← What Really Matters with Walter Russell Mead
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- [00:00]
A
Foreign. Welcome back, everybody, to what really matters. I'm Jeremy Stern with you in Los Angeles. I'm here as always with Walter Russell Mead of tablet, the Wall Street Journal, Hudson Institute and the Hamilton School at the University of Florida. Let's start with this week's news. First story of the week. Pope Leo warned that artificial intelligence, quote, threatens to normalize an anti human vision and said that the concentration of immense digital power in the hands of a few private actors must be countered. The pontiff's encyclical letter reads like a sharp warning to Silicon Valley executives and humanity more broadly about the future of civilization as new technologies rapidly advance. The risk, he said, is that humans will be reduced, quote, to mere cogs in a system driven toward ever greater efficiency. The primary choice, he wrote, is not between a yes or no to technology, but rather between constructing Babel or, or rebuilding Jerusalem. Conversations with scientists, political leaders and teachers led Leo to this disturbing conviction, the pontiff said Monday at the presentation of the encyclical. Leo was accompanied by Christopher Ola, the co founder of Enthropic. Walter, is this news orifo news?
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Well, I think it's news in that when the Pope issues an encyclical and sort of states the Catholic position on a major issue, it's going to be news, I think. You know, I have not yet read the 43,000 word encyclical and I must say I'm not sure I like this trend of world leaders writing long. Blair, Tony Blair had a 6,000 word essay out and there's Vladimir Putin's little book on Ukraine that he published the summer before the war. I think public intellectuals should publish and everybody else should just talk, you know, I suppose, you know, I guess popes are going to. Pope. So he's going to write encyclicals. I'm not. Again, this is, I'm, I am going to read it and I'm going to. We'll have a more considered response at that point. But I was struck by what seems to be a tension in there. On the one hand, he's saying that we have to avoid the Tower of Babel that, you know, a sort of. But then on the other hand, how do we do this? Well, we're going to have to build an international, global regulatory system that will differentiate good AI and bad AI. And I'm not sure that I know quite how the Russians, the Chinese, the Iranians or some others are going to vote on that. And I think you might actually end up with something that was Orwellian. And more horrible because it was more global. Now this, you could say this is just some bitter Protestant complaining about traditional Catholic ideas of universalism. And there is something there. But it also, I think it's a fair criticism, at least from what one's seen so far in the press. Is the Pope really just restating fundamental objections to capitalism and using AI as the know, as a sort of whipping boy here? Because this notion of, you know, a soulless machine, that people are reduced to being mere cogs, it sounds like the kind of description that some Catholic social theorists would use to describe capitalism as a whole. So I am not clear on exactly what it is about AI that gets, that elicits this response. Is it a real focused analysis, some specific element of AI that has changed the situation? Or is he merely seeing AI as at most an accelerant of a pre existing condition and using it as a hook to hang a sort of a polemic on? I just don't know.
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Just for our listeners edification and my own too, what is the ultimate point of encyclicals? How kind of either important or significant or binding are they for the Church, for the individual Pope's legacy, et cetera? Like, why does this exist in the first place?
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B
I guess, all right, the answer is that, and again, I'm an Anglican, so please take all of this. You're not talking to the sort of Secretary of State of the Vatican here. But as I understand it, papal infallibility is limited to very, very specific circumstances. And an encyclical letter is definitely below that level. He's not proclaiming a doctrine, but he is issuing a teaching. And the idea would be that a good Catholic would normally be, you know, would normally sort of accept this as teaching of the Church. And it doesn't mean that a good Catholic who was well informed and studied it couldn't disagree and even disagree sharply and publicly while you would remain a Catholic even if you did that, but that the Pope intends this. An encyclical is addressed to the entire world. So it is intended as a message that Catholic bishops and other authorities should say, okay, this is what the Pope wants and this is what I need to do. But also lay people everywhere should take it quite seriously.
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All right, our second story. The United Arab Emirates carried out dozens of airstrikes against Iran beginning in the early days of the war and continuing through the day after the April ceasefire was announced. A deeper involvement that was previously known in the air campaign led by the US and Israel. The attacks were conducted in coordination with the US and Israel, both of which provided intelligence. They included targets on islands in the Strait of Hormuz, Bandar Abbas, the oil refinery on Levon island in the Persian Gulf, and a petrochemical complex. Some of those strikes targeted Iranian energy facilities in response to Tehran's attacks on UAE oil and gas infrastructure. The Emirates has long had a high appetite for foreign policy risk and a willingness to use military power to advance its interests in the region. According to the Wall Street Journal, in recent years, it has sent weapons to militias in Sudan and Libya and mercenaries in Yemen. But it isn't yet clear whether the country has the capacity to deter a much bigger, closer enemy like Iran. Walter, is this news or Faux news?
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That last sentence didn't strike me as the most, what do I say? The wisest sentence in the column. Because no one, I think, I don't think there's anybody on the planet who thinks that the UAE has the power to deter Iran. That strikes me as absurd on its face. What the UAE was hoping to do was to strengthen its defense relations with the US and with Israel and to demonstrate to Iran that if you do something to me, not only I will retaliate against you, but I will do it with help from these other countries. And you keep on doing it, and these other countries may join in. So they were signaling Iran, signaling in a very focused and powerful way. But the Iranians will know, too, that the Emiratis can't really count on Donald Trump having their back. Trump makes his decisions from day to day based on other considerations, of which the Emiratis are one, but by no means the only. Nevertheless, it was saying, we saw what you entered. Their marauders are saying to Iran, we know what you did. We don't like it. We have options. Watch out.
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All right, final story of the week. The U.S. bureau of Economic Analysis released its newest GDP report Thursday, and it may help us understand why people are so miserable about the economy. Worker compensation, wages and benefits grew 0.8% in the first quarter from the fourth, while domestic corporate profits jumped 2.7%. As a result, labor's share of gross domestic income sank to 51%, the lowest since records began in 1947, while profit share climbed to 12.1%, the highest since 1950, adjusted for inflation. Hourly wages are up 3% since the end of 2019, while profits are up 50%. That, in a nutshell, explains the chasm between an anxious public and ebullient stock market, which is euphoric about almost any company connected to artificial intelligence. According to the Journal. A backlash is already brewing. California voters will likely be asked to vote on a billionaire tax in November. Proposed taxes on AI are catching on in some corners. Pope Leo has also taken notice. As we discussed, and as happened to Joe Biden, Donald Trump has seen voter approval of his handling of the economy crater, even as the stock market sets one record after another. Walter, is this news or fo news?
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What you just read to me is a complete mishmash. I'm not sure that, for example,
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we
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have an argument about the general state of profit versus the general state of labor market compensation, and then suddenly, out of nowhere, the AI stock surge comes jumping in there. A lot of the AI companies aren't actually making any money. So the stock surge, if anything, is disassociated from overall changes to the rate of profit. So that, you know, all of this just seems a little weird. We also, you know, one has to note that either directly or through their pension funds, a great many workers actually own shares. For example, if you, if you work for a company and you have a 401k and the company is matching your contribution to your 401k, and the value of this 401k is up 10%, shouldn't some of that at least be counted as part of your compensation? So I just think we have a mare's nest here that somebody is trying to weave into the case for economic populism. That doesn't mean that people are happy or that there aren't problems in the economy and so on and so forth. It just means that particular press extract should be, what can I say? Read it and then move on quickly.
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All right, that does it for the news this week. Let's have the big conversation. Walter, you wrote this week about how while Iran and America do actually change, share a common interest in ending the war and hyping the prospects for peace, the gap between the two sides, kind of minimum requirements for an actual agreement, make the prospects for peace, at least right now, pretty dim. So walk us through why that is for both sides.
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B
Okay. Well, first, as to why they would both like the war to end. And the Iranians want to be able to tell the Iranian people, hey, this period of suffering is over and things are really going to change and get better. So just give us a little more time. Things will be fine. And Trump knows he's got a war that doesn't poll well and an economy that's suffering, inflation accelerated, exacerbated by the closure of the strait. So he would very, very much like to be able to Say, game over. And he's noticed that every time the stock market thinks the war is going to continue longer, it goes down. And every time there's even a little flicker of hope that it might be ending, it jumps. And Trump likes for markets to jump. So both of them, both Iran and the United States, are interested in nourishing this narrative of a war just ending. But then you read through these constant reports we get. It's been negotiated. There's an mou, just a couple of tiny little points outstanding. The tiny little points outstanding tend to be like, well, yeah, except for the question of what's going to happen with Iran's nuclear fuel, whether the Strait of Hormuz will be open, whether the United States is going to pay Iran any money, and what kind of sanctions relief they're going to get and when. Other than that, it's pretty much done. We. We don't see a lot of progress on those underlying issues, at least not yet. And who knows? There could be some secret little document wending its way to the president's desk. But even as hard, the Iranians have to get a lot of sanctions relief. Their economy really is hurting and their people really are not happy. And, yeah, they shot 40,000 people down in the streets, and they might be willing to do that, but why wanting to do it is different from being willing to if you have no other choice. And at the same time, Trump would like for the war to be over, but he really doesn't want to have a big L branded on his forehead as one of history's great losers. You led the country into an unnecessary war, and then you came out of it with a deal that was worse than Obama had with the jcpoa. As I say in the piece, he alienated one chunk of his coalition by starting the war to alienate the other part of his coalition by then. Losing the war would really be the worst of all possible places for him to end up at. So it looks to me like we're just seeing the two of them dance around this unpalatable situation while the real contest continues. Can Iran handled the economic attrition and costs of the American blockade on Iran better than the United States can handle? The economic and political fallout here and the backlash from various allies over Iran's closure of the strait. That seems to be what is happening beneath all of this.
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This one final question. You know, Trump obviously has a very long history of being able to survive or weasel his way out of scandals, political failures, you know, any. Anything of this kind. He just has an Incredible ability to survive anything. Even when people pronounce, well, this, you know, this latest thing, this heat, there's no possible way he can survive it. So, you know, in the event he doesn't come out of this with a clear either military or diplomatic victory, and if it's even seen as a loss for him or for the United States, do you think this is of such a magnitude that this is just kind of outstrips everything he's survived in the past, and there's kind of no way he'll be able to survive this one this time? Or do you think he could even weasel his way out of this one?
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B
It's interesting. You know, I talked to all these people who were so sure that any fallout that Biden would suffer from the withdrawal from Afghanistan would be temporary and so on, and that, you know, and, you know, Afghanistan's a long way away. The war was unpopular and people wanted out of the war anyway. But that dragged him down for the rest of his presidency. And many observers would say it was the beginning of his kind of loss of, of authority and respect. So high profile foreign policy disasters do have the potential to impact the President's standing. After all, what's the president. You know, for the average person, one of the things the President's supposed to do is defend you from your foreign enemies. So it can have an impact. Now, it doesn't necessarily have to go that way. And you're right that Trump is very good at getting out of things. I do notice that as the situation is darkened in Iran, the US Seems to be ramping up around Cuba. And I do remember that when Reagan was president and Hezbollah basically blew up the Marine barracks in Beirut, killing hundreds of American Marines. Very soon after that is when the US Triumphantly liberated Grenada, the island of Grenada, where there were Cubans. And so it is not impossible that crossing Trump's mind is the idea that Cuba might be Iran insurance. And so a big flop balanced by a big win. The war has changed the situation in the Gulf in all kinds of ways. I mean, one of them is, obviously there's going to be a huge amount of construction of roads and pipelines that can get oil to the outside the straits. And so this is not a card Iran may be able to play forever. Interestingly, that might mean that as Iran sees this and it realizes that the deterrence that it now thinks it can establish by its ability to close the straits, that that might be a wasting asset, that changes their sense of their negotiating position, and it changes the way the Gulf Arabs are looking. The Turks are, I think, interested in saying, well, how about expanding the pipelines that now run up from Iraq into Turkey? And that way Turkey could be the center for oil exports, oil and gas, both from the Gulf and from Central Asia, thanks to the new sort of thing with Azerbaijan and the Caspian Sea. And then since a lot of people will think twice about putting big, expensive bank headquarters that have targets painted on them in the Emirates or even Saudi, why not put them in Istanbul? So the calculations around the Gulf are changing rapidly and in ways that we don't always see. And it'll certainly take time to fully appreciate. And that may mean that in time, whatever happens in the Gulf would look less important if economic changes and infrastructure changes means that Iran can control the straits, but not be able to control the flow of the oil in the Gulf. That is a new and different and in some ways, from an American point of view, better ball game. On the other hand, it seems to me a pipeline is actually easier to hit with a drone than a ship. Ship is at least moving. So the situation is changing and different actors are moving quickly to try to change the underlying conditions. We can be sure that the Saudis, the Emiratis and others are going to be spending immense amounts on air defense and missile defense, anti drone and all of this stuff. So where would we be in six months or a year or two years? So that what happens, it may not be as definitive for Trump's standing one way or the other now matter a lot to Israel for all kinds of reasons. But that is of less importance in American politics than the question of is America winning or losing, rather than is Israel benefited or not benefited?
- [19:59]
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All right, that does it for the big conversation. Let's end on the tip of the week. Listener dawn from New York, who saw a tweet of yours this week, wrote in to ask for your thoughts on or recommendations for reading Florence King.
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B
You know, she wrote a lot of great magazine essays and columns that unfortunately, before the era of everything being uploaded to the Internet. So I don't know what her online archive looks like. I would, if she has one, go find it and jump in. But I think Confessions of a Failed Southern lady is really, it's a classic. ABS is a book. Almost every page is laugh out loud. And she really does have this. I can say this as a Southerner. She's got us. She sees us at one point, she talks about, I think, somebody going in to see their psychiatrist. And she's, as she settles in on the couch, she sort of says, well, you need to understand that my, you know, I'm Descended from the 6th Earl of Derwent Water or something like that. This is sort of crazy conceits that people have. And she just had a lovely take on Southern American culture, mid century variety.
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All right, there you have it. Thanks to our producers Josh Cross and Quinn Waller, thanks to Alex Vitanov at Hudson and my co host Walter Russell Mead. I'm Jeremy Stern. We'll see you next week. And until then, please go rate and review us. This helps other people find the show. Sam.