, has come from popular movements of resistance. People saying, “it’s not working,” and therefore they go on strike or they have a #MeToo movement or a Black Lives Matter movement, or so forth. It doesn’t generally come from the goodwill of affluent people. I mean, you mentioned in the book Franklin Roosevelt’s New Deal, for example—well, that basically came about because there was a movement of unemployed people and impoverished people in the Great Depression, and demanding, and veterans demanding pensions, and so forth. So what I find absent in the book is any discussion of the popular movements that will propel this change. And let me give you my other issue of concern: you lumped populism as sort of the enemy in this book, and direct democracy and so forth. And you associated that primarily with Donald Trump. But we also have the populism of somebody like Elizabeth Warren, or Bernie Sanders. And isn’t that sort of discontent from below required for public, for change?

NB: So, at the end, change is maybe the hardest thing, and no matter what. And you can see that even in democracies, change is very difficult. The country I was born in, France, elected a president on the basis that he would make some changes. As soon as he started making changes—this is Emmanuel Macron—you know, everything was stopped. And it’s been 20 Saturdays in a row that you’ve had protests, including violent protests, in Paris and all around the country. So change is very difficult. But you can, you know—I think the seeds of change are a little bit everywhere. In the discussion we just had about economic changes, changes in the way capitalism works, it’s already there. Discussions of universal basic income is everywhere. We are proposing universal basic capital, as opposed to universal basic income. Meaning, you know, a stake, or the opportunity to be a participant in society from the beginning, not just through a stipend, you know, over time. So if you want, it’s an evolution in some of the ideas that exist already. So the ideas, in some cases, exist already; but in truth, very often you need sort of people to run out of ideas. You almost need a, you need a crisis for ideas to be emerging. It’s never good to go through a crisis, because that means also suffering. But change is difficult; change very often includes suffering. And I would say what you call populism is really a symptom of discontent in general. In this case, on both sides, right and left. And is it unhealthy? It’s healthy that it exists; the expression of it could be unhealthy. To take an extreme example, look at what happened before World War II, which led to World War II. So if it’s extreme, it can become very unhealthy. And very often it empowers people who, let’s say, are extreme and will shut out the other side for a period of time. I don’t think that’s healthy. So the debate is very healthy; that’s part of a democracy. The expression of it can become unhealthy, and that’s what we don’t want. Because in a democracy, you have the potential of the tyranny of the majority in a way that people will accept as legitimate, because it’s done through elections. But elections is not everything; you need more than that, and that’s part of, I think, what made our democracy successful, is that it’s an ecosystem that involves citizens, but also involves government as a service organization. People who are elected and who, when they serve, serve everyone, not just their party. And what happens in periods of populism is that the people who get elected get elected because they scream maybe louder, or they have a message that is very emotional, maybe sometimes very legitimate. But they get elected, and they represent their voters as opposed to representing all citizens. And at the end of the day, democracies work because they work for the most people, not just for the people who’ve gotten the power.

RS: There’s an important point that you’re raising. And the book does. I think there is technological changing; has to be managed, it can destroy a lot of lives. The question is, who do we trust to bring about this change? And there is a message in your book that has a critique of a notion of democracy. Your book goes so far as to say the Founders didn’t intend for us to be a democracy, they were afraid of democracy. And you have some quotes that are real, their concern about the turning into a mob-run country, and so forth. However, I think the problems that we’ve experienced–and let me be very precise about this—have come not from the mob, and not even from the Donald Trumps. You do say that in your book; he didn’t create all these problems, nor did Bernie Sanders for that matter. An elite that was very responsible, very logical, that claimed—very well-mannered. And you mentioned these financial transactions—they were a scam. They testified, they knew finally when they were hauled before congressional committees, they didn’t even understand what these collateralized debt obligations were. They were just grabbing a lot of different things and putting them in a package, and it looked good and you sold it, and then you gave these liars’ loans and you deceived people, and you told them it was wonderful. And then the next thing you knew, they lost all their life savings and so forth. This was a major tragedy, and you know, people lost a lot of their life savings and it set them back, particularly minorities. So this was mischief on a grand level. And because of that mischief–and something that’s not discussed in your book, the resources we waste on needless wars, the lying about going into war with Iraq and so forth—came from good people that claimed they were concerned people. So you have this enormous mischief-making by elites, you know. Henry Kissinger is another person you cite in your book as a source, and these are all these very respectable people. Some of them have played a very good role, by the way; Stiglitz, the Nobel Prize winner, he was a very good critic and says all the things that I’ve just said about the banking scandal. But the main issue I have with the book—and I do recommend that people read this book, because I think it’s an unnerving and all-too-accurate view of what’s happening to technology, its effect on the job market, what’s happening with globalization. And by the way, a very, I think, sophisticated view of China that we don’t normally get. So I want to be positive about this book. I think it’s well worth reading, well worth having a discussion about. Where I have a problem with it is, it attributes no effective role to popular opposition and concern. And yet it seems to me most of the progress we’ve made in society has come from below. You know, people demanding civil rights, demanding women’s rights, demanding a living wage as now happens. Here in Los Angeles County and city we have actually a living wage coming into being. And so this idea that we can count on the elite to do the right thing–and that was, you know, Roosevelt hoped they would, but they didn’t. And so he went with what people from below were demanding, you know? That, to my mind, is the key issue: Does progress come from enlightenment on above, when they feel their situation is at risk? Or does it come from, yes, a notion of democracy, of complaint from below, and a demand that something happen? And in the French situation, which you probably, I assume you know a lot more than I do, there seems to be genuine discontent fueling opposition to the person, to Macron.

NB: No doubt. And the issue is that at the end of the day, no matter where you are, which society, if you’re going to go forward you need leadership. The real question is, which leadership, and who, and when? And what you’re saying, what you’re implying indirectly, is it’s very possible that the thinking that has, let’s say, shepherded over the last hundred years, maybe the thinking has gotten tired. The so-called elites that have been sort of leading us have been misguided. Maybe they got tired.

RS: Corrupted.

NB: Corrupted. Any system, after a while, no matter how successful, become corrupt inherently. And you need renewal. In this case, we’ve progressed so much, but also so fast, that you need potentially not only new ideas, but you need a renewal in terms of thinking, but also in terms of people. Ultimately, you’ll get new leadership–in essence, new elites of some kind. The question is, who are those people? You definitely need new people, by definition. You need new ideas, I think, more than ever. And you have to enable those ideas. Are they going to come from the people who have led us up to now? Probably not. Part of what we do, Nathan, who you mentioned, and I have created an institute that hopefully, let’s say, enables, helps new thinking and new ideas. I think it’s absolutely necessary, and the people who are going to bring about some of these ideas and lead us into the future will have to be new people. So, yes, you need a renewal in different people. Does it mean that you have to give up on the idea that you need a system that works for everyone, and that isn’t just giving a voice to whoever speaks the loudest? I think the system of trying to build a long-term future for most people is still the right idea. The question is, how do we get there, and—

RS: Yeah, no question. I think the contradiction of your book—and that’s why I want people to read it, to provoke a discussion, “Renovating Democracy.” And I think we all agree our democracy and the world’s idea of popular involvement in politics needs renovating. I think the solution you offer is excellent. Don’t get me wrong here. I think we have to move from a society based on scarcity and market formations and all of the things that have guided us to, as I mentioned, “The Affluent Society” with John Kenneth Galbraith—that you actually, through new mechanisms of production and so forth, can eliminate a lot of the drudgery of labor, and you can have a different kind of way of ordering society. And that’s why, for instance, the living wage, the idea of healthcare for all, the idea of a guaranteed decent place to live, decent public education, all of which are endorsed in your book. I don’t want to put words in your mouth, but I mean, to my mind, the book has a very positive program. I don’t want anyone listening to think that this is a book calling for indifference to the fate of the average person, or anything; quite the opposite. You are saying we have to have the will to do the right thing. What I am questioning, even though I don’t doubt that you have the will personally, and that you are committed to this—and I’ll even give you Buffett and Gates, and you know, there are people out there who seem to be genuinely concerned. I don’t think that’s where change is going to come from. I think most people who have their hands on the levers of power are going to go for greed, corruption, and exploiting people, and indifference. And we see a lot of examples of that. And all I’m trying to suggest is that in this grand, democratic experiment, it was the voices from below and the voices of people who were being left out, whether through trade unions or civil rights movements, or women’s rights movements, that put the pressure for change.

NB: We need change. We need new ideas. We are very open, and actually, we love anyone’s ideas, as long as they’re truly new and fresh. And they can come from any place. And I agree, very often they will come from not only below, but from unexpected places. I couldn’t agree more. And what we are trying to do at the institute is foster new thinking and new ideas. Not easy, because most people come up with sort of tweaks in some of the existing systems, or pushing, you know, more in one direction or another. So the idea of, let’s say, just increasing tax rates–well, thus will it change the way, you know, society is successful? Not necessarily; you have to have a real rethink. That’s why, for example, this pre-distribution idea is something that we are developing. It’s just an idea; it may be misguided, it may be a good idea, but we need more ideas like that, that are somewhat fresh, and not just a tweak on an old idea.

RS: No, no, let me—I am trying to embrace what I think is very fresh in this book. And that is—the analogy is the discovery of oil in Norway is in your book, or in Alaska for that matter. Those resources were shared with the general population. So the life of the ordinary person in Norway is advanced by the fact that they happen to have oil. And the analogy in your book is really with the new technology, and the internet, and the whole digital world. And this came about through government investment and the hard work of people—and, by the way, the exploitation of our private data. Your book is very clear that one of the ways you make profit for being Google or Facebook or so forth, is exploiting people’s data and so forth. And so, yes, the idea of a public stake in those companies is a very important idea in this book, “Renovating Democracy.” And I don’t want to tweak it. However, I want to add that this didn’t have to even be this way, because Google—and this is something that’s not addressed in your book—Google and Facebook have, in effect, a monopoly position. And so does Amazon. And there was a time when we actually had government regulations breaking up monopolies and demanding competition. And one key question that’s raised in this book, because the profit center for Google and Facebook–which are enormously profitable–is basically something that should have been adjusted by law. And that is the use of private data. And in all the, when we discuss the Telecommunications Act and we discuss financial acts, there was a whole, a big choice–I don’t want to bore people too much with the details, but opt in or opt out. And the question is whether the person giving this data could know what’s happening to it, could control it, and so forth. And the fact is, we didn’t go for that regulation. We let Google and Apple and Amazon and everyone else use this data and exploit it and so forth. So there is a place for government regulation, the rights of the consumer, right? And so forth. And so what I’m only asking here is whether we can really expect—and you quote all these famous people, Eric Schmidt from Google and Alphabet and all these people. And yes, at conferences, at think tanks, at talks they say yes, we have to do something because the country is falling apart. The book is quite strong in talking about, you know, the desperate straits that we’re in. And then the question is, will change really come about from this group of–what do you call them? The cast of world citizens or cosmopolitans or something, that’s in the book. But anyway, these well-intentioned people who show up, you know, at the Brookings Institute. The fact of the matter is, these well-intentioned people have been part of a lot of mischief-making as well. And that’s why I bring up Lawrence Summers. And they’ve done a lot of dumb things, you know, and they haven’t solved problems. And every once in a while a maverick—and I think you are in that category—comes along and says hey, guys, it’s not working. We got to do better. So, really, don’t you feel that sometimes you’re talking to these people and they’re maybe not listening to you?

NB: Well, I think part of the message is, yes, things are not working; therefore we need new ideas. And we are very keen on new ideas. I think that, no question—and we’ve seen it—things, especially now with technology, are moving much faster than any government, especially in the West, can keep up with. So government, society in general, has been behind the changes that have happened in technology. In truth, I don’t think the people who have created these companies, the ones you mentioned, knew that they would go as far as they went. I don’t, you know—I don’t think they knew, and I think they’ve in some ways sort of lost control of their own creations. And society will have to address not only these companies, but the fact that data, technology, the ecosystem, has changed everything in society. Not just the economic values, but the human values, the–you know, what we own as people, not just economically but from a moral standpoint, from a personal standpoint. So all of this has to be rethought. There are different ways; it’s actually very interesting to see how it’s being thought about at the two extremes, let’s say the U.S. and China, or even Europe, which is somewhere–which is a third way of thinking about these things. So we’re in the middle of it, and there is no question that the old thinking can’t address it. So you need new thinking. But what I’m saying is that some of the people who have invented this, didn’t even know where it would go. So they’re not going to solve it, necessarily. The governments are not going to solve it. And people from the outside are also not going to solve it, unless everybody is willing to allow fresh thinking, new ideas, not just fighting out sort of the old battles, but what can the future look like with these new tools. You mentioned oil; oil became a tool that helped us over the last century. We know oil is not going to help us that much in the, you know, in the next hundred years. We do know data and technology will help us, but we just have to make sure that it’s productive for everyone, economically, but also from a governance standpoint.

RS: Yes. And finally, I do want to put a cap on that idea, because this book, “Renovating Democracy,” basically holds out the challenge. And I know the words “redistribution of wealth” is not exactly what you’re aiming at here through taxation. What you’re really talking about, though, is redistribution of the benefits that are needed to sustain life. And there’s no question in this book that you are supporting a giving back to the public. Not just totally through jobs, because the jobs might disappear; you’re basically asserting a basic human right, to health, to security, to education. Again, I don’t want to put, attribute ideas to you. But as I read this book, there is actually a humanist manifesto—am I reading it incorrectly? That says–

NB: You’re 100% right. It’s a question of giving everybody an opportunity from the beginning. Because we can. And I think that’s different today than a hundred years ago, fifty years ago. And I think we can do it pretty much worldwide.

RS: And to the end, too, because you talk about taking care of them after they’ve lost their jobs, right?

NB: You can, throughout somebody’s life today, from the very beginning until the very end, you can give them the opportunity to have a dignified, productive, and exciting life—you can. And I think that’s very unique. So not doing it will not only create, you know, harm and conflict, but frankly be an enormous missed opportunity for humanity. So I think we have to make sure that we get there, and it’s by giving everyone a chance to have it, to do it from the beginning. And I think that’s possible.

RS: Well, you know, you—this is a good point on which to end. But I just want to push it a little bit further, because I think this may be worth the price of the book [Laughs], or admission. We have lived for so long with an America-centric view of the world. And you, first of all, bring the perspective of a European, a well-traveled person. But I think this is the first time, well, in a long time, that I’ve read a book where they first of all understand China as more than this communist country. You’ve traced it back to is Confucian, philosophical origin; you talk about a notion of the whole society, of an obligation. You talk about Maoism as a sort of transitory period, and then a revival. And you’ve had a unique vantage point on this, because you’ve sat down in overstuffed chairs with people who actually make the big decisions in that society, right? And you’ve been accompanied by colleagues who know a lot about China and about the relationship. And this is a relationship that during the Cold War we would never have expected to have with a still-communist China, still run by a Communist Party. And what I thought was very strong in your book was an attempt to understand this other society as something other than a threat. Because it isn’t primarily a military threat, but it’s actually a modern economy that we can learn from. That seems to me the, you know, the–I don’t want to say “provocative” in the sense of bad. I think that’s maybe the real wisdom in this book, is that your willingness, you and your coauthor Nathan Gardels, to actually say wait a minute. There’s some big truths, and maybe we can learn from these people who look and talk and seem very different than us.

NB: Well, at the end, I think we need to reinvent some of the key things that we lived with, or that, you know, have made our lives. We have to reinvent probably our political system; we have to reinvent our capitalism; we also have to reinvent the way geopolitics has worked. This was your point just now. And ultimately, because of technology, we’ll probably have to reinvent our notion of the human. Between artificial intelligence and gene editing, we in essence have the chance to create a new human going forward. So we have to think about, what is the nature of who we want to be? So you know, these are big, big issues. They sound almost too big, but you can’t start small; you have to think, you know, where do you want to go? How far? You know, where is the other side? And then walk backwards, not the other way around. And if you think about the potential, it’s a stretch, but also the potential of reinventing who we are, then reinventing what the globe might look like with different cultures for the first time, not just one dominant one. Reinventing the nature of our social contract, our economic system, and ultimately also the nature of our democracy, because our democracy today has to function differently. People can and will want to participate much more as individuals, but you still need a way to bring people together, and you need to have people make, at the end, if they’re representatives, be able to make decisions. And in a way, that’s constructive, not just as political instruments; you need to have whoever you elect be there to service the people. So you have to reinvent that, too. So that’s a little bit the message of the book, is you’ve got to reinvent all these things that has made the world overall a success. You need new thinking; the old elites are probably not going to come up with the new ideas. They may have good questions, but we have to be open to new ideas. And open means really open. That means we have to shake up a little bit our culture, our thinking, and that’s hard. But that’s a little bit of what we try to do at the institute, and we welcome ideas, thinkers. Even if they’re not popular or, let’s say, conventional; especially the opposite.

RS: Yeah. And I just want to tell people that this book also asserts that we’re in big trouble if we don’t rethink these questions. I think that would get the attention. That’s it for this edition of “Scheer Intelligence.” I’ve been talking to Nicolas Berggruen, who along with Nathan Gardels has written a really provocative book, “Renovating Democracy: Governing in the Age of Globalization and Digital Capitalism.” It’s a University of California book. And I think it’s the beginning, not the end, of a discussion about the needs of democracy, whether it can work, and under what terms. Our engineers at KCRW are Kat Yore and Mario Diaz. Joshua Scheer is the producer of Scheer Intelligence. And I want to say here at the Annenberg School at USC we’ve had an admirable assist from Sebastian Grubaugh, and I want to thank USC and Annenberg School for hosting us. So see you next week.