The Munk Debates Podcast - Happy Canada Day!

Episode Date: July 1, 2022

Munk Members Podcast provides listeners with a focused, half-hour masterclass on the big issues, events and trends driving the news and current events. The show features Janice Gross Stein, the founding director of the Munk School of Global Affairs and bestselling author, in conversation with Rudyard Griffiths, Chair and moderator of the Munk Debates.   This edition of the Munk members podcast marks the half way point of the 2022 calendar year with Janice and Rudyard making their predictions on the major events, people and trends that will shape the reminder of 2022. Will inflation be tamed by December? Is Xi Jing Ping set to assume an unprecedented third term as Chairman of Communist Party of China? Will Europe be able to hold together in the face of soaring energy costs, slowing economy and rising inflation? Did Google actually create a sentient AI and is this big story that will dominate the back half of the year in terms of the emergence of a broader understanding that thinking machines are coming and possibly much sooner than we think? Is a Liberal Party leadership likely to kick off in the autumn with prime minister Trudeau exiting stage left? And, finally, will the Toronto Blue Jay win big in 2022? This podcast is a project of the Munk Debates, a Canadian charitable organization dedicated to fostering civil and substantive public dialogue.   More information at www.munkdebates.com.Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

Hi, Monk podcast listeners. The following is a sample of the Monk members-only podcast. To access the full-length edition of this episode and all of our regular Monk members-only podcasts, go to our website, www.W.munkdebates.com and register for membership. Membership is free, and it's available for you right now at www.munkdebates.com. Hope you enjoy the program. Hello, Monk members. Happy Canada Day. Welcome to this, the July 1st, Monk members only podcast with Janice Gross Stein, the founding director of the Monk School of Global Affairs, an internationally renowned scholar and author.

I've asked Janice to play along with me today instead of our usual format for this program. We're going to make some predictions. We're at the proverbial halfway mark. of 2022. What are the big issues, events, and trends that could shape the back half of the year? Janice is going to provide her reaction and feedback. And let's start kicking some predictions around. So let me start with you. And let's pick where we left off just before the Canada long weekend, our discussion on American politics. what is your prediction around the midterm elections? I think we know which way it's going to go,

but maybe give us a sense of the degree to which the scale of the Democratic loss, close, catastrophic. Where do you come down? So first of all, happy Canada Day weekend to everyone. I actually anticipate withering losses for the Democrats. I do not think it will be close. I think Biden loses control of the Senate, several seats, and I think there's going to be significant losses in Congress.

This is not going to be, I lost by a hair. This is going to be red as a repudiation of Biden. Okay, Richard, over to you. Do the Blue Jays make the full? playoffs, that's the question. That's the big issue in the fall. Do the Canadians, does a Canadian team finally make the playoffs? See, this is unfair because you have a lifetime of knowledge and hardwood experience when it comes to the Blue Jays. I know nothing about baseball or for that matter, most professional sports.

So I think I'm just going to, where's a coin? Can I flip a coin here? Oh, let me see. All right. Let me go way out. They're going to win. They're going to get in the finals. What do you think? Let me go way out on a limb here. And for all true baseball lovers, we are seeing something that we have never seen before. We are seeing an invisible, invincible Yankees team. If the United States was performing the way the team from the Bronx is performing, the rest of the world would be standing back. in admiration. That having been said, the Blue Jays will make it into the playoffs, even given the wholly

unfair division in which we find ourselves. And that's a metaphor for Canada as well, Richard. Well, from the profound to the ridiculous. No, baseball is profound. That's what I mean. I'm going

from the profound to the ridiculous. And the ridiculous genesis, we We had a lot of discussion in the first half of the year around AI, including some, yeah, some kind of bizarre stories. That's why I say maybe ridiculous that Google in particular was close to having produced something that was intelligent. I don't know how you define that or how that has concluded. What's your prediction for the back half of the year when it comes to AI?

Is this something that's real? we just also heard recently about this new Chinese supercomputer. It's arguably the most powerful in the world with the ability to conduct as many kind of calculations and connections in its mainframe as the human brain can using all of our kind of neural capacity. It is real. It is real. Now, what we do.

define its conscious. That's where the Google story exploded. A Google staffer said, well, Google has Google was able to create a sentient machine, a conscious, a machine that had consciousness. It took Google exactly two minutes to come out and pull back that story. And that's interesting in and of itself because it tells you, oh, my God, they're not ready for the regulatory consequences that would flow. But AI is moving at a pace that it's unbelievable. Let me slow us down for one minute to tell you a story, Richard. Yesterday, I saw a demonstration of an artificial hand for people whose hands have been amputated for one reason or other. So the big breakthrough, and it's huge, the hand can now grasp. It's a

can bring the thumb and the finger together. That is one of the most complicated precision tasks. Broke through can do it. But in addition to that, the company has to start up built in sensors attached to the fingertips. So when the hand touches something, message goes back to the brain and the person feels, experiences the sensation of touching. we this the technology is galloping ahead it is advancing by leaps and bounds and it is going to change our world

okay so our prediction is no sentient AI in the back half half of the year but it's something I thought just what was fascinating about that moment and it's like more of a cultural moment than anything else was you're right Google's rush to say no no no because it it and it's amazing that we don't have really a framework to think about what would the rights be of that machine quote sentient machines of programming I mean are we going to be running a a 21st century slave state and and or are we going to amaze it you know liberate these these sentient things because our own values values, if we apply them to another human being, would demand emancipation.

So, you know, most of the interesting fiction is all about that right now. Do conscious machines have rights? Here's what the world is going to look like now by the end of this decade. That's a relatively optimistic prognosis, but that's what everybody was working in the field is saying, an intelligent machine talks to another intelligent machine. without human intervention. There's nobody pulling the levers in the background. And you asked exactly the tough question,

do these machines have rights? Can we pull the lever on them? Can we shut them off? Is that murder? That's the kinds of conversations that are going on all around us right now. Let's talk about shift gears here. Another big kind of concern on people's minds, which is inflation.

There is an effort underway central banks around the world to aggressively hike interest rates. Some people are saying because of how substantial these moves are and their effects on stock markets and home prices and just about everything,

that inflation will fall off quickly. Others say, hey, wait a second, not so fast. We've got a war in Ukraine. We've got supply chain snarls that are continuing as COVID, you know, has its way with China in fits and start. So, Janice, you lived through the big inflation boom of the 70s. What was the perception back then?

When it first broke out, was it, oh, we can get this under control. This is, you know, 12 to 18 months. Or did people realize at the time, wow, this is going to be a long, hard fight? It was always, we can get this under control. it will be 12 to 18 months. And you're reading that all the time now on the business pages of newspapers. Well, this will last 12 to 18 months. I think we're, here's my prediction, Roger.

We will not have it under control by the end of 2022. And the reason is so much of some of it is domestic. Because as you have said so often, There was too much stimulus for too long a period. And that's what has created these asset bubbles that frankly have not yet popped. They are starting to trend downward. But they are far from popped. And as long as those bubbles are still around, this will go on.

But more to the point, all the things we talked about in last week's podcast, gas prices, food prices, those are being driven by shocks outside any central banks control, and they are going to push inflation for longer than we thought. Let me ask you one. Do we bring inflation down without a recession? Are we in a recession? It's the fair question by the end of 2022. Yeah.

So I've read a really smart thing recently by Ray Dalio, who is one of these kind of conspicuous that sometimes annoying, you know, billionaire hedge fund investors. But he said something to me that was very interesting. He said, basically, pick your poison, whether it's high rates or high inflation, either are a drag on growth. So what I think people are not understanding. And again, Jess, it's maybe because many of us have not lived through the 70s. We don't have memories of this, is that let's say we're able to lower inflation. Well, we've only lowered inflation because rates have been higher to reduce demand. So let's say we try to have our KKD too and we don't raise rates as much as we should because we want to avoid a recession.

Well, guess what? Inflation persists. And inflation is a tax on growth. That's the thing that Ray Dalio really points out in this article. You can go to his LinkedIn page if you want to read it. Is inflation is also anti-growth. So I think the odds are, yes, that there will be. a recession. And the question is whether it'll be a deeper, a shallow one. It'll be a shallow one

if the central banks kind of blink. If they lose their currently chest thumping vulgar-esque, you know, we're going to do whatever it takes type of rhetoric. But they could blink in the face of increasing job losses or even worse, one of those bubbles pops. And you let's say housing and you suddenly have a precipitous decline in Canadians or American's single largest asset, which is home values. So I think it's really a question of shallow or deep. I think it could be deep if they really do decide that they want to take inflation down to 2%. But that would be, I don't think people are really understanding just how profound the effect of those higher rates for longer will have on asset prices, on the economy.

So I guess what I'm saying, Janice, is I have an indication, a sense of where things are heading, but I don't yet know the quantum, you know, shallow or deep, and it just depends on whether these central banks ease off in the face of the threat of significant levels of rising unemployment. All right. The prediction for the end of 2022, in a shallower session? In a shallow recession, I hope that central banks have the courage to follow through because you kind of want to rip the Band-Aid off here.

You don't want to get into a stagflationary scenario of high inflation and low growth for an extended period of time, which is what you lived through in the 1970s as a professor at the University of Toronto with a young family. I don't want to do that with my family right now. I would rather have the pain up front and the correction in asset prices, even the risks of a substantial drop in the value of my house to get inflation back to the 2% target. I worry, though, that, you know, we're not a society that very much likes taking bitter medicine. We would prefer milkshake Sundays from now until eternity. and it may be hard politically, especially in the United States, the midterm elections,

2024 coming up for a federal reserve to take the risk. Just think of how roiled and angry and undistabilized, not only the American economy, but American politics would be in the middle of a deep recession in 2023. That's the reason that I think the Fed will have to ease up. we are going into election season. And I recall Trump's excoriation of the chairman of the Fed, he said, in fact, he was raising interest and he was interfering with Trump's stock market boom. That is nothing compared to the impact of Powell continuing to raise rates.

it will be, in fact, the death now for the Democrats in the midterm elections, as we said last week. I'm going to predict here that the Fed blinks. And of course, if the Fed blinks, everybody else blinks. And certainly we. Okay. Well, I'll take the other side of that just because I want to model best behavior. So let's see. I'll say, no, these guys are central.

Because girls and a few women are central bankers. and they're part of their own little club. And what they care about is what other central bankers think about them, not what the president of the United States might want come to ballot box. You've been listening to a sample of the Monk Members Only podcast. To access the rest of the episode, consider becoming a member. Membership is free and available at www. Wunkdebates.com. Once you've joined as a member, go to your membership profile

to access the rest of this episode and all of our Monk Memoir. members podcasts. Thanks for listening.