The Prof G Pod with Scott Galloway - Conversation with Fareed Zakaria — The Conflict in Israel and the State of Foreign Affairs

Episode Date: October 12, 2023

Fareed Zakaria, the host of Fareed Zakaria GPS on CNN and a columnist for The Washington Post, joins Scott to break down the conflict in Israel, including the historical context that is needed to know and the implications that are to follow within the region and around the globe.  Follow Fareed on X, @FareedZakaria. Scott opens with his thoughts on what Disney should do next and the role of a corporate board. He also discusses his thoughts on the IPO market, specifically why it’s in structural decline. Algebra of Happiness: What is wellness?  Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Episode 271. 271 is the country code belonging to south africa in 1971 the first starbucks opened its doors at seattle's historic pike place market and while disney world resort opened in florida a white woman walks into a starbucks and asks for the usual what's that the manager. Go, go, go! Welcome to the 271st episode of the PropGee pod. In today's episode, we speak with Fareed Zakaria, the host of Fareed Zakaria GPS on CNN and a columnist for the Washington Post, to break down the conflict in Israel, the implications that are following the region, and how the U.S. is responding.

Fareed is a role model. I just admire people. You can't tell their politics. You just know that they have a fidelity to insight and facts and think he's just a joy to listen to. Big fan of Fareed. Okay. What's happening? Disney is in the news again because Nelson Peltz, an activist investor, wants board seats for himself and a few others. According to the Wall Street Journal, the activist firm believes that Disney shares are significantly undervalued today and that the company needs a more focused board. In the past, they've contended that Disney has excessive executive compensation and a poor sense of expense discipline. I think there's a term for that.

I think it's called Hollywood. Disney is probably a really good buy at this point. There are a few companies that have the kind of IP that Disney has. The streaming, essentially, there's kind of three businesses here, right? There's the movie studios. There's the streaming network. There's the parks. Is that right? Streaming networks, movies, parks? the streaming network, there's the parks. Is that right?

Streaming networks, movies, parks? That sounds about right. Oh, wait, I forgot the fourth thing. I forgot the, you look down and you just peed and there's blood everywhere in the basin. Yes, that's right, the broadcast networks or the cable TV affiliates, which have seen their EBITDA cut in half. This is a company that needs divestiture, probably needs some cost cutting, but more than anything, I believe that if Disney, if and when they get rid of their cable assets, TV assets, which supposedly Byron Allen and others are circling,

I think the stock will go up just on that because it'll be a cleaner story, if you will. They have just standalone IP, fantastic culture of creativity, talented management team. And meanwhile, the stock is at a nine-year low. Part of it is one of the worst acquisitions in history when they acquired some of the assets of News Corp, specifically Fox. And whenever you have Ruva Murdoch and Jeff Bukas, who are arguably the two brightest minds as it relates to shareholder value selling assets, you do not want to buy those assets. And Bob Iger did, and likely, or did just massively overpay for them and has put so much debt on the Disney company that it has now become similar to Discovery Time Warner. Kind of what everybody sees. Everyone just looks

at this giant debt load and is a little bit scared of the equity and the equity has been driven down. They can essentially kill two birds with one stone with the sale of some of their cable assets. It'll be a cleaner story. We have movies that are synergistic with our streaming network. And we have something that is what I believe is the most defensible asset of Disney, which is in fact, it's parks. The parks are singular, although the most defensible asset of Disney, which is, in fact, its parks. The parks are singular, although the park attendance was down in the summer in Orlando. I wonder if that has something to do with the fact that Orlando is like 700 degrees during the summer, but even year on year it was down. I wonder if people are running out of their COVID money or they've decided to do other things or there was a bit of a revenge travel bump post-COVID that's now starting to

abate, but I don't care, long-term, these things are singular. Other than kind of universal Hollywood or universal studios tour, which is also pretty strong, call this thing a duopoly. I mean, other than Disney and Universal, what really is there that you feel as if they're going to call child services if you don't take your kids a few times by the time they're eight years old? They have been cutting costs at Disney. They're going to exceed their goal of $5 billion in savings. I do believe it's a buy right now. I think this is a company that's well-run, unbelievable assets, trading at a nine-year low. By the way, as an activist investor or someone who

conducted a few activist campaigns, what management, a rookie move of management is they circle the wagons and say, fuck you, we're geniuses. And anyone who questions our impeccable judgment is the enemy. And they spend so much time trying to fight off an activist that the business goes into further decline because they're totally distracted. What do really smart managers do? They say, sure, come on board. You've got a bunch of shares. We'd love to have you on the board. We don't have a monopoly on truth. And that's the best way to shut an activist up. It's what Apple did with Tim Cook. I think it's what Iger kind of did with Nelson earlier in the year. I think Nelson started rattling the cage and said, we want you to cut

costs. And they started. The stock has underperformed. So now he wants to go on and he wants board seats. What is a board's responsibility? The board of directors is there to show care and duty for the company. What do we mean by care and duty? Care. Care means that you are there to represent other people, and I'll come back to it. Duty means you have a duty to actually read the board book and keep up on the numbers and make sure that the company is engaging in fraud and there's no unwelcome surprises. Let's go back to care.

A wonderful word. A wonderful word to better describe care is fiduciary. and make sure that the company is engaging in fraud and there's no unwelcome surprises. Let's go back to care. A wonderful word, a wonderful word to better describe care is fiduciary. And that is once you have your deal figured out, you are now representing the interests of someone else. It's a wonderful role job description to be a fiduciary for other people's interests. Board members are supposed to be fiduciaries for stakeholders. It used to be just shareholders, but then Elizabeth Warren got angry and we got into identity politics and we decided that shareholders are mostly just rich white people, which is largely true. So we're going to broaden it to stakeholders, the community, employees, the environment,

and what have you. So I'll give each of those 5%, but it's still pretty much 80%. If you want to know what decisions a company is going to make, if you want to know what the CEO is going to say, it's pretty simple. Reverse engineer back from one thing. What will move the stock price higher in the next one to four years when the CEO vests his or her options and can finally get that Gulfstream or that place in the Hamptons? By the time they've gotten there, they have literally navigated the Hunger Games. They're usually in their late 50s, early 60s, or in the case of Iger, early 70s. And they're just kind of run out of time. So yeah, should they be thinking about the world and climate change? Maybe. But for the most part, they just want to get the stock price up But you are a fiduciary for all stakeholders. So let me do some virtue signaling. I was on the board of Eddie Bauer. I was put on by a friend of mine who ran a distressed credit hedge fund. Eddie Bauer was going out of business. They were going bankrupt. And I was there to basically help facilitate a new strategy, have a sober conversation. Let's stop kidding ourselves. Let's go into bankruptcy. Let's clean up this company, clean up the balance sheet, and hopefully it emerges stronger. And there was a bidder once we went into bankruptcy that was just a licensing firm that wanted to fire all 1,200 employees in Seattle and just license the

brand out. And economically, that might have been, in a purely Darwinian environment, that might have been the right decision. But we as a board decided, no, we're going to see if we can find or kind of stoke some demand and see if we can mature a bid from a player who wants to buy the company and will hopefully keep the majority of the jobs in place. Why? Because we are fiduciaries, not just for shareholders, not just for the debt holders. Once you go into the zone of insolvency, you're supposed to represent debt holders as well, meaning the company is about to go bankrupt, but also the employees, the stakeholders, the community. And we were fortunate enough to find another buyer, I believe it was Golden Gate, a private equity firm who kept the majority of the jobs in place. But fiduciary is

a wonderful term. And the problem is most CEOs who are in in fact, fiduciaries on the board are not representing any interest other than what gets the stock price up in the next one to four years. Full stop. Okay, moving on, moving on, moving on from my favorite word fiduciary. Let's talk about the IPO market and how fast it's becoming the last sort of stop on the pump and dump train of our capital markets. US IPO performance over the last three years has vastly underperformed the S&P 500. I mean, you're just saying these things are just especially SPACs, 300 companies de-SPACed, I think in 21 and 22, and I think 10 of them are above their offering price. Get this, about two thirds of companies went public in the UK over the last decade are below their offering price.

Why is that? It basically is the public markets have now become a place where people sell shares for one of two reasons. One, they have squeezed all of the juice out of the lemon. Or two, they are hoping that the public markets are stupid enough to provide capital to a company that makes no fucking sense. Among the 13 VC backed companies that went public in 2022, not one was profitable. It used to be three quarters of companies that went public were profitable. They had proven they had product market fit.

Now it's less than a quarter. Why? Because we have all this FOMO. Some companies have done exceptionally well over the last 20 years in the public markets. I mean, if you'd invested in Amazon, if you'd invested in Google's IPO, you'd be up 100 or 200 fold. If you'd invested in Apple's IPO, you'd be up something

like 2,000 or 3,000 fold. So people got excited and wanted to get into IPOs. But then private market investors, specifically hedge funds, venture capitalists who fund these companies in the private market said, why are we letting these gains leak to orphans and widows? Why do we want the little guy or retail investors to recognize these gains? We should just keep, hold on to all the shares. We have the capital. We used to need to go to the public markets to raise money. Now we don't need to. Now we sit on not $200 million funds, we sit on $8 billion funds. So as long as the company is going well, and we think there'll be an increase in value, we can give shareholders, existing shareholders, liquidity in secondary markets. We can buy shares from employees or other investors and we can find new capital know we can't raise money from the private markets at the valuation we want. Let's do another round at a very high valuation from existing investors to give a jazz hands fake signal head fake to the market that, oh, yeah, WeWork really is worth $45 billion because SoftBank invested at $45 billion in the private markets. Oh yeah, Instacart's worth $40 billion. Even though when it went public, the market said, no thanks, girlfriend, valued at 10 billion. And as we stand here,

it's at 7 billion. I am not immune from this. I invested in Oddity, which I like a lot. It's a combination of AI and beauty. Went public at 35 bucks a share, shot to 55. It's now, I think, at about 28 or 29. And I'm holding on because I think it's a great company. But look at, we want to talk about a train wreck. Blue Apron went public at a $2 billion market cap, just got sold for, I think, about 130 million. And the majority of IPOs are trading below their offering price. Now, what's the one that's coming up? It's easy to talk about the past. Birkenstock. Hello, hippie. Hello. Let's make love in the mud and listen to Jimi Hendrix. That's what I would do if I wore Birkenstocks.

It's a great brand, great product, really an interesting, well-run company. Expected to go public this week. May have already gone public by the time you hear this. And it's planning to issue 32 million shares priced at $44 to $49 each. It expects a $9.2 billion valuation. That's nearly double what private investors bought it for in 2021. They bought it for $9.2 billion valuation. That's nearly double what private investors bought it for in 2021. They bought it for $4.8 billion. It's approximately 14 times the company's expected EBITDA. Our financier, Aswath Damodaran, colleague at NYU, says that based on his inputs on growth,

profitability, and risk, he values the firm around $8.8 billion. So what's the prediction? If it follows the same path as every other IPO, look for it to get a pop because people are excited that the public markets are back. There's a lot of capital to be allocated. And then they will take their small gains off the table and the company will probably be a busted IPO within 30 to 90 days. These things are just not working. What does this mean? It means that increasingly kind of institutions and the already rich are sequestering the gains from what used to be an incredible wealth generator, and that is the public markets. Does that mean you can't make money in the public markets? No,

it does. But you probably need to go into index funds, hold on for a long time, which is still a great way to build wealth. Because if you purchased an index fund, you essentially own what's referred to as the fabulous or the magnificent seven, and you would have done just fine. But if you were going into IPOs hoping you're smarter than anyone else, you've kind of been screwed over the last year. Now, the good news is the IPO market is thawing, which is great news. What I am seeing personally is that in the private markets, these entrepreneurs still haven't come to grips with the fact that it's not 2021 and the valuations have come down. And effectively what you have here and the reason you're seeing, if you will, a drawdown in the price of IPOs post-IPO, once the excitement is off and kind of the traders are out of the trade and it's just people looking at the underlying company and its fundamentals, is that you had a

crowding effect and late stage venture taking evaluations well above what they were going to get in the public markets. And we've also seen a lot of IPOs underperform, which is probably giving people a little bit more caution or reticence to pile in, recognizing that the majority of the juice has already been squeezed. What does this mean? The IPO market is in structural decline. The private markets are increasingly where the action is. There are some ways to play the private markets. You can invest in funds like Apollo. There's some publicly traded VC vehicles where you can get access or get some exposure to the private markets. But effectively, what is happening has always happened or continues to happen in America. And that is the wealthiest, the largest, the incumbents are capturing the majority of the upside and the majority of the gains.

Look at Warby Parker, an amazing company, off 75% from its IPO. But that's not as bad as Allbirds and Rent the Runway, two, in my opinion, shitty companies that should have never gone public and were losing money when they went public. And those companies are off 96% since going public. Think about that. Hey, I know I want in in this cool, cool shoe company that all the VCs are wearing. Or, oh my gosh, you can rent a dress. You can rent a DVF dress. Isn't that a great idea?

Well, look at the financials. These companies make no fucking sense. And if you'd invested $100, you'd have $4 right now? You'd have $4? And look at the capital here. Uber raised $10 billion in private capital, most of it from SoftBank in the kingdom, before going public in 2019 at a valuation of $82.4 billion. Four years later, public shareholders have earned 3.5% annual return. And that's a good company that is essentially a monopoly. It's an incredible service.

And if you invest in the IPO, you've effectively made no money. When will SpaceX go public? I mean, get this, SpaceX is private. And yet it's managed to raise nine and a half billion dollars across several rounds and remains private. In sum, in sum, the private markets are serving everyone except the little guy. And guess what? No one gives a flying fuck about the little guy. No one gives a flying fuck about the individual who used to get an opportunity to participate at our best companies. So what do you have in the public markets? A bunch of companies that have run out of steam, have backers who are trying to create false signals in the market in a head fake, an underperforming IPO market, and fewer and fewer opportunities for people on Main Street America to build and create wealth. We'll be right back for our conversation with Fareed Zakaria. Hey, it's Scott Galloway, and on our podcast, Pivot, we are bringing you a special series

about the basics of artificial intelligence. We answering all your questions what should you use it for what tools are right for you and what privacy issues should you ultimately watch out for and to help us out we are joined by kylie robison the senior ai reporter for the verge to give you a primer on how to integrate ai into your life so tune into ai basics how and when to AI, a special series from Pivot sponsored by AWS, wherever you get your podcasts. Support for this show comes from Indeed. If you need to hire, you may need Indeed. Indeed is a matching and hiring platform

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Fareed, where does this podcast find you? I am in New York, in actually my bedroom, which has good light. And so I wasn't sure whether this was a video thing, but here I am. Well, I'm sure the light will come through on the podcast. So thank you. Thank you for that. And also just think, I can't imagine there must be, there's probably two or three people in the world right now that are more in demand than you. I don't know who they are, but I appreciate you carving out the time for us. So give us the atmospherics here around or some context for what happened in Israel and why now and what you think the objectives and the end state goals are for Hamas? It's a great question. So I think, you know,

if you want to think about it in a kind of historical backdrop, really the most important thing that has happened over the last two decades in the Middle East is the withdrawal of American power, you know, in a fairly dramatic sense. The United States had been the kind of dominating outside force in the Middle East for decades. It used to be the Soviet Union and the United States both had their client states. Then in a kind of amazing move of diplomatic jujitsu after the 1973 war, Kissinger gets Egypt to flip. It goes from being pro-Soviet to pro-American. And that begins the end of the Soviet era or the bipolar era, and it becomes a period of American domination. So the United States had better relations, if you think about it, in 1975

with every country in the Middle East than they had with each other. This was sort of Bismarck's dream in the 19th century in Europe, to be the pivot. So the United States had better relations with the Shah of Iran, with Egypt, with, you know, Syria, with all these countries. And of course, it had very close relations with Israel. Then that starts to change. But the fundamental thing that happens after the war in Iraq is that the United States realizes it is overinvested in the Middle East. It just does not have the capacity. It's a very turbulent, unstable region.

And the only way seemingly to stabilize it is military power, military force. And Obama begins this, it was called a pivot to Asia, but really was a pivot away from the Middle East. And he was continuing in a way something that Bush had begun in the second term, chastened by the Iraq adventure Bush had been cutting back. And so in that context, what's been happening is you've been creating a kind of post-American Middle East. And in that Middle East, everyone is jockeying for advantage. And everyone is trying to figure out, how do I protect my equities?

So the Turks have become much more active and freelancing. The Saudis and the Iranians, that's the principal dynamic. Each one is trying to become the top dog. Israel has quietly become the essentially economic superpower, technological superpower of the region, but increasingly military. And the Israelis have been trying to do this extraordinary move, which is to completely marginalize the Palestinians by making peace with the Arabs, who want to make peace with Israel because they fear a common enemy, Iran. So that's the backdrop of what's

happening. Two important things in the shorter term. One is Netanyahu really pushing forward to try to make a deal with Saudi Arabia, which would really marginalize the Palestinians. Because Saudi Arabia is the most important Islamic state. You know, it's the richest. It's the one with the two great mosques. King of Saudi Arabia is called the custodian of the two great mosques. And the second piece is that he has, because he has a very extreme right-wing coalition, he has people in his coalition

who basically don't believe there should ever be any kind of Palestinian state at all. They call, you know, they want a greater Israel, as they call it, from the river, the Jordan River to the sea. And that means no West Bank, no Gaza. I don't know what they plan to do with the, you know, five million Palestinians on those lands.

But the Netanyahu government has been very, very hardline, mostly in the West Bank, you know, shootings, arrests, killings, you know, thousands of Palestinian prisoners. So, you know, you had gotten to the point where Israeli-Palestinian relations were terrible. The Palestinians are looking and seeing they're being marginalized. They're going to be bypassed, this big deal. And all that comes together, and the Hamas must have decided, we are going to, you know, burn the house down. And in doing this, what are they hoping? They're hoping they'll trigger a massive Israeli reaction, which is ongoing, that that reaction will then make the Arab world sympathize with the Palestinians

who are getting pummeled. In that context, it'll be very hard for Saudi Arabia to normalize relations with Israel. And that serves their objectives of, A, highlighting the Palestinian cause, B, putting Israel on the defensive, C, getting rid of the Saudi normalization. So I think that was their objective. How much of this, in terms of the timing, do you think was because Hamas sensed weakness and a divided Israel? I think there's probably some of it. I wouldn't exaggerate it. I think that they know that the Israelis are very strong, that in situations like this, they've come together before. Remember, Israel has had divided and fractious government for the last 20 years. And this is the fifth time Hamas lasted 51 days. So this is, I think that there are some people on the Israeli right who are saying, see, you know, all these demonstrations

caused all this. I don't buy that at all. I think that, I would put it slightly differently, which is that the government in Israel had focused almost single-mindedly on three issues, overturning judicial independence or undermining judicial independence. That was a big constitutional push. Normalizing relations with Saudi Arabia and essentially creating de facto annexations on the ground in the West Bank to make a Palestinian state there more and more unviable. They might have not been paying a lot of attention to Gaza. In fact, we have some interesting Israeli reporting that says that there were army people who were telling the Netanyahu government, look at what's going on in Gaza, because some of what Hamas was doing is they were openly practicing maneuvers.

And the Netanyahu government thought this was a head fake, that they were trying to sort of fool them. And they didn't take it very seriously. I can't vouch for this, but this is being reported in places like Haaretz. So I think that some of that dynamic may be at work, but I doubt very much that, you know, did Osama bin Laden look and notice that, you know, 2000 was a very fractious election and the Supreme Court decided it and that's why he went for 9-11? I don't buy that. I think these guys know these countries are strong. What they're looking for, terrorists are always looking for the reaction. They're always trying to bait you into

a massive reaction. So if one of the objectives was to put a wedge between Riyadh and Israel, it just strikes me that, and tell me if you agree with this, that it's worked. And I'm just shocked that both Riyadh and Israel wouldn't make some noises that, no, this isn't working, but it appears as if they've, to a certain extent, if this was the primary objective, they've already achieved their objectives. as being very quiet. I'll tell you this. A few weeks ago, a Saudi official explained the situation to me. And he said, and I'm paraphrasing now because it was sort of all off the record, but I think this is the way the Saudis are thinking about this. Look, we are willing to do this and we want to do this because it serves both our interests, but we have to be careful with our domestic population, particularly because the crown prince has been doing a lot of stuff that has been enraging the religious fundamentalists in his country. He's shut down the religious police. He's allowed, you know, movie theaters, restaurants, desegregated every facility where women can be.

Women can now drive. Women can leave the country without checking with their male guardians. All that stuff has pissed off the mullahs. He said, we can't also piss them off by completely abandoning the Palestinians. So we do need some real concessions on the Palestinian front. So he was telling me, you know, that there's a feeling, particularly in America, in Washington, that the Saudis are, you know, completely unconcerned. They're happy to sell the Palestinians down the river. They just want to make a deal with Israel. Now, I think there's some truth to that.

That is that they are as frustrated with the Palestinian leadership as anyone who has ever dealt with the Palestinian leadership would be. They're feckless, corrupt, incompetent. But they know that they've got this issue. They don't, you know, and they're fairly careful about how much they push forward. You know, for example, they've been opening up all this tourism and all this, building all these hotels. They still don't allow you to drink alcohol.

And I talked to a couple of Saudi friends of mine, and the point is, you know, it's going to happen. But, you know, you push one of these things every six months. You don't push them all together, and you try to work with those people. So my guess, that's the dynamic here, that the Saudis are going to be very careful. But I think their national interests are driving them together. So, you know, as long as this doesn't completely explode, and it might, you could see this getting back on track maybe in a year. So if this is a war of perception, as Lincoln said, that you can't win a war without public support and you can't lose one with it, and they're trying, this is a game of perception, trying to evoke sympathy based on what they feel will be an outsized overreaction.

Granted, I'm seeing everything through the lens of Western media as someone who has family in Israel, as someone who sits on the board of companies of former Israeli combat veterans who that night were on planes to Israel. So I have a bias here. But it seems to me that they have vastly miscalculated, that the perception of what has gone on here will... I believe that empathy towards Palestine or the Palestinian cause across America and the West had somewhat increased steadily over the last 20 years, and that the perception was negative or increasingly less positive towards Israel. And I feel like the actions of the last three or four days have totally reversed that. Have I misread this situation? I tend to think you're right.

I guess I would say I hope you're right in the sense that I think this kind of brutal, savage, barbarous terrorism really has no place. You can sympathize with the legitimate grievances of Palestinians. You can barbarism with which they did it, that music festival, dragging women, raping, you know, taking children, all that, I think, will produce the kind of reaction you're describing. Now, it is worth saying, though, that that is not how it's being portrayed, particularly in the Arab world. I've taken pains to try to, you know, to the extent I can, watch and read stuff that is more available and gives you a sense of what's going on outside. You know, there was some initial shock at just the brutality. But now, increasingly, what is happening, and this is what I was sort of saying, Now what is happening is there is the focus on every building that's being bombed in Gaza. You know, every family that's being dispossessed, you know, the women and children in the rubble.

And, you know, my guess is you're going to end up with a very disproportionate body count at the end of all this. Because right now, yeah, you have 900 Israelis killed and, you know, several hundred Palestinians. But by the time the Israelis are done with this, you know, just because of this massive superior firepower of the Israelis, you're going to see the Gaza will be devastated. And that will probably evoke a certain amount of sympathy. So I think remains to be seen. It partly depends on what the Israelis do. And I hope the Israelis think about that issue because, you know, they bombed Gazaing a kilometer or so of land so that you make the border impregnable. But there is this desire for, understandable, for revenge almost. And I would hope that that is kept in check.

And there's a more strategic idea of like, what is the purpose of this operation? Yeah, just when I see, when I saw these barbaric images, I couldn't, you know, we spent a lot too many of these young men that have absolutely no, just quite frankly, nothing to lose. And have there been any ideas or opportunities to address longer term? I mean, I don't care if it's migrants flooding the US border. It all seems to reverse engineer to an absence of opportunity across young people, which, and I need to say this, in no way excuses what has happened. But do you think some sort of long-term solution, what is it? Is it economic aid? Is it their own governance rights? If Israel says, we can't have this again, and we need a buffer zone, and maybe some retribution that teaches people the algebra of deterrence are a pretty difficult lesson, there's going to also have to be a long-term sort of economic solution.

Because you're right, there's 5 million people we got to deal with. Has there been any leadership around this issue or any model for what we might want to implement here? So first, I want to underscore the point you're making, which is, you know, there are 2.2 million people in Gaza. It's the most densely populated part of the world. 50% of those are children. 50% of those are children. Youth unemployment in Gaza is over 60%. By some accounts, 70%.

75% of the people in Gaza lack access to drinking water. 60% live under poverty and below the poverty line. So it's a pretty miserable place. The Secretary General of the UN visited it and he described it last year as hell on earth. So it's an interesting question of how much worse can you make Gaza? And again, absolutely, and it's important,

but now I'm talking about the people of Gaza. Hamas is a terrible, tyrannical terrorist organization, so it's even worse for them. To the extent they have any governance, it's governance through this very tyrannical, radical, and corrupt organization, Hamas. The problem is, I think, Scott, that you put your finger on how to think about this, but what these people want more than anything else, as far as I can tell, is political rights and dignity. And the Israelis have been

very willing to give them a lot of other stuff, economic rights, development aid. The world has been willing to give them that. But it's almost as if we're trying to kind of obfuscate or get around the central problem, which is what they want as a state. And the Israelis, to be fair, have tried to go down that path as well. Not so much this government, but Ehud Barak, you remember 2000, Bill Clinton came tantalizingly close to a Palestinian state. They had agreed on all the parameters, both sides. And then Yasser Arafat pulls out the last minute. Ehud Omer, another Israeli prime minister, offered a version of that deal again to Abbas, the current Palestinian authority leader. He turned it down. So the Palestinians, I mean, I have a lot of

sympathy for the Palestinians. I do not have a lot of sympathy for the Palestinian leadership, which has time and time again just, you know, the way I would put it is fundamentally, there was a struggle here. The Israelis have won. The Israelis have won. They have, you know, they have all the territory. They're a rich, powerful, strong country. When you're in a war that you're losing, the longer you wait, the worse the deal you get. And the Palestinians have kept it.

If you think about it, the deal that were offered in 47, 48, the partition was half of that British mandate land. They said, no. The Israelis take more. Then the 67 war happens. The Israelis take more. Now the settlement activity is taking place. So what the deal that Clinton offered, Barack and the Palestinians, is way better than anything they could dream of getting today. Because in a war when you're losing, the longer you wait, the worse the deal gets. And the leadership doesn't want to own up to its people. That you know, the dream of a loaf is gone. We have a half loaf, and if we keep pissing around, it's going to be 40% of the loaf,

and then it'll be 30% of the loaf. And they just, you know, Palestinian leadership has a lot to put to answer for, in my view. So let's talk about second order effects. We talked about that for the time being, any sort of agreement between the kingdom and Israel is kind of on hold or is in stasis. What about, what does this do for U.S.-Israeli relations, U.S.-Iranian relations? What does it mean for the conflict, not the conflict, the invasion of Russia, Russia's invasion of Ukraine? What are the kind of, as we get away from the blast zone here, what do you see as the long-term geopolitical impacts across Europe, Middle East, and U.S. relations with these different entities? So I think in the region, what you see is

the reality of a post-American Middle East. It's very messy. Everyone is trying to gain a jockey for advantage. You're going to see more violence. You're going to see more groups that try to take advantage of the fact that there is this level of instability. I think with the Iranians, the interesting question is, how much do they want to? That's the crucial question here. Because the other ones, the Turks are trying to establish themselves a bit in Syria. The Israelis, of course, have largely been trying to do it through technology and that kind of thing and build up a big deterrent force. The Saudis are trying to do it with money. The Iranians have tended to try to extend their influence politically and militarily through militias in Lebanon, in Yemen, in Syria, in Iraq. And so will the Iranians really try to play

a game here? I think everyone, the Iranians are a malicious force, don't get me wrong, but they seem to be searching for a way out, partly because they have these crippling sanctions on them. What's the evidence of this? The biggest evidence of this is the Saudi-Iranian normalization, the rapprochement, right? That was a big, big deal. You remember it happened last year, the Chinese brokered it. That seems to me, they would jeopardize all that if they were to go really take advantage of this. But that's the part I worry the most about. And then there's the broader issue, which is, look, the central challenge in international relations we face is a version of what's going on in the Middle East, which is, can we maintain a rules-based international order that encourages open trade, open commerce, open communication, open information platforms without the great liberal hegemon superpower that sustained, built, and paid for the international system as it exists today, the United States. Because the U.S. is not

going to be able to play that role that it's played in the past, partly because it has grown weary, partly because others have risen and will not accept, you know, U.S. hegemony. And people, you know, states like Russia, Iran, groups like Hamas, Hezbollah, are basically trying to, in various ways, undermine the rules-based order, undermine the international system, burn the house down. Will they win? Or will the United States and Europe and Japan and Singapore and Saudi Arabia, all these countries that want order and stability and openness, will they prevail? That's the big dynamic. And that's why what happens in the Middle East does have a larger global significance. Ukraine, what, if any, impact does it have on our... I don't think it has too much.

The biggest problem in Ukraine is the West is getting fatigued. They won't admit it, but they are getting fatigued. You know, you're seeing signs of it in the Republican Party very strongly. You're seeing some signs in Europe as well. Slovakia election elected, they elected basically a pro-Russian leader. The Poles, these populist nationalists are, you know, they're pretty good on Ukraine, but they've been quarreling with Ukraine for the last two or three months about Ukrainian aid. As these refugees, remember, there's six, seven million Ukrainian refugees living in Europe. I think that's the critical thing to look at. The Ukrainians are

not going to give up. This is their land. This is existential for them. The question is, will they run out of money and weapons? And that's all on the West. I have begun to feel that one solution to this problem might be for us to seriously try to do what a number of very smart experts and senior former policy officials have been saying, which is, let's tap the Russian funds that are frozen from the Russian Central Bank. It's about $320 billion. And we start getting that money flowing to Ukraine as reconstruction, as reparations, call it what you will. Money is fungible. That both gives Ukraine a cushion. It also sends a signal to the Russians that, look, you can't outweigh us. The Russian strategy right now is

pretty clear. They're waiting for the 2024 election. They think there's a 50% chance Donald Trump will win. Trump will sell the Ukrainians down the river, make kind of deal with Putin. Well, what if you had this independent mechanism set up by an independent agency, maybe the European Union or something like that, that is just sending this money on the basis? And as Larry Summers, the foreign treasury secretary, said, this is unprecedented, but so is the naked aggression that Russia took, you know, engaged in. And if the precedent you're setting is your foreign exchange reserves and your central bank reserves are psychosanct,

unless you brutally invade your neighbor, in which case all bets are off, that's not a bad precedent to set. We'll be right back. Support for this podcast comes from Klaviyo. You know that feeling when your favorite brand really gets you. Deliver that feeling to your customers every time. Klaviyo turns your customer data into real-time connections across AI-powered email, SMS, and more. Thank you. during Black Friday, Cyber Monday, and beyond. Make every moment count with Klaviyo. Learn more at klaviyo.com slash BFCM. comes from Anthropic. You already know that AI is transforming the world around us, but lost in all

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Plus, you can rest assured knowing that Anthropic built Clawed with an emphasis on safety. The leadership team founded the company with a commitment to an ethical approach that puts humanity first. To learn more, visit anthropic.com slash Claude. That's anthropic.com slash Claude. I want to put forward a couple of theses and you validate or nullify them. But as we pull back the lens on the Middle East, I increasingly believe that the geopolitical or the catastrophic geopolitical or the catastrophic geopolitical decision of the last 50 years will be seen as our invasion of iraq our weariness the resources expended we're like someone who's gotten their eyebrows burned and we just don't

want to get near any hot surface any longer in the middle east that whether it's taking out a natural buffer to iran uh this this incredible vacuum that we will, in the fullness of time, look back on going too far. Going into Afghanistan, absolutely justification, but going into Iraq will be seen as probably the greatest geopolitical mistake in US history since last 50 years. Yeah, I think there's no question it was, it was, how would I, is it bigger than Vietnam? I don't know, but it certainly was a massive, massive mistake. And it represents two things. One was, this was the kind of peak American hubris. You know, this was an American dominated world. This was the post-Cold War world. We destroyed the world like a colossus. And then

9-11 happens, and we're like a wounded giant. And we start lashing out, and we lash out, and we totally militarize the conflict. You know, I wrote a piece for Newsweek, right, two weeks after 9-11 called Why They Hate Us. And we're trying to explain the roots of this kind of Islamic rage. And the main point I was trying to get across is, look, the main thing we have to understand is this is a kind of ideological, civilizational, political struggle. Don't turn it into a military struggle, because that's what they want. Again, Osama bin Laden once said, you know, it's so telling that he thought about it this way.

He said, if we go anywhere, if a that he thought about it this way. He said, if we go anywhere, if a small band of us go anywhere in the world and raise the flag of Al-Qaeda, we can be sure the American army will come thundering in. That's the goal. That's what they're trying to do, is to draw you into these places that are quagmires. Even Afghanistan, I think we massively misread how we should handle it. We should have gone in there, got rid of the Taliban, and then left. You know, I mean, these places, when you try to bring order in a country, what we always forget is we are the foreigners. And you can have all the best intentions in the world, but it's the easiest thing in the world to arouse nationalist opposition against an occupying foreigner. If we had understood that, I think we would be in a

much better place today. So the U.S., I think, crudely perceives the kingdom and MBS, poor track record on human rights, the murder of Jamal Khashoggi. And the thesis is that MBS is actually an enormous asset or an enormous positive for the West, that the pivot from a hot war in Yemen and a cold war in Iran, sort of the pivot, loosely speaking, from terrorism to capitalism, that we could have not written a better script for pro-West interests. Your thoughts? Yeah, I basically agree. But let me preface it by saying, when I went to Saudi Arabia about 10, 12 years ago, I guess it was more than that now, 15, 16 years ago. I don't know if this happens to you, Scott, but as you get older, you forget that the thing you did that you thought

were 10 years ago were actually 20 years ago. Yeah, no, time is just flying by. I went to Saudi Arabia, and Jamal Khashoggi was my guide, was my Sherpa. He took me around. So we got to be very close, and I admired him enormously. So I say this with that caveat. Look, at the end of the day, what he did on that front in some other areas was unpardonable, unforgivable, but he has been the principal modernizing force in the Gulf on a scale we have never seen before. Saudi Arabia has modernized more in the last two to three years

than it did in previous 50. Even if, even if you think about human rights, he's allowed women to drive. He's allowed them, most importantly, to be in unsegregated areas in education, in workplace. That means Saudi women, female participation in Saudi Arabia has been going up steadily, much, much faster than people realize. You are getting to the point where those distinctions

are becoming much less important. He's opened up the economy to outside forces. He's opened it up to entertainment. He's opened it up to tourism. All those are freedoms. People have the freedom now to do lots of different things that they were not able to. They don't have political freedom yet.

You can't pretend they do. But point two, as you say, he could be a huge Western asset because look at how he's modernizing his country. Is it along Chinese lines? No, it's along Western lines. Look at what he's buying. He's buying golf and Formula One and sports and soccer. They're opening four seasons.

Exactly. So we are sort of blowing it a little bit by not recognizing that. I think that the deal that the Biden people have been trying to do with the Saudis, with Israel, is good for Saudi Arabia, good for America, good for Israel America on the price of oil. Saudis would agree no Chinese military facilities in their country and basically no Chinese high-end technology, you know, no Huawei. They've agreed that they would continue to price oil in dollars. No question of pricing it in yuan. Those are real important elements of American power. Saudi Arabia is still the swing state for the most important energy resource in the world and will be the most important energy resource in the world for the

next 20 years. No question. You used a key term there was my next question, swing, swing state. So if you think these polls in the media, Biden versus Trump, I just I find just totally superfluous, obnoxious, because it really doesn't matter what the US, 45 states have already voted. It all comes down to a small number of people in five states. And then if you look globally, it strikes me that the swing voters in what looks like a bifurcation or a bipolar world where it's loosely speaking China and Russia versus the EU and the US, that the swing votes, the people who decide who wins and who loses here, come down to the kingdom and India.

Your thoughts? Kingdom, India, Turkey, maybe Indonesia, but basically it's a small number of states. I want to underscore the point you were making that people don't focus on enough right now, which is, I think, crazy. The most powerful man in the world is going to be elected by probably 100,000 people in four states, in Georgia, Arizona, Wisconsin, Pennsylvania. It's not even going to be in those states, as you know, because the cities are going to go blue, the rural areas are going to go red. And it's going to be those exurban counties. And you're talking maybe 50,000 people are going to go red. And it's going to be those exurban counties. And you're talking maybe 50,000 people are going to determine the fate of the, I mean, of the way the war in Ukraine goes,

the future of the international system, whether or not, you know, because the part that worries me the most is the Republican Party is returning to its isolationist roots. This is something people don't realize. This is a big deal for ever since World War II, the Republican Party had been taken out of that. They opposed U.S. entry into World War II. They opposed U.S. support for Britain and France, all that stuff. It was the most bitter debate in some ways of the 20th century in American politics. They were going back to that. Listen to Josh Hawley, listen to Vivek Ramaswamy, listen to Trump. And you see the Republican Party is basically saying,

you know, box on everybody's house, we get out of the world. If you want to see serious disorder, that's where I think it begins. If we really see a total withdrawal of America from the world. What are your cliff notes on the election or 2024 in America and where America is at economically and politically? To me, what's stunning about where we are is the mismatch between economics and politics. So if you look at where we are economically, Scott, if you would ask yourself at any previous point in history, who dominates the world of technology and the industries of the future? In the 1970s, you'd be looking at a lot of German companies, Japanese companies, even Dutch companies like Philips. You know, think about what were the hot technologies then.

NEC, Toyota, Siemens. Computer, consumer electronics, all that. Today, it's America, America, America. 100%. You know, it's just crazy how dominant we are. Our banks are absolutely dominant. There are no global banks left in. They're just American banks.

The Europeans are in tatters. The Chinese can't open up their system. The Japanese banks have been declining for 25 years. You look at demographics. We're the only rich country that is going to be demographically vibrant because we take in, not talking about anything illegal, we take in a million legal immigrants a year. That's more than the entire industrialized world put together. We're energy-sufficient, independent. We are now the largest producer of liquid hydrocarbons in the world. It doesn't have as much impact as people... People don't think about that because we consume most of it,

but we're still the largest. We produce more liquid hydrocarbons than Saudi Arabia or Russia. You put all that together, and then you say to yourself, how do we have this totally screwed up politics? We can't pass a budget, you can't have a speaker, you can't get any kind of rational immigration know, I'm a big believer that one of the great things that a rich country needs is drive. It's just sheer drive. And guess what? Those people trying to cross the border three times, four times, that pain of death, they have drive. And we need some of them, too. But you just need a system where it's lawful.

It's, you know, it's not just rewarding people who are breaking the law and pretending then to require asylum. How can we not, you know, we have this great hand. How are we screwing it up? And so having said that, do you think we're going to screw it up? Do you think Trump's going to be reelected here? You know, I'm an optimist by nature and I'm an immigrant. I kind of chose, I left my country and my culture and my family and came here. So I have a lot riding on that question. I hope that America will survive and prevail and thrive.

I think it will, because I think at the end of the day, we muddle through. Our politics is never great, but we don't kill the goose that lays the golden egg. We get it right. It just takes a while, right? On the Democratic side, do you think Biden is a lock for the nomination? I mean, it seems like we're all kind of praying for some mythical figure to show up and be the obvious replacement for Biden. Do you think it's too late for that?

It isn't too late, but it's getting there. Look, if he decides he's going to run, it's difficult to dislodge him. He has been a successful president. He's done more in terms of legislation than any president, any Democrat since Lyndon Johnson. He's got good judgment on Ukraine, on things like the Saudi deal. His foreign policy has been smart. And yet, the problem I think we all have at the back of our mind is he's going to be 82 years old when he starts his second term.

I don't know, my dad lived to 85 and he was a very healthy person. And in his 80s, he started to, mostly everybody I know who has been in there, who has been through this journey, 80s are different. And I just worry. And I think that, you know, I hope he's really thought through this because it seems to me one strategy would be to say, look, I came in to do a job. I've done it really well. I'm now leaving it to the next generation. Yeah, it's not the 82 number that really freaks me out. It's the 86 number when Marine One leaves the West Lawn for the last time. That means at 85, we're going to, I almost don't think it's fair to him. And the declines, at least among the people I've known in their 70s and 80s, the decline is not linear.

It escalates. So you've been very generous. And when we were off mic, we were talking about your son. I want to just pivot for a quick minute. Do you just have one son? I have a son and two daughters. A son and two daughters.

And daughters are younger or older? So my son is 24. My next one is 20. She's a girl. She's at Wellesley. And my 15-year-old is in high school in New York. So advice to your younger dad self? Gosh, I have a lot. I mean, to me, that has been in many ways the most important thing I've done in my life and the thing I think I've

thought about the most and tried to get right the most. And to the extent that I've done it, done it okay. It's the one thing I derive the most pride from. I would say there is no such thing as quality time. You have to spend a lot of time with your kids. Yeah, it's just, agreed. Secondly, whatever you say is irrelevant. They will follow what you do. If you tell them, you know, don't lie,

but they notice you fibbing, and you tell them live an honorable life, but you're not living an honorable life. If you tell them, you know, don't be on your phone all day, and you're on your phone all day. Like, it's all about doing. It's not about telling. And preach less and practice more.

And the third thing I would say is, you know, don't get too proud and don't get too worried. This will pass. In other words, when they're reading one year faster ahead of everybody else, don't boast about it, because next year they'll be reading slower. And if you're, you know, they're going through some strange phase, it's a phase,

you know, have the perspective of knowing it's not a, it's not a snapshot, it's a movie. So Fareed, just to, just to wrap up here, I can't help but ask a question about CNN and the larger mediascape. Have you thought in terms of managing your own career, like, how do you, have you thought about how does Fareed Zakaria and the content you produce, how do you, have you thought about how does Freed Zakaria and the content you produce, how do you skate to where the puck is headed? And how does it,

is it CNN in different formats? Is it podcasts? Is it writing more books? When you manage your own distribution channels, what are you thinking? Yeah, it's a great question. CNN is going through

a kind of classic innovators dilemma problem, right? Which is that it had an amazing business model. Most people don't understand how profitable the cable carriage business was. And CNN's margins on the cable carriage fees were close to 50%.

And it was getting, I'm guessing, one and a half billion dollars of cable carriage revenue. So it made sense for them to be milking that for as much as they can, but that world is going away. The revenue of the future is going to be in some form in streaming and digital. And can they make that transition? The guy who's been appointed CEO of CNN is amazing and just the right person for it. He's a serious grownup. He understands exactly what I said. He did it at the New York Times brilliantly. You know, let's see,

let's see whether he's able to do it. I certainly hope so. For me, the big advantage of CNN is I want a place where I can have maximum impact, not make the maximum amount of money. Don't get me wrong. I love making money. But if I have to choose, I want an open platform that anyone can access versus a closed platform where you have to subscribe to me, because then I'm only getting my groupies. I'm only getting the people who are my fans. I like the fact that I can, you know, I'm on in a place where anyone, anywhere in the world can get me. So as long as CNN can be that place, it's a great platform. There's no other global media brand like CNN in that sense. It does, you know, it's all over the world, 200 countries, easy to access. And then I have, you know, the books and writing. And that's another piece where I have to think about, you know, because I've written my column for the Washington Post for about 20 years. Again, is that model viable? You know, the post is itself going through its own challenges. So I'm thinking about these things all the time. But for me, the goal has always been, you know, try to have the maximum impact. Because if I'm trying to, in this

profession, make my goal, make the most amount of money, I made a stupid choice. I should have become a hedge fund manager or, you know, gone into venture capital or something. Fareed Zakaria is the host of Fareed Zakaria GPS on CNN and a columnist for The Washington Post. He's also the author of four highly regarded New York Times bestselling books, including his latest, Ten Lessons for a Post-Pandemic World. He joins us from his home in New York. Fareed, I know a lot of people who are super talented. I know a lot of people who have insight on geopolitics. The thing that makes you singular is you are fearless. The stuff you say, it's data-driven, and I get the sense you are singing and dancing on tables as if no one is watching

you. And I just, I have a great deal of admiration and you're a great role model for young journalists. So I really appreciate your time and your good work. Thank you, Scott. Real pleasure to be on here. As I told you, my 24-year-old son is going to be so, so happy that I did this because he just adores you and listens to you. He finds you wherever you are. Thanks for that. I appreciate it. Stay well. Thanks, Farid. As a root of happiness, wellness. What is wellness? Right? The ability to take care of yourself such that hopefully you can live a productive and prosperous life. And not only that, do, the path to wellness involves really two things, physical fitness and relationships. I have found when I am down, the things that really help

are one, eating clean, an absence from alcohol and THC exercise, but more than anything, really leaning on relationships, really engaging. I find that one of the fastest ways for someone to feel closer to you is to be vulnerable and let them know you're struggling and let them know that something's not going well. I have men in my life that I consider good friends, and I've never once heard about anything bad happening to them. Every business situation is a victory and another example of what fucking geniuses they are. And I only hear about the stocks that go up and hear how awesome and incredible their wife is and how their kids are setting new records on the baseball

field. And it's just, okay, so you're living a different life than the rest of us. You're living in a different universe. But it's when friends call and talk about their struggles such that when they have victories, we can celebrate them together. It's when I know I can call someone and talk to them about some of the struggles I'm facing. And I don't want sympathy. I want empathy and I want good advice and I want support. And I get that from my best friends. I'll call them and say, I'm really fucking stressed out about this. Or Jesus Christ, I got mean in the face. I invested in this company, this stupid company.

I've lost everything. Thought I was a genius. You know, whatever it is. I feel guilty. I haven't been calling my dad a lot lately. He's 93 and I can't find the time to reach out to him. What is wrong with me? Anyways, that is what makes people feel

closer. That is what strengthens relationships. That is the base for happiness and the base for rebounding faster from when you're down. Buy a candle, sure. Get a meditation nap. But first and foremost, if you're focused on your own wellness, it's in the agency of others. Also, also sweat. Relationships and sweat. Not candles, not apps. Relationships and sweat. This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and's why we built HubSpot.

It's an AI-powered customer platform that builds campaigns for you, tells you which leads are worth knowing, and makes writing blogs, creating videos, and posting on social a breeze. So now, it's easier than ever to be a marketer. Get started at HubSpot.com slash marketers. Support for this show is brought to you by Nissan Kicks. It's never too late to try new things, and it's never too late to reinvent yourself. The all-new reimagined Nissan Kicks is the city-sized crossover vehicle

that's been completely revamped for urban adventure. From the design and styling to the performance, all the way to features like the Bose Personal Plus sound system you can get closer to everything you love about city life in the all-new reimagined Nissan Kicks learn more at www.nissanusa.com slash 2025 dash kicks available feature Bose is a registered trademark of the Bose Corporation