 Welcome to World of Books. I am your host, Mihaila Stubbs, and I'm streaming live from my home in Honolua, Maui. Inflation, high interest rates, populism, central government fighting with states. All of these are signs that Ray Dalio describes in his book as the beginning of the decline of the United States as a world power. The book is called Principles for Dealing with a Changing World Order, and it is subtitled, Why Nations Succeed and Fail. To discuss this book with me, I have invited Dr. Carl Ackerman. Dr. Ackerman is a recipient of the Presidential Scholarship from President George H. W. Bush. He is a PhD in European History from Lucy Berkeley, and he has taught history at Kunahou and Yolani schools for 37 years. Last but not least, Dr. Ackerman is also an author, and his books may be purchased at CarlAckermanbooks.com. Dr. Ackerman, thank you so much for joining me today. Thank you. I'm blushing here because of that wonderful introduction, so thank you. And it's a pleasure to be here. Thank you. And I'm gonna jump right in and start the discussion on this book. Ray Dalio, the author, has studied the history and the economies of several former empires over hundreds of years and has determined certain indicators and patterns, and that's the cycle for their rise and fall. And according to him and the information he provides in the book, United States is now in the fifth stage of the cycle, basically five to 10 years away from a decline as a world power. Do you agree with his assessment of where we're at? Well, let me start by also mentioning some of the other sort of things that he mentioned. So, I mean, he draws these sort of cycles as he so eloquently mentioned and he talks about the new order beginning with consolidation of leadership. That's his first category. His second category is resource allocation and government bureaucracies being formed. The third one is when there is peace and prosperity. The fourth is when there are excesses in spending and debt and widening social gap between the haves and the haves-nots. And the fifth is which he, as you most appropriately and eloquently explained, says that there are bad financial conditions. And then, of course, the ultimate chasm is when there's revolution and war and then the cycle begins all over again. As a historian, I'm not much given to cycles and even by his own criteria, the United States I think is still in pretty good shape. Mr. Adalio talks about the things that are really important for a country or education. And while our educational system is not perfect, we're still doing pretty well. We still have competitiveness, which is a second category. The third category, I'm gonna stop here. There are more categories, but innovation and technology, I think there are very few countries in the world that can surpass the United States in innovation and technology. And despite the fact that we just had a COVID crisis, which is one of those contingencies that although the author addresses, doesn't really account for, like in the early part of the 20th century with the so-called Spanish flu, which really began in the United States. I really think that while I understand his cyclical notion of history, I would give the United States a little bit more time. And as we mentioned before the show went on, there was another book that said some of the same things by Paul Kennedy about the rise and fall of great nations. And I think the United States has some more time, although I think that every high school history student should read this book. Mr. Dalio is, what I like about it is that he equates these cycles and then he goes into a fairly long description of both European and Asian history. And I think that's just as a historian, of course, I think that's wonderful. So I think he should be congratulated on that, but I do not agree with his conclusion. That was my long way of answering your very simple question. Well, I agree with you. The good is excellent for high school students, for anybody that wants to understand a little bit more about macroeconomics or learn about China. China's history as an empire and also its current rise, European history as well. So there are good things about this book that I've learned and I've enjoyed, but just like you, I'm a little reluctant when it comes to describing where the United States is in the cycle. And I'm even more reluctant when he talks about China and China being about five to 10 years away from becoming the world power. And to argument that, he states that, China is already an aspiring leader when it comes to education and also when it comes to technology. And I have a hard time thinking that all those PhD factories in China, all those huge schools with thousands, tens of thousands of PhDs every year. And even the fact that there's so much information about intellectual theft coming from China, I kind of doubt China being an education powerhouse. I still think that US is quite ahead. I think you're right. And I think that there are many Chinese students that come to the United States for that very reason. I would also say that one of the problems with talking about China, of course, and this is probably the only major fault in this book is that I think there's very little attention paid to ideology and we'll come back to this when we talk about their samples of Russian history, et cetera, et cetera. But we're not that far from the 1960s and the Cultural Revolution. And we still have a Marxist-Leninist government. And with Marxist-Leninism, even though there's a great deal of freedom now in China to pursue things economically, things can change very rapidly. And most native Chinese entrepreneurs, that is in the People's Republic of China, realize this. And so it's much safer to be innovative and entrepreneurial in the United States than it is in China. And let me give you one more example of where this book fails to deal with ideology. You know, there's a great quote and I think he's right about after the 30 years war and after the English revolutions, you get to the building of nation states. But the problem is that there's no identification of why this was the period. I mean, it wasn't just the destruction of the 30 years war, it's because no longer did you have a unifying Catholic unity in European history. It had been destroyed in 1517 with Martin Luther and the Protestant Reformation. And with the pulling back of different countries, including England, I may add, for very, for very mercurial purposes, you know, you have the development of nation states because you don't have the unity under the Catholic church that occurred during the Middle Ages and in early modern Europe. So going back to your original point, I think that I wholeheartedly agree with you. I think that China's iffy. It is true that they're building up their military and they have many more battleships and things like this, but they also have an unpredictable leadership and that leadership is very controlling and I would say totalitarian. We definitely have a very complex relationship with China. We're looking at the news of Speaker Pelosi visiting Taiwan and, you know, all the commotion that is causing. So obviously there's quite a big rift between the US and China when it comes to Taiwan. You know, we have the trade wars that were initiated by Cornel Peltin Trump. We have military confrontations in the South China Sea between US military and Chinese military and China holds $1 trillion worth of US debt. So it is a complex relationship and I think that in a way they are already our rival. I'm not sure who's winning yet. Yeah, I think that the part about the debt is concerning but one must remember that, you know, it's not that far back in history to go to where Bill Clinton was president and I'm not talking about Democrats versus Republicans. I'm always talking from an economic viewpoint here where our debt was turned into surplus. So I will always bet on the United States and I believe in our banking system. I believe in our stock market and there will be ups and downs I believe but we do have to do something. I think the book is correct in calling out the notion that we have a huge debt to China and that's no good. And the United States of course was the country that people went to for credit and for money shortly after World War I when we started to take over from Great Britain. So that notion of the Dutch being very powerful and the British and then the Americans is I think a good part of this tax but I'm not ready to give up the United States quite yet and say that, you know, although China's our competitor, you know, they're better and after all, as he maintains, you know, we still are printing the dollars and the dollar is still the currency for the world. So. Yes, it is the reserve currency and I think it will continue to be even by his own admission, what are the choices there? He does present the synopsis of other possible currencies and none of them comes anywhere close to the use of American dollar. So let's dive in a little deeper when it comes to these economic indicators of decline. And Ray Dalio points out that people don't pay attention to what they get and they don't pay attention. I'm sorry, people pay attention to what they get but they don't pay attention to where the money comes from to cover what they got. So translation that would be, you know, when our elected officials are borrowing more money to fulfill campaign promises, everybody's happy but nobody's looking at where is this money coming from and, you know, printing more money is not a way of creating wealth. We're coming out of COVID and we all recall that in 2020, the US government financially supported businesses and individuals significantly and we're all very grateful for that but did it create any wealth or did it actually increase productivity which is the leading cause to wealth? In my bubble, I'm gonna speak about my bubble only. What I see is it's very hard to contract any service providers and it feels like there is less desire to work that people are more sufficient somehow. And I wonder what do you see in your bubble? Well, again, I'm gonna agree with you. I think that, pardon me, that I think that there's, you know, whenever you give out a lot of checks, you know, and people can spend more, you have to also urge people to save more and with Americans, you have to make sure that everyone's gonna be coming back to work and I work as a director of a hospital here in Honolulu and, you know, we had to import nurses during COVID. And so I think that the labor supply issue is a difficult one right now and I think that we have to worry about, you know, and I think this will add to a bit to the inflation about employing workers at a higher cost, but I think our politicians and I'm gonna interject something a little bit new here is I think we have to deal with our expenditures and, you know, no politician is going to question or to try to shrink government programs like Social Security and they're gonna have to, they're gonna have to attack, you know, attack big programs that are spending a lot of money and for good reason, but there has to be some sort of curbing so that people can have, I mean, you know, people who are my age and older can get Social Security just fine, but I'm worried about the people 20 years from now or 30 years from now. So as you said, our politicians have to have sort of a long-term perspective and not just give in to the contemporary moment. And I think also from having a good friend here in Hawaii who's a general, I think that also our expenditures on the military, well, extraordinarily important. And as Mr. Dalio says in his book, you know, a strong military and a strong economy really will put you in his top category, but we need to keep the military supply, but there's a lot of waste. And I think we have to worry about a lot of waste. And the other thing I would say kind of complimenting what you have said already is that we have to encourage Americans to save because you can't spend what you don't have. And of course, credit cards are the big problem in America. Well, I was surprised to see that the author admits that there's no connection between wealth of a nation and happiness. And as an immigrant to United States from Romania, I immigrated 18 years ago, one of the most surprising things for me is that here we are in what I've perceived to be the wealthiest country in the world. Yet you have people that go into significant debt while they're in medical school, or they have to mortgage their houses and default on their mortgages to pay their medical bills. And to me, that's just not acceptable. So where is our government? Are they focusing on its wealth or our happiness? And does it have to be one or the other? Can it be both? There are people who are, and I think this is the problem with American politics, is that they tend to have blanket statements like all government spending is bad. And I just outlined where I think that we might have to curb huge government programs. Having said that, we do very little for the elderly in the United States. And we need to, if people are going into an older age home, they shouldn't have to sell their house to do that. So I think that our politicians, well, maybe curbing parts of our social security system also have to spend more to make that possible. Now, in terms of your question about happiness, which I think is a good one, I mean, why aren't all Americans happy? I mean, we live really well compared to the rest of the world or most of the rest of the world. I think that has to do with a question I heard, a reporter asking Mikhail Gorbachev when he was mayor of Moscow. And he said, it may have been Ed Bradley, the CBS reporter. This was years ago, 20 years ago. I'm looking at you and you're probably a little girl or a young, very young person, anyway. So, but anyway, Ed Bradley and Mikhail Gorbachev and Ed Bradley said, what can we learn from you and what can you learn from us? And Ed Bradley said, look, what you can learn from us is, I mean, Mikhail Gorbachev said, and I hope I'm not confusing Boris Yeltsin and Mikhail Gorbachev. I think Mikhail Gorbachev was mayor of Moscow before he became president. But anyway, either one of those two. He answered the question by saying what we can do and learn from Americans, it was still the Soviet system. It's not to stand on line for so long. And what you can learn from us, I was thinking perhaps by reading Russian literature, like Dostoyevsky and Tolstoy and Turgenev and Chekhov, but he didn't say that. But he said, what you can learn from us is to be more philosophical about life. And interestingly enough, I think in Hawaii with a lot of the sort of springboard of the Hawaiian sovereignty movement, and I'm not promoting the Hawaiian sovereign movement by any means, I'm not taking a position one way or the other, but I think that Hawaiians have offered us a more philosophical framework for viewing living. And I think, taking care of water, taking care of the Aina, enjoying hula, slowing down a bit, but also being more reflective about how we live our lives. And perhaps we should drink less coffee and drink more tea. That's a good suggestion. And it kind of leads me to discuss what the author recommends to do in the future, knowing all these things about the upcoming decline of the United States and his view. And when it comes to what we should do, he's rather vague. He says, yeah, you should reduce your expenses, you should diversify, you should surround yourself with smart people. And I want to tell our viewers, this is what Think Tech Hawaii is trying to do here is to bring the smart people to you. So keep watching Think Tech Hawaii. Now, after reading this book, is there something that you want to do to prepare yourself if this decline is indeed happening? No, as a historian, I was really fascinated by his economic analysis. And he said, we kept talking about you can't spend more than you have. And not that I don't do that already, but I really found his economic analysis of what was going on in our society. I mean, this is a gentleman who's part of one of the largest hedge funds in the world. And so I was very impressed that he combined history with economics. And that's why I'm hoping that, I mean, I work often with a college board and I'm going to recommend this book for people who teach European history or Chinese history and things like this. But I want to come back to one point. And that is with the transitions in the cyclical history, again, where the book is strong, it's strong in many points and it's strong on economics. It's strong on the analysis of history about what happened in history. That's always very good. But there's a real overlooking I think of the ideology in China, the mandate of heaven system where things are granted to certain rulers because of their obedience and taking care of people. And when that mandate leaves, then the dynasty gets removed. When you're talking about the October 1917 revolution, the whole Marxist-Leninist coup d'etat of Vladimir Lenin. So a lot of these things are contingent civil wars, et cetera, on specific governments and specific events that happen. And even going back to the pre-30 years war period, when you're discussing somebody like Louis XIV, he had a form of mercantilism, but he also had a form of absolutism where he said that he was the direct descendant of God. And that has to change in order to develop nation-state. So that's kind of missing in the book. But what I found really interesting is that he wanted people to take note of what is going on and that inflation is not a good thing and it's gonna affect people dramatically. Whether it's gonna take down the United States, I doubt that. But again, where my criticism would come in is, this was all contingent on Russian oil prices and invasion of the Ukraine. And someone says, well, I could have predicted the invasion of the Ukraine. Well, you're a better person than I am. Especially before the invasion of the Crimea. Because remember Boris Yeltsin handpicked Vladimir Putin and we might have seen it in his biography, but if people can predict history. And when I always tell my students, and I cross it out in their writing, both at the university level and at the high school level, they say history shows or throughout history, I tend to think of history being more specific to the time period and the different contingencies of specific events. Well, Dr. Ackerman, I feel like we need like two more hours to discuss these issues in this book. So I thank you so much for joining me today. It's truly been a very eye-opening conversation. And to our viewers, I wanna let them know that two weeks from today, we will be discussing Vladimir Putin's plans to make Russia a world power, as described in Marvin Feld's book, Imperial Gembo. So join us in two weeks to see the show. And until then, read everything you can and enjoy it. A hui hou. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.